Latest updates

Corporate penalties and internal investigations
CMS
  • White Collar Crime
  • Germany
  • June 18 2018

The federal government plans to create new corporate penalties and abandon the discretionary principle which has thus far applied in corporate prosecutions. Further, the upper limit of penalties will be significantly increased. At the same time, the government aims to establish legal requirements for internal investigations that provide an incentive for investigation support.

Regional court prohibits HolidayPirates' error fare alerts
Arnecke Sibeth Dabelstein
  • Aviation
  • Germany
  • June 13 2018

The Munich Regional Court recently addressed the promotion of error fares by an online portal for cheap flights, hotels and travel packages in Germany. The promotions, which had encouraged customers to book error fares for flights published accidentally by airlines, were deemed unlawful due to a deliberate obstruction of competition in contravention of the Act Against Unfair Competition. The court's decision is appropriate considering the high number of consumers reached by online portals.

Berlin to Korneuburg: NIKI's insolvency proceedings
Clifford Chance Deutschland LLP
  • Insolvency & Restructuring
  • Germany
  • May 25 2018

Charlottenburg Local Court ordered insolvency proceedings for safeguarding NIKI Luftfahrt, a company incorporated under Austrian law with its registered office in Vienna. At the time, its indirect shareholder, Air Berlin (with its registered office in Berlin), had already commenced proceedings in Germany. While Charlottenburg Local Court was satisfied that NIKI's centre of main interest was in Berlin, the Berlin Court of Appeal decided that it had been wrong to assume jurisdiction.

Passenger rights and information obligations under wet lease agreement
Arnecke Sibeth Dabelstein
  • Aviation
  • Germany
  • May 09 2018

The Federal Court of Justice recently clarified the liability of airlines with respect to passenger rights and information obligations when a flight is operated under a wet lease. EU Regulation 261/2004 defines an 'operating air carrier' as an air carrier that performs or intends to perform a flight under a contract with a passenger or on behalf of another person having a contract with that passenger. The Federal Court of Justice held that in case of a wet lease, the lessee must be regarded as the operating air carrier.

Sale of real estate by special purpose vehicles
Noerr LLP
  • Real Estate
  • Germany
  • April 20 2018

Transaction structures involving special purpose vehicles, whose main assets after completion of the purchase process consist only of the purchased real estate, are often chosen in Germany. Such structures are used in particular to shield from liability, so that third-party access to the special purpose vehicle's assets is limited. They are also used to facilitate a sale without incurring real property transfer tax for the exit.

Passenger's right to refund restricted
Arnecke Sibeth Dabelstein
  • Aviation
  • Germany
  • April 18 2018

The Federal Supreme Court recently issued a decision regarding the right to a refund of the ticket price following the cancellation of non-refundable tariffs. The decision highlights that a passenger can waive his or her right to cancel a ticket so long as that passenger makes an informed decision. This secures an air carrier's flexibility in offering a wide range of different ticket prices and ensures lively competition.

Federal Court of Justice rules on price comparison tool ban
CMS
  • Competition & Antitrust
  • Germany
  • March 29 2018

The Federal Court of Justice recently held that absolute prohibitions to participate in online price comparison tools imposed on distributors in selective distribution systems amount to a hardcore restriction under Article 4c of the EU Block Exemption Regulation on Vertical Restraints. A closer look at the German decision reveals some doubts as to its compatibility with two European Court of Justice decisions.

VAT regarding international passenger transport services
Arnecke Sibeth Dabelstein
  • Aviation
  • Germany
  • March 14 2018

In Germany, a carrier is, in general, value added tax (VAT) liable along the domestic part of the flight route. However, it is possible for the carrier to apply for VAT remission according to the VAT Act. If the carrier is a German entity, the remission applies without further requirements other than an invoice without VAT. In contrast, if the carrier is a foreign entity, the tax relief must be mutual (ie, the state of the registered office of the foreign carrier must grant tax relief to German carriers as well).

Grand coalition's plans for labour law
CMS
  • Employment & Benefits
  • Germany
  • March 14 2018

The Christian Democratic Union of Germany, the Christian Social Union in Bavaria and the Social Democratic Party of Germany recently concluded negotiations for a new grand coalition. The 177-page coalition agreement contains very specific proposals for changes to labour law, including with regard to the maximum duration of successive fixed-term employment contracts, substantial restrictions for fixed-term contracts and employees' entitlement to part-time work for a limited period.

Increased liability for managing directors – bow wave theory rejected by court
Clifford Chance Deutschland LLP
  • Insolvency & Restructuring
  • Germany
  • February 23 2018

German regulations obliging managing directors to monitor the liquidity of a company during crisis situations are typically strict and give rise to the risk of personal liability in cases of non-compliance. Legislation requires company management to file for insolvency proceedings without undue delay in the case of illiquidity or over-indebtedness. Continued trading where the company is considered to be materially insolvent can have serious consequences.

Pay Transparency Act: information claims
CMS
  • Employment & Benefits
  • Germany
  • February 21 2018

The Pay Transparency Act bundles together some regulations and requirements that had already been established and is intended to close the adjusted gender pay gap. That the act's practical relevance has proved limited thus far can be explained by the fact that it was not possible to assert the information claim until January 6 2018. Nevertheless, it should be kept in mind that the legal consequences of failings to provide information have yet to be clarified.

Negative interest on existing cash deposits imposed by change in terms and conditions unlawful
Herbert Smith Freehills Germany LLP
  • Banking
  • Germany
  • February 16 2018

The Tubingen Regional Court recently held that negative interest on a consumer's existing cash deposits imposed by a German bank by unilaterally changing the bank's general terms and conditions was unlawful. According to the court, the defendant bank violated the rules of the general terms and conditions regime because it did not differentiate between existing deposits and newly deposited cash.

Court avoids decision on per se illegality of restrictions of competition by object
CMS
  • Competition & Antitrust
  • Germany
  • February 15 2018

A recent Celle Regional Court decision on a clear resale price maintenance case has been heavily debated because the court held that restrictions of competition by object can be compatible with Article 101(1) of the Treaty on the Functioning of the European Union if they have no potentially significant effects on competition. The Federal Supreme Court has since overruled the decision, leaving it open as to whether the potential effects on competition must be considered in such cases.

Police begin using drones
Arnecke Sibeth Dabelstein
  • Aviation
  • Germany
  • February 14 2018

The State of Hesse has decided to implement the use of drones. For this purpose, the police acquired four drones to help with their work in the region starting in February 2018. In order to operate the drones, each of the eight future drone pilots must complete a two-week workshop containing theoretical and practical modules. The drones will be used at accident sites and crime scenes in particular.

Requirements for interim injunction to enforce obligation to operate business
Noerr LLP
  • Franchising
  • Germany
  • February 06 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.

Insolvency of sea carrier: consequences for shippers and forwarders
  • Shipping & Transport
  • Germany
  • January 31 2018

When a sea carrier files for insolvency in the course of a sea carriage, considerable additional costs and expenses occur in the effort to deliver the cargo to the consignee. German law applies if a German freight forwarder is instructed with a multimodal carriage including a sea leg. This results in the general legal obligation for the forwarder to conduct the transport itself or with subcontractors in order to deliver the cargo to its destination for the fixed freight agreed.

Companies step up compliance while management support declines
CMS
  • White Collar Crime
  • Germany
  • January 29 2018

German businesses have steadily expanded their compliance structures and internal training programmes and have never been in a better position than they are now. However, declining support for compliance issues among management is giving compliance officers cause for concern, and recent compliance scandals appear to indicate that further work is necessary to make management fully acknowledge the significance of compliance matters.

Act to Strengthen Company Pensions brings important changes for employers
CMS
  • Employment & Benefits
  • Germany
  • January 17 2018

The Act to Strengthen Company Pensions has introduced pure defined contribution schemes for the first time. This means that employers will not promise specific or calculable retirement benefits, but merely undertake to pay specific contributions to an external pension provider. However, it remains to be seen whether the legislature has managed to strengthen and further spread company pension schemes as intended based on the act.

EAPO regulation: initial experiences with German courts
Herbert Smith Freehills Germany LLP
  • Banking
  • Germany
  • January 05 2018

As of January 2018, the EU regulation which established a new European Account Preservation Order (EAPO) procedure will have been effective and in force for one year. In Germany, the most important conclusion which can be drawn from the past year is that the German courts are adopting EAPOs. However, as the procedure is still fairly new to the courts, it has taken time and effort on the part of creditors.

Court rejects complaints against new airport's planned flight routes
Arnecke Sibeth Dabelstein
  • Aviation
  • Germany
  • December 20 2017

The Federal Constitutional Court recently rejected four constitutional complaints for adjudication against a decision concerning Berlin-Schoenefeld Airport. Following a deviation from the airport's originally envisaged flight routes, the plaintiffs had sought an annulment of the original plan approval order. The court held that the difference between the planning procedures for the airport expansion and the determination of the flight routes raised no constitutional concerns.