Federal Supreme Court on Independent Evidentiary Proceedings vs. Expert Determination

A dispute relating to the construction of a highway bridge gave the Federal Supreme Court (Bundesgerichtshof) the opportunity to clarify the relationship between the independent evidentiary proceedings (selbständiges Beweisverfahren; Sec. 485 Code of Civil Procedure, ZPO) and an expert determination agreement (Schiedsgutachtervereinbarung).

Independent evidentiary proceedings are provided for in the Code of Civil Procedure and are administered by the state courts. They are designed to establish facts in preparation of subsequent main proceedings. Expert determination, on the other hand, while serving a similar purpose, is a form of ADR outside the framework of state court proceedings. The Federal Supreme Court held that the expert determination agreement takes precedence; an application to commence independent evidentiary proceedings is inadmissible if it relates to the same set of facts.

Facts

The Applicant alleged that steel components that the Respondent intended to use in the construction of the new bridge were defective.

The Respondent had been awarded the contract for the bridge construction project in 2017. The contract incorporated the German Construction Contract Procedures (VOB/B, Vergabe- und Vertragsordnung für Bauleistungen). Section 18 VOB/B provides for an expert determination mechanism: If the parties disagree about the properties of materials or components for which standard testing procedures exist, each party can apply to a state or state-recognised materials testing body (staatliche oder staatlich anerkannte Materialprüfungsstelle) to establish the properties of these materials or components. The findings of the materials testing body are binding on the parties. When such the dispute about the steel components arose, the Respondent invoked Section 18 VOB/B and submitted an application to such a materials testing body to assess the allegations of defects made by the Applicant.

Before the materials testing body had been completed its assessment, the Applicant applied to the District Court (Landgericht) Cologne and sought to commence independent evidentiary proceedings pursuant to Section 485 ZPO regarding the very same alleged defects. The Respondent opposed the application and invoked the expert determination agreement pursuant to Section 18 VOB/B. Both the District Court and the Court of Appeals (Oberlandesgericht) Cologne rejected the application. They held that the Applicant lacked the required interest in seeking legal protection in the courts (Rechtsschutzbedürfnis). As the applicant had contractually agreed to submit these issues to expert determination, independent evidentiary proceedings were inadmissible. The Applicant appealed against this decision to the Federal Supreme Court (Bundesgerichtshof).

Decision

First, the Federal Supreme Court held that Section 18 VOB/B did indeed constitute an expert determination agreement and was validly incorporated into the construction agreement.

The Federal Supreme Court then held that the expert determination agreement took precedence over an application to commence independent evidentiary proceedings:

“If the parties conclude an expert determination agreement, they agree at the same time that the factual issues covered by the agreement are to be bindingly determined by the expert. The findings of the expert are then only subject to limited judicial review in accordance Section 317 et seq. German Civil Code (BGB) (…). By agreeing on expert determination, the parties express their intention to obtain an expert’s report in the event of disputes arising and, at the same time, make it clear that, in general, no court action shall to be taken on the same subject matter.

This follows from the principle of private autonomy. (…) If the parties have agreed that findings of fact shall be made precisely using a method other than independent evidentiary proceedings in court, there is therefore no legal interest in the prior or parallel conduct of dispute-settling evidentiary proceedings under Section 485 ZPO. This also applies in the case of an expert determination agreement pursuant to Section 18 VOB/B. The “blocking effect” of the expert determination agreement avoids the duplication of expert assessments in the same matter (cf. Section 485 ZPO).”

The Federal Supreme Court did not rule on the dispted issue whether independent evidentiary proceedings would be admissible in case a party did not invoke the expert determination agreement, as the Respondent in this case had done so.

The Court did clarified that the “multitude of unresolved questions under the statute of limitations”, which allegedly exposed the Applicant to great legal uncertainty, did not lead to the admissibility of the independent evidentiary proceedings. The expert determination agreement constituted an “agreed assessment procedure” within the meaning of Section 204 para.1 No. 8 BGB. With the initiation of expert determination, the limitations period is suspended for all claims connected with the expert determination.

Comment

The Federal Supreme Court gets it right. The view that allowed independent evidentiary proceedings to go ahead even if the parties had agreed on expert determination was taken in particular by the Court of Appeals Cologne in earlier cases. These Cologne decisions failed to convincingly state why an agreement on expert determination was to be treated differently from an arbitration agreement.

These cases had effectively held that the expert determination agreement did not really bind the parties and thus rendered it unenforceable. This view ignored the structural similarity between an arbitration agreement and an expert determination agreement: In both cases the parties contractually agree not to place the decision of their dispute in the hands of the state courts. In the case of the arbitration agreement, this applies to the entire dispute; in the case of the arbitrator clause, it applies (at least) to the determination of facts. The Federal Supreme Court rightly puts the principle of party autonomy at the heart of its decision. An expert determination agreement, just like an arbitration agreement, renders state court proceedings inadmissible if the agreement is invoked.

Federal Supreme Court, order dated 26 January 2022 – docket no. VII ZB 19/21

An extended German version of this post has been published at zpoblog.de.

Photo: Holger WeinandtBendorfer Brücke 02 Koblenz 2014CC BY-SA 3.0 DE

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