The Effectiveness of German vs. EU Arbitration Law in Resolving Cross-Border Disputes

Abstract

The present paper is a critical discussion on the effectiveness of German law of arbitration and European Union (EU) framework of arbitration in settling cross-border commercial and investment disputes. Although arbitration is a well-known alternative to litigation, which is considered efficient, the regulative environment that surrounds this process influences greatly its predictability and enforceability as well as the procedural fairness. The paper assesses the German as a judicial system, which is based on the Zivilprozessordnung (ZPO) and the UNCITRAL Model Law, its transparency, efficiency, and the minimum judicial interference offering a safe international arbitration ground in general. On the other hand, a fragmented legal terrain in the EU, including the legislation of member states, the Brussels I Regulation, and other strong-willed European Court of Justice judgments (Achmea and Komstroy) that have provided certain ambiguity in the procedure of intra-EU arbitral awards enforcement has been analyzed in the paper. With the help of comparative analysis, case studies, and practical considerations, this paper will show that the German arbitration law is better in providing legal certainty and predictability of enforcement of law compared to EU arbitration, which experiences the obstacle of complex regulations as well as lack of judicial enforcement. The paper draws a conclusion that there is need to advise businesses and legal practitioners to use German arbitration frameworks in resolving cross-border disputes because this ensures efficiency and legal risks are reduced.