TYPICAL QUESTIONS OF FOREIGN – ESPECIALLY RUSSIAN – CLIENTS IN RESPECT OF GERMAN LAW

17 Мар

Разногласия в отношениях клиентов, как правило, возни­кают на почве различных правовых требований Германии и России. Эти различия в правовых требованиях могут приве­сти к недопониманию сторон. Тому как преодолеть возможное недопонимание сторон посвящена настоящая публикация.


I. typical misunderstandings in Russian-German relations

А typical misunderstanding in the relation between German and Russian clients results from different legal requirements. Whe­reas Russian clients are usually astonished how little formalities German law requires in respect of notarisation, written form and how widely for example emails and facsimile-messages are recognised as proof in German courts, German clients usually need a lot of explanation in respect of docu­ments or formalities that simply do not exist in Germany. For example, those include the «пас­порт сделки», «акт выполнения работ» or the «печать».

Whereas Russian clients can hardly imagine how to «survive» without these documents, for Ger­man clients, this is just unknown and sometimes it can lead to disbe­lief or even distrust if the Russian partner explains that he cannot pay an invoice without proper do­cumentation, where a European bank will execute the payment order without demanding any do­cumentation at all. Depending on the state of relation between the parties, any such demand can lead to distrust – or if there already is distrust – enlarge that. For exam­ple, I had a case most recently in which a Russian company sued a German company in a court in Russia. In the end, the German party had to pay and in order to pay on the judgment, the parties signed an agreement. That in itself is unusual from a German per­spective, where it would be eno­ugh just to pay to opponent’s acco­unt using the judgment as a refe­rence. However, in that case, where – after long litigation – there was not much trust left between the parties, by a simple clerical error, the German party used the wrong date for calculating the exc­hange rate and in the end overpaid by about 3,000 Rubles (the overall payment was somewhere above RUR 4 million). From a German perspective, it was no big deal, from the Russian perspective, it re­quired a «доп–coглашение» in order to convince the bank to release the payment.

This is one of the cases where additional explanation and under­standing is needed in order toj solve the matter for both sides and explain to the German side tha this «доп–coглашение» is not trick played by the Russian side.

II. Enforcing rights/claims in Germany/gathering information

The first encounter a foreign client has with German law is usually when he tries to enforce his rights or claims in Germany. That can be claims from a delivery contract, a sale and purchase agreement or claims in tort or contract resulting from damage to cargo or many other reasons.

Out of court, there is no restric­tion in German law as to who can assist a claimant, that is, literally anyone can do that, including re­covery agents, special debt collectors or just private persons. In court – other than in Russia – only lawyers are allowed to appear on behalf of the parties. Therefore, if the matter is likely to go to court, clients will need the help of lawy­ers.

Before starting legal action, usu­ally it is advisable to gather as much information as possible about the opponent in order to ve­rify whether it is worthwhile going through the effort and costs of eit­her negotiation or litigation.

If the opponent is a legal entity, it is usually possible to obtain a copy of the latest balance sheet that has been filed with the com­mercial register (all companies have to file their balance sheets within 12 months after the acco­unting year, even though most companies try to delay that as long as possible, so for example, right now it is usually only possible to obtain balance sheets from 2010). Another possibility to obtain infor­mation is the use of specialised agencies such as «Creditreform» or «D & B». These reports costs-in the range of EUR 50-150, but the qua­lity varies from very useful infor­mation to completely outdated data that can more easily be retrie­ved from open sources on the in­ternet.

Information on real property usually is more difficult to obtain. In case of companies, the balance sheet will already indicate whether or not the company has any real estate, but access to the real estate registers is usually denied as long as the applicant does not have a judgement in his favour. Equally difficult it is to obtain credit infor­mation on natural persons. Credit reports of natural persons are not available without their consent, which is hardly ever given. Only with a judgement, the bailiff can be send to freeze assets and provide information on further assets.

Another very valuable source of information – especially in case of theft or damage to cargo in an ac­cident – can be the access to the po­lice or court and prosecutor’s file. If the applicant is the owner or in­surance of the goods that have been stolen or damaged, upon proof of ownership or insurance, a lawyer equipped with a duly signed PoA can usually get access to the respective file.

III. Enforcing of Russian judgements and Awards

Sometimes it is not necessary to go to Germany for litigation, especi­ally when the client has already obtained a judgement or arbitra­tion award in Russia. In this respect, it should be noted that arbit­ration awards from Russia are ea­sily enforced in Germany by virtue of the 1958 New York Convention. In practice, there are minor diffi­culties, but in general, awards for example from МАК or MKAS are enforced in Germany without any severe difficulties. The competence for recognition and enforcement of foreign arbitration awards rests with the Higher Regional Courts, which are in fact, the Courts of Ap­peal in Germany.

A different matter are judge­ments from state courts (ordinary or arbitration courts). Unfortuna­tely, there is still no treaty between Germany and Russia about the re­cognition and enforcement of state court judgements, so the general rule is that Germany recognises and enforces judgements if there is reciprocity with the country where the judgement originates from. With Russia, the situation is gradu­ally changing: Sofar, in the lawbo­oks, it is still written that there is no reciprocity between Germany and Russia as far as the recognition and enforcement of judgements is concerned. However, German la­wyers and the legal community is monitoring the situation and we note that the Russian VAS has re­cently recognised and enforced de­cisions from Great Britain and Ne­therlands, so there is hope that -should a case come up – it will be possible to convince a German court to recognise Russian deci­sions.

A different matter in this respect are judgments rendered in applica­tion of the CMR. Since Art. 31 para. 3 CMR provides that judge­ments rendered in CMR-matters will be recognised in all member states of the CMR, those judge­ments can be recognised and en­forced in a simplified procedure in Germany.

IV. Costs/fees

One of the first questions clients usually ask in respect of enforcing rights in Germany are the costs and fees of lawyers and courts. In this respect it should be noted that costs and fees in Germany are maybe not cheap, but conside­rably lower than for example in Great Britain. Lawyers – especially if they are dealing with internatio­nal matter – will usually charge hourly rates for their services, which may vary considerably bet­ween about EUR 250 and 450/h, depending on specialisation and experience.

Court fees on the contrary are fixed by a statutory scale which depends on the value of the claim. Some examples:

The costs for the first instance reach from about EUR 1,368 if the value at stake is EUR 50,000 to EUR 2,568 for a claim of EUR 100,000 and EUR 13,368 if the value of the claim is EUR 1,000,000. In addition to that, Ger­man law has a fixed fee system for legal services as well, which is ma­inly used to determine the mini­mum rate a lawyer is allowed to charge and at the same time, deter­mines the rate the underlying party has to reimburse to the win­ning party. These fees reach from EUR 2,635 if the claim is of EUR 50,000, to EUR 3,405 if the claim is EUR 100,000 and EUR 11,260 if the claim is EUR 1,000,000.

In addition to that, there may be costs for translations (which need to be done by a sworn translator in Germany), travel to the court, ex­penses for travel of witnesses, costs for court-appointed experts.

In case of court proceedings, the underlying party has to reimburse the winning party’s fees and costs, that is:

  • court fees
  • costs for court-appointed ex­perts
  • expenses for witnesses that have been heard in court
  • travel costs of opponent’s la­wyer
  • translation costs
  • lawyer’s fees in the amount fixed by the law.

So, for example, if a claimant files a claim for EUR 100,000 and wins, respondent has to pay the court fees of EUR 2,568, translation costs for documents, travel costs and lawyer’s fees of EUR 3,405. If the claimant had hired a lawyer that charged on a time-consuming basis, the remaining legal costs are for claimant’s account.

V. Contingency fees -litigation financing

Contingency fees, that is, a fee that is payable only in case of su­ccess, is in general not allowed in Germany. The most relevant ex­ception for foreign clients is that contingency fees are allowed if the client would otherwise not be able to enforce his rights because he could not afford a lawyer. In that case, it is possible to agree on a contingency fee and lawyers are open to that to different ex­tents. However, lawyers will ne­ither be allowed nor willing to fi­nance the court fees and other ex­penses for experts, translations etc.

As an alternative that, there exist specialised firms that do litigation financing. That is, they take over the full costs of litigation including court fees, expert fees etc. and bear the risk that – if the case is lost – they will reimburse the opponent. The downside to this possibility is that it requires a full draft claim, which needs to be prepared at client’s expenses and the litigation finance institution will only finance the claim if there is a good chance of success. Further, this possibility usually only exists for claims exceeding EUR 200,000 and the financial institution will require a full transfer of claim and full control of the proceedings.

Автор: А. БОЭС, доктор права, ассоциированный партнер GGV (Grutzmacher Gravert Viegener)

Источник: Морское страхование. – 2013. – № 1. – С. 62 – 65.