In Germany, civil proceedings are initiated by filing a statement of claim with the competent court. The court delivers the statement of claim to the defendant parties as soon as the plaintiff has paid the advance on court costs in accordance with the German Law on Court Costs.
After service, the defendant party is given the opportunity to state within two weeks whether it intends to defend itself against the claim. If this is not done, a default judgment may be given in the written procedure, but an objection may still be lodged.
Before the Regional Courts, lawyers are required to appear, so that this declaration can only be made effectively by a lawyer admitted to practice in Germany. The so-called procedural fee becomes due when the statement of claim is filed or the statement of defense is submitted.
By means of an initial injunction, the court then requests the defendant to comment on the statement of claim within a period of often a further two, sometimes four, weeks. As a rule, this period can easily be extended once. The statement of defense is forwarded to the plaintiff party with a request for comments. At this stage of the proceedings, the court will usually set a date for a conciliation hearing and oral proceedings. At this date, the so-called appointment fee of the lawyers is due.
No pleadings are made before German courts in civil proceedings. A legal discussion takes place before the judge. According to § 278 of the Code of civil procedure (ZPO) the judge has the task to discuss with the parties about the possibility of an amicable solution. The judge summarizes the facts of the case and gives a first, preliminary legal assessment, which is the basis for the settlement discussions. The lawyers’ task is to defend their client’s position in the best possible way and to respond to the respective arguments of the other party and the court. Statistically speaking, the majority of cases are settled by mutual agreement at the first hearing. However, one must not lose sight of the fact that it is in the judge’s own interest to settle a dispute quickly without lengthy taking of evidence or the drafting of a judgment. If a settlement is reached, the lawyer receives an increase in his fees by the so-called settlement fee and the court reimburses the plaintiff two thirds of the court costs paid in advance.
If the matter is not settled amicably, the court enters the oral proceedings immediately and sets a date for the pronouncement of a decision. This can either be a judgment when the case is ready for decision; or the court issues an order for evidence or information if there is still a need for clarification.
The court corresponds exclusively with the lawyers and also delivers decisions to them. Time limits for appeals begin on the day the decision is served on the lawyer. An appeal must be lodged within one month of service of the judgment and reasons must be given within a further month. The second time limit may be extended once by one month without the consent of the opposing counsel. In German civil procedural law, it is important to know that no new facts may be presented in the second instance, with the exception of facts that could not be presented in the first instance in a justifiable manner. Also, there is only a limited possibility to attack the evaluation of evidence by the first court. Only in the case of violation of the laws of experience and logic can the court of appeal substitute its assessment of evidence for that of the first court or refer the case back.
The fees of the second instance are increased by approx. Thirty percent compared to the fees of the first instance, if billing is based on the German Lawyers’ Fees Act.
The party winning is entitled to demand reimbursement of the costs incurred as well as the costs of its lawyer on the basis of the Lawyers’ Fees Act. This means that if the party loses the lawsuit, it must pay the other party’s costs in full. It is therefore important, when advising the client on the prospects of success of legal proceedings, to point out the entire litigation risk of the first and second instance. In the event of partial success/failure, the costs will be calculated pro rata. The costs will be shown in a separate cost assessment decision after the conclusion of the proceedings and demanded for reimbursement.