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The Federal Supreme Court recently underlined the importance of commercial considerations in the context of insolvency avoidance rules regarding the repayment of shareholder loans. The court explicitly outlined that a commercial approach is required in order to prevent any potential strategies to structure around the German principles of equitable subordination.

The Federal Supreme Court recently ruled that a termination clause was invalid pursuant to Section 119 of the Insolvency Code, as it was based on an insolvency-related termination event which limited the insolvency administrator's right to choose whether to perform the supply contract in accordance with the code. The court's judgment is likely to cause suppliers to monitor the financial situation of their customers more carefully.

When a company is in financial distress, the shareholders and management must decide to what extent they will subordinate their own interests to the company's interest in survival. It is vital for them to know whether they can rely on advice given by company advisers. A recent Federal Supreme Court judgment provides insight to advisers and stakeholders on how best to protect their interests in a distressed situation.

Subordination agreements between a debtor and its shareholders are a frequently used restructuring tool for German companies. A Federal Finance Court decision has highlighted that the decisive factor in the treatment of debt is the wording of the relevant subordination provision and, in particular, the circumstances under which the debtor must repay the subordinated claim.

The German Federal Court of Justice has refused to recognise an English scheme of arrangement in relation to the German branch of an insurance company, finding that such recognition would be contrary to EU Regulation 44/2001. The judgment was based on specific insurance-related provisions of the Judgment Regulation, suggesting that outside the scope of these specific provisions, schemes will be recognised in Germany.

The Federal Court of Justice has clarified that a former shareholder will be subordinated to its claim under a loan only for a one-year period. The ruling has been widely accepted by German legal scholars and practitioners. However, some legal authors have criticised the ruling, since they think that it could create questionable incentives for delays in filings for insolvency in order to overcome the one-year period of subordination.

The German government was required to transpose the EU Carbon Capture and Storage Directive into national law . However, the fate of the resulting act on carbon capture and storage is still uncertain. The crucial subject of discussion is the so-called 'exit clause'. Nevertheless, the fact that talks are continuing seems to indicate a general willingness for compromise among the parties involved.

The Federal Supreme Court recently confirmed that foreign arbitration agreements which do not adhere to the formal requirements of Article II(2) of the New York Convention may still be valid under the less strict criteria of Section 1031 of the Code of Civil Procedure.

The Federal Supreme Court has rendered an important decision dealing with the international jurisdiction of German courts in execution proceedings against sovereign assets of foreign states. In the case at hand, even a waiver of the debtor state's immunity under German law could not establish the jurisdiction of German courts for the granting of execution orders into sovereign claims.

A recent European Court of Justice decision has substantially expanded environmental NGOs' standing in court . As a result, it is to be expected that environmental NGOs will gain a more prominent role in future permitting procedures in Germany.

The Federal Supreme Court has changed its jurisdiction on preclusion in enforcement proceedings relating to international arbitral awards. The court held that a debtor is not required to exhaust all available remedies at the (foreign) seat of arbitration to preserve its right to argue in enforcement proceedings in Germany that no valid arbitration agreement exists.

The European Court of Human Rights has recently pointed out that excessively long judicial proceedings constitute a systemic problem in German procedural law and stated that the German legal system does not provide for an effective remedy against this. The government has since submitted a draft law with the aim of implementing an effective remedy against unreasonably long judicial proceedings.

The Federal Supreme Court has ruled that, despite being of an extra-contractual nature, liability for damages on tort may trigger a court's jurisdiction in accordance with Article 13(1)(3) of the Lugano Convention, provided that these claims are so closely linked to the contract that they are indissociable from it. This development will significantly increase the protection afforded to consumers.

Irrespective of certain weaknesses that German restructuring and insolvency law may have, creditors whose claims are secured by land charges can nevertheless choose between several feasible possibilities for realising encumbered real estate. German law tends to be somewhat reluctant to allow creditors to grasp direct control of real estate. As such, the Federal Ministry of Justice's recent proposals should be welcomed.

Emergency laws which are enacted in the wake of the financial crisis are unavoidable for creditors and the rules that they establish are hard to predict. As long as these foreign laws achieve the collective satisfaction of creditors' claims, the risk of a pending lawsuit in Germany being suspended cannot be excluded. However, the chances of litigating such cases in the German courts may be better than in other EU countries.

The Frankfurt Higher Regional Court has frozen assets on the basis of an ex parte application for preliminary enforcement of a foreign arbitral award. The decision was made under Section 1063(3) of the Code of Civil Procedure's preliminary enforcement provision, which allows successful claimants in arbitration to obtain securing measures like asset freezes even before exequatur of the arbitral award is granted.

The Federal Supreme Court's decision in Gebäckpresse confirms that there is a de facto necessity to apply for Community registration of designs which have been disclosed outside the European Union within one year of the date of disclosure. This is because any publication of a design has a novelty-destroying effect, regardless of whether it takes place inside the European Union.

The Federal Supreme Court ended the German practice of permitting claimants to seek the enforcement of foreign judgments confirming arbitral awards. Overturning a 25-year-old ruling, the court no longer offers claimants a choice between the enforcement of the original arbitral award and the recognition of its exequatur from jurisdictions following the procedural merger doctrine.

In the German courts, German lawyers present their cases based on German law. This scenario does not benefit from the use of the English language. While non-German parties should not be excluded due to language difficulties, oral arguments and briefings take place not for the benefit of non-German parties, but in order to convince the German judge.

The new Section 32 of the Federal Data Protection Act fails to draw a clear line between what constitutes permissible anti-fraud measures and what is considered impermissible interference with employees' personal rights. At least until a new act is passed on the protection of employee data, the uncertainty surrounding how to ensure the legality of internal investigation and control measures will remain.

The Supreme Court has held that disputes on the validity of shareholder resolutions in German limited liability companies are arbitrable, based on an arbitration clause in the company's articles of association. The court established a set of requirements for the validity of shareholder arbitration clauses that other jurisdictions may wish to take into account when considering their position on appropriate procedural safeguards.

A recent Federal Court of Justice decision has clarified that a property owner can start remediating soil contamination as soon as the competent authority has announced that it is planning to issue a remediation order, safe in the knowldge that it will subsequently be able to claim compensation. The court also affirmed that compensation claims become statute-barred after three years.

In a recent case, the International Centre for the Settlement of Investment Disputes tribunal has refused to apply the 'most-favoured nation' clause of the German-Argentine bilateral investment treaty to its dispute settlement provision. It thereby contributed to the longstanding debate regarding the applicability of such clauses to dispute settlement provisions.

When negotiating a corporate acquisition, the buyer and the seller often agree on a standardized share purchase agreement. It is impossible for a seller to exclude itself from any liability for damage sustained by the buyer due to a defect which the seller was aware of but did not disclose. Many recent civil actions against enterprise sellers have been based on alleged breaches of disclosure obligations.

The Federal Parliament has passed a bill to promote the use of green energy. From 2009, a certain percentage of the energy used in new buildings for heating, hot water preparation and cooling must be drawn from renewable sources. The law will apply, with certain exceptions, to industrial, commercial and residential buildings.

A draft bill to bring national law into line with the EU Regulation Concerning the Registration, Evaluation and Authorization of Chemicals (REACH) is awaiting approval in the upper house of Parliament. Among other things, the regulation will designate implementing authorities and set out their powers of enforcement.

Over six months after the implementation period provided by the EU Environmental Liability Directive, the Environmental Damages Act has finally entered into force. At present, it is difficult to predict what impact the act will have on liability, and consequently how large the environmental damage insurance market will be.

Companies that are formed under foreign law and that subsequently move their registered offices to Germany are currently denied legal capacity unless they establish a new company under German law. The European Court of Justice is to rule whether this practice is compatible with the freedom of establishment.

A Federal Ministry of Justice draft bill on the Euro Balance Sheet Act provides some relief from the legal obligation to disclose results for foreign companies' branch offices, and increases the threshold values at which annual financial statements must be disclosed.

The Registered Shares Act introduces important innovations with respect to the use of modern media in German stock corporations. It sets out new regulations concerning registered shares, and has introduced the possibility of proxy voting. The rules of post-formation acquisitions have also been amended.

Shareholders can request information only at the shareholders' meeting and only if the information is necessary to permit proper evaluation of the relevant item on the agenda. The Federal Constitutional Court has considered whether these restrictions violate a constitutional guarantee of ownership.

Security for building claims has been under discussion in Germany recently. The principal often requires a surety bond with the obligation to pay on first demand from the contractor in order to ensure proper performance of the building work. However, the extent to which this is permissible has been disputed.

Pursuant to a new act which implements EU law, the disclosure obligations of corporations and commercial partnerships in which no general partner is a natural person have become more rigid. Failure to meet the new requirements may be penalized by a fine.

Including: Types of Building Contract; The Award Rules for Building Works; Formal Requirements for the Building Contract; Construction of the Agreed Building; Payment for Building Work; When is Payment Due?; Payment Claim; Bearing of Risk; Acceptance; Warranty; Delay and Contractual Penalty; Termination; Security for Claims

Two new acts have incorporated European Union directives on the award of public building contracts into German Law. These acts safeguard the principles of competition and equal treatment of applicants

Construction contract award procedures in Germany have recently changed to enable rejected bidders to contest contract awards once they have been made.