GERMANY Law and Practice Contributed by: Leif Gösta Gerling, Matthias Krämer, Anna Reuber and Jiabao Gerling-Li, LPA
LPA WestendGate Hamburger Allee 2-4 60486 Frankfurt am Main Germany Tel: +49 69 979 61 0 Fax: +49 69 979 61 100 Email: lgerling@lpalaw.tax Web: www.lpalaw.tax
1. Market Conditions 1.1 Geopolitical and Economic Factors Over the past 12 months, there has been an increase in joint ventures (JV) in certain economic sectors, while other (JV-oriented) areas have remained robust. Above all, there has been a particular increase in the pooling of resources and exchange of expertise in the defence, armaments, raw materials and military- related sectors (such as coating and communica - tion), to leverage financial strength and (proprietary) know-how and share risks in development, and also in capital-intensive areas. It seems reasonable to assume that the geopolitical situation (most notably the wars in Ukraine and Gaza, as well as the US withdrawal) is a key – if not the primary – driver behind the increase in JVs in these sectors in Germany. Domestically, the shift in policy priorities towards greater security through deterrence, the readiness of Germany’s own armed forces and the assumption of greater responsibility within NATO as well as the provision of considerable financial resources by the German government, which are to be invested in the defence industry and infrastructure over the next few years, provide planning security and make business models in these sectors economically more attractive, but also more appealing for private investors as well. As a result, there has been a noticeable increase in available private capital and a strengthening of invest - ment activities (including through the establishment of JVs and the pooling of private equity by setting up investment funds with a clear investment focus
towards these areas, among other methods). This increase will certainly continue and extend into 2026. 1.2 Industry Trends and Emerging Technologies Certain German industries have been significantly more active in forming JVs – a trend directly attrib - utable to the monumental capital requirements and technological shifts driven by the national and EU- wide digital and sustainable transformation ( Doppelte Transformation ). The automotive sector is highly active due to the urgent need to electrify, exemplified by the long-term JV formed by BMW and Rimac to co- develop high-voltage battery systems. Similarly, the energy sector is a hotspot for partnerships aimed at building the hydrogen economy and decarbonising industry. This surge in JV activity is ultimately down to the strategic necessity of sharing immense risks, pooling resources and combining expertise to navi - gate profound technological disruption and stringent new regulations. Emerging technologies are shifting JVs in Germany from simple risk-sharing vehicles into highly regulated structures, making it imperative to integrate critical regulatory frameworks from the outset. The EU AI Act mandates strict compliance and liability for high-risk AI systems, directly impacting a JV’s risk profile and operational costs. Simultaneously, the General Data Protection Regulation (GDPR) and data localisation rules dictate cross-border data flows, necessitating built-in governance for how data is shared, particularly with non-EU partners. Furthermore, intellectual prop - erty ownership for AI-generated output remains legally uncertain in Germany under the traditional “human
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