In a recent judgment, the German Federal Court of Justice (BGH) had to, inter alia, clarify whether and under what conditions large numbers of claims may be bundled and pursued by a claims vehicle under the German Legal Services Act (RDG). The decision confirms the general admissibility of such models, but also establishes limits, in particular regarding procedural manageability and conflicts of interest.
Background
The recent judgment of the BGH arises from one of the largest private antitrust damages actions in Europe, linked to the so-called “truck cartel”. To recap: In 2016, the European Commission found that leading truck manufacturers had engaged in a cartel from 1997 to 2011, coordinating prices and passing on emission-related costs. The Commission imposed fines totaling approximately EUR 2.93 billion.
Following this decision, thousands of claimants sought compensation for alleged overcharges. In the case at hand, more than 3,000 claimants from 21 countries assigned their damages claims to a claims vehicle operated by a registered legal services provider. These claims related to more than 70,000 truck transactions, with a total asserted value of around EUR 500 million (and additional amounts in foreign currencies).
The claims vehicle brought a consolidated lawsuit before the Munich Regional Court, supported by a third-party litigation funder. The first-instance court dismissed the claim, mainly arguing that the assignments violated the RDG.
On appeal, however, the Higher Regional Court of Munich (OLG) took a more liberal view and allowed the model, considering the assignments generally valid and the claims vehicle entitled to litigate.
The defendants appealed to the BGH, which set aside the appellate judgment and remanded the case back to the OLG for further examination.
The assignment model and claims vehicles under the RDG
Procedurally, the case centers on the so-called assignment model (Abtretungsmodell), which has become a crucial substitute for class actions in Germany. Since German law does not foresee a US-style opt-out class action mechanism, collective enforcement has developed through private-law structures.
Under this model, individual claimants assign their claims to a claims vehicle, typically a registered debt collection service provider (Inkassodienstleister). The claims vehicle then aggregates the claims and pursues them in its own name in a single lawsuit.
These lawsuits are typically financed by a third-party litigation funder, which covers litigation costs in exchange for a share of any recovery. This allows claimants to pursue complex and costly litigation without financial risk.
The BGH had already approved this model in earlier decisions, recognizing that litigation brought by such vehicles may fall within the permissible scope of debt collection services under the RDG. Thus, prior to the BGH’s recent judgment, the general expectation was that large-scale bundling of claims was in principle legally feasible, provided certain formal requirements were met.
Generally permissible, but within limits
In its ruling, the BGH confirmed that collective enforcement via assignment and claims vehicles is, in principle, permissible. The mere bundling of a large number of claims does per se not violate the RDG and can serve effective legal enforcement. However, the BGH set limits:
- Abuse of process through unmanageable bundling
The central limitation concerns situations where the scale and structure of the aggregation prevent effective judicial adjudication. According to the BGH, if the bundling of claims makes it “practically impossible” for a court to grant effective legal protection within a reasonable time, the claims vehicle abuses procedural rights.
This was particularly relevant in the present case, given the extraordinary dimension, heterogeneity and inadequate manner of the preparation and presentation of the claims consolidated in this action. This made – as the BGH found – a proper and procedurally sound handling of the claim impossible. The BGH emphasized that in such scenarios courts are empowered to order the separation of proceedings and require the claims vehicle to reorganize the claims accordingly and submit new written pleadings following specific requirements set by the court within a specific timeframe (in principle not exceeding six months). In the case at hand, the BGH considered the OLG’s discretion to do so to be reduced to zero.
If the claims vehicle fails to comply with such an order, the entire claim may be dismissed by the court as inadmissible due to abuse of process.
- Structural conflicts of interest and litigation funding
A second key limitation concerns the relationship between the claims vehicle and the litigation funder. The BGH emphasized that courts must examine whether the underlying funding agreement grants the funder influence over litigation strategy.
If this were the case, there may be a structural conflict of interest, undermining the obligation of the claims vehicle to act solely in the interest of the assignors. In such cases, the underlying assignments may be invalid. The BGH emphasized that if litigation funders were to have more than just rights to information, it must be determined on a case-by-case basis, by assessing all relevant circumstances, whether there is a specific risk for a conflict of interest. An example for this would be a situation in which, the litigation funder is permitted to conduct out-of-court negotiations with the debtor or has veto rights regarding procedural steps. In contrast, only theoretical or substantively insignificant influence shall not justify such a risk. Accordingly, the BGH has instructed the OLG to reexamine whether the litigation funding agreement must, after all, be disclosed by the claimant side to assess the aforementioned criteria.
Implications for future litigation in Germany
While, the judgement confirms the general viability of the assignment model, which remains a central mechanism for collective redress in Germany, it leaves vagueness and ambiguity as regards when exactly aggregation becomes “unmanageable” and therefor “abusive”. This not only leaves considerable discretion to lower courts but also leads to legal uncertainty on claimant side when bringing large‑scale actions.
In consequence, the ruling will likely make the structuring of cases and the presentation of data strategically more important. It effectively imposes a “manageable aggregation” standard, requiring claim organizers to balance efficiency with procedural fairness.
Finally, litigation funders may face heightened scrutiny when it comes to limiting funder influence, potentially affecting the economic viability of large-scale funded claims.
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