A real advantage of arbitration over litigation is that parties can influence who decides the dispute. 

In court litigation, businesses generally have to accept the judge allocated under the court’s internal allocation system. In arbitration, by contrast, the parties may shape the tribunal’s composition and appointment mechanism. German arbitration law gives broad room for this. Under sections 1034 and 1035 ZPO, the parties are largely free to agree on the number of arbitrators and the method of their appointment. Arbitration model clauses regularly invite parties to specify whether they want a sole arbitrator or a three-member tribunal, as well as the seat, language, and applicable law. 

That flexibility matters where disputes are technical or sector-specific. Construction, energy, automotive systems, industrial supply, financial services, and post-M&A disputes often turn not only on legal analysis, but also on commercial context and industry practice. A tribunal with the right legal and factual background may understand the case faster, ask better questions, and make more intelligent use of expert evidence. That does not mean state judges are not capable. It means arbitration allows the parties to reduce the translation gap between a complex business reality and the adjudicator deciding it.

The drafting trap is obvious. Many clauses become too clever. A requirement that an arbitrator must be a German-qualified lawyer, fluent in English, with 15 years of automotive electronics experience and no previous work for any competitor may sound reassuring at the signing stage. Later, it can make tribunal constitution slower, harder, and more conflict-prone. If agreed qualifications are not met, that may itself become a challenge issue under section 1036(2) ZPO. What looks like precision may turn into delay.

Key takeaway

Adding arbitrator qualifications to a contract can add real value, but they should be drafted precisely enough to improve decision quality and loosely enough to avoid making constitution the first dispute in the arbitration. 

German Disputes Bites series

We hope you are enjoying our series of blogs on Litigation vs Arbitration. This series will cover different aspects of the choice between a litigation or arbitration forum. Previous posts in the series:

German Disputes Bites – Arbitration vs Litigation: confidentiality doesn’t make a dispute invisible