Security for costs in enforcement proceedings in Germany – The German Federal Supreme Court adds another piece to the puzzle


Pursuant to Sec. 110 of the German Civil Procedure Code (ZPO), claimants who do not have their habitual place of residence in a member state of the EU/the EEA can be ordered to provide security for the costs upon request of the defendant if certain requirements are met. The provision aims at protecting the defendant from the difficulties related to the recognition and enforcement of a cost decision abroad.

While Sec. 110 ZPO is designed for ordinary civil actions, it is recognised that the provision applies to other types of (state court) proceedings if the requirements of an analogous application are met, or in other words if (i) there is a lacuna, and (ii) the proceedings are comparable to an ordinary civil action. This is not the case, for instance, in proceedings requiring a particularly expeditious conduct (e.g. in attachment and interim injunction proceedings).

Security in enforceability proceedings

In the case at hand, a Moscow-seated ad hoc tribunal had granted a EUR 50 million payment claim for a German (formerly Moscow-based) entrepreneur against seven companies. Four of these companies ("Applicants") brought an action before the Higher Regional Court of Koblenz ("OLG Koblenz") requesting a declaration that the arbitral award was not enforceable. In response, the German entrepreneur ("Respondent") sought a declaration of enforceability of the arbitral award by way of a counterclaim. When the Respondent informed the court during the proceedings of a change of his residence to Dubai, the Applicants applied for security for the costs under Sec. 110 ZPO.

The BGH held that, in principle, security can be requested in respect of an application for a declaration of enforceability of an arbitral award (a precondition under German law for a later enforcement of the arbitral award), thereby overruling an earlier decision from 1969. The court reasoned that the two requirements of an analogous application were met, since (i) the German enforcement procedure lacked a regulation of security for costs, and (ii) the considerations underlying Sec. 110 ZPO were suitable to fill this gap for the following reasons:

  • First, the parties face each other in similar roles as claimant and defendant in an ordinary civil case. Therefore, Sec. 110 ZPO is, just as in ordinary civil proceedings, suited to secure the enforcement of a possible cost reimbursement claim of the defendant against a claimant with residence outside the EU/EEA. In the overruled decision of 1969, the BGH took a different view in respect of the "old" German arbitration law, reasoning that an oral hearing was only required if the defendant brought forward grounds for setting aside the award so that he was considered to be the actual claimant. This is different under the "new" arbitration law adopted in 1998 under which an oral hearing is held as soon as grounds for setting aside the award "are to be considered", Sec. 1063 (2) ZPO.
  • Second, there is no urgent event that could militate against a (possibly time-consuming) request for security for costs. Not only has the prevailing party in the arbitration already obtained a certain "security" through the arbitral award, the party also has the possibility of protecting the later enforcement of the arbitral award by filing an application for provisional precautionary attachment under Sec. 1063(3) ZPO.

Nevertheless, the court ultimately rejected the application of Sec. 110 ZPO in the case since the requirements for a security order were not met. Pursuant to Sec. 110(2) ZPO, security for costs cannot be requested for counterclaims. Due to the Respondent’s move to Dubai, the BGH could leave the question open whether the Hague Convention on Civil Procedure precludes a request for security for costs against claimants domiciled in Russia and, if so, whether the Russian war of aggression on Ukraine might stand against such an exemption.

Applicability in other arbitration-related state court proceedings

The applicability of Sec. 110 ZPO had already been affirmed by the Higher Regional Court of Munich ("OLG Munich") (Decision of 24 June 2021, 34 Sch 62/19) for another arbitration-related state court proceeding. The Court held that foreign-based claimants can be requested to provide security for costs of setting aside proceedings (Sec. 1059 ZPO). As the BGH in the case at hand, the OLG Munich found that setting aside proceedings are comparable to ordinary civil actions, which is convincing since under German law an oral hearing is mandatory for setting aside proceedings. Furthermore, the court saw a particular interest for the respondent in setting aside proceedings in order to secure the enforcement of a possible claim for reimbursement of costs in view of the frequently high amounts in dispute in international arbitrations.

The above reasoning, however, applies only to "stand-alone" setting aside proceedings. In 2021, the BGH decided that if grounds for setting aside an award are raised as a defence in enforcement proceedings, the applicant (seeking the declaration of enforcement) cannot request security from the respondent (invoking grounds for setting aside of the arbitral award) (Decision of 29 September 2021, I ZB 21/2). The BGH held that Sec. 110 ZPO implies a formalistic view of the parties' roles and does not apply to counterclaims.

The right to request security for costs was further rejected for proceedings under Sec. 1032 para. 2 ZPO, in which parties to an arbitration agreement can ask the court to decide on the admissibility of arbitration proceedings. In this case, the roles of the parties were not the determining factor. Rather, the Higher Regional Court of Hamburg (Decision of 15 June 2009, 6 Sch 2/09) held that Sec. 110 ZPO did not apply for lack of an oral hearing and the applicant's interest in speeding up the proceedings.


This decision is part of a series of rulings clarifying the availability of security for costs in arbitration-related state court proceedings. When examining whether the provisions on security for costs applicable to ordinary civil actions can be applied to another type of proceedings, the courts take a formalistic view of the parties' roles. This approach ensures legal certainty. However, it can also lead to random results. Before filing an application for declaration of enforceability, parties seeking enforcement of a domestic award should consider whether the opponent might initiate setting aside proceedings. While in the latter case they can request security for costs, they may be exposed to such a request themselves if they submit their own application for enforceability first (while not being based in the EU/EEA). The amount of such a cost security cannot be reliably predicted since the state court determines this at its sole discretion. The court takes into account the amount that the defendant will "likely have to pay".

The decision of the BGH (original German version) can be accessed under the following link:

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