Definition and Basics of the Action for Declaratory Judgment of Resolutions
Die Action for Declaratory Judgment of Resolutions is a legal remedy under German company law that plays a central role, particularly in the context of capital companies and partnerships. The purpose of this type of action is the binding judicial determination of whether a company resolution was duly adopted and thus is valid or invalid. The action for declaratory judgment serves to provide clarity and legal certainty within company structures and protects against uncertainties regarding the validity of collective decisions.
Scope of the Action for Declaratory Judgment of Resolutions
Forms of Companies
The action for declaratory judgment of resolutions is applied in various forms of companies, particularly in:
- Limited Liability Company (GmbH)
- Stock Corporation (AG)
- Partnership Company (PartG)
- Cooperative
- Associations
- Limited application also to partnerships (OHG, KG, GbR), where permitted by the articles of association
The legal basis derives from special statutory provisions, particularly the German Stock Corporation Act (AktG) and the Limited Liability Companies Act (GmbHG), as well as from general provisions of the Code of Civil Procedure (ZPO).
Legal Categorization and Purpose
The action for declaratory judgment of resolutions serves the objective clarification of the existence or non-existence of a company resolution. A distinction is made between:
- Determining the Validity
- Determining the Invalidity (Nullity)
- Determining the Contestability of a resolution
The court decision creates a binding legal status that applies equally to shareholders and the company. This significantly contributes to legal certainty and peaceful dispute resolution within a company.
Distinction from Related Types of Actions
Action for Annulment
In company law, the Action for Annulment is distinguished from the action for declaratory judgment of resolutions. While the action for annulment is directed against the validity of an already adopted and existing resolution and seeks its annulment, the action for declaratory judgment focuses on determining the existence or non-existence of the resolution regardless of a specific annulment effect. In particular, the action for declaratory judgment may be relevant when there is doubt as to whether a resolution has come into existence at all (e.g., in case of formal problems).
Action for Nullity
The action for nullity is brought mainly in stock corporation law as a special form for cases of resolutions invalid from the outset. If there is obvious nullity, the non-existence of a resolution can also be made the subject of judicial proceedings through an action for declaratory judgment.
Right to Bring an Action and Parties Involved
The action for declaratory judgment of resolutions may generally be brought by the following parties:
- Shareholders of a capital company or a partnership, provided the company agreement allows for this
- Members of an association or a cooperative
- In certain situations, the managing director or the management board of the company may also be entitled to bring the action, especially if the company itself has a legal interest in the determination
A prerequisite for bringing the action is proof of a legal interest in the determination.
Legal Requirements (Admissibility and Merits)
Admissibility
Die Admissibility of the action for declaratory judgment of resolutions particularly requires:
- Existence of a legal interest in a judicial determination pursuant to § 256 ZPO
- The subject matter of the claim must relate to a determinable legal situation, i.e., the existence or non-existence of a specific resolution
- Party and procedural capacity of the participants
If a general “resolution” is made the subject of the action without clear specifications, the action may be inadmissible.
Merits
An action for declaratory judgment of a resolution is well-founded, if:
- The alleged condition (validity, invalidity, passing or non-passing of the resolution) actually exists
- The resolution in question legally exists and the relevant company law or articles of association provisions have been observed
- No special grounds for invalidity or causes of nullity are present
Course of Proceedings and Special Features
Jurisdiction
For actions for declaratory judgment of resolutions, the competent civil court at the company’s registered office has jurisdiction according to general rules (§ 17 ZPO). For GmbHs and AGs, the regional court is usually the court of first instance.
Limitation Period
Unlike the action for annulment, which is subject to specific limitation periods (e.g., § 246 para. 1 AktG: 1 month), the action for declaratory judgment of resolutions is in principle not subject to a limitation period, but may be time-restricted to some extent for reasons of legal certainty and good faith (§ 242 BGB).
Proceedings
The proceedings follow the general provisions of the Code of Civil Procedure. The defendant is generally the company itself; in exceptional cases, proceedings can also be brought against individual shareholders or members.
Res Judicata and Binding Effect
A final and binding judgment in an action for declaratory judgment of resolutions has inter partes effect. This means that it applies at least to all participants in the proceedings, but always within the company structure,
Frequently Asked Questions
Who is entitled to bring an action for declaratory judgment of resolutions?
In principle, owners of residential property or members of a company or association who have a legitimate legal interest in the determination of the invalidity or nullity of a resolution are entitled to bring an action for declaratory judgment of resolutions. This is mainly derived from § 44 para. 1 WEG (German Condominium Act) or relevant association or company law provisions. Generally, it is sufficient if the plaintiff can assert that their rights are impaired by the contested resolution. Joint ownership communities or minority shareholders can also be entitled to bring an action, provided that they can demonstrate concrete, direct effects of the resolution on their legal position.
Against whom is the action for declaratory judgment of resolutions directed?
The action for declaratory judgment of resolutions is regularly directed against the community of condominium owners, the association, or the company whose body or members’ meeting adopted the disputed resolution. In the context of condominium law, the community of condominium owners must always be sued, not individual owners or the administrator. For associations and companies, the correct defendant is the respective entity or company. The claim must be served to the community or entity via its authorized representative body (e.g., administrator, board). Choosing the correct defendant is crucial, as otherwise the claim may be dismissed as inadmissible.
What time limits must be observed in actions for declaratory judgment of resolutions?
An action for declaratory judgment to establish the nullity of a resolution is not subject to any specific time limit and can generally be brought at any time, as long as the legal interest in the determination persists. This differs from the action for annulment, for which, for example, a one-month time limit applies in condominium law. However, excessively long inactivity may in exceptional cases lead to loss of the interest in a determination based on the principle of good faith (§ 242 BGB). In associations or other legal entities, limitation periods are usually governed by the articles of association; thus, the relevant statutes should always be consulted.
What are the legal consequences of a successful action for declaratory judgment of resolutions?
If the action for declaratory judgment of resolutions is successful, the court determines by final judgment that the challenged resolution is void or invalid. As a result, the resolution is considered non-existent from the beginning, that is, it produces no legal effects whatsoever. A cure of legal defects is generally excluded if absolute grounds of nullity exist. In practice, the previous legal situation thus remains in force, and the community or entity must undo any measures based on the void resolution. The judgment is binding towards and for all members of the community (“inter omnes”).
What costs are incurred when bringing an action for declaratory judgment of resolutions?
The cost structure for an action for declaratory judgment of resolutions is based on the Court Costs Act (GKG) and the Lawyers’ Fees Act (RVG). The value in dispute is usually determined by the significance of the contested resolution for the plaintiff and can vary considerably in condominium matters. In association and company law, the economic value of the dispute or the value specified by the articles of association is typically used. In addition to court and lawyers’ fees, the losing party must also bear the costs of the opposing party. In certain cases, there is entitlement to legal aid if the party is in need.
How does court proceedings for an action for declaratory judgment of resolutions unfold?
The legal proceedings commence with the filing of the claim with the competent court, often the local court at the seat of the community or association. After the proper service of the claim, the defendant’s response follows, usually by the relevant representative body (e.g., administrator, board). This is followed by a written preliminary procedure and, if necessary, an oral hearing in which the parties can present their arguments. The court examines whether there is an interest in determination as well as grounds for nullity or invalidity of the challenged resolution. After extensive factual and legal review, a judgment is handed down, which becomes final if no appeal is lodged. In many cases, courts offer opportunities for amicable settlement (compromise) beforehand.
What role does the difference between the action for annulment and the action for declaratory judgment play in connection with resolutions?
In the context of resolutions, a strict distinction must be made between the action for annulment and the action for declaratory judgment of resolutions. While the action for annulment seeks the removal of a (formally valid but flawed) resolution due to specific defects, the action for declaratory judgment serves to establish in court the nullity or invalidity of a resolution due to serious, absolute violations of law (e.g., breach of mandatory legal provisions or impossibility under the articles of association). An erroneous election process or procedural defects usually constitute contestability, while serious breaches, such as a resolution passed by an incompetent body, result in nullity and thus justify the action for declaratory judgment. This has significant practical implications for the admissibility, time limits, and legal consequences of the respective action.
