The question of whether the notarial form is also preserved when a settlement is concluded in writing in accordance with § 278 para. 6 ZPO has been answered with a resounding “yes” by the Federal Court of Justice (BGH). This decision clarifies the previous uncertainty regarding the legal requirements for the effectiveness of certain legal transactions, such as the sale of real estate or shares in a GmbH.
Notarial Certification and Judicial Settlement
Certain legal transactions, such as the sale of real estate or shares in a GmbH, require notarial certification in order to be effective. According to § 127a BGB, the notarial certification is replaced by the inclusion of declarations in a protocol established in accordance with the provisions of the Civil Procedure Code for a judicial settlement. In the past, it was disputed whether the settlement had to be recorded in a court hearing or whether the notarial form would also be preserved in the case of a settlement concluded in writing in accordance with § 278 para. 6 ZPO.
Different Legal Opinions
Different legal opinions have been expressed on this matter. Some argued that § 127a BGB does not apply to settlements concluded in accordance with § 278 para. 6 ZPO because there is no sufficient “functional equivalence” between notarial certification and a settlement. They claimed that the procedural guarantees associated with notarial certification are not ensured in the proceedings according to § 278 para. 6 ZPO, as there is no consultation or warning by a notary or judge (cf. OLG Celle FamRZ 2014, 795, 796; OLG Brandenburg FamRZ 2008, 1192, 1193; Zöller/Greger ZPO 31. Aufl. § 278 Rn. 31; Musielak/Voit/Foerste ZPO 13. Aufl. § 278 Rn. 18a).
Others argued that § 127a BGB should at least apply to settlements concluded in accordance with § 278 para. 6 ZPO if the settlement is based on a proposal made by the court, as this involves a judicial examination comparable to that of a notary (OLG München FamRZ 2011, 812, 813; Thomas/Putzo/Reichold ZPO 37. Aufl. § 278 Rn. 17).
Finally, there were voices arguing that a settlement concluded in accordance with § 278 para. 6 ZPO is a fully valid judicial settlement and therefore always replaces notarial certification by virtue of § 127a BGB (OLG Brandenburg FamRZ 2014, 1202, 1204; OLG Frankfurt FamRZ 2016, 548 [summary] and decision of 14 December 2010 – 5 UF 105/10 – juris Rn. 4; OLG Naumburg FamRZ 2009, 617 [summary]; MünchKommZPO/Prütting 5. Aufl. § 278 Rn. 44; Baumbach/Lauterbach/Hartmann ZPO 75. Aufl. § 278 Rn. 59).
BGH Decision
With its ruling of 1 February 2017 (XII ZB 71/16), the Federal Court of Justice has now endorsed the latter view. Although the wording of § 127a BGB contradicts a direct application, the conditions for an analogous application are fulfilled, namely an unintentional regulatory gap and a comparable situation:
Firstly, the BGH explains in detail that there is an unintentional regulatory gap. When § 127a BGB was introduced into the German Civil Code on 1 June 1970, there was no provision for a settlement under § 278 para. 6 ZPO, which was only introduced on 1 January 2002. The fact that the legislator did not amend § 127a BGB in the context of the reform of civil procedure law or in the context of the First Act on the Modernisation of the Judiciary on 24 August 2004 does not preclude the assumption of a subsequently arisen regulatory gap. Neither the government’s draft law on the reform of civil procedure law of 24 November 2000, nor the recommendation by the legal committee and the report on this draft law addressed the question of whether the settlement also replaces the notarial certification required by substantive law. The same applies to the legislative justification for the First Act on the Modernisation of the Judiciary. However, the aforementioned legislative materials clearly indicate the legislator’s clear intention to equate the effects of a settlement recorded in court in full with those of a settlement recorded in a protocol by a notary. Therefore, it cannot be concluded from the fact that the wording of § 127a BGB remained unchanged even after the introduction and expansion of § 278 para. 6 ZPO that the legislator consciously decided to exempt the settlement from the scope of application of § 127a BGB (which the Federal Labour Court already pointed out in NJW 2007, 1831 Rn. 31). The non-adaptation of the provision is rather due to the fact that the legislator did not recognize the need for regulation that arose retrospectively due to the introduction of the settlement.
Secondly, the BGH considers the second condition for an analogy, namely the comparability of the circumstances, to be fulfilled. This condition is met if the legal situation to be assessed is so similar to the factual situation regulated by the legislator that it can be assumed that the legislator would have arrived at the same result if he had based himself on the same principles as when enacting the legislation used. This is the case here.
The doubts that the proceedings under § 278 para. 6 ZPO lack the required “functional equivalence” to notarial certification are expressly not shared by the BGH. The provisions of the Certification Act (BeurkG) apply only to notaries (§ 1 para. 1 BeurkG) and other persons or bodies responsible for public certifications (§ 1 para. 2 BeurkG), but not to courts. With § 127a BGB, the legislator took up the principle previously recognized in case law and legally acknowledged that a settlement concluded in compliance with procedural law replaces any form required by substantive law for a legal transaction. Therefore, it is not necessary for the procedural requirements of notarial certification to be complied with in the judicial proceedings, but it is sufficient for the relevant procedural provisions to be complied with. The crucial point is therefore whether the settlement concluded in accordance with § 278 para. 6 ZPO corresponds to a settlement properly recorded in accordance with procedural law to such an extent that an equivalent application of § 127a BGB is justified.
The BGH answers this question in the affirmative. The legislative materials on the reform of civil procedure law already show that the legislator intended to provide an easier way to terminate court proceedings by means of a settlement. In terms of its effects, the settlement should be fully equivalent to a settlement recorded by the court.
This intention of the legislator is reflected in the existing law. For example, § 794 para. 1 no. 1 ZPO does not distinguish between whether the settlement was recorded by the court or established in accordance with § 278 para. 6 ZPO. It has already been recognized that settlements can also be concluded in accordance with § 278 para. 6 ZPO for other provisions such as § 492 para. 3 half-sentence 2 ZPO or § 118 para. 1 half-sentence 2 ZPO, which, according to their wording, require a settlement recorded by the court. The legislator has now explicitly clarified for § 491 para. 4 BGB that a settlement established in accordance with § 278 para. 6 ZPO corresponds to a recorded settlement.
Finally, the proceedings under § 278 para. 6 ZPO also fulfill the protective purposes associated with notarial certification in the same way as the recording of a settlement by the court. If a provision of substantive law requires the special form of notarial certification, this generally serves the purpose of protecting the parties involved in the legal transaction from hasty decisions and securing proof of the agreement made by the certification. In addition, the contracting parties are to be reminded of the special significance of the legal transaction and informed about the consequences of the agreement made. With regard to the protection against hasty decisions and the evidential function associated with notarial certification, there are no relevant differences between a settlement recorded by the court and a settlement established in accordance with § 278 para. 6 ZPO.
In fact, the protection of the parties involved against hasty decisions is often better ensured in proceedings under § 278 para. 6 ZPO than in the recording of a settlement by the court in an oral hearing, because in proceedings under § 278 para. 6 ZPO, the parties are either presented with a proposal from the court or they have developed a settlement proposal themselves and submitted it to the court. In both cases, the parties have the opportunity to examine the intended agreement in detail and without time pressure, possibly with the assistance of legal advice. In the case of a recorded settlement, on the other hand, the parties often first become aware of the settlement text in the oral hearing and then have to decide in the oral hearing whether to accept the settlement. Therefore, as the Federal Labour Court already pointed out in NJW 2007, 1831, the settlement does not offer any less protection against hasty decisions than a settlement recorded by the court.
The evidential function of a notarial document is achieved in the case of a settlement recorded in a protocol by the inclusion of declarations in the protocol (§ 160 para. 3 no. 1 ZPO), the approval of the protocol after reading or playing the provisional record (§ 162 para. 1 ZPO) and the signing of the completed protocol by the chairman and the court registrar (§ 163 ZPO). In the proceedings under § 278 para. 6 ZPO, this is achieved by the court’s decision declaring the effective conclusion and content of the agreement in a public document within the meaning of § 415 para. 1 ZPO. This also does not justify a different treatment from the BGH’s point of view.
Finally, it is irrelevant whether the settlement proposal comes from the court or has been submitted by the parties for determination. While it may be true that the court explains a settlement proposed by it and thus provides the parties with a better basis for decision-making, this is not mandatory. Furthermore, § 278 para. 6 ZPO treats both possibilities of concluding a settlement equally, so that a differentiated consideration of the form-replacing effect based on whether the settlement is based on a proposal by the court or by the parties is prohibited for this reason alone.
In conclusion, the Federal Court of Justice has decisively answered the question of whether the notarial form is also preserved when a settlement is concluded in writing in accordance with § 278 para. 6 ZPO with a resounding “yes”.
