Banking Litigation in Germany

The German Insolvency Code

Financial litigation in Germany is usually related to companies’ insolvency. The legislation related to German companies' insolvency cases is the Insolvency Code which establishes the legal grounds under which a creditor, usually banks or other financial institutions, wants to recover a certain amount of money and appeal courts. The main objective of the German Insolvency Code is to provide banks the legal framework to recover their money and the debtor a proper way to liquidate their debt. In this type of case, company liquidation is the most employed legal instrument. However, if parties do not agree, a litigation case may be brought before a German commercial court be one of the parties, usually by the creditor.

Banking litigation court proceedings in Germany

Court proceedings for banking litigation cases depend on the type of financial institution. Banks will abide by the regulations of the German Banking Act; financial companies will follow the regulations established by the Payment Services Supervision Act, while insurance companies are subject to the German Insurance Supervision Act.

Court proceedings in banking litigations will usually start with a request for conciliation before getting to the hearings. In order to start these proceedings directly, the plaintiff must file an action with the German commercial court without requesting the conciliation hearing. The claimant will file for a provisional court order, which usually implies the seizing of property and freezing of the defendant’s bank accounts. Direct court proceedings may also start in the case of foreign defendants. Following the beginning of the court proceedings, both parties are required to submit evidence which will be tried by the court.

Banking arbitration in Germany

Compared to other countries, financial litigations in Germany have recently begun to be resolved by arbitration. Commercial litigation resolved by arbitration in Germany also applies to insurance companies. Among the advantages of resolving banking litigation by arbitration are the low-cost procedures and the amount of time spent to settle the matter.

Our lawyers in Germany provide legal assistance in litigation cases. You may also contact us for information about the German Banking Law.