German law pertaining to arbitration agreements with consumers, in particular in securities/futures transactions, has changed its approach several times over the last twenty years. Until a reform of the law in 1989, private investors could not participate at all in futures transactions. Following this law reform, German case law slowly accepted arbitration as an alternate method of dispute settlement in such transactions. However, in 2002, the German law on securities transactions was amended again and the legislature decided to restrain securities arbitration heavily by introducing section 37h of the Securities Trading Act which makes pre–dispute arbitration clauses with consumers in the area of securities trading de facto impossible. This article considers this provision and comes to the conclusion that this provision violates European law as there is no justification for the restraint of the freedom to deliver services within the EU.
Journal of International Arbitration