Germany updates

Arbitration & ADR

Contributed by Skadden Arps Slate Meagher & Flom LLP
Third-party arbitration funding – an overview
  • Germany
  • 24 October 2019

Third-party arbitration funding continues to be a hot topic in Germany, with a growing number of companies considering using third-party funding and more international funders than ever joining established German funders. This article outlines some of the pros and cons of third-party funding in an arbitration context.

2018 DIS Arbitration Rules – one year on
  • Germany
  • 18 July 2019

In March 2018 the German Arbitration Institute's (DIS's) new arbitration rules came into force. The new rules are a good choice in almost every setting, offering competitive fees for arbitrators and institutions and providing a modern and efficient arbitration framework that preserves and expands on the distinctive features of the previous DIS rules. These unique factors are particularly appealing to in-house counsel.


Aviation

Contributed by Arnecke Sibeth Dabelstein
Airport charges take flight: airlines challenge fee structure
  • Germany
  • 05 February 2020

In a recent Federal Administrative Court case – in which the German court referred questions to the European Court of Justice (ECJ) – Deutsche Lufthansa AG achieved its goal of defending itself effectively against higher airport charges and underlined the possibility of a judicial review to examine the appropriateness of airport charges. However, the ECJ decision clarifies that, for the time being, there is no scope for free pricing under the EU Airport Charges Directive and thus no contractual freedom for airport users.

Security controls outside scope of airlines
  • Germany
  • 15 January 2020

A recent Erding Local Court judgment concerned a compensation claim after four passengers missed their flight due to a security alert at the airport. The court decided that there was no entitlement to compensation because there had been no refusal of carriage by the airline. Given the growth of passenger numbers and the resulting need for extra security staff, the decision sets a positive and correct precedent for the benefit of airlines operating in Germany.

Q&A on pitfalls and red flags when dealing with German MROs
  • Germany
  • 23 October 2019

As airlines must constantly strive to reduce maintenance costs, it is prudent to carefully review and negotiate contracts with maintenance, repair and overhaul organisations (MROs). As MROs often insist that contracts must be governed by the law of their home jurisdiction, this article addresses a selection of important issues that must be considered when negotiating so-called 'time and material' or 'power by the hour' contracts with German MROs.

Discounted tariffs: change of legal position?
  • Germany
  • 16 October 2019

A recent Frankfurt am Main Local Court decision is a useful reminder that in the event of an assertion of claims under the EU Flight Delay Compensation Regulation, the associated booking conditions must be considered when determining claim validity. Ultimately, travellers with access to corporate customer tariffs between their employer and the airline cannot claim compensation if their flight – whether for professional or private purposes – is delayed or cancelled.

Air fares can be displayed in multiple currencies
  • Germany
  • 18 September 2019

The Federal Court of Justice recently requested a preliminary ruling from the European Court of Justice on the question of whether airlines are in principle entitled to choose the currencies in which their air fares are listed. Under EU law, airlines that offer flights departing from EU airports must list passenger fares; however, whether airlines have the right to choose the currencies of said listings required further clarity.


Competition & Antitrust

Contributed by Fieldfisher (Germany) LLP
Cartel damage claims for indirect damage: questioning German law on cartel damages after ECJ decision
  • Germany
  • 16 January 2020

Under German law, a plaintiff does not only have to prove the unlawful behaviour of a liable party (ie, in the case of cartel damages, a competition law infringement such as a cartel) and any damage caused by this behaviour; the Act Against Restraints of Competition also requires a plaintiff to be "affected" by unlawful behaviour. However, the broad wording of the act could still be too restrictive in light of a recent European Court of Justice decision and will therefore have to be amended or reinterpreted.

Steel manufacturers fined record €646 million for agreeing surcharges and exchanging information
  • Germany
  • 19 December 2019

The Federal Cartel Office has fined three companies and three persons a total of approximately €646 million. The companies agreed and exchanged certain supplements and surcharges for so-called 'quarto plates' in Germany for approximately 14 years. Companies and associations should review their practices with regard to price components (particularly surcharges) as this is not the first decision on this matter.


Employment & Benefits

Contributed by Mayer Brown
Lump sum compensation for overtime work
  • Germany
  • 18 December 2019

The labour courts regularly consider the enforceability of clauses in employment contracts that declare overtime hours to be deemed compensated by payment of regular remuneration. The fact that lump sum compensation clauses still appear in mostly inadmissible forms potentially results from employers' aim to save the cost of the remuneration and considerable organisational effort. However, lump sum compensation clauses are suitable only to a limited extent and involve a high risk of unenforceability.

Leave pay for commission-based employees: an often overlooked pitfall for employers
  • Germany
  • 23 October 2019

An accurate method for calculating leave pay must take into consideration an employee's holiday, sickness, bank holiday and other paid absences; however, this can be burdensome for a company's HR department if its employees earn fluctuating rates of commission. While a certain amount of bureaucratic effort is inevitable, a well-thought-out system and properly trained HR officials will help to minimise complications and avoid negative consequences.

Risks associated with engagement of external personnel
  • Germany
  • 24 July 2019

There is a considerable need for external personnel – partly due to the current labour market's limited supply of highly qualified specialists willing to work as employees in some areas and partly due to the increasing demand for flexibility. However, while engaging external personnel allows companies to concentrate on their core competencies and provides easier access to external know-how, it also carries considerable legal and economic risks if handled improperly.


Franchising

Contributed by Noerr LLP
Inadmissible imitation of 'presentation of dishes': stronger protection for gastronomic concepts
  • Germany
  • 13 August 2019

Franchisors must typically consider the extent of concept protection if franchisees which have left the franchise system reuse the concept in a largely unchanged fashion or if third-party competitors (outside the franchise system) copy the concept's main features. A recent decision concerning a fast-food restaurant franchise reinforces the IP protection of gastronomic concepts against competitors' inadmissible imitations.

Bogus self-employment and unethical franchise agreements
  • Germany
  • 30 April 2019

Case law from the highest German courts on franchise law matters is rare, which makes a recent Federal Court of Justice decision on the subject of bogus self-employment of franchisees – a perennial issue for franchise law practitioners – even more noteworthy. The case concerned claims for payment under a licence agreement and the question of whether the licence agreement was void due to the franchisee's bogus self-employment.

For want of an asterisk: regional court scrutinises franchisor's TV advertising
  • Germany
  • 15 January 2019

The Munich Regional Court I recently established a new precedent for competition restriction, which is prohibited in franchising systems under the Act against Restraints on Competition. The court found references to "participating restaurants" in a franchisor's TV advertising insufficient and in violation of the price maintenance prohibition. This decision deserves special attention as it relates to advertising with non-binding price recommendations, which is common among franchisors.

Admissibility of lawsuit despite effective mediation clause in franchise agreement
  • Germany
  • 02 October 2018

A recent Hamburg Regional Court decision is generally understood to have solidified the first franchise-related court judgment on bad faith regarding mediation clauses rendered by the Saarbruecken Higher Regional Court in 2015. However, at second glance, the Hamburg judgment provides a different reasoning for bad faith regarding a mediation objection and might therefore serve as a new application of bad faith in future franchise-related court proceedings regarding mediation clauses.

Requirements for interim injunction to enforce obligation to operate business
  • Germany
  • 06 February 2018

The Bochum Regional Court recently looked at whether a franchisee's contractual obligation to operate a business can be enforced by way of an interim injunction. To grant an interim injunction to enforce the obligation to keep the business open, it must be demonstrated that the franchisor faces serious losses at least equivalent to a threat to its survival or to drawbacks that cannot later be remedied.