German court rules on admissibility of claims bundling for foreign law claims

On 13 June 2022, the Federal Supreme Court (BGH) ruled that a claims management company registered under the Legal Services Act (RDG) did not have to obtain a permit under section 10(1) sentence 1 number 3 of the RDG if it asserts a claim transferred to it that is subject to a foreign law.

The case related to a German claims management company which had claims for damages from car owners in Switzerland assigned to it in the Diesel context in order to bundle these claims and jointly enforce them in the German courts. The alleged claims for damages are subject to Swiss law. The case which the BGH had to decide only concerned one of the 2,000 bundled claims: that of a Swiss citizen who had bought a diesel vehicle in 2015. His case had been separated from the other proceedings by the court of first instance, the Regional Court of Braunschweig.

In December 2017, the car owner had assigned his claims against the vehicle manufacturer to the claims management company. The company is registered under the Legal Services Act and is based in Germany. He was to assert the claim out of court. If this was unsuccessful, he was to enforce the claims in his own name in court. If he succeeded, he was to receive a commission.

In first and second instance, however, both the Regional and the Higher Regional Court of Braunschweig had concluded that the claims management company had not been entitled to assert the Swiss client's claims in court. Both courts had ruled that the claims management company did not have the necessary expertise to assert the claim, which was subject to Swiss law, and required a licence under section 10(1) sentence 1 number 3 of the RDG. This rule provides for a separate registration for the provision of legal services in foreign law. The lower courts considered the fact that the claims management company had acted without this permission and expertise a violation of the law. They said that both the contract between the company and the car owner and the assignment of the claim were null and void.

However, the BGH came to a different conclusion, overturned the judgment of the Higher Regional Court of Braunschweig and referred the case back to it for hearing and decision. The BGH stated that it interpreted the RDG on the basis of its wording, its syntax and its purpose in such a way that an additional authorisation for the provision of legal services under foreign law was not necessary. An additional licence was not necessary to achieve the purpose of the rules in the RDG, the BGH said.

The Braunschweig Higher Regional Court will now have to decide whether the claims for damages that the claims management company wants to assert are justified.