1. 1Arbitrability of Corporate Law Disputes – A German Perspective| 29 May 2014
Arbitrability of Corporate Law Disputes
-
A German Perspective
Dr. Nils Schmidt-Ahrendts – Russian Arbitration Days 2014

2. 2Arbitrability of Corporate Law Disputes – A German Perspective| 29 May 2014
Outline
Introduction – The Notion of Corporate Law Disputes and the
relevant statutory provisions on arbitrability of German Law
Part 1: The leading cases of the German Supreme Court (BGH):
“Arbitrability I” (March 1996) and “Arbitrability II” (February 2009)
Part 2: DIS-Supplementary Rules for Corporate Law Disputes –
an overview of their content and application in practice

3. 3Arbitrability of Corporate Law Disputes – A German Perspective| 29 May 2014
Introduction – Corporate Law Disputes
- Post-M&A disputes
• e.g. claim for breach of a warranty
- Joint-venture partner
• e.g. right of a joint venture partner to exit the joint venture
- Shareholder disputes
• e.g. right of a minority shareholder to exercise a put option
- Shareholder disputes requiring an “erga omnes” decision
• e.g. action for annulment of a shareholder resolution

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Introduction – The relevant statutory
provisions
- § 1030 German Code of Civil Procedure
• “Any claim involving an economic interest can be the subject of
an arbitration agreement.”
• “Statutory provisions outside this code by virtue of which certain
disputes may not at all or only under certain conditions be
submitted to arbitration remain unaffected.”

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Introduction – The relevant statutory
provisions
- § 246 German Stock Corporation Act
• “The regional court in the district where the company has its
seat shall have exclusive jurisdiction. If that court has a chamber
for commercial matters, such chamber shall have jurisdiction.”

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“Arbitrability I” (BGH 29 March 1996)
– the facts
- Claimant: Shareholder
- Respondent: GmbH (German limited liability company)
- The articles of association contain an arbitration clause
covering all disputes including annulment actions
- Claimant files its annulment action with the state court
- Respondent invokes the arbitration agreement

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“Arbitrability I” (BGH 29 March 1996)
– the holding
- Actions for annulment of a shareholder resolution are not
arbitrable - as long as - the legislator (and not the judiciary)
has set forth how to bridge the gap between the conduct of
such actions before state courts and private arbitral tribunals

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“Arbitrability I” (BGH 29 March 1996)
– the reasoning
- The arbitrability of the claim is not excluded because of
• § 246 AktG
• the importance of the matters in dispute; or
• the rights of a minority shareholder are at stake

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“Arbitrability I” (BGH 29 March 1996)
– the reasoning
- The arbitrability of the claim is excluded because
• an annulment action requires an “erga omnes” decision
• German arbitration law does not contemplate for an “erga
omnes” but only for an “inter partes” effect of arbitral awards
• § 248 AktG (which contemplates for an “erga omnes” effect of
state court decisions) cannot be applied by analogy because:
an arbitral award is not a decision (i) by an independent and
impartial judge, (ii) in a strictly formalized and public proceeding
and (iii) motivated exclusively by objective legal consideration

10. 10Arbitrability of Corporate Law Disputes – A German Perspective| 29 May 2014
§ 248 German Stock Corporation Act
“If the shareholders’ resolution has been declared null and void
by a judgment that is final and not subject to appeal, such
judgment shall be binding on all shareholders and the members
of the management board and the supervisory board, even if
such persons have not been parties to the court proceedings.”

11. 11Arbitrability of Corporate Law Disputes – A German Perspective| 29 May 2014
“Arbitrability II” (BGH 6 February 2009) –
the holding of the BGH
- Actions for annulment of a shareholder resolution of a GmbH
are arbitrable as long as they are
• (i) based on an arbitration agreement binding the shareholders
and the GmbH (contained in the articles of association or a
shareholder agreement) and
• (ii) the arbitral proceedings provide all shareholders with the
same protection of their rights as state court proceedings

12. 12Arbitrability of Corporate Law Disputes – A German Perspective| 29 May 2014
“Arbitrability II” (BGH 6 February 2009) –
the reasoning of the BGH
- The “erga omnes” effect of the award on the annulment action
can be achieved by applying § 248 AktG by analogy if:
• (i) an arbitration agreement binding all shareholders and the
company (contained in the articles of association)
• (ii) all concerned parties are notified of the arbitral proceedings
and granted the opportunity to participate therein
• (iii) all concerned parties have the equal right and possibility to
participate in the establishment of the arbitral tribunal
• (iv) all disputes concerning the shareholder resolution in
question are concentrated in one single arbitral proceeding

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The DIS-Supplementary Rules for Corporate
Law Disputes (SRCoLD) – An Overview
- The DIS-SRCoLD only “supplement” the standard DIS Rules
- The DIS-SRCoLD set forth a “model” arbitration clause
- The DIS-SRCoLD only govern shareholder disputes which
necessarily require an “erga omnes” decision –
they do not apply to all types of corporate law disputes

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The DIS-Supplementary Rules for Corporate
Law Disputes – An Overview
- Notification and joinder of additional “concerned parties”
• Claimant and Respondent must notify all concerned parties
• The concerned parties may join the proceedings as a “party” or
as a “compulsory intervenor” within a certain period of time
• If the concerned parties join the proceedings in time, they are
granted the same rights as the original parties
• If they join later, they have to take the proceedings and the
tribunal “as they stand”
• If they do not join, they are nevertheless bound to the award

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The DIS-Supplementary Rules for Corporate
Law Disputes – An Overview
- Appointment of the arbitral tribunal
• Sole arbitrators must be jointly selected by all parties
• Co-arbitrators must be jointly selected by all claimants,
respectively by all respondents
• Chairmen must be selected by the co-arbitrators
• Failing any such agreement, the sole arbitrator, co-
arbitrators and/or the chairman are selected by the DIS

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The DIS-Supplementary Rules for Corporate
Law Disputes – An Overview
- Effect of the arbitral award
• The award is binding on all parties and concerned parties
regardless of whether they joined the proceedings or not
- Recovery of costs
• Only available to the parties which joined the proceedings

17. 17Arbitrability of Corporate Law Disputes – A German Perspective| 29 May 2014
The DIS-Supplementary Rules for Corporate
Law Disputes – The Practice
- DIS-SRCoLD were widely welcomed by business community –
adaption of standard clauses by major firms and companies
- Relative youth of the DIS-SRCoLD - Thus, as of today only a
little more than 10 cases administered by the DIS
- Difficult task for DIS to notify all concerned parties in due time
– ensuing difficulties in the constitution of the Tribunal
- Smooth and efficient application by experienced arbitrators
(one of the first cases was chaired by BGH judge)

18. 18Arbitrability of Corporate Law Disputes – A German Perspective| 29 May 2014
Спасибо за Ваше внимание!
Dr. Nils Schmidt-Ahrendts
Partner
Hanefeld Rechtsanwälte
Brooktorkai 20
D-20457 Hamburg
schmidt-ahrendts@hanefeld-legal.com
T +49 40 180 482 93-0
F +49 40 180 482 93-9
www.hanefeld-legal.com