Originally from Baker and McKenzie International Arbitration Yearbook 2014-2015

A. LEGISLATION, TRENDS AND TENDENCIES

A.1 Legislation

International arbitration in Germany continues to be governed by the German Arbitration Act of 1998 as set forth in the ZPO. There have been no relevant changes in the past year.

A.2 Trends and Tendencies

This year, international arbitration has become the subject of a heated public debate in Germany (and other parts of Europe). This debate has been triggered by the critics of the envisaged Transatlantic Trade and Investment Partnership Agreement (“the TTIP”) which is supposed to include an Investor to State Dispute Settlement (“the ISDS”) provision. The European Commission, EU Member States and the European Parliament consider the ISDS to be an important tool for protecting EU investors abroad.4

The main criticism of the TTIP negotiations seems to be that the intended investment protection provisions of the TTIP will undermine European standards of consumer and environmental protection. There is also a concern that it will prevent European legislators and governments from passing laws (or will at least limit their ability to do so), as such legislative measures could negatively affect US investments in Europe and thus potentially create an obligation to compensate investors. This debate has put the ISDS increasingly at center stage, along with the perceived ability of arbitration to satisfactorily deal with investment disputes. During the course of this debate, arbitral tribunals have been denounced as “secret courts” and arbitration proceedings as “shadow justice in luxury hotels”5 conducted by lawyers from major international law firms who are biased and influenced by their own economic interests. It has also been claimed that the proceedings lack transparency, are nonappealable and provide unjustified privileges to business enterprises to the detriment of the community in which they operate.6