Author: Otto Sandrock*
Published: June 1990
Description: German unification is proceeding apace. One of the first landmarks in this process was the creation, on July 1, 1990, of a monetary union and an economic and social community between the Federal Republic of Germany (FRG) and the German Democratic Republic (GDR). These achievements were effected by the Staatsvertrag (Convention or German-German Convention), an extremely important convention signed by the two governments on May 18, 1990 and later ratified by their parliaments. Among its many effects, the Staatsvertrag has altered arbitration law and practice in the GDR, affecting the resolution of commercial disputes in joint ventures between enterprises from Western countries and the GDR,
I. ARBITRATION LAW AND PRACTICE OF THE GERMAN DEMOCRATIC REPUBLIC BEFORE 1990
Prior to the Convention, arbitration in the GDR followed the general pattern of all East European countries, treating domestic economic arbitration and foreign trade arbitration as two distinct and unrelated systems. Domestic economic arbitration consisted of a network of state agencies whose purpose was to ensure compliance with obligations under the state economic plan. It removed from the jurisdiction of ordinary courts commercial disputes involving state-owned enterprises, placing them under state arbitration agencies charged with deciding whether the state enterprise was operating contrary to law or planning orders.
*Professor and Director of the Institute of International Business Law, University of Muenster. L. L.B. 1953 University of Göttingen, L L.M. 1956 Yale Law School, L L.D. 1956 University of Göttingen. Member of the Panel of Arbitrators of the American Arbitration Association.