Preliminary court injunction or adjudication−new legal tools to avoid excessive duration of con-struction court proceedings in Germany?

By Kristina Fischer, Eva Hugo and Christoph Mank, K&L Gates, Berlin

In general, German court proceedings relating to construction and engineering matters can take between three to six years and sometimes up to ten years, until a final, binding judgment is obtained. The reasons for such excessive duration in construction court proceedings are manifold: Courts may be overloaded by the number of disputes brought before them, judges may not have the necessary technical or judicial experience or expertise and the clarification of the facts of the case may be time-consuming and not be possible without one or more experts´ opinions. In addition, the losing party generally exhausts all court instances before a case is finally settled. The excessive duration of construction court proceedings is expensive; and often, it even poses a threat to one or both parties´ economic existence.

The call for a reform of the current procedural law for construction disputes is getting louder: Working groups, organizations and experts demand that a new−accelerated−procedure for the resolution of construction disputes must urgently be introduced into the German legal system.

Amongst them, the Deutscher Baugerichtstag e.V., a renowned institution advising on construction−related legislative initiatives, recommended in its 2014 symposium the statutory implementation of specific summary proceedings: In the future, construction disputes shall be avoided or settled faster and more effectively by means of a building injunction (“Bauverfügung) or an adjudication. One or the other proceeding shall be chosen by the contracting parties as an alternative to “regular” litigation.

The Bauverfügung is a preliminary court injunction, binding upon the contracting parties, which shall serve to settle a construction dispute quickly in order to avoid a long delay or standstill of construction works, insofar as a special need for urgency exists. The court shall have specific knowledge and expertise on construction law and building practice. The procedure shall be accelerated; i.e., that a judgment shall be obtained in approximately eight weeks. Nevertheless, legal aspects of the dispute shall be completely examined. The court´s decision shall be preliminary; however, due to the court´s required expertise, it is expected that the decision, albeit preliminary, is more likely to be accepted by both parties, so that subsequent “regular” court proceedings can be avoided.

Another legal tool for summary proceedings may be adjudication. Adjudication−which is already been successfully introduced in Great Britain−represents a method of alternative dispute resolution which combines judicial and technical know-how. The contracting parties shall be free to agree in writing upon the adjudication procedure, instead of dispute settlement by a “Bauverfügung” or “regular” litigation. The adjudication procedure is scheduled in a fixed time frame of six to eight weeks during which the adjudicator, who is appointed by the parties, has to come to a decision. Factual as well as legal aspects of a dispute are analyzed only summarily. Due process is limited to the minimum. The adjudicator must be well experienced in the building practice and have deep knowledge of building law and techniques. An adjudicator´s decision would be binding, but may be reviewed and annulled by a court in “regular” litigation. Furthermore, the decision would be declared enforceable or be recognized for enforcement.
A few years ago, adjudication was praised as a “revolution” in construction disputes, providing for quick and well-accepted results. It has yet not been implemented into the German legal system. Critical voices have raised constitutional concerns that a statutory regulation of adjudication would infringe the right of due process. These objections are, in substance, related to mandatory adjudication, meaning that the parties could only file for “regular” litigation if an adjudication proceeding had been carried out previously. In 2013, the famous former president of the German Federal Constitutional Court, Hans-Jürgen Papier, published a paper in which he came to the conclusion that a statutory regulation of a mandatory adjudication does not infringe German law, especially not principles under constitutional law.

The ongoing complaints about the ineffectiveness of the German legal system with regard to construction disputes show that a change of the current procedural law, in some form or another, is necessary. It remains to be seen whether the German legislature will implement as legal tool for summary (construction) proceedings the “Bauverfügung“ or adjudication, or whether they will leave it to the contracting parties to choose between one or the other, before they file for “regular“ litigation.