The leading decision procedure is coming – doubts remain

Mass proceedings continue to burden the German judiciary. Diverging case law on the same legal issues leads to uncertainty for both claimants and defendants. The new leading decision procedure at the FCJ is intended to relieve the burden on the lower courts. However, it is questionable whether it will actually bring more efficiency and legal certainty to mass proceedings.

Efficient processing and relief of mass proceedings

Mass proceedings consist of numerous individual lawsuits with similar claims, often involving the same core legal issues. The new procedure aims to allow the FCJ to select certain claims from the ongoing appeals as leading cases. Those selected should cover a broad range of unresolved legal questions that are "relevant to a large number of other proceedings".

Once the FCJ clarifies these questions, similar cases pending before the lower courts may be uniformly decided based on this leading decision, facilitating a quicker and easier resolution for the claimants. A leading decision should have a signalling effect, guiding lower courts on how the FCJ assesses the respective legal issues and potentially relieving the courts of many similar lawsuits.

Until now, parties have been able to withdraw appeals to avoid FCJ judgments. However, under the new procedure, a leading decision can be made even if the appeal is withdrawn for strategic reasons or if proceedings end in another way.

Guiding decision as an orientation aid

In a leading decision, the FCJ should focus on those aspects most relevant to mass proceedings. In its reasoning, the FCJ should explain how it would have ruled on key legal issues, taking into account the underlying facts. However, a leading decision is not founded on the merits of the case itself, so is not binding on the lower courts nor does it have a direct impact on specific appeal proceedings. Rather, the leading decision should serve as a guide for courts and the public, providing insight into what the decision on the legal issues would have looked like.

However, the expectation that leading decisions will create legal certainty is deceptive for two reasons. Firstly, because of the lack of binding effect. Mass proceedings often require several FCJ decisions to conclusively clarify the legal situation especially as the circumstances of individual cases may differ from the leading decision, necessitating different decisions. Secondly, the FCJ must wait until after receipt of the appeal, or at least one month after service of the grounds of appeal, before making its decision. This means that – through clever procedural manoeuvres – many cases could "slip through the net". This raises the question of whether the purpose of the leading decision procedure is at risk of being undermined. For example, if an appeal is withdrawn within this period, the FCJ would be deprived of the opportunity to declare it a leading case. Furthermore, the parties still have room to make tactical decisions in advance to prevent a leading decision. In case of doubt, the parties will consider whether they allow a specific case to move up to the FCJ at all. It remains to be seen whether the legislator has only taken half-hearted measures here.

Suspension of parallel proceedings

The lower courts have the option to suspend parallel proceedings until the FCJ has ruled. This is regulated by the newly introduced section 148(4) of the German Code of Civil Procedure. Originally, the legislative process required that a stay should only be granted with the consent of both parties. However, the court now has the discretion to stay parallel proceedings even without the parties’ consent, allowing it to directly consider the leading decisions of the FCJ in these cases. All that is required is a hearing of the parties. Continuing the proceedings despite a parallel leading decision procedure should only be possible in exceptional cases.

An immediate appeal can be lodged against the court's decision to stay proceedings under section 252 of the German Code of Civil Procedure. Otherwise, the parties can apply to continue the proceedings one year after the suspension. This regulation contrasts with the suspension order pursuant to section 251 of the German Code of Civil Procedure, which is only issued at the joint request of the parties if a clarification by the FCJ is in progress in parallel proceedings. In addition, the parties can resume the proceedings in accordance with section 251 of the German Code of Civil Procedure at any time.

(No) involvement in the lead decision procedure

Parties from parallel proceedings do not have the opportunity to be heard in the leading decision proceedings and, thus, to participate. This is neither surprising nor objectionable. However, it is problematic that a leading decision can be issued without the opposing party being heard. Even if this does not constitute a violation of the right to be heard, because the leading decision of the FCJ has no direct impact on specific appeal proceedings, the FCJ fails to address the arguments of both parties. It cannot be ruled out that the FCJ would have come to a different conclusion in the event of a hearing.

Leading decision procedure instead of a preliminary ruling procedure

Alternatively, the legislator could have considered a preliminary ruling procedure similar to the referral procedure at the European Court of Justice, or an extension of the right of appeal. Although these proposals were discussed in the Legal Affairs Committee, they were not included in the current legislative process. Presumably, there was not enough time for the usual discourse with academics and practitioners before amendments to the German Code of Civil Procedure. As a result, numerous individual proceedings must still proceed through the regular court system before the FCJ can prioritise a case. An actual acceleration and easing of the burden on the courts can therefore only be expected in several years' time when the rush of first instance lawsuits has presumably already subsided.

Conclusion

The law on the introduction of a leading decision procedure shows that mass proceedings are becoming increasingly important and have, therefore, moved into the focus of the legislator. However, it remains questionable whether the intended goals – to relieve the burden on the lower courts and create legal certainty for consumers bringing claims and companies being sued – will actually be achieved. In practice, it often takes several years for proceedings to reach the FCJ. And whether a case makes it that far at all is ultimately influenced by the tactical decisions of the parties. This means that the flood of first instance actions cannot be stemmed by the leading decision procedure.

The legislator has failed to take a bold step, such as introducing a preliminary ruling procedure, or extending the right of appeal. It is to be expected that it will take a few more years and further mass proceedings before the legislator makes any real progress towards efficiency here.

Until then, the complaining companies will have to continue to be patient.