During long and complex civil cases it is essential to remain attentive throughout the entire case and constantly review and question the performance of the opposing party.
At the same time, it must be ensured that one’s own statements on the facts of the case are complete and truthful. Otherwise, there may be fraud or deception found in the case. In turn, this may lead to criminal liability for litigation fraud according to § 263 StGB.There is often a fine line between permissible defence strategies and fraudulent actions.
At Schlun und Elseven Rechtsanwälte, we would like to give you an understanding of the meaning and the possible forms of committing fraud in court and to inform you about the corresponding penalties. If you require expert criminal law advice and defence, please do not hesitate to contact our firm directly.
Litigation Fraud – Significance, Forms of Commission and Sanctions
Litigation fraud is a subset of the primary fraud offence according to § 263 StGB and, therefore, punishable by law. According to its wording, anyone who intends to procure an unlawful financial advantage for themselves or a third party damages the property of another by causing or perpetuating an error by presenting false facts or by distorting or suppressing facts is to be punished.
Thus, trial fraud is understood to be the deception of facts by a party in a court case with the aim of winning the case and thus causing financial damage to the opposing party. Two basic constellations can be distinguished:
- First, there can be a triangular case of fraud, in which deception is made to the judge, and the losing party in the proceedings subsequently suffers the financial loss.
- The other variant of litigation fraud proceeds in such a way that the litigant has already been deceived and is then forced to make a self-damaging asset disposition. This can be, for example, a procedural waiver of action or a pre-litigation waiver of the assertion of own claims.
Possibilities for litigation fraud can also arise in a dunning (default) procedure, insolvency proceedings, and before a judicial officer or bailiff. The forms of fraud and the possibilities of action are, therefore, quite varied.
This variety also means that in all these proceedings, attention must be paid to the exact statement made to the public officials. According to § 138 ZPO Code of Civil Procedure, the parties have a duty of truth in the proceedings.
According to the provision, they must make their statements about actual circumstances completely and truthfully. The acts of deception, i.e. the pretence of false facts or the distortion or suppression of facts, can therefore be structured as follows:
- One’s own falsified statement of facts,
- Influencing witnesses to persuade them to give false testimony, especially relatives and acquaintances,
- manipulation of evidence such as deeds, cash vouchers or similar supporting documents.
Given these diverse possibilities for deception, it is not surprising that litigation fraud is often combined with other offences such as false testimony, perjury, forgery or suppression of documents.
Attempted litigation fraud, which was uncovered before a decision of the court damaging to assets, is also punishable.
In any case, it is advisable to engage an experienced and interdisciplinary qualified lawyer for criminal law and civil procedure law in these suspected cases to avoid the risk of a conviction for procedural fraud or, as a victim of procedural fraud, to bring charges against the opposing party.
Verifiability of Fraud in Court
It can be pretty demanding to prove legal fraud with legal certainty. There is often no clear distinction between admissible defence strategies and fraudulent statements.
For example, the Hamm Regional Labour Court (Landesarbeitsgericht Hamm – on 30 September 2011 – 10 Sa 471/11) decided that the appointment of a plaintiff in dismissal protection proceedings that she had not used the company cars used by her for private purposes did not yet constitute an assumption of attempted or completed litigation fraud. Therefore, no extraordinary reason for dismissal.
The reason given for this was that incorrect statements an employee made to the employer in their defence in a lawsuit or pre-litigation procedure, even if they were not objective, did not justify an extraordinary dismissal. A party may not be prevented from making those assertions and making value judgments in the trial that it considers appropriate and necessary to exercise its procedural position. The plaintiff had only taken a position favourable to her on one controversial issue.
In another case, the Federal Court of Justice recently worked out (Federal Court of Justice of 31 October 2019 – 1 StR 219/17) that the duty of truth in civil proceedings under § 138.1 Code of Civil Procedure (ZPO) forms the limit of sanctions for litigation fraud, with the result that sanctions for litigation fraud through an incorrect presentation of the facts presupposes breach of the duty of truth. He went on to say that the party to the proceedings was entitled to assert facts about which he had no reliable knowledge and could not obtain knowledge but which he considered likely or possible according to the state of affairs. According to this, the limit to the inadmissible presentation of facts was only reached when arbitrary assertions were made “at random” or “out of the blue”.
Thus, at least in civil proceedings, the limit of the sanctions for litigation fraud with the duty to tell the truth under § 138 Code of Civil Procedure is regulated. However, when this limit is exceeded in the respective individual cases and declarations still fulfil the duty of truthfulness can still be disputed in detail. This also depends on the particular circumstances of the respective case.
Penalties for Procedural Fraud
Under § 263 (1) STGB German Criminal Code, litigation fraud is punishable by imprisonment for up to five years or a fine.
Anyone who causes a significant loss of assets through procedural fraud, which is predominantly considered to be the case for damages of 50,000 euros or more, must expect a much harsher penalty. In such a case, the penalty is imprisonment from six months to ten years according to § 263 (3) StGB.
In addition, the interplay of fraud in the trial with other offences committed during the trial, such as false testimony, perjury, forgery and suppression of documents, can also be considered in assessing the sentence.
Suspicion of Litigation Fraud
Should you suspect that you have committed fraud in your own trial, you should immediately contact a criminal lawyer and describe your situation to them. If necessary, correcting false or incomplete statements in court is possible, thus avoiding criminal liability.
Should there be factual indications that the other party wanted to present false facts in court or distort or suppress true facts, and if there is a suspicion of fraud on the part of the other party, you can take action against this by certain means. For example, you can file a criminal complaint against the other party.
However, it is important to note that the deception must be verifiable. Otherwise, you could risk criminal prosecution for insulting or defamatory statements.
If it turns out after the end of the legal proceedings and after the expiry of the period for appeal that the other party has committed fraud, the proceedings can be resumed with the so-called restitution claim. The final judgment can also be set aside, and a new decision can be reached.
Under § 580 No. 4 of the Code of Civil Procedure, an action for restitution may be brought if the judgment was obtained by the party’s representative or by the opponent or their representative by means of an offence committed in relation to the legal dispute. However, it should be noted that a final criminal conviction must have established fraud in the proceedings for this to be the case.
Our Litigation Lawyers
Our Litigation Lawyers