GERMAN DIS ARBITRATION RULES

by | 3. October 2016 | German Business Law

The German Institution of Arbitration (Deutsche Institution für Schiedsgerichtsbarkeit e.V., DIS) is the most prominent arbitration institution. It serves all parties planning to make reference to the DIS Arbitration Rules as a body for the administration of arbitration procedures in accordance with DIS Arbitration Rules 1998.

The German Institution of Arbitration offers an administrated arbitral procedure for parties who have agreed to settle their disputes according to the DIS Arbitration Rules. The current DIS Arbitration Rules entered into force on 1 July 1998. These DIS Arbitration Rules are currently under update in order to take into account new developments in arbitration practice and arbitration law.

According to available statistics from the German Institution of Arbitration (Deutsche Institution für Schiedsgerichtsbarkeit – DIS), 147 new DIS arbitration proceedings were registered in 2014 and 140 new DIS arbitration proceedings were registered in 2015. Among those 34 international arbitration proceedings were commenced in 2015, compared to 38 in 2014.

The costs of the arbitral proceedings under DIS rules are calculated in accordance with the schedule to Sec. 40, which forms part of the DIS Arbitration Rules. The DIS arbitration administrative fee and the arbitrators’ fees are determined on the basis of an “ad valorem” scale. The most recent Schedule of Cost is effective as of 1 March 2016 (Cost Calculator 2016). The arbitrators’ expenses pursuant to section 40 paragraph 1 DIS Arbitration Rules are reimbursed in accordance with the DIS Guidelines for the Reimbursement of Arbitrators’ Expenses effective since 1 January 2005 [Richtlinien für die Erstattung von Auslagen der Schiedsrichter 05]. A cap on the DIS’s administrative fee (€40,000) and the fact that there is no range for the arbitrators’ fees (but rather a fixed amount calculated based on an “ad valorem” scale) helps in planning and controlling the costs of DIS arbitration.

DIS recommends the use of the following arbitration clause:

“All disputes arising in connection with this contract or its validity shall be finally settled in accordance with the Arbitration Rules of the German Institution of Arbitration (DIS) without recourse to the ordinary courts of law.”

Users may find it being appropriate to use an amended clause:

“All disputes arising out of or in connection with this contract or its validity shall be finally settled in accordance with the Arbitration Rules of the German Institution of Arbitration (DIS) which are in force at the time when this clause becomes effetcive without recourse to the ordinary courts of law.”

DIS also recommends to users the consideration of the following points – particularly in the case of foreign elements –:

  • The place of arbitration is …
  • The number of arbitrators is …
  • The language in which arbitral proceedings shall be conducted is …
  • The applicable substantive law is …

It is strongly recommeded to follow this advise. Under FIDIC forms of contracts the communication language constitutes the language in which the hearings shall be conducted. FIDIC forms do not include a template for the Agreement of the seat of Arbitration albeit it is recommendable to agree on the venue.  The number of arbitrators should not be made exclusively dependent on costs.

To the extent the parties agree on a German place of arbitration sections 1025 et seq. German Civil Procedure Code (abbreviated Zivilprozeßordnung – ZPO) because pursuant to section 1025 ZPO the German Arbitration provisions as included in the ZPO apply if the place of arbitration as referred to in section 1043 paragrpah 1 ZPO is situated in Germany. If the place of arbitration shall be outside Germany, the mandatory procedural regulations applicable at that place should be / must be taken in consideration. Users should be aware of the fact that the place or seat of arbitration pre-determines the applicable procedural framework, governs the jurisdiction in case of any necessary recourse to the state courts and is, as a general rule, a crucial factor for the determination of the content of natural justice and the methodology used in fact-finding and the taking of evidence.

It is common place that because the courts are requested to adopt, support and trigger the enforcement of arbitration awards, it is permissible for, and incumbent on, them to ensure that arbitration awards meet certain standards to prevent injustice. The German arbitration provisions (the ZPO provisions):

  • are based on the UNCITRAL model law and closely follow its structure and content.
  • incorporate the UNCITRAL model law for all arbitrations in Germany (not just commercial”); hence they include international and domestic arbitrations.

The German ZPO provisions

  • do not provide for any direct supervision of arbitrators. However, the appointment of arbitrators and their awards can be challenged; and
  • distinguish between the correction (or interpretation) of an award and recourse against an arbitral award.

Upon application by either party a German court may set aside an award if the applicant can show sufficient cause that one of the following applies:

  • a party had not been properly notified of the appointment of an arbitrator, or of the arbitration proceedings, and/or
  • a party had not been properly notified of the appointment of an arbitrator, or of the arbitration proceedings, and/or
  • a party to the agreement did not have legal capacity to enter into it; and/or
  • the relevant arbitration agreement is not enforceable under the law to which the parties have subjected it (or, failing any indication thereof, under German law); and/or
  • a party to the agreement was unable to present its case; and/or
  • the arbitral award deals (in whole or in part) with matters falling outside the terms of the dispute referred to arbitration; and/or
  • the composition of the tribunal or the procedure did not accord with an applicable provision of the ZPO provisions or with a binding agreement between the parties, and this affected the award.

Under German arbitration law (section 1055 German ZPO), a domestic arbitral award has the like effect on the parties as a final court judgment (for foreign awards see below). The enforcement takes place subject to a court decision making the award enforceable (section 1060 German ZPO). The enforcement of foreign arbitral awards is dealt with according to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards– without affecting the provisions of other (bilateral) treaties (if any).

Dr. Hök is an experienced construction practitioner, a German lawyer registered at the Berlin bar, a FIDIC advisor, FIDIC accredited trainer and FIDIC approved dispute adjudicator, working also as arbitrator and mediator and arbitration counsel, in particular in construction related cases. He is currently a member of the DIS expert commission for the DIS Arbitration Rules Update. He has inter alia work experience under UNCITRAL, DIS and ICC Arbitration Rules. Dr. Hök has also published papers on the subject matter:

  • Hök, Die UNCITRAL Schiedsgerichtsregelungen 2010 in baurechtlichen Schiedsverfahren, NZBau 2011, 385 ff. [Hök, UNCITRAL Arbitration Rules 2010 in construction related arbitration proceedings, New Journal for Construction Law 2011, at page 385]
  • Hök, Zum internationalen baurechtlichen Schiedsgerichtsverfahren im Allgemeinen und nach FIDIC, ZfBR 2011, 107 [Hök, on international construction related Arbitration in General and in accordance with FIDIC, Journal for German and International Construction Law, 2011, at page 285]

WARNING: the material contained in these notes is a simplified guide to some of the major topics in international and German construction law. It is not intended as a substitute for legal advice on individual transactions, and does not necessarily stand on its own. Whilst the contents are believed to be correct, the authors cannot accept any responsibility for errors or omissions.