A BRIEF ABOUT GERMAN LAWS

1. POLITICAL SITUATION:-

Germany is a democratic federal parliamentary republic, and the Bundesrat, which

represents the regional states of Germany, has legislative authority at the federal level. The
Federal Law of Germany’s constitution is called the Basic Law. The states in Germany are
referred to as ‘Landers.’ Germany is called a ‘Chancellor’s Democracy’ as the Chancellor is
the Prime Minister and the President is the constitutional head.
It follows the civil law system. The constitution is called the “Grundgesetz”. The president
is considered as Head of State and of Constitution.
Federalism
There are 16 constitutive states in Germany, and each has considerable authority over
subjects relating to the police, the law, culture, and disaster management. Berlin, Hamburg,
and Bremen are also federal states for historical reasons. The federal state comprises several
component states (Länder or Bundesländer) and a central government (Bund).
Democracy
The Fundamental Law states. "The people hold all power in the state." Germany is a
democracy. Thus, all power is believed to come from the people there. The separation of
powers is designed to create formal limits on the use of power, uphold democratic
representation, and encourage the effective discharge of obligations. Another element of
Basic Law is the separation of powers. The legislative, executive, and judicial branches all
have equal authority.
Executive
The President is the Head of State, and the Chancellor is the Head of the Government. The
executive branch comprises the President, the Chancellor, and Federal Ministers. The
President appoints and removes ministers on the advice of the Chancellor. The Chancellor
and the ministers set the policies and guidelines for the federal government.
Legislature
The legislature at the federal level is composed of two houses, the Bundesrat and the
Bundestag. “Bundestag is the lower house with 598 regular seats” elected under a mixed
electoral system. Bundesrat is the upper house comprised of members of the Lander
governments and represents state interests.
Judiciary
Germany has an independent judiciary consisting of the Federal Constitutional Court,
Supreme Federal Courts, and others. The Basic Law conflicts between Landers and the
Federation, disputes between Landers, and other matters are decided by the Federal
Constitutional Court. As a result, it resembles the supreme court of India
 2. ANTI CORRUPTION AND BRIBERY LAWS:-

 In Germany, the fight against corruption is primarily governed by criminal law. The
acceptance of benefits, passive corruption, granting of benefits and bribery are punishable
under Sections 331 to 335a of the German Penal Code.

 Sections 299, 299a and 299b of the Penal Code govern criminal offences sanctioning
corruption in “business dealings and in the healthcare system” and it deals with active and
passive both kind of bribery.

 Following are the grounds for constitution of corruption and bribery: -

 Demanding, allowing himself/herself to be promised or accepting as an employee or

agent of business a benefit for himself/herself or another in a business transaction as
consideration for according an unfair preference to another in the competitive
purchase of goods or commercial services.
 For competitive purposes offering, promising or granting an employee or agent of a
business a benefit for himself/herself or for a third person in a business transaction as
consideration for such employee’s or agent’s according him/her or another an unfair
preference in the purchase of goods or commercial services.
Obtaining, being promised or accepting as an employee or agent of business a benefit
for himself/herself or for a third party without the consent of the company as
consideration for goods or services and thereby breaching his/her obligations vis-à-vis
the company by performing or refraining from performing any act in relation to such
goods or services.
 Offering, promising or granting to an employee or agent of a business without the
consent of the company, a benefit to that company or to a third party as consideration
for performing or refraining from performing any act in relation to the purchase of
goods or services, and thereby failing to fulfil its obligations vis-à-vis the company.

 ABOUT FOREIGN ENTITY:-

 Only natural persons are addressees of German criminal law. In the absence of
corporate criminal law, legal entities may be prosecuted only via “Administrative
offence law.” Pursuant to Section 30 of the Act on Administrative Offences,
companies are accessorily liable for criminal offences and administrative offences
committed by their executives. As in many cases it is not an executive, but rather an
ordinary employee who bribes or is bribed, it is frequently not the corruption itself
that can be considered as a connecting offence.
 In such cases, however, Section 130 of the Act on Administrative Offences may be
applied. Section 130 sanctions the violation of a supervisory duty as an administrative
offence.
Under Section 130, management must take supervisory measures to prevent the
commission of criminal offences within the company. With respect to corruption, this
 means that a company must take all appropriate, necessary and reasonable supervisory
measures to prevent corruption.
 If these supervisory measures are omitted and, as a result, acts of corruption are
committed within the company, the company is liable under Section 30 of the Act on
Administrative Offences.

 Foreign companies can be prosecuted pursuant to Section 30 of the Act on

Administrative Offences only to the extent that:
 the connecting act constitutes a criminal offence or administrative offence
under German law;
 German criminal law or administrative offence law is applicable; and
 the legal form of the foreign company is comparable to that of a German legal
entity or association of persons.

 CRIMINAL LIABLITY :-

 Natural persons who commit a corruption offence can be sanctioned with a fine or
imprisonment (up to five years).
 Companies held responsible for acts of corruption under Section 30 of the Act on
Administrative Offences may in particular be subject to monetary fines. Pursuant to
Section 30(2)(1) of the Act on Administrative Offences, ‘association fines' may
amount to up to €10 million.

3. ARBITRATION:-
The arbitration law in Germany is codified in the 10 th Book of The German Code of Civil
Procedure (Zivilprozessordnung – ZPO), in sections 1025 to 1066 ZPO. Apart from
mandatory provisions, parties to an arbitration may contractually agree to apply any
institutional or other rules for the conduct of their arbitration proceedings.
The provisions of the German arbitration law are largely a verbatim adoption of the United
Nations Commission on International Trade Law (UNCITRAL) Model Law in its original
version. However, the German arbitration law applies not only to commercial disputes in
international arbitration, but also to domestic arbitrations.
Germany has signed for NEW YORK CONVENTION 1998 AND GENEVA
CONVENTION under European Convention on International Commercial Arbitration 1961.
KEY POINTS ABOUT GENEVA CONVENTION:
 The key provisions regarding the recognition and enforcement of arbitral awards are
Articles IV and V. Article IV requires Contracting States to recognize and enforce
foreign arbitral awards, subject to the grounds for refusal specified in Article V.
  The grounds for refusing recognition and enforcement under Article V include:
incapacity of parties, invalid arbitration agreement, lack of proper notice, award
beyond the scope of the submission to arbitration, irregular composition of the arbitral
tribunal or procedure, and conflict with the public policy of the enforcing state.
 No, under Article IX, courts cannot review the merits of the award when deciding on
recognition and enforcement.
 The territorial scope is defined in Article (1) as applying to the recognition and
enforcement of arbitral awards made in the territory of a State other than the State
where recognition and enforcement are sought.
 Geneva convention only governs the recognition and enforcement of awards.
 The Convention interacts with the New York Convention through Article VII (2),
which states that the Geneva Convention shall not deprive any party of rights they
may have under other treaties. In practice, the New York Convention has largely
superseded the Geneva Convention.
NEW YORK CONVENTION 1958 KEY POINTS
 SECTION 45 – Power of judicial authority to refer parties to arbitration
 SECTION 46- when foreign award is binding
 SECTION 47 – Evidence
 SECTION 48 – Conditions for enforcement of awards.

COURTS DECISION:-
The Convention of June 10, 1958, governs the recognition and enforcement of foreign
arbitration awards in Germany.
The leading German arbitration institution is the Deutsche Institution für
Schiedsgerichtsbarkeit (DIS), the German Institution of Arbitration. The DIS
administers national and international proceedings. The DIS also acts as appointing
authority for ad hoc proceedings and provides general advice on the selection of
potential arbitrators.
There is no "specialist" arbitration court in Germany. However, judicial supervision of
the arbitration process in Germany is delegated to the higher regional courts
(Oberlandesgerichte or OLG). Within these higher regional courts, specific chambers are
generally designated to deal with arbitration matters.
The most important decisions of the national courts regarding arbitration come from the
higher regional courts, as they are competent to enforce and set aside awards, and from the
Federal Court of Justice (BGH) at the appeal stage. In line with the decisions of past years,
the German courts continue to foster an arbitration-friendly environment that accepts and
even favours arbitral proceedings.
A recent study enables statistical statements to be made for the first time on the basis of 630
setting aside and enforcement decisions. Due to the confidentiality of arbitration proceedings
and in the absence of conflicting empirical data, these decisions are also one of the few
indicators of the acceptance and spread of arbitration.
Arbitration clauses and arbitration pleas
German courts have upheld their broad understanding and interpretation of the validity and
scope of contractual arbitration clauses.
If an arbitration clause provides that the details of the submission to arbitration are to be
regulated separately, the legal effects of the absence of a corresponding provision are to be
determined by interpreting the arbitration clause. In a recent decision, the Federal Court of
Justice (I ZB 15/22) shared the assessment of the Hamburg Higher Regional Court, according
to which an effective arbitration clause exists even without a separate agreement. Such
declarations of intent may properly refer to procedural questions that are separable from the
arbitration agreement itself and can be answered by recourse to statutory provisions.
If a party participates in the arbitral proceedings without complaint, it is generally precluded
from raising the objection in enforcement proceedings that there is no valid arbitration
agreement. The Federal Court of Justice (I ZB 31/21) held that the declaration of
enforceability of the arbitral award made without an arbitration agreement does not violate
public policy if no objection to jurisdiction was raised in the arbitral proceedings.
The fundamental right to be heard
A violation of the fundamental right to be heard is one of the most common arguments used
by a party to challenge an arbitral award. However, German courts have held that only
violations of a certain weight can lead to the setting aside of an award on these grounds.
It is standard practice for the German courts to point out that, as a rule, arbitral tribunals are
to be presumed to have taken the party submissions into account, even if they are not
explicitly mentioned in the award. It can only be concluded that the submission was not taken
into account if the arbitral tribunal has not addressed “the essential core of the factual
submission ... on an issue of central importance to the proceedings”, unless it was “irrelevant
or manifestly unsubstantiated” from the arbitral tribunal's legal point of view.

4. JUDICIAL SYSTEMS: -
The judicial systems of Germany are as follows: -
A. General Structure of the German Court System In contrast to many other countries,
Germany does not have one single highest court that ensures a uniform ap-plication of the
laws across all areas.
Rather, German courts are divided into five branches, each having its own highest court.
According to Art. 95 (1) of the German Constitution (Grundgesetz), these branches and their
respective highest courts are:
 Ordinary courts (civil and criminal law): Federal Court of Justice (Bundesgerichtshof);
 Administrative courts: Federal Administrative Court (Bundesverwaltungsgericht);
 Tax courts: Federal Finance Court (Bundesfinanzhof);
 Labour courts: Federal Labor Court (Bundesarbeitsgericht);
 Social courts: Federal Social Court (Bundessozialgericht).
Germany’s Federal constitutional Court (Bundesverfassungsgericht) rules solely on matters
of constitutional law. Although the Federal Constitutional Court is often described as
Germany’s highest court, it does not act as ap-pellate court for the five top-of-their-branch
courts. Recourse to the Federal Constitutional Court is generally available only if the
applicant can demonstrate that its fundamental constitutional rights have been breached or
that the decision of the lower court is based on an unconstitutional law. There is also a
Federal Patent Court, which hears certain intellectual property (IP) matters. Appeals against
its decisions go before the Federal Court of Justice. Therefore, the Federal Patent Court is
considered part of the “ordinary courts” branch.
The organization of the ordinary courts is governed by the Courts Constitution Act
(Gerichtsverfassungsgesetz, GVG). Civil Procedure in Germany is predominantly governed
by the Code of Civil Procedure (Zivilprozessordnung, ZPO).

5. DOUBLE TAXATION LAWS :-

Double taxation refers to the taxation of the same Income In two different countries or in the
hands of two different persons. In double taxation, there is a double levy of income tax. The
levy may be at the investor level, and the payor level or the levy may be residence-based
taxation in one country and at the source level in another country.
Double Tax Avoidance Agreement (DTAA) between India and Germany was signed
in 1995 and came into force on the 26th day of October 1996. DTAA Between India and
Germany has 28 sections which discuss the regulations on how Double taxation can be
avoided. ]
Under the Double Tax Avoidance Agreement (DTAA) between India and Germany, various
sources of income have been considered for tax relief. Here is a list of applied taxes in the
Federal Republic of Germany (i.e. ‘German Tax’):
1) Income tax also known as the Einkommensteuer, 2) Capital tax also known as
the vermogenstur 3) Tax for trading also known as the Gewerbesteuer, 4)
Corporation tax also known as the Korperschaftsteuer
These are the taxes applicable to the Republic of India (i.e. ‘Indian Tax’):
Surcharge taxes under the income-tax slabs of India which includes darauf entfallender
Zusatzsteuern, Einkommensteuer, and Vermögensteuer (tax on wealth).
India Germany DTAA TDS Rates
The maximum applicable TDS rate on dividend income earned in both contracting States is
10%. Both India and Germany have the right to levy taxes on interest income as well. TDS
rate on such income cannot exceed 10% under the India Germany DTAA. Royalty also falls
under this agreement and tax rate is same as other rates which is 10%.
Taxation on Capital Gains under DTAA
under Article 13 of DTAA is covered between India and Germany are as follows: -
 Any capital gain from immovable property in the Contracting States will be taxed by
the said state only.
 Any capital gain related to shipping and aircraft is taxed only in the state where the
company’s managerial office is situated.
 In cases of movable properties, the Contracting State with a permanent base is
responsible for collecting the taxes.
 If there is an exception in any of these cases, the Contracting State of the taxpayer,
where they are resident, will levy the taxes.

6. Data Protection Laws

Data protection in Germany is primarily governed by the General data protection
law ('GDPR') It was adopted in year 2018 and is supplemented by the bringing into full
effect the new German Privacy Act (Bundesdatenschutzgesetz), also known as “BDSG-
new”.
Application: According to Section 1(1) of the BDSG NEW IT applies to private bodies,
public body of federation.
According to Section 1(4) of the BDSG, the BDSG applies to public bodies.
Main Functions : The tasks listed largely repeat Article 57 of the GDPR and include the
following (among others):
 monitor and enforce the application of the BDSG and other data protection
legislation; promote awareness in relation to data processing;
 handle complaints;
 cooperate with other supervisory authorities; and
 conduct investigations on the application of the BDSG and other data protection
legislation.
 The GDPR requires companies to have a legal basis for processing personal data,
such as consent, contractual necessity, or legitimate interests.
 The GDPR requires companies to appoint a “Data Protection Officer” (DPO) in
certain circumstances, such as when the company's core activities involve regular and
systematic monitoring of individuals on a large scale.
PENALTIES
Section 42 of the BDSG includes penal provisions and provides that:
 transferring data to a third party or otherwise making it accessible for commercial
purposes may be punished with up to three years imprisonment or a fine if done
 deliberately and without authorisation with regard to the personal data of a large
number of people; and
o processing data that is not publicly available without authorisation or
fraudulently acquiring such data in return for a payment or with the intention
of enriching oneself or someone else or harming someone may be punished
with imprisonment of up to two years or a fine
o For especially severe violations, listed in Art. 83(5) GDPR, the fine framework
can be up to 20 million euros, or in the case of an undertaking, up to 4 % of
their total global turnover of the preceding fiscal year, whichever is higher.

7. CONTRACT LAWS :-
Germany Has Its own contract law.
The primary source for German contract law is the German Civil Code (Bürgerliches
Gesetzbuch) (BGB) and It has incorporated from European union law body “Acquis
Communautaire” principles on contract laws as a addition . Here are some example section
from BGB In contract laws. rules on the capacity to contract (§§ 104–113 BGB), mistake and
undue influence (§§ 119–123 BGB), nullity of legal transactions for infringements of form
requirements, illegality and public policy (§§ 125, 134, 138 BGB), as well as the formation
(§§ 145–156 BGB) and interpretation of contracts (§§ 157 BGB).

8. INTERNATIONAL CONVENTIONS :-
Domestic Workers Convention, 2011 -The convention was adopted by the International
Labour Organization (ILO) in 2011 and sets labour standards for domestic workers. It
guarantees domestic workers the same basic rights as other workers in their country.
CYBERCRIME CONVENTION - The Convention and its Explanatory Report was
adopted by the “Committee of ministers of council of Europe” at its 109th Session on 8
November 2001. It was opened for signature in “Budapest” on 23 November 2001 and it
entered into force on 1 July 2004. As of April 2023, 68 states have ratified the convention.
Hague Convention on Choice of Court Agreements of
30 June 2005.
Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil
or Commercial Matters of 2 July 2019.
Paris Convention on Third Party Liability in the Field of Nuclear Energy of 29 July
1960.

9. LABOUR LAWS :-
 There is no singular place where the German labor laws are codified. Rather, a
conglomeration of federal statutes, court decisions and industrial practices govern
employment in Germany. There are:
Individual labor laws
 Civil Code (“Bürgerliches Gesetzbuch”).
 Part-time and Fixed-term Work Act (“Teilzeit- und Befristungsgesetz”).
 Employee Leasing Act (“Arbeitnehmerüberlassungsgesetz”).
 Holidays Act (“Urlaubsgesetz”).
 Act on Maternity Protection.
Holidays and vacation :- Employees who work six days a week are entitled to 24 working
days of paid vacation. Employees working five days a week are entitled to 20 working days
of paid vacation.
Terminating an employee
The statutory notice periods are ruled by article 622 German Civil Code. The basic notice
period is four weeks effective as of either the 15th or the end of the calendar month. It may be
reduced to two weeks during a probationary period of six months, and it extends in steps after
two years of service with the company up to seven months to the end of a calendar month (in
case of twenty years of service, whereas years of employment below the age of 26 are
disregarded).
The exception to this is dismissal for cause. If employees engage in a significant breach of
their employment contract, the employer can give a dismissal and terminate employment
immediately. That notice of termination must be provided within two(2) weeks of the
underlying issue that caused the dismissal.
Sick leave
The Continuation of Remuneration Act protects employees from being sick or injured so long
as they’re not at fault. In that case, employees have the right to receive up to 100% of their
salary for six weeks.
Incapacitated employees are expected to notify their employer of injury or illness
immediately. They must also show a doctor’s note or medical certification backing their
assertion within three days of notification.
Maternity leave
Germany has strong parental leave protections. Mothers aren’t expected to work for the six
weeks before their due date or the eight weeks after the birth; however, they can if they want
to.
Maternal leave can extend up to 12 weeks for premature or multiple births. And during this
time, the employee is eligible for maternity benefits via her health insurance.
After the child has been born, the mother has the right to parental leave until the child is 3
years old. Up until this point, the employer must keep the job position available.
Minimum wage
In Germany, the national minimum wage is €9.50 per hour and was updated on July 1, 2021.
This figure is adjusted every two years to account for inflation. Currently, only apprentices
and interns are exempt from minimum wage laws.
Health insurance and social security
When it comes to health insurance and social security, both employers and employees make
equal contributions of roughly 20% of gross monthly salary to the statutory pension insurance
system. The benefits of a pension depend on factors like the employee’s income, contract,
number and amount of contributions made.
Germany’s social security system has seven components:
1. Pension insurance 2.Health insurance 3.Unemployment insurance 4.Nursing care
insurance 5.Accident insurance 6. Maternity insurance 7. Insolvency insurance
Though extensive and detailed, this coverage is intended to keep German workers protected
no matter what occurs.
10. GERMANY COMPANIES ACT.

The Limited Liability Companies Act and the German Stock Corporation Act are the two
main legal resources for the top types of companies in Germany. The German company law is
comprehensive and these two Acts describe the named business forms and the legal basis for
incorporating these types of legal entities.
Other relevant laws for doing business in Germany
Together with the Company Act in Germany, the labour legislation contributes to the well-
being of the commercial businesses. As far as the employment contracts are regarded, they
are formed based on the relationship between the employer and the employee, with the
possibility to negotiate the terms of the company so that the text is convenient to both parties.
Employment contracts are regulated by the Federal Labor Court.
When it comes to the rights and obligations of the employer and the employee in Germany,
one can find information regarding all aspects of the employment in laws such as:
 the German Civil Code,
 the Working-Time Act,
 the Act Concerning Paid Vacations,
 the Act Against Unfair Dismissal,
 the Act Concerning Trainees,
 the Act Concerning Disabled Employees, Maternity Leaves and Remuneration During
Sickness.
The employment law is good support for the Company Act in Germany, providing a legal
environment for business and ensuring all parties of good collaboration, as well as good
company management and organization.