Germany Proposes Minor Reforms to Arbitration Law

On 27 January 2026, the German Federal Ministry of Justice and Consumer Protection (Bundesministerium der Justiz und für Verbraucherschutz, "BMJV") published a ministerial draft bill to modernise the law on arbitration (the "2026 Draft").

This Draft Bill follows on from a similar attempt in 2024 (the "2024 Draft"), discussed e.g. here and here, which, despite broad consensus as to its contents, ultimately failed because the Parliament was disbanded before it could pass the draft. Maintaining the course of the 2024 Draft, the 2026 Draft aims to fine-tune and tweak German arbitration law, which is seen both domestically and abroad as a largely successful, UNCITRAL Model Law-based system.

This post provides an overview of the reforms proposed in the 2026 Draft – which, unlike the 2024 Draft, has not been published in an accompanying English version (all translations are the author's own) – and assesses them in the context of current domestic and international developments.

Bug Fixes and Updates by Statutory Reform

The last reform to German arbitration law, a major remodelling in 1998, is rapidly approaching its thirtieth anniversary. In light of the major changes in international business and technology over this period, the fact that German arbitration law has not, to date, received a significant update speaks to the credit of both the normative framework and of institutional actors such as Germany's leading arbitration provider, the DIS. Clearly, the law, as it stands, works. Both the 2026 Draft and the prior 2024 Draft took this finding as a starting point to propose minor reforms.

While arbitration law has thus remained unchanged for several decades, a different part of the German dispute resolution landscape changed drastically in 2025. Since last year, a number of German States (Länder) have introduced specialised "Commercial Courts" and "Commercial Chambers" which sit in English and model their proceedings on established standards in arbitration in an explicit attempt to compete with arbitration. Given this change to the German litigation landscape, the 2026 Draft contains several provisions to better align arbitration and the courts.

Against this backdrop, the 2026 Draft explicitly states that its goal is minor revision, not major reform.

Relaxed Rules on Formalities for Arbitration Agreements

Perhaps the most significant proposal in the 2026 Draft concerns new rules on formalities for arbitration agreements. The 2024 Draft controversially proposed total abolition of formalities requirements for arbitration agreements, an idea that might have sounded more convincing on paper than in practice; large parts of the German arbitration community flagged that excessive relaxation of formalities requirements would likely lead to unnecessary disputes concerning forum or the existence of an arbitration agreement.

The 2026 Draft reacts to this criticism by suggesting not total abolition, but relaxation of formalities requirements. The 2026 Draft proposes that it suffice for the arbitration agreement to be concluded or documented by a means of communication which can be used to later retrieve the information, aiming for a mid-way point between flexibility and evidentiary concerns.

This provision is explicitly intended to be open to new technologies and avoids many of the pitfalls of the 2024 Draft. However, whether there is truly a practical need for this relaxation is unclear; if anything, the more complex area of German law is arbitration agreements involving consumers due to the German courts' wide interpretation of consumer status, but this question has not received further legislative attention.

Increased Digitalisation

In a reaction to technological progress since 1998, the 2026 Draft explicitly allows for virtual hearings and electronic arbitral awards. While virtual hearings are well-established in practice, not least of necessity during the COVID-19 pandemic, electronic awards are, to date, less common, given that a paper award remains the most internationally recognised form. Given the traditionally rare intervals at which arbitration law is reformed, this provision is thus arguably more a sort of future-proofing than a pressing, current concern.

Better Integration with the New Commercial Courts

Concerning the new English-language Commercial Courts, the 2026 Draft makes explicit provision for arbitration-related matters to be heard in English where the parties agree either explicitly or by lack of objection. Moreover, even in matters heard in German, documents arising from English-language arbitration will no longer automatically require translation. These proposals align German arbitration law more closely with recent developments in domestic litigation and ensure that inefficient and costly switching of languages can be kept to a minimum. The 2026 Draft also proposes having arbitration-related matters heard before the Commercial Courts to use their expertise in hearing disputes arising from international commercial transactions.

Further Minor Updates

On a more technical note, the 2026 Draft reforms a peculiarity of German law, the procedure for forum determination under sec. 1032 (2) of the Code of Civil Procedure (Zivilprozessordnung, ZPO). This mechanism currently allows parties to apply to the State courts for a determination of whether arbitration would be admissible (discussed in detail here). The 2026 Draft extends this procedure to allow domestic courts to determine whether the arbitration agreement is generally valid, making this procedure even more attractive due to an increased binding effect.

In further minor fixes, the 2026 Draft (i) introduces a new mechanism to resolving the Dutco problem (see previously e.g. here), (ii) explicitly clarifies that courts can enforce interim measures issued by foreign-seated tribunals, (iii) provides for a judicial remedy where an arbitral tribunal incorrectly declines jurisdiction and (iv) introduces a new remedy where an award results from serious irregularity. The 2026 Draft also explicitly allows arbitral tribunals to issue dissenting opinions, thus resolving an issue that had been the subject of some debate in Germany.

Increased Publicity

Finally, the 2026 Draft makes proposals for publication of awards unless the parties object and for the publication of court decisions in challenge and recognition or enforcement proceedings. This reacts to common (mis-)conceptions about arbitration outside the specialist community, where there are frequently misunderstandings about the legitimacy of private dispute resolution for commercial parties and the different considerations involved in commercial arbitration, investor-State arbitration and sports arbitration are largely ignored. Increased publication of court decisions, conversely, is a welcome addition contained in the 2026 Draft, since at present only a small percentage of German court decisions are made publicly available and projects on increasing access to case law are still in their infancy.

Small Tweaks to a Tried and Tested System

Overall, the 2026 Draft makes minor adjustments to a well-functioning system. Renewed legislative attention to the relatively specialist area of arbitration law is always welcome, and the 2026 Draft, together with 2025's introduction of the Commercial Courts, demonstrates that the German legislator increasingly sees commercial dispute resolution as a service industry requiring an attractive offering.

Many of the provisions in the 2026 Draft fix minor technical points which had limited practical relevance and would likely not have justified reform on their own. To the extent that the 2026 Draft proposes more significant changes, most of these reflect a need to update and align arbitration law with current developments. Whether relaxation of the formalities requirements for arbitration agreements is truly necessary is a matter for debate, as is whether the current proposal achieves this.

Certainly, abandoning the idea of arbitration agreements without any formalities requirements whatsoever is a good idea, since this rule would likely have frequently generated unfounded jurisdictional objections. In line with this, whether the new exceptional remedy against arbitral awards resulting from serious irregularity is necessary is unclear; to the extent that any possible further remedy delays the final resolution of the parties' dispute, introducing this exceptional remedy is not without cost.

Conclusion

Overall, the 2026 Draft is a useful update to keep German arbitration law in step with current developments in dispute resolution and maintain Germany's position as a leading arbitration jurisdiction. Many of the provisions in the 2026 Draft address arguably rather specific questions of arbitration law, showing, conversely, that the broad lines of German arbitration law are not in need of significant reform.

The fact that the legislator has nonetheless chosen this point in time to review the German law of arbitration is instead evidence of a renewed political interest in ensuring that Germany remains an attractive jurisdiction for dispute resolution. In this regard, reform to the law of arbitration is perhaps significant less on its own, but rather as evidence of a comprehensive strategy concerning dispute resolution in Germany as a whole, with major changes to the German litigation system in the form of the new Commercial Courts in 2025 and – now – corresponding adjustments to the law of arbitration on their way.

Given that in Germany arbitration and litigation are traditionally complements rather than substitutes, with each dispute resolution mechanism drawn upon largely in response to limitations in the other, the legislator's willingness to take a holistic perspective considering how arbitration and litigation combine to satisfy business needs is particularly welcome. As such, the sometimes minor content of the 2026 Draft may belie its broader significance as a means of ensuring that both major dispute resolution mechanisms – litigation and arbitration – are properly aligned and continue to go hand in hand.