International Economic Arbitration in Germany: A New Era

Abstract

AT a press conference held in Bonn on January 21, 1992, which was featured in the major German newspapers and on German television, the Chairman of the German Federation of Industry and Trade, together with some German arbitration specialists, announced the foundation of the German Arbitration Institution (‘ Deutsche Institution fur Schiedsgerichtsbarkeit, e.V .’, ‘ DIS ’) on January 1, 1992, Some months earlier, on October 31, 1991, the Working Group on the Reform of the German Law of Civil Procedure had held its inaugural session at the Federal Ministry of Justice in Bonn to commence work on the reform of German arbitration law. These dates mark the beginning of a new era of international arbitration in Germany. The development deserves attention for various reasons. German unification has made Germany the gateway to Eastern Europe. The political and economic changes in this part of the world, and the need to build up run-down state economies, will lead to a substantial increase in commercial and financial activities. The state of judicial emergence of the court systems in Eastern Europe makes arbitration the only viable alternative for an effective dispute resolution process for these cross-border transactions. This is true, not only for the traditional commercial contract, but also for financial agreements, even though banks and other lending institutions have traditionally refrained from accepting arbitration agreements in their contracts. Also, the coming EC Single European Market, and the expected substantial rise in cross-border trade and resulting commercial disputes, account for Germany's increasing significance on the international arbitration scene.1 International practitioners and academicians alike have long since deplored the striking contrast between Germany's strong position in world trade and the small number of international arbitrations taking place in Germany every year. Professor Sandrock has aptly described this phenomenon: > Though it is an elephant …