Increased energy and raw material prices lead to suppliers (having to) pass on rising costs to their customers and request their customers to (re)negotiate contracts. If price renegotiation requests are combined with the announcement that material procurement is no longer possible or only possible with difficulty or that the supplier’s liquidity is threatened, there is a risk that a preliminary injunction will be issued at the request of the customer without hearing the supplier.
In the context of our last news article on this topic, the recent decision of the German Federal Constitutional Court is welcome: It sharpens the contours of procedural equality of arms and once more emphasises the very exceptional situation of not holding a hearing in preliminary injunction proceedings.
The hearing as a general principle
In principle, it follows from the right to be heard that the respondent (in this case the supplier) must be heard before a court order granting a preliminary injunction is issued and must thus be given the opportunity to influence a forthcoming court decision. The court must equally grant the parties the opportunity to present everything relevant for the court decision and to assert all procedural defences necessary to ward off the opponent’s claim.
Such an opportunity must be granted to the parties as a general rule; however, the opportunity to make a statement can be granted in various ways (e.g. by the court giving the respondent the opportunity to make a statement by phone).
No hearing as an (utter) exception
The courts may only deviate from this principle in very strict exceptional cases. In addition to particular urgency, the prerequisite is that the purpose of the preliminary injunction proceedings would otherwise be frustrated.
The German Federal Constitutional Court made it clear that a decision made (to the respondent’s disadvantage) without hearing the respondent must clearly reveal that the court was aware of the exceptional nature of its procedural approach. The decision must explain why a party is being kept out of the proceedings. A merely formulaic justification that “due to urgency” the hearing is dispensed with is not sufficient. In particular, less drastic alternatives must have been unavailable, i.e. a hearing by phone at short notice must have been impossible.
Consequences and recommended action
Even in cases of threatened delivery stops and even more so in cases of a request for renegotiation, there is usually still enough time for the court to give the respondent (here the supplier) the opportunity to comment, at least by phone.
Since, notwithstanding this, it cannot be ruled out that courts will deviate from the general requirement of a hearing in preliminary injunction proceedings, suppliers should not only pay very careful attention to their communication with the customer, but they should also make use of their preventive legal options. Suppliers can and should also counter the economic and entrepreneurial risk associated with the issuance of a preliminary injunction by filing a protective letter. This can at least ensure that their own description of the facts is taken into account.back