GERMANY Law and Practice Contributed by: Tanja Pfitzner, Fabian von Schlabrendorff and Niklas-Arne Hecht, Pfitzner Legal
in individual cases, but to render decisions on issues of law which are important for the entire system of justice. The Federal Court of Justice must accept the factual findings of the lower courts as correct in principle and will examine only whether the contested judgment is based on a violation of procedural or sub- stantive law. 10.5 Court-Imposed Conditions on Granting an Appeal The entry court cannot impose conditions on grant- ing an appeal. A second appeal is only admissible if the appellate court expressly admits a second appeal in its judgment. An appeal on points of law is to be admitted if the legal matter is of fundamental impor- tance for the further development of the law or if the maintenance of consistency in court rulings requires a decision of the Federal Court of Justice. The appellate court cannot impose any additional conditions for the granting of a second appeal. 10.6 Powers of the Appellate Court After an Appeal Hearing The appellate court may dismiss or grant the appeal. If the appeal is granted, the appellate court will usually replace the judgment of the lower court with its own judgment. At the request of one of the parties, the appellate court may also remit the case to the court of first instance for further proceedings. The Federal Court of Justice may decide the case itself if no additional fact finding is necessary. In many cases, however, the proper application of the law will require further factual findings by the lower courts. The Federal Court of Justice will then remit the case back to the lower court, which is bound by the legal analysis of the Federal Court of Justice on the legal issues which have been the subject of the second appeal. 11. Costs 11.1 Responsibility for Paying the Costs of Litigation As a rule, the party losing the case must bear all the costs of the proceedings. If both parties lose parts of
the dispute, the costs will be allocated between the parties in proportion to win and loss. In principle, the costs of the court and the attorneys are strictly linked to the amount in dispute. In rela- tion to this amount, statutory law provides for spe- cific fixed rates. A party can agree much higher billing rates with its attorney, which is common in complex commercial matters. However, in litigation, the win- ning party can only demand payment from the los- ing party of the sums calculated based on the fixed statutory rates. In arbitration proceedings, deviating agreements generally apply. 11.2 Factors Considered When Awarding Costs The general allocation of costs is linked to the propor- tion of win and loss between the parties. However, if one party caused additional costs, it will usually have to bear them. For equity reasons, certain exceptions may apply. 11.3 Interest Awarded on Costs Upon request, the judicial officer orders interest on the reimbursable costs at a rate of five percentage points above the base rate from the date on which the cost application is submitted. 12. Alternative Dispute Resolution (ADR) 12.1 Views of ADR Within the Country ADR has increasingly gained acceptance in the Ger- man business community, and there is a refined legal framework for ADR procedures under German law. The number of mediations in Germany may be positively influenced by the fact that more and more insurance companies include mediation in their legal expenses insurance. The recognition of mediation procedures is reflected, inter alia, in the fact that mediation proce- dures suspend the limitation period. 12.2 ADR Within the Legal System As a rule, ADR proceedings are only conducted on a voluntary basis in Germany. The Mediation Act regu- lates the main features of the mediation procedure for private, out-of-court mediation. In civil proceedings,
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