Generally, in a German civil case, two litigating parties face each other.
However, the KapMuG makes an exception to this rule. In special cases, it allows for a "bundling" of parallel proceedings and their uniform decision in model proceedings. The KapMuG dates from 2005 and was then partially revised. The new version (KapMuG 2012) entered into force on 1 November 2012.
The KapMuG is applicable in proceedings for damages due to false, misleading or omitted public capital market information. If such information is used or if a required clarification is omitted, proceedings under the KapMuG can also be initiated.
The proceedings are instituted at the request of the plaintiff or defendant. The applicant must show that the decision in the model case could have significance beyond the individual legal dispute for other similar legal disputes.
The procedural court usually publishes the model case applications in the register of actions of the electronic Federal Gazette. If at least ten applications of the same nature are received within six months of the announcement (this is the case in the Wirecard matter), the initial court, i.e., in the case of Wirecard the Munich Regional Court I, issues a so-called order of reference (§ 6 KapMuG). In the case of Wirecard, this order is dated 14 March 2022.
This order for reference summarises the common issues affecting all proceedings (so-called declaratory objectives) and contains a concise presentation of the underlying same facts of life. The order is submitted to the Bavarian Supreme Regional Court. All pending legal proceedings whose decision depends on the asserted declaratory objectives are then suspended by the original court (§§ 7, 8 KapMuG).
The Bavarian Supreme Regional Court selects a model plaintiff from the suspended action proceedings at its own discretion (§ 9 II KapMuG), which it publicly announces, in addition to the model defendants and the file number of the proceedings, in the register of actions of the electronic Federal Gazette. In selecting the plaintiff, the suitability of this plaintiff to conduct the model case appropriately, considering the interests of co-defendants, an agreement of several plaintiffs on one model plaintiff and the amount of the claim, as far as it is affected by the declaratory objectives of the model case, shall be taken into account (§ 9 II KapMuG).
Only after the publication of the model plaintiff in the register of actions of the electronic Federal Gazette (www.bundesanzeiger.de) persons who have not yet filed an action for the same claim may register their claim in writing with the Higher Regional Court (§ 10 II KapMuG). The applicant must be represented by a lawyer. The application must be filed within a period of six months from the date of publication. By filing the application, the statute of limitations of the applicant's claims can be suspended until the conclusion of the model proceedings without the applicant having to file a single claim (§ 204 I No. 6a BGB).
Since the decision to suspend legal proceedings is deemed to be an summon to join in the model proceedings, all claimants become mandatory parties to the model proceedings. They are entitled to assert means of attack and defense as well as to validly perform all procedural acts, provided that these do not contradict the procedural conduct of the model plaintiff.
The Bavarian Supreme Regional Court decides on the submitted questions of fact and law by way of a model decision in interlocutory proceedings, which proceed similarly to normal contentious civil proceedings. Appeals against the model decision may be lodged with the Federal Supreme Court. After the model decision has become final, the action proceedings continue at the courts of origin.
The findings of the legally binding model decision bind the trial courts in all suspended proceedings. This binding character encompasses all factual and legal bases and is, in principle, effective for and against all parties of the model proceedings. However, with respect to the aggrieved parties who have only filed their claims in the model proceedings, the decision in those proceedings does not have any legally binding effect. These injured parties must, as mentioned above, sue for their personal damages individually in subsequent proceedings, unless there are special settlement agreements with the defendants.
The model plaintiff and the model defendant can reach a settlement for all parties to the proceedings while they are still in the model proceedings. For this, the consent of all persons involved in the model case is not required. The settlement applies to all parties who do not declare their withdrawal from the settlement within one month of notification. If less than 30% of the parties withdraw from the settlement and the court approves the settlement, it becomes effective. However, this only applies to the parties to the model proceedings, not to the mere applicants.
Injured investors who have not yet asserted their claims in court can register their claims in the model proceedings through a lawyer. This can suspend the statute of limitations of the claims at low cost. However, the filing of a claim does not constitute participation in the model proceedings, see above.
In contrast to normal lawsuit proceedings, the litigation cost risk of a lawsuit filed as part of a capital investor procedure is regularly limited to the costs of just one instance - in this case before the Munich I Regional Court. Normal legal proceedings usually must be conducted over several instances, which entails additional cost risks that in civil proceedings can only be influenced to a limited extent and are thus difficult to calculate.
Even if the plaintiff party prevails in the first instance, it is up to the defendant party to decide whether the case continues or not, because it can decide whether to appeal. If the defendant party then succeeds in the appeal instance, the plaintiff party has to bear the costs of the entire legal dispute even if it had won in the first instance. If the plaintiff party also wins the second instance, there is still a considerable cost risk. The defendant then still has the option (provided the legal requirements are met) to appeal to the third instance and have the judgement reviewed by the Federal Supreme Court. If the defendant finally wins in the last instance before the Federal Supreme Court, the plaintiff bears all costs of the legal dispute, which can grow to enormous amounts over three instances.
In contrast, a civil action in opened model proceedings involves on average only about 25 % of the cost risk of a conventional action through three instances, and that is if in the event of an unsuccessful course of the model proceedings the action is still withdrawn in the first instance and prior to the issuance of the model decision by the Bavarian Supreme Regional Court and if - as is no longer possible in the Wirecard case - no oral hearing has yet taken place in the action before the Munich I Regional Court..
The reason for this is the suspension of the initiated legal action even before the first oral hearing since the court responsible for the legal action must wait after the suspension until a legally binding decision is issued in the model case. The legal action could be resumed at the earliest after the conclusion of the capital investor model proceedings.
If, contrary to expectations, the model proceedings were to end negatively, the action could be withdrawn in the first instance after the proceedings had been reopened and even before the oral proceedings had been held, as the court would first have to schedule a hearing after the reopening, which in turn would be associated with further costs.
Should a negative outcome of the KapMuG proceedings emerge clearly during the course of the proceedings, the original action could even be withdrawn before the (negative) model decision is even issued. In this case, the costs would be further reduced. In addition, there would possibly be proportionate costs of the model proceedings, which, however, should be relatively low in view of the large number of model plaintiffs at Wirecard.