On 16 August 2023, the German Federal Government adopted the government draft law submitted by the German Federal Ministry of Justice on the introduction of a lead decision procedure at the German Federal Supreme Court (Bundesgerichtshof, BGH). The Federal Government's law corresponds to the draft of the German Federal Ministry of Finance. The introduction of leading decisions opens up the possibility for the Federal Supreme Court to comment on fundamental legal questions independently of the termination of the proceedings by the parties.
As already stated in our article of 17 July 2023 (German), mass individual actions, mostly brought by consumers, to enforce similar claims in court represent a great burden for the German civil courts. Current examples include the diesel lawsuits, invalid clauses in fitness center contracts or in insurance and banking contracts. Taking legal action is therefore intended on the one hand to relieve the courts through efficient and speedy decisions, to create legal certainty more quickly for those affected as well as legal practitioners, and on the other hand to protect consumers from high costs.
The law provides that the Federal Supreme Court may declare a case to be a leading case if an appeal is filed in mass proceedings. The Federal Supreme Court can decide on the fundamental legal questions even if the proceedings have been settled by an act of the parties. However, the leading decision has no effect on the individual appeal proceedings, so the parties are still free to end the proceedings, for example, by withdrawal or settlement.
The leading decision then serves as a guide for the courts of instance in reaching a judgement in similar factual situations with the same legal questions. The courts of instance may, with the consent of the parties, stay pending parallel proceedings from the time of the Federal Supreme Court's declaration of the lead decision proceedings until the lead decision.
The Federal Government's approach is going in the right direction to help speeding up proceedings at the courts and thereby relieving the burden on the judiciary and consumers. However, there is still criticism of the draft law, because the relief effect depends on further factors:
On the one hand, it is relevant how many appeals are allowed by the courts of appeal or how many appeals are allowed by the Federal Supreme Court on a complaint of non-admission. On the other hand, the extent of the relief depends on how many parties decide to appeal to the Federal Supreme Court in further proceedings. The Federal Government's draft law ties in with the object that the parties can prevent proceedings pending before the Federal Supreme Court by settling or withdrawing the appeal.
However, this problem is only partially solved by the introduction of a leading decision procedure. The parties are free to decide after the second instance not to appeal to the Federal Supreme Court by means of an appeal or a non-admission appeal. The losing party up to the second instance could include in its considerations that by not filing an appeal with the Federal Supreme Court, a final judgement is issued, but similar facts could nevertheless be decided differently in another individual action in the context of mass proceedings before another court. Since there is no Supreme Court decision by the Federal Supreme Court in this case, there is no clear orientation for the judiciary. The question therefore arises whether mass proceedings could not be countered more effectively by already allowing the courts of instance to declare proceedings to be lead decision proceedings.
Furthermore, the parties no longer have comprehensive power of disposal over proceedings that the Federal Supreme Court has declared to be lead decision proceedings. The parties can no longer prevent a leading decision on this legal question. This contradicts the principle of disposition enshrined in the German Code of Civil Procedure. The principle of disposition includes the right of the parties to dispose of the legal dispute as a whole. In particular, this also includes the right to end the legal dispute prematurely, i.e. without a judgement. The opposite of the principle of disposition is the official maxim that applies in German Criminal Procedural Law: According to this maxim, the state is the master of the proceedings. However, such management of the legal dispute has so far been alien to civil proceedings.
The leading decision procedure thus represents, in addition to the model declaratory action, the capital investor model proceedings and the intended introduction of the action for redress, a further possibility of civil procedural design in the context of mass proceedings. These means of collective legal action in consumer disputes are united by the goal of making legal enforcement more efficient and cost-saving for the state and consumers. The model declaratory action, for example, was introduced in consumer disputes in order to determine the preconditions for the existence of claims in the case of mass damages by bundling claims and to clarify the central legal questions in advance in a procedure with effect for all injured parties.
The German Federal Council is expected to deal with the draft law at the end of September 2023.