Elke Umbeck: "Post-Brexit, Germany can handle more international commercial disputes"
Elke Umbeck and Thomas Wambach, partners at Heuking Kühn Lüer Wojtek, discuss dispute resolution in Germany and the turning point the pandemic represents in the attorney-client relationship.
Leaders League: What was the thinking behind developing HKLW’s arbitration practice?
Elke Umbeck: Since its foundation in 1971, HKLW has always focused on arbitration. Commercial arbitration as an alternative means of dispute resolution has a long history in Germany. In 2020, the German Arbitration Institute (“DIS”) celebrated its 100th anniversary. In recent years, international commercial arbitration has constantly been on the rise. In particular, in cross-border matters, commercial arbitration is often preferable to litigation for multinational companies due to its advantages at the enforcement stage. Following the increase in bilateral investment treaties and trade agreements, the number of investor-state and state-state arbitrations grew steadily and many jurisdictions and industries have become more arbitration-friendly.
Germany is made up of different regional powerhouses. How does this affect the way Heuking works with clients?
Thomas Wambach: The port city of Hamburg in particular, has developed into a new arbitration hub. Hamburg is home of the Hamburg International Arbitration Centre (HIAC) and seat of a number of international arbitration institutions like the Chinese European Arbitration Centre (CEAC), the European-Latinamerican Arbitration Association (ELArb), and the German Maritime Arbitration Association (GMAA), as well as commodity arbitrations in various industries. It’s no wonder that it has a very vivid arbitration scene organized around the Hamburg Arbitration Circle (HAC) which also leads to inbound business.
Umbeck: There is also an initiative to open up English-speaking courts in Germany (as of November 2020 in Stuttgart and Mannheim in addition to chambers for international commercial disputes at the regional court of Frankfurt and Hamburg) in order to become more attractive for setting disputes between international businesses. Via its English-language proceedings the court can also interrogate witnesses in English and consider evidence/annexes in English without the need for such documentary evidence to be translated into German. Thus, our international clients can benefit from a reliable and expeditious dispute resolution mechanism. Following Brexit, Germany can play a more important role in handling international commercial disputes.
Disputes are often cross-border or involve international clients: how does your international network help in this regard?
Wambach: With a view to cross border disputes we strongly benefit from our international network. In recent years, we handled a large number of cases for foreign clients from medium-sized cases relating for example to compensation claims of commercial agents to large-scale complex disputes (D&O liability, shareholder disputes etc.).
In litigation, you’ve had a growing number of cases involving commercial & consumer litigation and climate change. How is Heuking positioned in these areas?
Umbeck: Over the last decade mass litigation in the areas of consumer and investor protection has increased. The most notorious example is the emissions scandal which led to some 300,000 Volkswagen Group customers seeking redress from the car manufacturer. In addition, there were many areas where an indefinite number of consumers and investors sought cash awards against stock companies, investment funds or banks because of violations of their obligations.
The number of these cases was small compared to the Volkswagen case but nonetheless they marked a trend. We expect this trend to continue in the next couple of years, particularly after the European Union addressed this issue with Directive EU 2020/1828 and the fact that there are a growing number of law firms now specializing in representing consumers in mass litigation. Heuking is excellently positioned to benefit from this trend. The main requirement to represent defendants effectively in these cases is having the infrastructure to handle any number of cases within a limited timeframe. Heuking was able to establish this infrastructure in all of its offices.
The Covid crisis will lead to a surge in insolvency, restructuring and labor litigation matters. How do you see this playing out?
Wambach: The impact of the Covid crises was insignificant in 2020. This might dramatically change in 2021. We expect a rise in bankruptcies and unemployment. We therefore anticipate a higher demand for legal services in these areas. Furthermore, there are clear indications that the number of disputes over the termination of commercial leases or the cancellation of all types of investment projects will increase. We have already started to prepare our workforce in DR to be ready for such conflicts.
Do you see any evolution or new requirements for arbitrators and litigators in Germany?
Umbeck: Because of the enormous progress made in information technology in the last two decades, the requirements for professionals are quickly evolving. knowledge is now accessible without limits; the decisive skill will be to structure and find that knowledge. The necessary skills therefore shift from applying acquired legal knowledge to identifying and structuring legal problems and finding the right legal sources to resolve the issue at hand.
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