Security for legal costs also in proceedings for a declaration of enforceability of arbitral awards

In Germany, parties who are sued by plaintiffs domiciled outside the European Union may, as a condition for continuing the litigation, require the plaintiff to provide security for the costs of the litigation, including the defendant's attorneys' fees.

Since in Germany the amount of the costs of litigation depends on the value of the claim, the US or Japanese plaintiff may have to pay considerable sums before the German judge will take action. (§§ 110 ZPO). The German Federal Court of Justice (BGH) has extended the application of these provisions to proceedings for the declaration of enforceability of arbitral awards (BGH 12.1.2023, I ZB 33/22), which can also involve significant costs. However, the provision of procedural security must be objected to by the respondent; it is not ordered ex officio. In individual cases, this excessive requirement may slow down foreign plaintiffs from the outset.

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