The FinSV elaborates on the provisions of section 14 (1) of the German Injunctions Act (Unterlassungsklagengesetz – UKlaG). It replaces the German Regulation on Rules of Procedure for Dispute Resolution Entities (Schlichtungsstellenverfahrensverordnung – SchlichtVerfV) and the German Regulation on the Arbitration Board Pursuant to Section 342 of the Investment Code (Kapitalanlageschlichtungsstellenverordnung – KASchlichtV). The background to this is the EU Directive on Alternative Dispute Resolution for Consumer Disputes.

Organisation and recognition

According to the regulation, every dispute resolution entity must establish an office. In addition, a website must be set up which allows dispute resolution applications to be submitted electronically.

Private dispute resolution entities may only become active after they have been recognised as such by the Federal Office of Justice. They have to be independently organised and have sufficient staff and financial resources. The respective operator can decide themselves how to finance this business, for example through charges paid by the companies taking part in the dispute resolution procedure.

Provisions for mediators

Each dispute resolution entity must have two or more mediators, who must be appointed for at least three years. All mediators must be qualified to hold judicial office. Their remuneration must not be results-oriented.

Public mediators must have been employed for at least three years before by the operator. Private mediators cannot have been in the employ of the operator in the three years prior to their appointment. They also cannot have been employed by a company taking part in the entity's dispute resolution procedures or by any company associated with such a company.

Deadlines, confidentiality and reporting obligation

The FinSV also provides for fixed deadlines for the processing of dispute resolution cases: decisions must be made within 90 days after receipt of all information necessary for such a decision. All employees of the respective entity are obliged to maintain confidentiality with regard to the procedures.

The dispute resolution entities must draw up an activity report each year as well as an evaluation report every two years. Amongst other things, this must include information on further training for the entity's staff as well as on international cooperation.

Entry into force

The provisions of the FinSV for private dispute resolution entities have already been in force since mid-September.

For the public dispute resolution entities, which include those at the Deutsche Bundesbank as well as at BaFin, they will enter into force on 1 February 2017. Until then, the procedures are carried out pursuant to the provisions of the KASchlichtV.