Preventing Precedent – Good or Bad?

Whatever they told you in law school about the difference between common law system based on case law and a codified civil law system, the truth of the matter is that even a codified civil law system heavily relies on precedent. But in high-profile matters such as Lehman certificates litigation or or disputes about Clerical Medical’s life insurance policies, the creation of new precedents has increasingly been prevented, causing controversy. In these matters, typically dozens or even hundred of similar cases are pending in different district courts and courts of appeals across the country, all eagerly waiting for Federal Supreme Court (Bundesgerichtshof) in Karlsruhe to issue guidance.

Civil procedure hardly ever makes it to prime time television. The controversial strategies to avoid unfavourable precedents in the Federal Supreme Court, however, were covered on national television (here’s the video, and here’s a write-up). The withdrawals of the appeal (Revision) by banks and insurance companies appear to occur more frequently, judging by the court’s press releases – often when a hearing before the Federal Supreme Court had already been scheduled. It is fair to assume that in the vast majority cases, the court will have indicated that the outcome of the appeal would be unfavourable to the appellant. The individual claimant of the matter before the court wins, but, so the argument goes, the public at large looses, since it is deprived of Karlsruhe’s legal guidance.

This has led lawyers and consumer protection groups to advocate changes to the civil procedure: It should allow for judgment to be given even if the underlying litigation has been terminated. Volker Vorwerk, a member of the appellate bar of the Federal Supreme Court, Germany’s most exclusive bar, is one of the advocates in favour of granting the Federal Supreme Court power to issue so-called “leading decisions” (Leitentscheidungen). He has drafted legislation to that effect, which is now being considered by the Ministry of Justice.

As much as I have sympathy for the need to develop the law on the basis of precedents, I think any proposal there is treading on dangerous grounds, since it limits party autonomy, one of the pillar stones of civil litigation. I have not yet seen a fully-fledged draft proposal for such legislation, but I find it very hard to balance the right of any party to control the fate of the action brought by it or against it, on the one hand, and the interest of a wider public to learn what the court ‘s position is on the legal issues of what has then become, in my view, a hypothetical case. In addition, such legislation would most likely introduce a degree of discretion of the court to hear, or rather decide, matters that it currently  does not have, and would be somewhat alien to the German system.

The only comparable situation that I am aware of is the 1998 decision of the Federal Constitutional Court (Bundesverfassungsgericht). It issued its ruling on the reform of Germany’s orthography (Rechtschreibreform), notwithstanding the last-minute withdrawal of the constitutional complaint (Verfassungsbewerde) in this matter. The Federal Constitutional Court argued that the withdrawal (Rücknahme) was invalid in a situation where a constitutional complaint had been accepted because it was of general relevance (allgemeine Bedeutung) and the matter had remained of relevance after it had been heard by the court. This case could provide some guidance, if one were to grant the court the power to issue leading decisions.

 

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