German Government wants to introduce preliminary rulings to handle parallel mass proceedings
Parallel court proceedings in mass actions remain very common in Germany but pose great challenges to the judiciary and the parties. On 16 August 2023, the Government therefore proposed to introduce a so-called preliminary ruling procedure at the Federal Supreme Court (Bundesgerichtshof – “BGH”), aimed at enabling an early decision on fundamental legal questions that arise in a large number of parallel proceedings.
Mass proceedings in Germany
German law does not allow for “US style" class actions. Instead, bundling models are on the rise and, in implementation of the EU Collective Redress Directive, representative actions for redress will soon be introduced (read more in our blog post). However, plaintiffs will still often want to or even have to enforce their rights individually. As a result, defendants find themselves exposed to a multitude of parallel proceedings in case of mass damages, quite often also at different courts across the country, revolving around the same or at least very similar legal issues. In these complex proceedings, it usually takes many years until the BGH gets the opportunity to decide on contentious issues, and it sometimes takes several appeals to clarify all relevant issues. During all these years, courts of lower instance may come to different conclusions, burdening the parties with great uncertainty and complicating amicable solutions.
Proposal for the introduction of a preliminary ruling procedure
To tackle this inefficiency and to relieve the courts, the Government proposes to introduce a so-called preliminary ruling procedure (Leitentscheidungsverfahren) at the BGH. The BGH shall be able to speed up the handling of mass proceedings by designating a case from the pending appeals with the broadest possible spectrum of open legal questions for a preliminary ruling.
The courts of instance then have the possibility to suspend ongoing parallel proceedings in which the legal questions to be decided by the BGH arise. The consent of the parties to the dispute is required for the stay.
In contrast, the BGH's preliminary ruling does not lie in the parties’ discretion. Thus, if the parties in the preliminary ruling procedure withdraw the appeal or if the proceedings are settled in a way other than by judgment, the BGH nevertheless clarifies the legal issues by way of a preliminary ruling. If the appeal proceedings continue as normal, however, no particularities arise and a conventional appeal judgment is issued.
The preliminary ruling is not formally binding for other courts. However, according to the draft, the courts of instance and the public would be given some guidance as to the BGH’s stance. In addition, the judiciary will be less burdened.
Comment
The legal uncertainty associated with lengthy parallel mass proceedings and the overload of the judiciary are well-known problems that must be taken seriously. The German Government is doing well to address the issue, but its current proposals fall short of those of the judiciary (read more in our previous blog post).
Ultimately, the introduction of preliminary rulings can indeed only be one building block of several to create legal certainty at an early stage and to bring about a reduction of the workload at the courts. In particular, the initiative must be seen in conjunction with the introduction of new representative actions, which will lead to a reduction, albeit not a total elimination, of mass proceedings. For the remaining mass proceedings, however, the introduction of preliminary rulings would at least make it possible to obtain legal certainty more quickly and to adapt the litigation strategy accordingly.
