So far there have been many uncertainties regarding the requirements for lawful service of an action to a defendant based in another EU country. In its ruling of 25 February 2021, the IX. Civil Senate of the Federal Court of Justice (“BGH”), has now brought some light on this issue. The senate dealt with the question of whether a translation is required for proper service of an action in another EU country and under which conditions a service can still be considered "forthcoming" within the meaning of Section 167 of the German Code of Civil Procedure (“ZPO”) despite delays in the translation.
The German plaintiff is an insolvency administrator. He filed a payment claim based on the German rules regarding insolvency challenges against the defendant, which has its seat in France. An insolvency challenge reverses asset transfers prior to the opening of insolvency proceedings. The related claim would have become time-barred on 31 December 2015 if the limitation period had not been interrupted by timely service of action to the defendant.
The plaintiff had filed the statement of claim in German language with the competent Regional Court on 15 December 2015 and paid the requested advance on court fees on 31 December 2015. One month later, the plaintiff received a request from the Regional Court asking whether the statement of claim should be translated before service to the defendant. He affirmed and paid the requested advance on expenses for the translation a few days later. However, the statement of claim was not translated into French until 24 October 2016 and the translated statement of claim was not served on the defendant until 9 December 2016. The defendant therefore raised the statute of limitations.
The Regional Court decided that the plaintiff's claim for challenge of transactions was not time-barred. Admittedly, the action had only been served on the defendant almost a year after the expiry of the limitation period. However, in the opinion of the senate, this was harmless, as the service was still effected "shortly" pursuant to Section 167 ZPO. This applies even if the service is delayed by several months. The aim of the retroactive effect of Section 167 ZPO is to protect parties from disadvantages caused by delays in the course of court business. The provision is therefore to be interpreted by way of an evaluative consideration, but not by way of a purely temporal consideration.
However, delays attributable to the serving party's own negligence were to be attributed to the serving party. However, the senate clarified that such negligence could not be seen in the fact that the plaintiff had only ordered a translation of the statement of claim upon request of the court.
The senate first states that, in accordance with Articles 5 and 8 of the REGULATION (EC) No 1393/2007, the plaintiff may choose between several methods of service of the action abroad. Consequently, he could choose to have the application served without translation. In this case, the addressee's rights would be protected by the fact that he would have the right to refuse to accept service if the application is written in a language that he cannot understand or is not the official language of the state in which service is to be effected. If acceptance is then rightly refused by the defendant, the service would be suspended until service is effected again. Alternatively, the plaintiff could have the application served with a translation. The translation could be obtained either by the plaintiff himself or by the court. Special formal requirements for the translation would not be necessary. A simple translation would be enough.
Regardless which method of service the plaintiff chooses, the senate states that any court related delays cannot be attributed to the plaintiff. The basic purpose of the REGULATION (EC) No 1393/2007 is to improve and accelerate the service of judicial documents between the Member States. However, the interests of the parties cannot be disregarded.
However, this would be a matter of concern if the plaintiff would initially be referred to an attempt of service without translation for the purpose of meeting the deadline. This would render this method of service the rule, which would neither sufficiently take into account the interests of the defendant nor those of the plaintiff. For the defendant, priority service without translation would mean an excessive burden of admission. Finally, the defendant would have to deal with exercising its right to refuse acceptance. For the plaintiff, on the other hand, there would be uncertainty as to whether service would be effected within the time limit. If the defendant refuses to accept the document for lack of translation, a second service would be required, which would have to be effected immediately. However, there are no precise rules when such "immediately" could be assumed. Therefore, the plaintiff would be subject to an additional risk of limitation because he does not know exactly how much time he has to issue a second service. It is therefore unreasonable to require the plaintiff to take a course of action in line with Section 167 ZPO that could be associated with procedural disadvantages for him.
Finally, the senate clarifies that negligence on the part of the plaintiff is also not to be seen in the fact that he has chosen the translation by court and did not already arrange for it by himself in advance of the action. In order to obtain the retroactive effect of Section 167 ZPO, the plaintiff merely has to create the conditions for prompt service. He has already done this if, in addition to the timely filing of the statement of claim, the advance on court fees and the advance on fees for the translation had also been paid. Moreover, there is no obligation on the plaintiff to check the court’s doing for a timely translation. Rather, the plaintiff can expect that the court would properly conduct the service proceedings in its own jurisdiction.
For our European neighbours, the ruling is first of all significant because it proves that German insolvency law regarding challenge of transactions applies in across border cases as well. According to Art. 6 (1) of REGULATION (EU) 2015/848, the court with jurisdiction for such actions is the court of the insolvent debtor's registered office (lex fori concursus, Art. 3 (1) of REGULATION (EU) 2015/848). Entrepreneurs based in other European countries are therefore well advised to always keep an eye on the law regarding challenge of transactions in their business relations with German companies and to develop a protection concept as early as possible.
In civil procedural terms, the ruling of the BGH has now clarified that translation-related delays in the cross-border service of action are not at the risk of the plaintiff. This even applies to delays of up to one year. In addition , it is now clear that the plaintiff has a right to choose whether a translation of the action is to be made at all and, if so, whether it is to be made by the court. However, the plaintiff must still ensure that he has done everything possible to ensure prompt service. In particular, the plaintiff must observe the following points: