Guide to International Civil Procedure: Recognition and enforcement of foreign judgments in Germany

Starting point: Necessity of a Recognition Procedure under Section 722 (1) of the Code of Civil Procedure (Zivilprozessordnung/ZPO).

Unless special agreements under international law provide otherwise, a foreign judgment is initially of no value in Germany. Rather, only a successfully obtained enforcement judgment (cf. section 723 ZPO) leads to the enforceability of the foreign judgment in Germany as well.

A foreign creditor wishing to enforce a foreign judgment against a German debtor in Germany must therefore first apply to the competent German court for the foreign judgment to be declared enforceable. This is standardised in Section 722(1) of the German Code of Civil Procedure (ZPO):

“(1) Compulsory enforcement may be pursued under the judgment of a foreign court if such compulsory enforcement is ruled admissible by a judgment for enforcement.“

The object of this enforcement procedure under Section 722(1) of the ZPO is no longer the facts of the case already decided by the foreign court, but only the examination of whether the conditions for recognition set out in Section 328 of the ZPO are fulfilled.

If the German court comes to the conclusion that the foreign proceedings meet these requirements and that the decision was therefore formally justified, enforcement of the foreign judgment is also permitted for the territory of the Federal Republic of Germany. Enforcement is then carried out solely on the basis of the German enforcement order, which in fact merely reproduces the decision of the foreign court.

Grounds for refusal to be examined by the German court

As mentioned above, the enforceability of a foreign judgment in Germany requires that it be recognised in Germany. The enforceability of a foreign judgment is reviewed ex officio by the German court in the enforcement proceedings referred to above under Sections 722 and 723 ZPO.

In the absence of a relevant bilateral agreement between Germany and the plaintiff state, the general rules of international law apply to recognisability.  In this general case, recognisability is to be measured against section 328(1) of the ZPO:

“(1) Recognition of a judgment handed down by a foreign court shall be ruled out if:

1. The courts of the state to which the foreign court belongs do not have jurisdiction according to German law;

2. The defendant, who has not entered an appearance in the proceedings and who takes recourse to this fact, has not duly been served the document by which the proceedings were initiated, or not in such time to allow him to defend himself;

3. The judgment is incompatible with a judgment delivered in Germany, or with an earlier judgment handed down abroad that is to be recognised, or if the proceedings on which such judgment is based are incompatible with proceedings that have become pending earlier in Germany;

4. The recognition of the judgment would lead to a result that is obviously incompatible with essential principles of German law, and in particular if the recognition is not compatible with fundamental rights;

5. Reciprocity has not been granted.”

Accordingly, recognition of a foreign judgment is to be refused in the following cases:

Lack of jurisdiction of the foreign court

The objection of lack of jurisdiction is always the most obvious argument against recognition. This is because the international principle is that, in case of doubt, an action must be brought at the defendant’s domicile or place of business. Consequently, the jurisdiction of the foreign court for an action against a German defendant would have to be based on a special place of jurisdiction or an effective agreement on jurisdiction.

No proper service / breach of the right to be heard

It is not uncommon to raise the objection that the foreign claim has not been properly served. This presupposes, for example, that the German defendant had sufficient opportunity to defend himself properly against the action. Since case law interprets this requirement very narrowly, this objection is usually only helpful in extreme cases, e.g. if there were only a few days between service on the German defendant and the date of the foreign judgment, which is likely to be rare.

In addition, a translation of the complaint into German is usually required. In most cases, this follows from the Hague Service Convention of 15 November 1965, to which a large majority of countries in addition to Germany have adhered.

Incompatibility with other judgments

The objection that the recognition of the foreign judgment is incompatible with a domestic, German court decision is also very relevant in practice and accordingly significant.

This is particularly relevant in the case of an earlier lis pendens of domestic proceedings with the same subject-matter. „Lis pendens“ is the point in time at which a validly filed claim has been validly received by the defendant. The time of lis pendens abroad is determined by the foreign law. It is irrelevant whether the foreign court was aware of the domestic proceedings.

Please also read my separate article on this constellation „The negative declaratory action to prevent a foreign action“.  

By the way:

The priority of the domestic judgment applies even if the domestic judgment was issued despite the earlier pendency of the foreign proceedings. Domestic judgments therefore always block, even if they should not have been issued at all.

Incompatibility with the so-called ordre public

Finally, the so-called ordre public must be observed. This concerns the compatibility of the foreign judgment in question with the essential principles of German law.

If a foreign judgment is so contrary to the fundamental principles of German law that it would be almost intolerable to declare such a judgment enforceable in Germany, it must be refused recognition.

The above applies above all to violations of fundamental rights (In German: ”Grundrechte”). Other examples of judgments that violate German ordre public are those that are based on procedural fraud or judgments whose subject matter is gambling or betting debts.

Lack of guarantee of so-called reciprocity (In German: “Verbürgung der Gegenseitigkeit”)

A mandatory requirement for recognition is also the so-called „guarantee of reciprocity“ in relation to the sentencing state in question.

„Reciprocity“ means that the recognition and enforcement of a German judgment in the foreign state in question should not encounter significantly greater difficulties than, conversely, the recognition and enforcement of a comparable foreign judgment in Germany. In short: The point is that the „rules of the game“ must be reasonably consistent among themselves. It is unacceptable for Germany to recognise a judgment from a country which, on the other hand, refuses to recognise German judgments or only recognises them under considerably more difficult conditions.

Notice:

The above definition leads to the following problem: The question of so-called reciprocity can only be answered by looking at the actual judicial practice of both countries. This practice is in a constant state of flux, so the question must be examined on a case-by-case basis.

The above-mentioned requirements for the recognition of foreign judgments already have an impact on the German defendant’s decision as to whether he should defend against the foreign action at all.

In principle, the German defendant is free to decide whether to take up the „defence at a distance“ – accepting (perhaps) unnecessary and thereby high costs.

For the German defendant, however, it is important to note that objections to the merits of the claim must generally be raised in the main action, i.e. in the foreign proceedings. However, according to the case law of the German Federal Supreme Court (BGH), this does not apply without exceptions. In particular, it is still possible to raise the defence of procedural fraud in the recognition proceedings. In its judgment of 29.04.1999 (X ZR 263/97), the BGH stated that:

„In proceedings for a declaration of enforceability, supplementary factual submissions by the parties are admissible at any rate to the extent that a violation of section 328 (1) no. 4 of the Code of Civil Procedure is to be inferred from the manner in which the judgment to be recognised was reached. (….)

In contrast, both section 328 (1) no. 2 and no. 4 of the Code of Civil Procedure leave it up to the defendant domiciled in Germany to plead abroad at all. If he takes the risk of being sentenced abroad, he takes on the complication of only being allowed to assert narrowly limited defences in the recognition proceedings. In any case, the plea of fraud is not cut off.“

According to the aforementioned judgment, the German debtor who did not defend himself against the foreign claim could still claim in the subsequent German recognition proceedings that

• he was never properly served with the claim, and/or
• the foreign judgment is incompatible with fundamental principles of German law.