German Law: Recognising US Judgments in Germany
Germany and the USA do not have a bilateral treaty that provides direct recognition and enforcement of judgments. This is in contrast to Germany and other member states of the European Union as for these countries, mutual recognition is provided for under European Regulation on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (the CFI Regulation) where under § 36 it states: “(a) judgment given in a Member State shall be recognised in the other Member States without any special procedure being required.” For other jurisdictions, judgments need to be recognised by the German court before they can be enforced, and it is § 328 German Code of Civil Procedure (Zivilprozessordnung – ZPO) that outlines the requirements for civil law cases.
§ 328 ZPO provides a list of factors that will prevent the recognition of a foreign judgment in Germany. One of the most important requirements to determine whether Germany can recognise a foreign judgment is if the other jurisdiction has granted reciprocity. In detail, the provision states:
Recognition of foreign judgments
Recognition of a judgment handed down by a foreign court shall be ruled out if:
- The courts of the state to which the foreign court belongs do not have jurisdiction according to German law;
- 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;
- 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;
- 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;
- Reciprocity has not been granted.
The rule set out in number 5 does not contravene the judgment’s being recognised if the judgment concerns a non-pecuniary claim and if, according to the laws of Germany, no place of jurisdiction was established in Germany.
If the German courts recognise the decision, the process of enforcement begins. The decision of the US court will not automatically be enforced in Germany; therefore, it is necessary to bring an action to the local German court.
Enforcement of US Judgments in Germany
Enforcement of a US judgment in Germany can be sought under § 722 and § 723 ZPO. § 722 ZPO states that to pursue the enforcement of a foreign judgment, the party should bring a case where the defendant is located in Germany.
Another option available is to bring the case to the court district, where the defendant’s assets are located. This option under § 23 ZPO is available in cases involving assets based in Germany where the person is not resident in Germany.
§ 23 ZPO: Specific jurisdiction of assets and of an object
For complaints under property law brought against a person who has no place of residence in Germany, that court shall be competent in the jurisdiction of which assets belonging to that person are located, or in the jurisdiction of which the object being laid claim to under the action is located. Where claims are concerned, the debtor’s place of residence and, in cases in which an object is liable for the claims as collateral, the place at which the object is located shall be deemed to be the location at which the assets are located.
The amount of money in dispute in the case will also impact where the case will take place. Should the disputed amount be in excess of €5000, the regional courts (Landesgericht) will have subject-matter jurisdiction. Cases concerning lower amounts of money in dispute will be decided at the district courts (Amtsgericht).
If you can bring the case to the German court successfully, the US judgment can then be enforced in Germany. Once enforced, the plaintiff can seek to enforce their rights derived from the previous judgment and have the defendant’s assets seized. Applicants can also seek a distress warrant and proceed to have the defendant’s bank accounts frozen.
Issues to be Aware of when Seeking Enforcement of US Judgments in Germany
It is noteworthy that only a final decision from a US court can be enforced in Germany. Temporary court orders and preliminary injunctions will not have the same standing in a German court. Jurisdiction also plays a role in how the decisions will be recognised. German courts will determine whether the US court had the jurisdiction for the case. This is determined by examining whether the US court is equivalent to the German court which would have overseen the case if the case had taken place in Germany. Another aspect to be aware of is that German courts will not enforce a US judgment where the decision cannot be accommodated under German law. Such matters include decisions which are contrary to fundamental rights or basic principles of local civil procedure.
Ensuring that all the requirements are followed and in place to enforce a US judgment in Germany is a complex process, and professional legal counsel is necessary. The best means of ensuring that the judgment will be enforced and recognised in Germany is to consider this end result from the beginning of the legal action. Consult with our lawyers in advance of the proceedings in the USA and allow our legal experts to advise you concerning the enforcement of foreign decisions in Germany. If that is not possible, and you are currently in the process of seeking recognition and enforcement of a US judgment in Germany, then please contact our team directly. With experts in legal areas stretching from family law to debt collection and insolvency, our team can provide advice tailored around specific legal areas.