In January, we reported on the decision of the Higher Regional Court Cologne dated 17 February 2025 (Case No. 19 Sch 24/24) regarding the requirement for security deposit for costs in Germany. Now, the German Federal Court of Justice has published a decision regarding the same topic dated 15 January 2026 (Case No. I ZB 53/25).
In its decision, the German Federal Court of Justice had to decide whether a Russian plaintiff had to provide security deposit for costs.
Factual Background
The applicant, a company domiciled in Russia, had entered into a purchase agreement with the German defendant in February 2021. The contract provided for staggered deliveries in three stages as well as an obligation to refund payments in the event that the German seller failed to dispatch the goods due to reasons for which it was responsible. The parties also agreed on an arbitration clause in favor of the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation in Moscow (“ICAC”).
The defendant refused to carry out the final delivery because it had terminated its business relations with Russia as a result of Russia’s war of aggression against Ukraine. The plaintiff thereupon declared its withdrawal from the contract and initiated arbitration proceedings before the ICAC, which ruled in its favor.
Before the Higher Regional Court Stuttgart, the plaintiff sought a declaration of enforceability of the arbitral award. The defendant then request that the plaintiff provide security deposit for costs. The court rejected both the defendant’s request that the plaintiff provide security deposit for costs and the application for a declaration of enforceability, holding that the arbitral award could not currently be recognized in Germany.
Legal Framework
Section 110(1) German Code of Civil Procedure permits security deposit for costs against non-member states of the European Union (“EU”) or members of a signatory state of the Agreement on the European Economic Area (“EEA”) in order to protect the defendant’s ability to later recover costs. This provision is not applicable if an international treaty prohibits it (Section 110(2) No. 1 German Code of Civil Procedure).
Article 17(1) of the Hague Convention on Civil Procedure prohibits requiring foreign plaintiffs domiciled in another contracting state to post security for costs merely because they are foreign or lack a domestic residence. Both Germany and Russia are contracting states to the Hague Convention on Civil Procedure.
The Decision of the German Federal Court of Justice
The German Federal Court of Justice rejected the defendant’s request for security deposit for costs as procedurally inadmissible. The Higher Regional Court Stuttgart had already issued a binding interlocutory decision refusing to order security deposit for costs. Under the rules of Section 111 German Code of Civil Procedure, a defendant may only raise such a request again in a higher instance if new circumstances arise or if the defendant was unable to raise the issue earlier. Neither condition was met: No new facts have arisen and the defendant had already brought the request before the Higher Regional Court Stuttgart.
The plaintiff remains protected by the Hague Convention on Civil Procedure and the deterioration of Russian-German relations does not suspend or override the obligation to waive cost security requirements.
Even if the application had been procedurally admissible, it should still be rejected as meritless. The German Code of Civil Procedure expressly provides in Section 110(2) No. 1 German Code of Civil Procedure that no security deposit for costs may be demanded when a relevant international treaty prohibits it. Here, such a treaty exists: Article 17(1) of the Hague Convention on Civil Procedure obligates contracting states, including both Germany and Russia, to refrain from demanding security deposit for costs from plaintiffs residing in another contracting state merely because they are foreign or lack domestic residence. The plaintiff is a Russian legal entity and therefore entitled to rely on this treaty‑based exemption. As a result, Germany is legally bound to refrain from demanding a security deposit for costs.
The defendant attempted to counter this by invoking the EU’s sanctions regime against Russia, specifically Article 11(1) of Regulation (EU) No. 833/2014, the so‑called “No‑Claims‑Provision.” The German Federal Court of Justice rejected this argument. Article 11(1) of Regulation (EU) No. 833/2014 concerns substantive claims connected to contracts affected by sanctions, such as claims for compensation or performance. According to the German Federal Court of Justice, a requirement or exemption from providing security deposit for costs is not a substantive commercial claim but a procedural guarantee ensuring access to justice. That procedural dimension is explicitly safeguarded by Article 11(3) of the Regulation, which states that the rights of the persons, entities and bodies referred to in paragraph 1 retain the right to judicial review. The EU sanctions regime therefore does not suspend or limit the plaintiff’s entitlement to rely on Article 17 of the Hague Convention on Civil Procedure.
The Court also dismissed the defendant’s argument that Russia’s annexation of Crimea, the invasion of Ukraine, the deterioration of diplomatic relations, or the refusal of Russian courts to cooperate in cross‑border judicial matters could justify suspending the application of the Hague Convention on Civil Procedure under Articles 62 or 63 Vienna Convention on the Law of Treaties. The German Federal Court of Justice noted that treaties remain in force under Article 42 Vienna Convention on the Law of Treaties unless they are formally suspended or terminated in accordance with the procedures set out in the Convention, specifically Article 65. Germany has not invoked any such procedure, nor has it purported to suspend or terminate the Hague Convention on Civil Procedure. Furthermore, even significant political and practical difficulties do not of themselves dissolve treaty obligations. The Hague Convention on Civil Procedure therefore continues to bind Germany, and Article 17 remains fully applicable.
Conclusion
The German Federal Court of Justice clarified that Section 110(2) No. 1 German Code of Civil Procedure is based on the international legal obligation, and not on the actual possibility of enforcing claims for reimbursement of costs. Although this outcome may appear counterintuitive in light of Russia’s war of aggression against Ukraine, the ruling draws an important boundary of legal certainty. By affirming that political developments and geopolitical tensions cannot alter the continued applicability of treaty‑based exemptions, the German Federal Court of Justice underscores the stability and reliability of the legal framework. In doing so, it aligns itself with the existing case law of the Higher Regional Courts.
