This opportunity does not, however, guarantee a good result.

A mediator manages the process, facilitates communication and helps the parties explore possible solutions. A mediator does not represent either party or advise whether a proposal should be accepted or rejected. These decisions remain with the parties. Mediation advocacy provides the legal, commercial and strategic support required to make these decisions on an informed basis.

We recently concluded two successful mediations, which were strikingly different in nature. One process unfolded over several months before reaching a resolution. The other was completed in just over two weeks. Yet both shared a common thread: While our role as counsel and the respective mediation styles differed, the same disciplined approach to preparation and case management proved decisive in achieving the best possible outcome for our clients.

1. What is mediation advocacy?

Mediation advocacy describes our role in preparing a client for commercial mediation, guiding the negotiations and turning any agreement reached into clear legal terms. It differs both from the role of the mediator and from conventional advocacy before a court or arbitral tribunal.

In litigation and arbitration, the lawyer’s principal task is to persuade a decision-maker of the client’s legal position. In mediation, there is no decision-maker to be persuaded. We instead help the client understand its position, evaluate settlement and non-settlement scenarios, define objectives and limits, develop possible solutions, negotiate effectively and translate any agreement into clear legal terms.

This requires a combination of legal analysis, commercial understanding, strategic judgment, negotiation experience and restraint.

2. Establishing the decision framework

Before entering into negotiations, the client needs a clear framework for evaluating possible outcomes. This includes identifying the desired result, the interests that must be protected, acceptable areas of compromise and any non-negotiable limits.

An important part of this exercise is assessing the client’s best and worst realistic alternatives to a negotiated agreement, commonly referred to as BATNA and WATNA. Relevant considerations include the prospects of success and evidential risks, the likely costs and duration of proceedings, enforcement or insolvency risks, the impact on management and internal resources, commercial and reputational consequences, and the future of the parties’ business relationship. 

This analysis provides a benchmark against which proposals can be measured. It helps prevent the client from accepting terms that are worse than its realistic alternatives or rejecting terms that would leave it in a better overall position.

BATNA and WATNA do not produce a mechanical settlement figure. Legal and institutional constraints, such as mandatory law, directors’ duties, compliance requirements, equal-treatment considerations or the precedent created by a settlement, may exclude options that otherwise appear commercially attractive. Our task as counsel is to make the true decision space visible:

Which alternatives are realistically available? Which settlement options improve on them? Which limits must be respected?

3. Moving from positions to interests

Commercial disputes are usually expressed through opposing positions. 

One party demands payment. The other denies liability.
One party insists on performance. The other seeks to terminate the contract.

A position describes a particular result. An interest explains why that result matters.

A demand for immediate payment may reflect a need for liquidity, security or planning certainty. A refusal to pay may be driven less by the amount than by concerns about precedent, reputation or similar claims from other parties.

Once the underlying interests are understood, additional solutions may become possible. Depending on the circumstances, these might include structured payments, security, adjustments to future business, revised performance obligations or a package combining financial and operational terms.

Focusing on interests does not mean abandoning legal rights. It allows the parties to identify solutions that may be more practical, valuable or predictable than the outcome of litigation. A mediation counsel helps identify the interests on both sides and translating them into workable settlement options.

4. Preparing and shaping the mediation

Mediation requires structured preparation. For corporate clients, this begins with the internal decision-making process. We would identify who needs to participate, who has authority to settle, who must be consulted and whether approval from management bodies, shareholders, insurers, lenders or other stakeholders may be required. The criteria for evaluating any settlement should be clarified in advance, not for the first time when an offer is already on the table.

Preparation also includes shaping the process. We as counsel may assist in selecting a mediator with suitable legal, commercial or sector experience and determining which participants can provide relevant information, assess the commercial consequences of the dispute or support the relationship between the parties.

The presentation of the case also requires consideration. Where appropriate, a mediation statement can help the mediator understand the dispute and its central legal, technical and commercial issues. We would consider whether an opening statement would assist the process and how our client’s position can be presented persuasively without unnecessarily entrenching positions.

A clear information and confidentiality strategy is equally important. The parties should understand the applicable confidentiality framework, including what may be disclosed in joint or private sessions and how information exchanged during the mediation may subsequently be used. Together with the client we would determine what should be shared, when it should be disclosed and what should remain confidential.

Preparation does not eliminate flexibility. It provides a framework within which the client can respond to new information and unexpected developments without making consequential decisions primarily under pressure or fatigue.

5. Advocacy in the room

Effective representation during the mediation requires assertiveness, judgment and restraint. A mediation is not an oral hearing. Repeating every legal argument may entrench positions without improving the client’s negotiating position. At the same time, remaining silent when the client is acting on a serious misunderstanding or moving beyond an agreed limit would not constitute effective representation.

We would explain the significance of new information (if required), test the assumptions underlying an offer, compare a proposal with the client’s alternatives, request time for private advice, structure concessions carefully, develop packages combining financial and non-financial terms, or protect the client against undue pressure.

Parties may also use ambitious opening positions, deadlines, assertions of limited authority or threats to leave. Such techniques are not necessarily improper, but they must be recognised and assessed. We as counsel may test whether an asserted constraint is genuine, resist pressure for an immediate response, make concessions conditional or reciprocal and return the discussion to objective criteria.

There will also be moments when the client is the most effective person to speak, particularly when explaining the commercial impact of the dispute or addressing a damaged business relationship. The relevant question is whether a particular intervention by us as counsel or the client advances informed decision-making and supports the negotiation.

6. Navigating obstacles and impasse

Even where the parties’ interests are understood, agreement is not automatic. Distrust, perceived unfairness, internal expectations or differing assessments of litigation risk may prevent progress.

Depending on the circumstances, progress may require clarifying disputed assumptions, separating individual issues, introducing objective criteria, developing conditional or package proposals or obtaining further information or internal approvals. A temporary adjournment may allow the parties to reconsider their assessments or continue negotiations once a particular uncertainty has been resolved.

A complete settlement is not the only useful outcome. Mediation may also result in agreement on individual issues, clarification of disputed facts, an exchange of information, a reduction in the matters requiring adjudication or an agreed process for continuing negotiations.

Effective advocacy is, therefore, not measured solely by whether a settlement is reached. If the available terms do not improve on the client’s realistic alternatives or fail to protect essential legal and commercial interests, declining them may be the right result. We would help our client to distinguish between an impasse that may still be overcome and a proposed agreement that should not be accepted.

7. Turning an agreement into a workable settlement

Agreement on headline terms is not the end of the process. Legal precision is essential to ensure that the settlement resolves the dispute instead of creating new uncertainty.

We as counsel would then consider whether the agreement is intended to be immediately binding, whether approvals or other conditions remain outstanding, which claims, contracts and related matters are covered, how and when each obligation must be performed, whether security or enforcement mechanisms are required, what happens in the event of delay or non-performance, how pending litigation or arbitration will be dealt with, how costs, confidentiality and external communications will be handled, and how disputes concerning implementation will be resolved.

Good mediation advocacy turns the negotiated solution into an agreement that is legally effective, practically workable and, where appropriate, enforceable.

Effective mediation advocacy helps clients make informed decisions, negotiate with clarity and convert any agreement reached into a workable legal solution. It does not guarantee settlement, but it ensures that each possible outcome is assessed and pursued on a sound legal, commercial and strategic basis.

Dr Ralf Hafner
Dr Tobias Pörnbacher

According to the 2025 International Arbitration Survey conducted by Queen Mary University of London in partnership with White & Case, the ICC Arbitration Rules emerged as the preferred set of arbitral rules across nearly every region (with only the exception of Asia-Pacific, where the ICC ranks third after HKIAC and SIAC), underlining both their global reach and their flexibility.

The revision also follows a period of continued growth for ICC Arbitration. In 2025, 881 new cases were filed under the ICC Arbitration Rules, placing the year among the three busiest years in the institution's history. At year end, a record 1,869 cases remained pending. In December 2025, the ICC Court reached another milestone by registering its 30,000th arbitration under the ICC Rules.

The scale of ICC Arbitration is further illustrated by the value of disputes administered by the institution. According to the 2024 ICC Dispute Resolution Statistics, the total value of pending cases reached US$354 billion, representing the highest aggregate caseload value ever recorded by the ICC.

Against this background, the 2026 revision was not intended to fundamentally reshape ICC Arbitration. Instead, the 2026 Rules continue the ICC's longstanding approach of refining existing mechanisms, expanding procedural options and adapting to evolving commercial realities.

1. Expanded Expedited Procedure and More Effective Emergency Arbitration

The 2026 Rules further strengthen the ICC's commitment to efficient dispute resolution by refining two mechanisms that have become increasingly important in practice: the Expedited Procedure Provisions ("EPP") and Emergency Arbitration.

1.1 Expanded Scope of Expedited Procedure

The overall structure of the EPP, now governed by Article 32 and Appendix V, remains unchanged. Proceedings continue to benefit from a sole arbitrator by default, shortened procedural timetables and lower costs than ordinary ICC arbitrations.

The principal amendment is the increase of the monetary threshold for automatic application from US$3 million to US$4 million for arbitration agreements concluded on or after 1 June 2026.

The revised threshold reflects both the growing value of international commercial disputes, and the confidence users have developed in expedited proceedings since their introduction in 2017. By the end of 2025, the ICC had administered more than 1,000 expedited cases, and more than 40% of cases filed in 2025 involved amounts below US$4 million.

Party autonomy remains fully preserved: parties may opt out of the EPP even where the threshold is met or agree to apply it to substantially larger disputes.

1.2 More Flexible Emergency Arbitration

The 2026 Rules also introduce targeted amendments to the Emergency Arbitration provisions contained in Article 31 and Appendix IV.

Most notably, emergency applications may now be brought not only against signatories and their successors, but also against parties for whom the President of the ICC Court is satisfied that an arbitration agreement may exist. The amendment reflects the increasingly complex structures of modern commercial transactions and seeks to ensure that access to urgent relief is not unnecessarily restricted.

Another significant innovation is the express recognition of preliminary orders. Emergency arbitrators are now expressly authorised to issue orders aimed at preventing a party from frustrating the purpose of an emergency application.

Where necessary, such orders may be granted without prior notice to the opposing party, for example where advance notice could result in asset dissipation or the destruction of evidence. At the same time, the Rules preserve due process by ensuring that affected parties are subsequently given an opportunity to present their case and by empowering the emergency arbitrator to modify or revoke the order.

These amendments align the ICC Rules more closely with other leading arbitration frameworks and enhance the effectiveness of urgent interim relief.

2. Enhanced Arbitrator Disclosure and Transparency

The independence and impartiality of arbitrators remain among the cornerstones of ICC Arbitration. Accordingly, the 2026 Rules devote particular attention to the disclosure framework contained in Article 12.

The substantive disclosure standard itself remains unchanged. Prospective arbitrators continue to be required to disclose circumstances that may call into question their independence or give rise to reasonable doubts as to their impartiality.

However, the Rules now incorporate several principles that had previously been reflected mainly in the ICC Note to Parties and Arbitral Tribunals (a guide on how to implement the arbitration rules in practice). Article 12(2) expressly provides that any doubts regarding whether a circumstance should be disclosed must be resolved in favour of disclosure, while Article 12(4) clarifies that disclosure alone does not establish a lack of independence or impartiality.

Another important innovation is Article 12(5), which requires each party to provide the Secretariat at the outset of the proceedings with a list of persons and entities that prospective arbitrators should consider for conflict purposes, together with the reasons for their inclusion.

The 2026 Rules also strengthen the position of tribunal secretaries. Tribunal secretaries are now subject to the same requirements of independence, impartiality and confidentiality as arbitrators and must sign a statement of acceptance, availability, impartiality and independence before their appointment. This development acknowledges the increasingly important role tribunal secretaries play in modern arbitral proceedings.

3. Express Recognition of Early Determination

Another important development under the 2026 Rules is the express introduction of Early Determination in Article 30.

Although not new, early determination had previously existed primarily through arbitral practice and the ICC Note to Parties and Arbitral Tribunals, which since 2017 has guided tribunals in disposing of manifestly unmeritorious claims or jurisdictional objections.

In response to feedback from users and the wider business community, the ICC has now incorporated this mechanism directly into the Rules, thereby removing any remaining uncertainty regarding a tribunal's authority to employ it.

Under Article 30, any party may request the early determination of one or more claims or defences on the grounds that they are manifestly without merit or manifestly outside the tribunal's jurisdiction. The tribunal retains broad discretion both as to whether the application should proceed and how the procedure should be organised.

Applications are expected to be made promptly, as those brought only after extensive submissions or document production are less likely to achieve their intended purpose.

Early determination is likely to be most effective where issues can be decided as a matter of law and without extensive evidentiary analysis. Its codification brings the ICC Rules into line with a broader trend among leading arbitral institutions, including SIAC, HKIAC and the SCC.

At the same time, the requirement that claims be "manifestly" without merit suggests that Early Determination will remain an exceptional tool rather than a substitute for full merits proceedings.

4. Greater Procedural Flexibility and the End of Mandatory Terms of Reference

One of the most notable procedural changes introduced by the 2026 Rules concerns the traditional Terms of Reference.

For decades, the Terms of Reference represented one of the defining features of ICC Arbitration, serving to confirm consent to arbitrate, record procedural agreements and identify the scope of the dispute. Over time, however, these functions became less significant as international arbitration evolved.

Under previous versions of the Rules, tribunals were required to prepare the Terms of Reference within 30 days after receiving the file. In practice, extensions were frequently granted, and many users increasingly regarded the process as adding costs and procedural complexity without materially narrowing the issues at such an early stage.

The Terms of Reference have been abolished as an instrument altogether, which does not, however, preclude the tribunal and the parties to the arbitration from agreeing on such.

The amendment builds on the ICC's experience with expedited proceedings introduced in 2017. In more than 1,000 expedited cases administered to date, only a small number of tribunals considered Terms of Reference necessary.

The reform places greater emphasis on early case management. The initial Case Management Conference under Article 24 now becomes the central procedural milestone in the arbitration. Following that conference, no party may introduce new claims without the tribunal's authorisation.

Another consequence concerns the timing of awards. Article 34 now allows the President of the ICC Court to determine and extend time limits by reference to the procedural timetable established in the case.

5. Introduction of Highly Expedited Arbitration

Perhaps the most visible innovation of the 2026 Rules is the introduction of the Highly Expedited Arbitration Provisions ("HEAP"), first referred to in Article 33 and further set out in Appendix VI.

Building on Emergency Arbitration (2012) and the Expedited Procedure Provisions (2017), HEAP provides an additional opt-in option for parties seeking a swift and cost-efficient resolution.

Unlike the Expedited Procedure Provisions, HEAP does not apply automatically and is not linked to any monetary threshold. Instead, it is available on an opt-in basis, irrespective of the amount in dispute.

The suitability of HEAP depends not on the value of the dispute, but rather on its complexity and on the parties' interest in obtaining a rapid resolution. The procedure is intended primarily for disputes involving straightforward factual issues or limited procedural complexity and is therefore not available for joinder or consolidation scenarios.

Proceedings are conducted by a sole arbitrator and are accelerated from the outset. Parties are required to frontload their case by submitting the Statement of Claim together with the Request for Arbitration and the Statement of Defence together with the Answer. The sole arbitrator enjoys broad discretion to limit further submissions, witness evidence and document production and may decide the dispute without a hearing.

Most notably, the award is expected within three months from the initial Case Management Conference, including the ICC Court's scrutiny process.

Another innovative feature is the possibility for parties to agree to an award without reasons. While this may further enhance efficiency, parties should carefully consider potential enforcement risks in jurisdictions that require reasoned awards.

HEAP represents one of the few genuinely new mechanisms introduced by the 2026 Rules. HEAP reinforces one of the central themes of the revision: enabling parties to tailor the arbitral process to the needs of their dispute.

6. Further Noteworthy Amendments 

In addition to the headline changes, the 2026 Rules contain several smaller amendments that further modernise the ICC framework and align it with contemporary arbitral practice.

Electronic communications are now the default under Article 3. Requests for Arbitration, Answers and Requests for Joinder are to be submitted electronically, reflecting long-standing practice and the increasing use of ICC Case Connect.

Consistently with the abolition of mandatory Terms of Reference, Article 34 now links award deadlines to the procedural timetable rather than the signing of Terms of Reference, without affecting the specific timelines under the EPP and HEAP.

The Rules also address confidentiality more expressly. For the first time, arbitrators are subject to an explicit confidentiality obligation under Article 12(8), while parties retain the freedom to tailor confidentiality arrangements to the needs of their particular dispute.

Another amendment reflecting contemporary practice concerns virtual tribunal deliberations. Article 19(3) expressly provides that arbitral tribunals may deliberate in person, virtually or in any other appropriate manner. Following the widespread adoption of remote working practices after the COVID-19 pandemic, the amendment formalises what has already become common practice in international arbitration.

Finally, Article 14 expands the factors that may be considered when appointing arbitrators. In addition to traditional criteria such as nationality, residence and availability, the ICC Court may now expressly consider the qualifications and expertise required by the dispute, including expertise in investment protection law where appropriate. Article 14 also provides greater flexibility by allowing direct appointments in suitable cases.

7. Conclusion

The 2026 ICC Arbitration Rules illustrate the ICC's long-standing approach of measured and pragmatic reform in response to developments in international commerce and arbitral practice.

At the same time, the Rules demonstrate the ICC's willingness to innovate where appropriate. The introduction of Highly Expedited Arbitration, the express recognition of Early Determination and the move away from mandatory Terms of Reference show that the institution continues to adapt its framework to evolving user expectations and the increasing demand for efficiency and proportionality.

In that sense, the 2026 revision reflects one of the ICC's greatest strengths: maintaining continuity while ensuring that the Rules evolve alongside international arbitration itself - with a record caseload and more than 30,000 cases administered to date as testament to their enduring relevance.

Dr Ralf Hafner
Oliver Korte
Dr Tobias Pörnbacher

Reform of the German Arbitration Law

On 27 January 2026, the German Federal Ministry of Justice presented a revised draft bill to modernize Germany's arbitration framework. While the 2026 version introduces two material modifications compared to the 2024 draft – notably with respect to Sections 55 and 1031 of the German Code of Civil Procedure (ZPO) (Modernisation of German Arbitration Law: Key Changes in the January 2026 Draft | ADVANT Beiten) – it retains the broader reform agenda already set out in 2024.
The overall objective of the reform remains unchanged: to strengthen Germany's position as a competitive place for arbitration, to further harmonize domestic arbitration law with prevailing international standards, and to enhance procedural efficiency in practice. To that end, the draft continues to provide for a number of structural adjustments, including the facilitation of digital proceedings, expressly permitting electronic awards and video hearings, and clearer rules on the publication of arbitral awards (subject to party consent). It also establishes a narrowly tailored retrial mechanism beyond the ordinary set-aside period and clarifies key issues such as multi-party arbitrator appointments, enforcement of foreign interim measures, judicial review of jurisdictional decisions, and the admissibility of dissenting opinions. Collectively, these measures reflect the legislator's intention to modernize German arbitration law in light of international developments and technological process. 

Within this broader framework, the 2026 draft introduces targeted refinements. The revised version of Sec. 55 ZPO now permits reliance on the principle of lex fori and habitual residence of the party concerned, rather than requiring recourse to foreign nationality‑based capacity rules. This approach aligns procedural capacity with modern principles of private international law. 
A further improvement concerns the revised wording of Sec. 1031, Subsection 1 ZPO. Under the draft, arbitration agreements shall be concluded or documented in writing or by any other means of communication that allows the information to be stored. This amendment brings German Law more closely into line with international legal standards while preserving the flexibility required in contemporary commercial practice. 
Taken together, the reform – both in its unchanged core elements and its 2026 refinements – signals a clear policy direction: Germany aims not merely to update its arbitration law, but to position itself proactively within an increasingly competitive global arbitration landscape.

Court of Arbitration for Nazi-Looted Cultural Property: First Cases Underway

The newly established Court of Arbitration for Nazi-Looted Cultural Property began its work in December 2025. It serves as an alternative dispute resolution mechanism for addressing disagreements regarding the restitution of cultural property confiscated as a result of Nazi persecution. Claimants can trigger arbitration unilaterally if public institutions in Germany refuse to return items, utilizing a "standing offer" system. It handles cases of cultural property lost between 30 January 1933 and 8 May 1945 due to persecution on racial, political, religious, or ideological grounds. The court is administered by the German Lost Art Foundation (Deutsches Zentrum Kulturgutverluste) in Magdeburg, with the arbitration office located in Berlin. The panel consists of 36 arbitrators. Its framework was negotiated with the Jewish Claims Conference and the Central Council of Jews in Germany. This institution represents a major shift in Germany's approach to restitution, aimed at providing legal certainty for both claimants and public holders of art. Something which is obviously well appreciated, given that as of February 18, 2026, already two cases have been brought before this institution.

Germany's Commercial Courts

The recent introduction of Commercial Courts in Germany, as part of the broader reform efforts surrounding German arbitration law, cannot be viewed in isolation from developments in arbitration. For decades, arbitration has been the preferred mechanism for resolving complex cross-border commercial or M&A disputes, largely due to its flexibility, international enforceability, specialized decision-makers, and the possibility of conducting proceedings in English. These advantages have increasingly shaped the expectations of multinational companies regarding dispute resolution.
Against this backdrop, the establishment of Commercial Courts represents a deliberate legislative response. By incorporating features traditionally associated with arbitration – such as English-language proceedings, procedural flexibility, specialized senates, and virtual hearings – the German legislator has sought to enhance the competitiveness of its state court system. In doing so, Germany positions its Commercial Courts not as a replacement for arbitration, but as a complementary and, in some cases, competitive alternative within the broader dispute resolution landscape.
Proceedings before Commercial Courts may be conducted in English at the level of certain Higher Regional Courts – a notable innovation within the German judicial system. 
The courts operate through specialized senates, with subject-matter expertise varying by federal state. For instance, two senates at the Hanseatic Higher Regional Court hear commercial disputes with an amount in dispute of EUR 500,000.00 or more, covering areas such as corporate law, post-M&A, banking and insurance law, transport, and shipping. Proceedings may be conducted virtually and offer enhanced confidentiality as well as verbatim transcripts – features traditionally associated with arbitration.
It is therefore unsurprising that the new Commercial Courts have been well received and are widely regarded as a success. Initial experiences suggest that both the Commercial Court and the Commercial Chambers established at certain Regional Courts, such as the Regional Court of Frankfurt am Main, are committed to conducting proceedings efficiently and resolving disputes significantly faster than is typically the case before state courts. 

AI-bitration

The rapid advancement of artificial intelligence has also reached the field of arbitration, bringing significant new developments. AI is increasingly influencing arbitral proceedings by offering transformative tools that promise greater efficiency and enhanced analytical capabilities. While it remains widely accepted that decision-making must rest with human arbitrators, AI's expanding capacity for analysis, interpretation, and drafting raises complex legal, ethical, and practical questions. 
A central issue for arbitral tribunals is whether, and to what extent, arbitration rules permit the use of AI – particularly given that neither international treaties nor most national arbitration laws expressly regulate its deployment. In the absence of legal provisions, parties and tribunals frequently look to institutional guidance. However, such guidance remains in an early stage of development. Examples include the 2024 Guidelines of the Silicon Valley Arbitration & Mediation Center, the SCC's 2024 Guide, and the CIArb's 2025 Guideline. Most recently the American Arbitration Association published its AI Arbitrator focusing on documents-only construction disputes. However, a real arbitrator remains involved and decisive in this procedure.
These initiatives seek to promote the responsible and effective use of AI in arbitration. Yet the existing guidelines remain deliberately broad and preliminary, while technological innovation continues to evolve at remarkable speed. Looking ahead to 2026, the growing relevance of AI in dispute resolution is likely to prompt further institutional guidelines and frameworks. As practical experience accumulates, existing guidelines will be tested, adjusted, and developed further to ensure that arbitral proceedings remain both technologically advanced and firmly anchored in fundamental principles of due process and fairness.

New Arbitration Laws and Rules

Across Asia, 2026, marks a year of significant regulatory reforms. China has introduced comprehensive amendments to its Arbitration Law, effective 1 March 2026. The reform constitutes a strategic step toward modernizing the domestic arbitration framework and further aligning the regime for foreign-related arbitration with international practice. Notable innovations include the nationwide introduction of ad-hoc arbitration, improvements to the recognition and enforcement of foreign arbitral awards, and the incorporation of additional internationally recognized key concepts, including a clearer statutory recognition of the separability of arbitration agreements and enhanced tribunal authority to rule on its own jurisdiction (Kompetenz-Kompetenz) – widely regarded as meaningful progress.
Pursuing a comparable objective of strengthening procedural governance and aligning its framework with internationally recognized best practices, the Asian International Arbitration Centre (AIAC) has introduced the AIAC Suite of Rules 2026. Effective from 1 January 2026, the suite comprises six new or revised sets of rules and guidelines. Key changes include an expanded scope of application, a clarification of party obligations, adjustments to procedural requirements, mandatory disclosure of third-party funding, and revisions concerning arbitrator conduct and tribunal powers.
In Korea, the 2026 version of the KCAB Rules has entered into force. Among the most notable developments are the establishment of the KCAB International Arbitration Court, the introduction of differentiated procedural tracks designed to enhance efficiency, the expansion of virtual proceedings, and the formal recognition of remote hearings.
From a European perspective, the ongoing reform of French arbitration law also merits close attention. The reform, expected to be finalized by autumn 2026, envisaged the codification of a unified and modern Arbitration Code aimed at harmonizing the legal framework and further consolidating France's position as a leading place of arbitration.

Dr. Ralf Hafner
Oliver Korte
Dr. Tobias Pörnbacher

Germany's current arbitration framework in Book 10 of the ZPO dates back to 1997 and was based on the UNCITRAL Model Law in its 1985 version. After more than 25 years, the legal landscape has shifted significantly, for example regarding digitalisation. This evolution prompts the Federal Government to adapt the law to modern needs, improve procedural efficiency and enhance Germany's attractiveness as an arbitration venue. The reform process has been shaped by developments including the 2006 revision of the UNCITRAL Model Law, reforms in other jurisdictions, updated institutional rules and the ongoing digitalisation of procedural law.

The reform introduces several central innovations. These include the establishment of specialized Commercial Courts with English-language proceedings for arbitration matters under Sec. 1062 (5), 1063a, and 1065 (3) ZPO-Draft, along with procedural facilitation through English-language submissions pursuant to Sec. 1063a and 1063b ZPO-Draft. The draft embraces digital practice by permitting electronic arbitral awards and video hearings under Sec. 1054 (2), (5), 1064 (1), 1047 (2), and (3) ZPO-Draft. Additionally, it introduces the publication of anonymised awards subject to party consent or non-objection under Sec. 1054b ZPO-Draft and creates a narrowly framed retrial mechanism that operates even after set-aside deadlines have expired under Sec. 1059a ZPO-Draft.

The legislation also provides clarifications addressing multi-party appointment of arbitrators under Sec. 1035 (4) ZPO-Draft, enforcement of foreign interim measures under Sec. 1025 (2) and 1041 (2) ZPO-Draft, judicial review of both positive and negative jurisdictional decisions under Sec. 1040 ZPO-Draft, and the admissibility of concurring or dissenting opinions under Sec. 1054a ZPO-Draft.

In substance, the reform remains deliberately modest. Compared with the June 2024 draft (Draft bill on the modernization of the German arbitration law of the Federal Government of Germany | ADVANT Beiten), the version of 27 January 2026 differs in only two aspects: Sec. 1031 ZPO and Sec. 55 ZPO. These two amendments form the core of the following analysis.

Tightening of the Form Requirement for an Arbitration Agreement, Sec. 1031 (1) ZPO-Draft

The original Sec. 1031 ZPO-Draft limited formal requirements for arbitration agreements to consumer contracts only, proceeding on the assumption that parties in commercial transactions do not require the protective function of form. The abolition of formal requirements was intended to reflect modern commercial realities, particularly complex supply chains and framework agreements where the parties involved and their respective obligations may evolve over time, making the inclusion of a formal arbitration clause at an early stage impractical.

This approach attracted substantial criticism during the consultation process and parliamentary hearing. Practitioners emphasised that complete freedom of form entails significant risks and legal uncertainty. Without clear formal requirements, evidentiary problems would likely arise, and disputes over (i) whether an arbitration agreement has been concluded and (ii) its precise content would become more frequent, particularly in complex contractual structures. Cultural and linguistic differences in international transactions were highlighted as further factors increasing the risk of misunderstandings.

A further concern related to the enforceability of arbitral awards under the 1958 New York Convention, which requires arbitration agreements to be signed by the parties or contained in written communications such as letters or telegrams. Critics warned that arbitral awards based on purely oral or implied arbitration agreements could face serious obstacles in international enforcement proceedings. Additionally, the draft's reliance on the distinction between consumers and entrepreneurs was regarded as impractical, as the definition of "consumer" is difficult to apply in practice and particularly opaque for foreign parties.

Reflecting this criticism, the revised Sec. 1031(1) ZPO-Draft abandons complete freedom of form. It now requires that arbitration agreements are concluded or at least documented in writing or by any other means of communication that allows the information to be stored and reproduced at a later stage. This approach seeks to preserve flexibility for modern commercial practice while restoring the evidentiary and legal certainty functions traditionally served by formal requirements. Although it remains unclear which means of communication are sufficient to fulfil the form requirement, this amendment of Sec. 1031(1) ZPO represents a welcome improvement over the previous draft.

The new legal capacity regarding foreign countries, Sec. 55 ZPO-Draft

The current version of Sec. 55 ZPO governs the procedural capacity of foreign parties and remains based on nationality. It provides that a foreign party who lacks legal capacity under the law of its home state is nevertheless deemed capable of conducting legal proceedings if it possesses such capacity under the law of the court seized. In contrast, the new Sec. 55 ZPO-Draft abandons the nationality-based approach and links procedural capacity to habitual residence. A party who does not already have the capacity to conduct proceedings in its own name pursuant to Sec. 51 and 52 ZPO is deemed capable if it has party capacity under the procedural law of the state of its habitual residence.

This amendment was necessary following the reform of Article 7(2) EGBGB, which no longer determines legal capacity by reference to nationality but instead by habitual residence. Since under Sec. 51 and 52 ZPO a party's legal capacity is decisive for its capacity to be a party to proceedings, the continued reliance of Sec. 55 ZPO on citizenship created a systematic inconsistency. While substantive legal capacity was already residence-based, procedural capacity for foreigners still depended on nationality.

The new Sec. 55 ZPO-Draft resolves this conflict by harmonising the connecting factors and aligning procedural capacity with modern private international law. It simplifies judicial practice by allowing German courts to rely on lex fori procedural concepts and habitual residence rather than having to determine and apply foreign nationality-based capacity rules. This synchronisation enhances legal certainty, particularly in cross-border disputes and international arbitration-related court proceedings.

Summary

Overall, the modernisation of German arbitration law remains evolutionary rather than revolutionary. While the reform introduces a range of procedural improvements aimed at efficiency, digitalisation and international accessibility, the comparison between the June 2024 and January 2026 drafts shows that only two adjustments were ultimately required. The recalibration of Sec. 1031 ZPO restores legal certainty through a flexible documentation requirement, while the new Sec. 55 ZPO harmonizes procedural capacity with contemporary conflict-of-laws principles. Together, these targeted changes demonstrate the legislator's willingness to modernize German arbitration law without sacrificing predictability or enforceability.

Dr Ralf Hafner
Dr Tobias Pörnbacher, LL.M.