Parallel Proceedings in Germany: Problems and Solutions
| Date | 01 March 2001 |
| Pages | 71-78 |
| Published date | 01 March 2001 |
| DOI | https://doi.org/10.1108/eb026008 |
| Author | Volker Lipp |
| Subject Matter | Accounting & finance |
Journal of Financial Crime — Vol. 9 No. 1
Parallel Proceedings in Germany:
Problems and Solutions
Volker Lipp
INTRODUCTION
This paper examines the problems of parallel pro-
ceedings against financial intermediaries, and the
solutions offered by German law. The first part iden-
tifies the practical problems and principal questions of
parallel proceedings. The second part describes the
proceedings which can be brought against financial
intermediaries in Germany. The third part provides
an overview of how the fundamental problems and
questions of parallel proceedings are dealt with
under German law. The fourth and final part analyses
special problems and constellations.
PRACTICAL PROBLEMS AND
PRINCIPAL QUESTIONS OF PARALLEL
PROCEEDINGS1
Fraud or other wrongdoings in the financial sector
may lead to various proceedings brought by different
bodies or individuals against financial intermediaries,
whether individuals, companies or other forms of
business associations. Criminal proceedings may be
brought by criminal prosecution authorities. Civil
proceedings may be initiated by liquidators against
those who may have defrauded the now insolvent
company, and by private litigants seeking compensa-
tion for their losses. Regulatory bodies may com-
mence regulatory proceedings, and consumers may
bring proceedings before an ombudsman. A single
event may thus give rise to a multitude of proceed-
ings,
commencing in quick succession and running
parallel. Cases like Maxwell or BCCI caught the
eye of the international public, but there have been
many others which have likewise led to a large
number of parallel proceedings on the same set of
facts.
Each kind of proceedings serves a different func-
tion, and has different rules of procedure accordingly.
Whereas parallel proceedings of the same kind and on
the same subject matter are barred by virtue of
the rules of lis pendens, and
res
judicata, respectively,
proceedings of a different kind can run parallel.
Nevertheless, even if they have different purposes,
multiple proceedings on the same set of facts cause a
number of difficulties.
— For prosecutors and regulatory bodies, it means a
duplication of resources in investigations.
— Information gathered by the appropriate
authority for one set of proceedings may be not
available in another.
— Defendants, on the other hand, have to defend
themselves in a number of forums, face problems
of logistics because they have to be in two or even
more places at one time, and feel impaired in
their ability to prepare properly for all sets of
proceedings.
— Proceedings may have 'spill-over' effects. Pro-
ceedings and decisions in one forum have the
potential of prejudicing the proceedings and
outcome in another.
— Multiple proceedings can mean multiple use of
evidence gained initially for a single purpose.
This may compromise privileges of witnesses
and parties guaranteed only in the type of
proceedings that come later.
— Different proceedings on the same set of facts may
lead to inconsistent decisions, thus affecting public
confidence in the legal system and its ability to
deal with financial crime coherently.
In view of these problems with parallel yet different
kinds of proceedings, the very first question is:
— Should there be one, or better, a unified set of
proceedings, instead of different proceedings
which may run parallel?
If this question is answered in the negative, and par-
allel proceedings are regarded as unobjectionable in
principle, further questions arise:
— One is priority: which proceedings should
come first — criminal, regulatory, civil, or
investigative proceedings?
— Another important issue concerns the flow of
information, and the regulation of that flow,
Journal of Financial Crime
Vol.
9,
No.
1,
2001.
pp.
71-78
© Henry Stewart Publications
ISSN 1359-790
Page 71
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