GERMANY Law and Practice Contributed by: Tanja Pfitzner, Fabian von Schlabrendorff and Niklas-Arne Hecht, Pfitzner Legal
11.3 Interest Awarded on Costs Upon request, the judicial officer orders inter- est 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 German 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 insur- ance. The recognition of mediation procedures is reflected, inter alia, in the fact that mediation procedures 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 regulates the main features of the mediation procedure for private, out-of-court mediation. In civil proceedings, the trial judge may refer the parties to a conciliation judge appointed for this purpose; however, if the parties do not give their consent, the conciliation hearing is conducted before the trial judge as part of the normal civil proceedings. 12.3 ADR Institutions Several German institutions promote ADR or offer a platform on which various forms of ADR can be pursued – eg, the European Institute for Conflict Management (EUCON). The German Institution of Arbitration (DIS) provides for a pro- cedural framework in its Mediation Rules and a service infrastructure for mediation procedures.
The Federal Court of Justice may decide the case itself if no additional fact finding is nec- essary. 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 analy- sis of the Federal Court of Justice on the legal issues which have been the subject of the sec- ond 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 allo- cated between the parties in proportion to win and loss. In principle, the costs of the court and the attor- neys are strictly linked to the amount in dis- pute. In relation to this amount, statutory law provides for specific fixed rates. A party can agree much higher billing rates with its attorney, which is common in complex commercial mat- ters. However, in litigation, the winning party can only demand payment from the losing party of the sums calculated based on the fixed statu- tory rates. In arbitration proceedings, deviating agreements generally apply. 11.2 Factors Considered When Awarding Costs The general allocation of costs is linked to the proportion of win and loss between the parties. However, if one party caused additional costs, it will usually have to bear them. For equity rea- sons, certain exceptions may apply.
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