BGH on damages due to US lawsuit in German jurisdiction

The Federal Court of Justice has ruled that a contractual partner may be entitled to compensation for the costs incurred by him because, contrary to the agreement of an exclusive jurisdiction in Germany, he is suing a US court in Germany. has been. The contract at issue in the present case contained the agreement that German law was applicable.

The current defendant nevertheless filed a lawsuit in federal court in the United States in 2016, but lost the lawsuit under the jurisdiction agreement. However, reimbursement of costs does not take place in the USA if the victory is complete.

The current plaintiff therefore sued for compensation of USD 196,118.03 (yes, costs in the USA are that high, even if it is ONLY a question of jurisdiction – mostly legal fees) and was upheld by the BGH. The agreement conferring jurisdiction must be interpreted as meaning that the parties were obliged to bring actions under the contract only at that place of jurisdiction and, otherwise, to be able to rely on costs of appropriate defence.

With such an agreement, the parties would have expressed their interest in making legal disputes predictable in terms of both substantive law and procedural law, making litigation risks calculable and preventing subsequent forum shopping by one of the contracting parties.

The fact that, according to the case law of the Federal Court of Justice, the mere use of a state, legally regulated judicial procedure to enforce alleged rights cannot, in principle, be seen as a breach of contract obliging the party to pay damages does not contradict this.

The ruling impressively shows how relevant questions of jurisdiction and applicable law can be in international contracts, although these clauses are often placed somewhere under “Miscellaneous” and are quickly overlooked.