Reform of the Capital Markets Model Case Act (KapMuG): Speedier proceedings planned


On 28 December 2023, the Federal Ministry of Justice published the bill for a Second Act to Reform the Capital Markets Model Case Act (the “Act”). The bill is required because the Act in its current version will expire on 31 August 2024 after several extensions. As the Act has fundamentally proven its worth (in the opinion of the Federal Ministry of Justice) as an instrument of class and mass action defence in capital market-related lawsuits, the previous time limitation is to be removed and the Act is to be refined on this occasion.

Background to the Act

The reason for introducing the Act in 2005 was the volume of individual lawsuits filed by investors in connection with Deutsche Telekom AG’s third IPO in 2000 and the resulting excess workload for the courts. At that time, the idea was to establish a powerful instrument for class and mass actions in capital market law disputes in Germany in order to improve individual legal protection and relieve the burden on the courts.

Current status of the Act

The Act is intended to provide affected investors with special model civil proceedings before the higher regional courts for claims based on false, misleading or omitted public capital markets information, so that potentially affected investors can file their claims more easily. In short, proceedings under the Act will be used to submit individual questions of fact or law that play a decisive role in several individual disputes to one higher regional court, where they will be heard and ruled on in a single process. The prerequisite for such model case proceedings is that at least ten parties to such individual proceedings have filed an application for model case proceedings to be conducted. The proceedings are initiated by an order from a regional court to refer the matter to a higher court. As long as the model case proceedings continue, all pending individual proceedings must be suspended ex officio in accordance with section 8 of the Act if the decision depends on the objectives of the model case proceedings. Once the model case has been concluded, the individual proceedings before the regional courts will be finalised on the basis of the model decision. The model decision will be binding for all suspended proceedings, in which only the individual damage issues then have to be decided. Individual claimants therefore will not receive an enforceable title through Act proceedings. They can only obtain such a title in the individual proceedings to be continued.

Content of the bill

In practice, model case proceedings under the Act have proven to be lengthy. The current bill therefore states that one of the aims of the planned changes is to speed up the model case proceedings and make them more efficient. To achieve this aim, the Federal Ministry of Justice proposes the following specific changes, for example:

Faster proceedings

  • The time period between bringing an individual action and the model case proceedings in the higher regional court will be shorter: in future, the trial court will publicly announce model case applications within two months (instead of the previous six months) in accordance with section 4(1) of the bill. The trial court will also no longer be permitted to wait six months after receiving the first model case application before checking whether the required quorum has been reached. Instead, it must issue the order to refer the matter to another court as soon as the quorum of ten similar model case applications has been reached (section 7(1) of the bill).
  • According to section 10(5) of the bill, the higher regional court is to decide on the commencement of model case proceedings within three months of the order to refer the matter being announced, in the interests of a rapid commencement of the model case proceedings.

Strengthening the position of higher regional courts

  • Under section 10(2) of the bill, the higher regional courts are to be allowed to determine the declaratory objectives at their reasonable discretion on the basis of the model case applications submitted, i.e. they are then not bound (as they were previously) by the declaratory objectives from the order to refer the matter.
  • Under section 10(4) of the bill, the higher regional courts may refuse to commence model case proceedings in full or in part if the objectives of the declaratory judgment are not relevant; this decision is to be non-contestable.

Fewer parties involved

  • The regional courts should no longer be obliged to stay ex officio all pending proceedings that depend on the decision about the declaratory objectives. Instead, under section 2(1) and section 11(1) of the bill, only those parties who have filed either a model case application or an extension application are to participate in the model case proceedings. Only in such cases will the initial proceedings be interrupted ex officio (section 6(1) and section 11(6) of the bill).
  • To this end, section 8 of the Act, which provided for an ex officio stay of all pending proceedings that depend on the decision about the declaratory objectives, is to be deleted. This measure is intended to reduce the number of parties to the proceedings, since all claimants whose proceedings were suspended in accordance with section 8 of the Act due to their dependence on the model case proceedings must also be summoned to the model case proceedings.
  • Such proceedings, which are not covered by the order to refer the matter or the one-time extension of the model case application (following the deletion of section 8 of the Act) are only to be suspended if a party applies for this before the model case has been finalised (ministerial draft of section 145(5) of the German Code of Civil Procedure). In these cases, however, there should be no formal tie-in to the (factual) findings of the model case proceedings.

Section 1(3) of the bill will also clarify that proceedings under the Act and the German Consumer Rights Enforcement Act (VDuG) are not mutually exclusive, i.e. representative actions and model case proceedings under the Act can be conducted at the same time.


The draft bill contains some important changes in the area of mass proceedings influenced by capital market law. Interested parties had time until 31 January 2024 to comment on the bill. Those comments have now been received and can be viewed on the website of the Federal Ministry of Justice. The intended abolition of the suspension of individual proceedings under section 8 of the Act has been a particular focus of debate in the comments received.

If section 8 of the Act is deleted, it is likely that companies will be burdened with a larger number of individual legal actions. The current consolidating effect of the Act and thus also the relief of the judicial system would essentially be in vain. Unlike today, there will be competition between individual claims and model cases with the risk of contradictory decisions. Furthermore, it is not clear which higher regional court will decide first.

At first glance, the proposals in the bill seem likely to speed up proceedings. Whether this acceleration of proceedings will actually materialise remains to be seen in practice. One thing is clear: the higher regional courts will be given more leeway in organising and conducting the proceedings. This leeway must be utilised to ensure efficient proceedings that quickly provide legal certainty for investors and issuers. This is essential to make Germany attractive as a forum for capital market disputes.

We will closely monitor the next steps in the legislative process and keep you informed of any major developments. If you have any questions about class and mass proceedings or need specific advice, please do not hesitate to contact us.

You will find more detailed information in the upcoming issue of WM in the article by Dieter Hettenbach, Bill for a Second Act to Reform the Capital Markets Model Case Act – Overview and Initial Assessment, WM 2024, 237-242.