Bring Your Trusted Lawyer – At Your Own Cost

Foreign parties involved in German litigation often, for a variety of reasons, involve their trusted home jurisdiction advisers alongside German litigation counsel. The question then arises to what extent the costs to be reimbursed by the opponent also include the fees for the foreign lawyer, in addition to those for German counsel, if the foreign party is successful in the litigation.Until now, the court practice differed to what extent these additional costs could be claimed. Some courts of appeals, such as Stuttgart and Berlin, were friendly fo foreigners: They held that foreign parties were per se entitled to claim these additional fees – albeit on the basis of the German Federal Fee Schedule (Rechtsanwaltsgebührengesetz, RVG).

The Federal Supreme Court (Bundesgerichtshof) has now ruled on the issue in a matter involving a Swiss party in a copyright dispute. It came down less favourably for foreign litigants. In short, the Federal Supreme Court ruled that the test used for the reimbursement of additional counsel’s fees shall apply to domestic litigants and foreign parties alike.

Foreign litigants will need to show a necessity for involving a Verkehrsanwalt, an additional lawyer to instruct local German counsel, just as a German party would need to. However, the Federal Supreme Court acknowledges that a foreign party may be more likely to meet that test. Relevant factors would be language issues, cultural differences or lack of familiarity with the German legal system (“sprachliche Barrieren, kulturelle Unterschiede oder mangelnde Vertrautheit mit dem deutschen Rechtssystem“). On the other hand, if the foreign party has a distribution system in Germany, then it would most likely fail the necessity test – if you can sell goods and services in Germany, you are presumably qualified to deal with German lawyers directly.

As the first and second instance courts in Berlin had not applied the necessity test, and hence not established the relevant facts, the Federal Supreme Court sent the matter back to the lower courts for the factual issues to be dealt with. Thus, it remains unclear whether the Swiss party would met the necessity test: Reading between the lines, my feeling is that a Swiss party in a commercial dispute that arises out of selling into Germany would not qualify. As the judgment is sanitized, you can not tell whether it was a party from the German-speaking part of Switzerland, but I suspect it was.

1 Comment

  1. As a practitioner in New York with many clients involved in global transactions, this is an important decision to know about. Vielen Dank, Peter!

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