GERMANY Law and Practice Contributed by: Oliver Sieg, Helmut Katschthaler, Philipp Koch and Charlott Kujath, Noerr
the interpretation of exclusions for deliberate breach of duties and the allocation of insufficient policy limits (recently decided, for example, in a series of judg- ments concerning the collapse of the Wirecard group). Additionally, policy wordings regularly come under scrutiny in collective action proceedings, as seen recently with premium adjustments in private health insurance or surrender clauses in life insurance, which were ultimately decided by the German Fed- eral Supreme Court. 1.3 Dispute Resolution Strategy and Outcomes Dispute Resolution Before State Courts and Arbitral Tribunals In major loss scenarios, parties in the German mar- ket will frequently seek to reach an amicable solu- tion by way of settlement, with deal-orientation and negotiation practices differing significantly between the individual lines of business. Where a settlement is not possible, insurer vs insured disputes are typically resolved before the state courts. Arbitration proceed- ings are relatively rare in the German primary insur- ance market, but are standard practice in the rein- surance market and in connection with transactions between insurers. Costs of Dispute Resolution In litigation before the state courts, court fees tend to be relatively low and German civil procedure law caps cost reimbursement claims against the unsuccessful party at the statutory fee rates. Proceedings before the state courts typically take well over a year to reach a first-instance judgment. This can make lawyers’ fees – usually billed on an hourly-rate basis – a material factor, while at the same time providing an incentive for settlement. Commercial Courts To mitigate the traditional weaknesses of the state court system in resolving disputes, such as lengthy proceedings and the comparatively low degree of spe- cialisation of the courts, Germany introduced “Com- mercial Courts” in 2024 through the Justice Location Strengthening Act ( Justizstandort Stärkungsgesetz ) for disputes with a case-value of EUR500,000 or more. These courts provide direct access to the Appeal
Courts ( Oberlandesgerichte ) as courts of first instance with the Federal Supreme Court as the first and only court of appeal. In particular, Commercial Courts for insurance disputes have been established at the Appeal Courts of Düsseldorf and Hamburg, where complex major loss cases can be adjudicated by highly specialised panels within shorter timeframes. 2. Jurisdiction and Choice of Law 2.1 Choice of Law in Insurance Contracts Where the parties to an insurance contract act in commercial or professional settings, German law, in accordance with EU law, respects party autonomy to a very high degree, while stricter requirements apply when the policyholder is a consumer. “Rome I” Regulation The governing law of insurance contracts is primar- ily determined by EU Regulation (EC) 593/2008 or “Rome I”. Article 7 of Rome I contains a dedicated legal framework for insurance contracts, differentiat- ing between categories of risks and focusing on the protection of policyholders. Thus, a blanket clause defining German law as the governing law for an insur- ance contract is only valid to the extent allowed by Article 7 of Rome I. In general, for contracts that insure mass risks situ- ated in the European Economic Area (EEA), Article 7of Rome I allows the parties to choose the contract’s governing law. However, their options are limited and include, most prominently: • the law of the member state in which the insured risk is situated; or • the law of the policyholder’s habitual residence or seat. Where an EU or EEA member state mandates com- pulsory insurance and prescribes the application of its own law, the contract is governed by that member state’s law. If the parties do not agree on a governing law, it is determined by the law of the state in which the risk is situated.
127 I NSURANCE L I T IGATI O N 2026
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