Unilateral Declaration of Settlement

Unilateral Declaration of Settlement

The unilateral declaration of settlement is a procedural legal instrument in German civil procedure law. It enables a party, particularly the plaintiff, to notify the court of an event that renders the matter settled after the initiation of proceedings and to have the proceedings shifted to a determination as to whether the main issue has been resolved. This declaration has significant implications for the further course of the proceedings and the allocation of costs. The following provides a detailed overview of the legal basis, prerequisites, procedure, effects, and cost implications of the unilateral declaration of settlement.

Legal basis of the unilateral declaration of settlement

Code of Civil Procedure (ZPO)

The unilateral declaration of settlement is not explicitly regulated by law, but is recognized by case law and is closely related to the provisions of §§ 91 ff., 269 and 91a ZPO. It is part of the jurisprudential development in civil procedure and serves to economically resolve proceedings that were initially contentious after the occurrence of events that render them settled.

Distinction from other procedural declarations

The unilateral declaration of settlement must be distinguished from the joint declaration of settlement by both parties (§ 91a ZPO), as well as from a withdrawal of the lawsuit (§ 269 ZPO) or acknowledgment (§ 307 ZPO). In the case of the unilateral declaration, the other party does not agree to the settlement, and the proceedings are continued with a changed objective.

Prerequisites and procedure for the unilateral declaration of settlement

Timing and form

The unilateral declaration of settlement is possible after the occurrence of a settling event, which happens during pendency, that is, after the initiation of a lawsuit and before the final and binding conclusion of the proceedings. The declaration is usually made in writing, but can also be made orally during the hearing.

Settling event

A settling event arises when the original procedural claim becomes moot or impossible due to subsequent developments after the lawsuit has become pending. Typical examples include:

• Fulfillment of the claim (e.g., payment, delivery)
• Loss of the subject matter of the dispute (e.g., destruction of an item)
• Waiver of the claim
• Termination of the adverse measure (e.g., withdrawal of an administrative act in administrative court proceedings)

The unilateral declaration of settlement requires that the settling event occurs only after the lawsuit has become pending.

Effects and court procedure after a unilateral declaration of settlement

Transformation of the proceedings

With the receipt of the unilateral declaration of settlement, the original objective of the lawsuit is no longer the subject of the proceedings. The action is then continued as an action for a declaratory judgment. The key point of contention is usually whether the lawsuit was originally admissible and justified at the time of the settling event.

Interest in legal protection

The interest in a declaratory judgment arises from the interest in costs: the prevailing party should be able to prove that their claim was originally justified.

Substantive examination by the court

The court now decides whether the matter has been settled. It examines the following questions:

1. Was there an admissible and justified claim at the time the settling event occurred?
2. Was the settling event procedurally significant and did it actually occur?
3. Is there a new objective (namely, the determination of settlement)?

The court no longer makes a substantive decision on the original lawsuit objective, but only decides whether the main issue has been settled.

Costs and allocation of costs in the case of a unilateral declaration of settlement

Relevant provisions

The allocation of costs is made analogously to § 91a ZPO at the court’s equitable discretion, taking into account the state of the facts and disputes up to that point. The decisive factor is how the proceedings would have been decided if the settling event had not occurred.

Obligation to bear costs

• If the original action was justified up to the settlement, the defendant bears the costs.
• However, if the action was unfounded, the plaintiff bears all the costs.
• In the case of partial settlement, costs are apportioned accordingly.

Special features in the case of default

If a default judgment has already been issued at the time of the settling event, the proceedings cannot be converted to the procedure for determination of settlement.

Difference compared to the joint declaration of settlement

Unilateral vs. joint declaration of settlement

While in the case of a joint declaration of settlement by both parties, the court’s decision is usually limited to a summary decision on costs, in the case of a unilateral declaration the court comprehensively examines the original merits of the lawsuit.

Procedural design

The defendant may explicitly object to the unilateral declaration of settlement or join in the settlement. If an objection is raised, the court decides on the merits whether and to what extent the original action was justified.

Appeals and contestability

Independent appeal

The judgment on the determination of settlement is a final judgment (§ 322 ZPO) and is fully open to appeal and revision, provided the statutory requirements are met.

Binding effect

The determination of settlement has the force of res judicata and protects the parties from being sued again over the original subject matter of the dispute.

Practical relevance and areas of application

Common case scenarios

Unilateral declarations of settlement commonly arise in cases of refusal to perform due to subsequent fulfillment, subsequent impossibility, or in situations where claims for injunctive relief have become moot.

Significance in other codes of procedure

Apart from civil procedure law, there are comparable regulations in administrative procedure law (§ 161 VwGO) and in social court procedure (§ 102 SGG), where the settling event leads to a declaratory judgment that the matter has been resolved.

Summary

The unilateral declaration of settlement is a fundamental instrument of German civil procedure law for the efficient conclusion of what was initially a contentious case after the occurrence of a settling event. It alters the objective and scope of the proceedings and significantly influences the allocation of costs. The court focuses on whether the original claim was justified and who is to bear the costs of the proceedings. The unilateral declaration of settlement is therefore a central element of judicial dispute resolution, and especially in practice of great practical importance.

Frequently Asked Questions

What procedural requirements apply to making a unilateral declaration of settlement?

A unilateral declaration of settlement can, in principle, only be made within the context of court proceedings if the underlying subject of dispute was initially admissibly pursued by way of a lawsuit or application, and a settling event (such as the lapse of the need for legal protection) occurs during the proceedings. The declaration of settlement then refers to the original main issue. The admissibility of the unilateral declaration of settlement is especially tied to the fact that there is neither mutual acknowledgment nor waiver, nor has a joint declaration of settlement been made. Furthermore, it is required that the settling event occurs after the lawsuit has become pending. After the declaration has been made, the court shall decide on the costs in accordance with § 91a ZPO, taking into account the previous facts and state of the dispute at its equitable discretion.

How does the unilateral declaration of settlement affect the court proceedings?

With the unilateral declaration of settlement, the proceedings regarding the main issue are transformed into a dispute solely over costs. The court no longer examines the original claim in the main matter, but solely decides who is to bear the costs of the proceedings. The key factor is whether the claim was admissible and justified at the time the settling event occurred. The decision on costs is made by the court pursuant to § 91a ZPO. The main issue is no longer pursued and as such, no judgment granting or dismissing the original claim will be issued.

What are the consequences of the unilateral declaration of settlement for the parties involved?

The unilateral declaration of settlement results in the substantive legal issues no longer being subject to a decision. For the plaintiff, after submitting a unilateral declaration, there is generally no longer an opportunity to return to the main matter or to pursue the original claim. The defendant only needs to comment on the settling event and, if necessary, dispute that settlement has occurred. There is no binding substantive legal effect; the dispute is decided solely with regard to the allocation of costs and not on the basis of a substantive legal judgment.

What role does the opponent’s consent play in the unilateral declaration of settlement?

In the case of a unilateral declaration of settlement, the opponent’s consent is not required, unlike with a joint declaration of settlement. The proceedings are shifted to a cost decision solely by the declaration. However, the opponent may dispute the alleged settlement (“objection”), which leads to a contentious decision on the prerequisites for settlement and, as a result, to a comprehensive judicial review—especially of the original need for legal protection—with respect to the costs.

What options does the opponent have to respond to a unilateral declaration of settlement?

The opponent may oppose the declaration of settlement and substantiate that no settlement has in fact occurred, for example, because there was no legal standing, no cause of action, the asserted claim was unfounded, or the alleged settling event has not taken place. They can challenge the cost liability by arguing that the plaintiff would not have succeeded with the claim before the occurrence of the settling event. The opponent may also present evidence and objections. The court will consider these before making a cost decision.

How is the allocation of costs structured after a unilateral declaration of settlement?

The court decides on the allocation of costs in accordance with § 91a (1) ZPO based on the factual and legal situation at the time of the settling event and at its equitable discretion. The key consideration is how the proceedings would likely have been resolved if the settling event had not occurred. If the plaintiff would have prevailed, the defendant bears the costs; otherwise, the plaintiff bears the costs. In unclear situations, the court may order costs to be split or mutual cost absorption.

Is there an appeal against the cost decision after a unilateral declaration of settlement?

The court’s cost decision pursuant to § 91a ZPO constitutes an independently appealable order. The permissible remedy, depending on the amount in dispute and the type of proceedings, is generally an immediate complaint (§ 567 ZPO). The complaint seeks a review of the court’s equitable cost decision. The admissibility of the immediate complaint requires that the appellant has a legal interest in pursuing protection; this is generally the case when the order imposes a cost burden.