Recognition and Enforcement of Foreign Titles in Germania

There are various ways of finding out which assets a debtor has and whether it is worth taking action against him. Especially, the following methods are helpful:

• The commercial register
  The commercial register (https://www.handelsregister.de/rp_web/normalesuche.xhtml) can be used to check whether a debtor's company still exists or whether it has been liquidated. The commercial register can also be used tofind out the type of company, which gives important information about the type and amount of liability.
• Insolvency announcements
  The website https://neu.insolvenzbekanntmachungen.de shows whether insolvency proceedings have been opened against the debtor's assets in Germany.
• German debtor register
  It is possible to view the German debtor register, which provides certain information about the debtor, cf. Sec. 882b German Civil Code (following “ZPO”).Access to the debtor register is granted to anyone for the purpose of enforcement (cf. 882f ZPO).  The debtor registers are kept by the central enforcementcourts of the federal states (cf. Sec. 882h ZPO). According to Sec. 882c ZPO the register contains entries about those debtors,
  • who have not fulfilled their obligation to provide information on assets,
  • for whom enforcement is likely to be unsuccessful according to the content of the list of assets,
  • who do not provide evidence of full satisfaction of the creditor within one month of submitting the statement of assets,
  • for whom an application to open insolvency proceedings has been rejected for lack of assets. 

In this way, at least those debtors with no (significant) assets can be identified.

• Information rights of the bailiff 
  If enforcement measures have already been initiated by a bailiff, the following information about the debtor's assets – provided they are necessary for enforcement – is also available (cf. Sec. 802l ZPO):
  • the debtor's bank details,
  • the debtor's employer,
  • motor vehicles registered in the debtor's name from the competent offices,

The requirement for this information is that no assets have been found in the debtor's possession and the debtor has not submitted a statement of assets or the assets stated in the statement of assets are not sufficient to satisfy the creditor.

EU judgement: The foreign title is already enforceable. A special procedure for a declaration of enforceability does not have to be conducted; instead, the creditor can apply directly to the competent enforcement body and start with enforcement measures (Art. 39 Regulation 1215/2012 (“Brussels Ia) in conjunction with Sec. 1112 ZPO).

Non-EU judgement: Whether a foreign judgment has to be recognized depends on the non-EU country from which the judgment originates. In some cases, special international treaty provisions apply according to which no special recognition procedure is necessary. For example, there are agreements between Germany and Norway as well as between Germany and Israel. Additionally, the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters (Hague Convention) entered into force on 01.09.2023. As a result, now also judgments from the Ukraine are enforceable without a special recognition procedure.

In case no agreement exists, a so-called exequatur procedure before a German court is required, which is regulated in Sec. 328, 722, 723 ZPO. Before enforcement steps can start, the German courts must recognize the foreign judgment and declare it enforceable. But, there are also agreements that simplify this procedure. For the EFTA states (Iceland, Norway, Switzerland and Liechtenstein) the Lugano Convention (LugÜ) applies, which eases the recognition of the foreign judgments in Germany.

Even though in case of an EU judgement no special procedure for a declaration of enforceability is required, certain conditions must be met to start the enforcement proceedings.

• According to Art. 42 para. 1 Brussels Ia Regulation, a copy of the judgment and the certificate according to Art. 53 in conjunction with Annex I Brussels Ia Regulation must be attached.
• By issuing the certificate, the court of origin confirms that the judgment is enforceable. The certificate must also contain certain information like an extract from the decision, the recoverable costs of the proceedings and the calculation of interest. This certificate must be sent to the debtor before the first enforcement measure starts (Art. 43 para. 1 Brussels Ia Regulation).
• According to Art. 42 para. 3 Brussels Ia Regulation, the competent enforcement authority may – where appropriate – require a translation or transliteration of the certificate in German (Sec. 1113 ZPO). The competent enforcement authority may only require the applicant to provide a translation of the decision if it cannot continue the proceedings without such a translation, Art. 42 para. 4 Brussels Ia Regulation. 
• Art. 43 para. 2 sentence 1 Brussels Ia Regulation also gives the debtor the right to request a translation of the judgment in order to be able to challenge its enforcement in accordance with Art. 46, 47 Brussels Ia Regulation.
  

If an exequatur procedure according to Sec. 328, 722, 723 ZPO is required, enforcement of the (recognizable) foreign judgment under German law only takes place if its recognized by an enforcement judgment – which is nothing else than an ordinary judgment.

Process of exequatur procedure 

• The district court where the debtor has his place of residence or business has jurisdiction for the action for recognition of a judgement. If the debtor has no place of residence or business in Germany, the district court in whose district the assets to be enforced is located is competent for the action (cf. Sec. 722 para. 2 ZPO).
• The action must be filed in German. The plaintiff does not have to prove a specific intention that he actually wants to enforce the judgment. In fact, enforcement doesn’t even need to have any prospect of success for the action to be granted.
• Only the exequatur, but not the foreign judgment, is the basis for enforcement in Germany.
• The exequatur is granted in regular contradictory proceedings if the following requirements are met.

Requirements for the exequatur (cf. Sec. 723 ZPO)

• Legal force

First of all, the foreign judgment must have become legally binding according to the law of the state of origin.

•  Eligibility for recognition, Sec. 328 ZPO

The foreign judgment must also be recognizable in Germany according to Sec. 328 ZPO. This requires:

A foreign judgment may only be enforced if the court of the state of origin had international jurisdiction (No. 1), if the defendant's right to be heard was respected when the proceedings were initiated (No. 2), if there is no conflicting overriding judgment (No. 3 Alt. 1), if no previous proceedings in the same matter were pending in Germany (No. 3 Alt. 2), if enforcement is in accordance with German public policy (No. 4) and if reciprocity is guaranteed in relation to the state of origin (No. 5).

• Enforceability of the judgment

A judgement must be sufficiently specific so that it can also be enforced.

•  Enforceability in the country of origin

The foreign judgment must also be enforceable in the state of origin. The legal effect of a foreign judgment should not go further in Germany than in the state of origin.

• No substantive objections by the debtor to the enforceable claim
  

Substantive objections against the enforceable claim must be observed if those objections arose after the initial proceedings in the state of origin. Only those objections that are not covered by the substantive legal force of the foreign decision are to be regarded as subsequent objections. The scope of the legal force of the foreign decision is determined by the law of the state of origin.

If the debtor has subsequently asserted the objections in the state of origin – for example by waiving a counterclaim for enforcement – the exequatur court is bound by the relevant foreign decision. But the exequatur court is only bound to the foreign decision, if and to the extent that it is recognizable pursuant to Sec. 328 ZPO.

The burden of presentation and proof for the existence of the requirements is generally placed on the party pursuing enforcement, i.e. the plaintiff in the initial proceedings.

There is no general rule, but  the exequatur procedure usually takes several months. An interim injunction, which would fast-track the proceedings, is not possible, but there is the possibility of applying for an attachment order under certain conditions.

There is no fixed fee for the exequatur procedure.

Court costs and, if incurred, lawyer's fees depend on the amount in dispute. The higher the amount in dispute, the higher the costs, whereby they do not increase exactly proportionally. The amount in dispute is generally based on the amount of the principal claim to be enforced.

If the legal dispute reaches a higher instance, since one party appeals against the judgement, further costs will arise.

If the exequatur procedure is decided in favour of the applicant, all costs will be borne by the debtor.Conversely, the applicant bears all costs if the debtor prevails. If the application is partially granted and partially rejected by the court, the costs are shared by the parties according to the degree to which they have lost or prevailed.

The debtor can file an application for refusal of enforcement in accordance with Art. 46 Brussels Ia Regulation. 

The application is justified if there are grounds for refusal of recognition under Art. 45 Brussels Ia Regulation. These grounds for non-recognition are not examined ex officio, but only in response to a complaint by the debtor. Grounds pursuant to Art. 45 para. 1 Brussels Ia Regulation are

• or incompatibility with a previously issued judgment of a member state or third country (lit. d).  
  
• as well as incompatibility with a national decision (lit. c),
  
• the right to be heard (lit. b),
  
• violations of national ordre public (lit. a),

In principle, it is not examined whether the court of first instance in the state of origin had jurisdiction by the time it has issued its decision, Art. 45 para. 3 sentence 1 Brussels Ia Regulation. Furthermore, a substantive examination of the foreign decision by the state of recognition is also excluded, Art. 52 Brussels Ia Regulation.

In addition, the debtor has the option of obtaining a cessation or restriction of enforcement in accordance with Sec. 1116 ZPO, if he can submit a court decision from the state of origin that sets or restricts the enforceability.  

• During the exequatur proceedings 

As already mentioned, the debtor can raise such substantive objections against the enforceable claim that arose after the initial proceedings in the foreign country.

Regarding the recognition of the judgment, the debtor can also assert the infringement of his right to be heard in the initial proceedings as a ground for refusal. The plaintiff must then prove that such an infringement did not take place.

• After exequatur proceedings 

Once the debtor has lost the legal dispute and the exequatur has been granted, but is not legally binding yet, the debtor has – like against every other judgement – the right to file an appeal.

In addition, after the exequatur has become legally binding, the debtor can assert any subsequent objections by means of an enforcement counterclaim. This applies both to objections against the German exequatur (e.g. due to subsequent annulment of the judgment or its enforceability in the state of origin) and against the foreign judgment. The debtor is, however, precluded from raising objections that already existed during the exequatur proceedings.

The German Code of Civil Procedure does not stipulate any time limit for the exequatur proceedings.

But, based on the applicable law, it is possible that the statute of limitations of the legally determined claims may prevent the proceedings as the limitation period can be objected to by the debtor during the proceedings.

Concerning the costs, it must be differentiated between normal procedural costs and enforcement costs.

The costs of obtaining an enforcement judgment in exequatur proceedings (Sec. 722, 723 ZPO) are just normal procedural costs. An application for the determination of costs must be submitted to the court, which then constitutes a separate enforcement title (which can be enforced together with the foreign judgment).

Costs incurred by the enforcement can be pursued together with the enforcement of the claim in accordance with Sec. 788 para. 1 ZPO. Therefore no separate enforcement is required.

The enforcement procedure is regulated by national law (Art. 41 para. 1 sentence 1 Brussels Ia Regulation). 

The enforcement steps are regulated in German law in the provisions of the ZPO. Enforcement measures can be, for example:

• seizing tangible objects by the bailiff (Gerichtsvollzieher)
  
• attaching and transferring claims by the judicial officer (Rechtspfleger)
• selling of intangible assets by the court.

The bailiff can also request the debtor to submit a statement of assets (Sec. 802 c ZPO). If the debtor fails to attend the date for the submission without excuse or refuses to submit it, an arrest warrant can be applied against the debtor (Sec. 802 g ZPO).

Sec. 89 of the German Insolvency Code (InsO) prohibits enforcement during a debtor's insolvency proceedings. 

During the insolvency proceedings creditors only have the option of registering their claims in the insolvency schedule. The claims become part of the collective enforcement by the insolvency administrator, and all creditors get a proportionate satisfaction of their claims in accordance with the insolvency quota.

The recognition and enforcement of foreign arbitral awards are ruled by the provisions of the UN Convention (New York Convention on the Recognition and Enforcement of Arbitral Awards of June 10, 1958). In particular, the following regulations of the UN Convention should be noted:

• Art. 4 of the UN Convention specifies the documents that must be submitted with the application: The legalized (certified) original of the arbitral award and the arbitration agreement or a copy duly certified to be in conformity with such an original.
• Art. 5 of the UN Convention sets out refusal grounds to recognize and enforce an arbitral award.