GRP Rainer Rechtsanwälte – Assessment of claims for damages in response to kickbacks
Corruption, attempted bribery and kickbacks are all commonplace in commercial life. Aggrieved parties can assert claims on account of damage caused by acts contrary to public policy.
Up until the end of the 20th century, it was still possible in Germany to claim bribes paid to foreign business partners against tax as „nützliche Aufwendungen“, i.e. beneficial expenditures. Times have changed. Kickback payments made by German firms have been punishable by law since 2002. We at the commercial law firm GRP Rechtsanwälte note that this has led to greater accountability of businesses and their managers. Kickback payments are contrary to public policy. According to sec. 826 of the Bürgerliches Gesetzbuch (BGB), the German Civil Code, a person who inflicts damage on another person in a manner contrary to public policy is liable to pay compensation for the damage.
Assessing and proving whether damage has been inflicted because of an illegal payment arrangement can sometimes prove challenging, since the party claiming compensation due to a kickback arrangement made without their knowledge must first be able to prove its existence. It is enough, however, for them to be able to present sufficient evidence indicating that a kickback agreement was concluded. In a ruling from 18 January 2018, the Bundesgerichtshof (BGH), Germany“s Federal Supreme Court, held that this would already be enough to satisfy the burden of proof (Az.: I ZR 150/15). It went on to note that the other party would then have to be able to demonstrate that the accusations are without merit and that there were no illegal arrangements.
In the instant case, a furniture dealer had engaged a forwarding company to transport furniture from Asia to Europe and granted a third party the relevant powers necessary for the purposes of supervising these transactions. In the course of this, increased freight reimbursements were reported, of which the furniture dealer knew nothing. It demanded that the freight surcharges be returned. The Oberlandesgericht (OLG) Hamburg, Hamburg“s Higher Regional Court, dismissed the claim.
The BGH delivered a different ruling. It took the view that the plaintiff had presented sufficient evidence supporting the existence of a kickback arrangement. However, the respondent then went on not only to dispute the kickback payments within the scope of its secondary burden of presentation, but also set out a completely different version of events, facts and circumstances. The BGH referred the case back the OLG, stating that the judge had not given sufficient consideration in their judgment to all aspects when hearing the evidence.
Legal advice is essential if there are accusations or suspicion of damage caused by acts contrary to public policy or kickback payments. Lawyers who are experienced in the field of commercial law can serve as expert advisers.
GRP Rainer LLP www.grprainer.com/en/ is an international firm of lawyers and tax advisors who are specialists in commercial law. The firm counsels commercial and industrial companies and corporations, as well as associations, small- and mid-sized businesses, self-employed freelancers and private individuals worldwide from offices Cologne, Berlin, Bonn, Dusseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London UK.