Every pecuniary claim falling within the jurisdiction of ordinary courts of law may be the subject of an arbitration agreement (§ 599(1) Code of Civil Procedure). Expressly excluded are disputes under family law and certain company law disputes, among others. Non-pecuniary claims are also arbitrable if the parties are able to reach a settlement on the subject of the dispute.
The precondition for arbitration is an agreement between the parties. The parties are granted procedural autonomy; if no agreement between the parties exists, the arbitral tribunal may exercise its discretion (§ 611 Code of Civil Procedure).
The arbitration agreement must be in writing. Both parties must sign a legal document, or the arbitration clause must be included in written correspondence (e.g. e-mail) or in model contracts (general terms and conditions).
The conclusion of an arbitration agreement does not entirely waive legal protection by the state (e.g. action for annulment or grounds for annulment).
- Significantly faster proceedings (only one instance)
- The arbitrators are chosen by the parties themselves
- Potentially lower costs for domestic proceedings when amount in dispute is high
- Flexible proceedings, since details such as language of proceedings can be arranged
- Confidentiality of proceedings, since arbitral awards are generally not published
- Easier enforcement of awards abroad
- Relief of state courts