Why your limitation of liability in B2B contracts fails

In 2014, the German Federal Ministry of Justice had more than 1,200 companies surveyed about their contracting practice. Two results stand out. First, for most companies, limiting their own liability is important or very important; among large companies, more than 80 percent say so. Second, only a minority considers the legal room for doing so insufficient.¹ The two results only make sense together once you know the third finding. Lars Leuschner, the study’s author, later put it soberly: on the basis of the Federal Court of Justice’s case law, effective limitations of liability are “nearly impossible”.² German contracting practice relies, across the board, on clauses the law does not give it. It simply does not notice. The worst case is rare, and most B2B disputes end in confidential arbitration.³ The same study, and the four stages that decide whether a clause holds, are placed in context by the entry article “Standard terms in B2B: freedom of contract is the exception”.

After twenty years of drafting and negotiating international contracts, I consider this gap between expectation and legal reality the most underrated contract risk in German law.

The starting point: unlimited liability

Absent a contractual arrangement, a debtor is liable in damages for any breach of duty it is responsible for (Section 280 of the German Civil Code, Bürgerliches Gesetzbuch, BGB). Responsibility already attaches to simple negligence (Section 276 BGB). Liability is unlimited in amount and in principle covers consequential losses: production downtime, business interruption, lost profits. Picture a supplier whose component, worth a few hundred euros, shuts down a production line. Under the statutory default, that supplier is liable for the entire standstill loss. Statutory liability ceilings are rare exceptions, for instance for carriers (Section 431 of the German Commercial Code, Handelsgesetzbuch, HGB). This is exactly why every seller, contractor, and service provider wants to limit its liability by contract. And this is exactly where the problem begins.

Almost everything is standard terms

The first error concerns the scope of judicial review. Standard terms are all terms pre-formulated for repeated use that one party imposes on the other (Section 305(1) BGB). The courts read that broadly: templates, text modules, and even industry-standard clauses suffice. The exception for “individual negotiation” applies far less often than almost everyone believes. Negotiating individually means more than negotiating. The user is the party that imposes the terms. It must genuinely put the core of the liability clause itself up for discussion. For a liability clause, this usually means offering unlimited statutory liability as a real alternative.⁴ Which company does that in plant engineering, IT outsourcing, or the supply industry? Even intensely negotiated large-volume contracts consist almost entirely of standard terms by this yardstick. Courts assess each clause on its own. Hard bargaining over the price does not turn the unchanged liability clause into an individually negotiated term. Details in “No individual agreement”.

These errors are measurable. In the ministry’s study, 32 percent of respondents believed the parties could simply agree that the liability clause counts as individually negotiated. Nearly half of the respondents from large companies believed intense contract negotiations were enough.¹ Both are wrong. The first has even been decided expressly by the Federal Court of Justice.⁵

What content review leaves standing

For the review itself, the specific clause prohibitions of Section 309 BGB do not apply directly between businesses. But the Federal Court of Justice treats them as indicative.⁶ Together with Section 307(2) No. 2 BGB, the result is three limits that a safe standard term respects:

• no restriction of liability for intent and gross negligence, including that of vicarious agents (for the user’s own intent Section 276(3) BGB, otherwise Section 309 No. 7(b) BGB);
• no restriction of liability for injury to life, body, and health (Section 309 No. 7(a) BGB);
• liability for the breach of essential contractual obligations (cardinal duties). For simple negligence, this liability may only be capped in amount, and not below the foreseeable, contract-typical damage.⁷

These limits apply to any restriction of liability, including an indirect one. For example, a general shortening of the limitation period conflicts with Section 309 No. 7 BGB, because it indirectly eases liability for gross fault.⁸ Between businesses, this indicates under Section 307 BGB that the clause is invalid. No-fault liability extensions in purchasing terms fail under Section 307 BGB as well.⁹ And the popular proviso “to the extent permitted by law” does not help; see the article “To the extent permitted by law? Not a good idea”. An overreaching clause is not trimmed down to the permissible maximum, it is struck.

So what remains? In the following clause, the Federal Court of Justice upheld the limitation to foreseeable, contract-typical damage.¹⁰

This clause holds. But it holds because it concedes what the statute demands anyway. The liability risks that matter in practice, quality deviations and delay, almost always concern essential contractual obligations. And the consequential losses one actually wants to exclude, above all the customer’s lost profits, are precisely what is contract-typical and foreseeable in commercial dealings. The customer buys the performance in order to earn money with it.² Under the foreseeability formula, liability for exactly these losses therefore remains. The Anglo-American standard exclusion of “consequential damages” also regularly achieves something other than what both parties believe. See the article “Consequential damages in international contracts”.

The four levels where limitation works

The conclusion is not resignation but a different division of labor. Limiting liability happens on four levels, and the clause is only one of them, the weakest. Whoever wants to use every option can also look at opting out of standard-terms law in arbitration.

First level: the subject matter, meaning the statement of work

What is not owed cannot be breached. The statement of work escapes the strict review of content only in its narrow core (Section 307(3) BGB). It must still be clear and comprehensible. A court reviews clauses that restrict or modify the promised performance.¹¹ A precise, exhaustive description of the owed performance with defined metrics, tolerances, and acceptance criteria limits liability more effectively than any liability clause. If you do not promise 99.9 percent availability, you are not liable for 99.9 percent. It is the most powerful drafting tool German law offers, and it is chronically neglected. The statement of work is the most important contract topic nobody writes about; see the article “Why contracts fail on the statement of work”.

Second level: the legal consequences, with realistic expectations

In standard terms the room is narrow, but it exists. Use a clause built like the one above, plus a monetary cap for the segment of simply negligent breaches of essential duties. The cap must cover the contract-typical damage. In practice, the cap is often aligned with the coverage of the business liability insurance. That amount can be justified as reasonable, and it is actually funded when things go wrong, to the extent the insurance covers the loss. Whoever wants more must genuinely negotiate. Put the core of the clause up for discussion, give the customer a real choice (say, unlimited liability at a higher price), and document the process. That is laborious, uncomfortable, and the only path to a clause that may do more than the statute. And whoever sits in a supply chain aligns the tiers. Your own upstream supplier must be liable to you to the same extent you are liable to your customer. Otherwise you pay the difference yourself.

Third level: the governing law

The benchmark of content review is not the same for every contract. It follows from the applicable law, and that is a matter of drafting. There are three ways to use this. Under the CISG, liability clauses are measured against the Convention’s flexible framework rather than the strict BGB model. In my view, a genuine limitation, at least for simple negligence, becomes achievable, one of the strongest reasons not to exclude the CISG reflexively; see the article “CISG: advantages and disadvantages for German exporters”. Swiss law reviews standard terms only vis-à-vis consumers (Article 8 of the Swiss Unfair Competition Act). In an international sale of goods, the CISG forms part of Swiss law unless the parties exclude it (Article 1(1) and Article 6 CISG). Without the CISG, what remains between businesses is essentially a check for unusual clauses. The main mandatory limits are those of Article 100 of the Swiss Code of Obligations, which prohibits any exclusion for one’s own intent and gross negligence. A limitation of liability for simple negligence that German law prohibits in standard terms is routine under Swiss law.¹² The precondition is an international setting; in purely domestic cases mandatory German law stays applicable (Article 3(3) of Regulation (EC) No 593/2008, the Rome I Regulation). This check for unusual clauses applies to limitations of liability as well. It requires that the terms are clearly incorporated and accessible when the contract is concluded. The customer must also accept them as a whole without reading or understanding them. In that case, a limitation that departs markedly from the statutory liability for that type of contract becomes part of the contract under Swiss law only if the user expressly points to it and to its scope. This applies at least toward a customer from outside the industry.¹³ The article “All-Caps Clauses in Commercial Contracts” shows what such a notice looks like. The third way, the choice of forum, is important enough to get a level of its own.

For the other party, the inversion holds. It is a tactical instrument in its own right. As a buyer, you benefit from Germany’s strictness. If you choose German law and exclude the CISG, most limitation clauses in your supplier’s terms of sale are invalid. You can then accept such a clause without objection.

Fourth level: the forum, meaning the arbitration clause and the seat

Whoever drafts the liability clause decides only half the case. The other half is decided by whoever reads it later. An arbitral tribunal is a private court. It is bound by the law, but not by the case law of the Federal Court of Justice, and nobody checks whether it applied the law correctly. There is no review on the merits (révision au fond), and an error of law leads to annulment only exceptionally. With a seat in Germany, the only ground for this is a violation of public policy (Section 1059(2) No. 2(b) of the German Code of Civil Procedure, Zivilprozessordnung, ZPO).

This invites a misconception I meet regularly. An arbitration clause does not make the liability clause valid. If German law governs, Sections 305 et seq. BGB apply in arbitration too. According to a 2014 survey of experienced arbitration practitioners, the objection that a clause is invalid as a standard term is raised in roughly a third of arbitrations governed by German law. Of the 54 most experienced respondents, 96 percent named limitations of liability among the three types of clause the objection most often targeted. Of the same 54 respondents, 62 percent agreed or tended to agree that tribunals follow the cardinal-duties case law of the Federal Court of Justice.¹⁴

The advantage lies elsewhere, and it can be stated precisely. Arbitral tribunals are more generous about what counts as individually negotiated. What the Federal Court of Justice refuses to treat as an individual agreement, tribunals, in the experience of most of the practitioners surveyed, accept where the parties negotiated intensely and the clause was textually changed from the first draft.¹⁴ The arbitration clause shifts the threshold of content review; it does not eliminate the review. Negotiate hard, document it, and an arbitral tribunal may recognize the individual agreement you would lose before a German court.

On top of that comes what often weighs more in practice than the doctrine: the proceedings are not public, the parties select the arbitrators themselves, and the award is easier to enforce across the 172 contracting states of the New York Convention than a German judgment. The maps in the article “Arbitration or litigation?” show where exactly that applies. The drawbacks are a single instance, no appeal on the merits, and higher costs.

Many overlook one technical point. The arbitration clause is an agreement independent of the main contract (Sections 1029(2), 1040(1) sentence 2 ZPO). If the main contract is invalid or is avoided, the arbitration clause regularly survives. The clause that decides your liability outlives the contract it sits in. All the more reason to draft it deliberately: institution, number of arbitrators, seat, language of the proceedings, applicable law. Each of these is a decision with consequences, not a formality.

The furthest-reaching option: a foreign seat plus opting out of standard-terms law

The idea is to choose German law, but carve Sections 305 to 310 BGB out of it, and combine that with an arbitration clause seated outside Germany, as a rule in Switzerland. The construction is not settled.

The first objection is obvious and seems decisive. Sections 305 et seq. BGB are mandatory law, not at the parties’ disposal, as the Federal Court of Justice has expressly held.⁵ But the objection only covers one half. It says you cannot contract out of standard-terms law within German law, that is, by private autonomy. It says nothing about which law governs in the first place. That question is answered by party autonomy, meaning conflict of laws. Party autonomy can do what private autonomy cannot.¹⁵

Before state courts this leads nowhere. Under Article 3(1) Rome I Regulation you can only choose a national legal system, not a tailored extract from one. In arbitration, a different conflict-of-laws regime applies. Under Section 1051(1) sentence 1 ZPO a tribunal seated in Germany decides according to the rules of law designated by the parties, and rules of law are not the same thing as a legal system. Swiss law at the seat permits the same in Article 187(1) of its Private International Law Act. German law without Sections 305 to 310 BGB is therefore a choosable benchmark, at least where the transaction is genuinely international.¹⁶

Here the Swiss seat covers the residual risk that the Rome I Regulation applies to arbitral tribunals after all, which the prevailing view denies. The Court of Justice of the European Union has never ruled on it.¹⁷ The arbitration agreement is where the construction is most vulnerable. For the arbitration agreement itself no tailored benchmark can be chosen, only a national law. Choose German law for it, and you expose the arbitration clause of all things to review under Section 307 BGB. Choose Swiss law, which knows no open B2B content review, and that review disappears.¹⁶

That leaves the heaviest objection. Is standard-terms law part of public policy? If it were, the opt-out would have no effect, because public policy is the limit of every choice of law. The most prominent advocate of the opt-out is, of all people, a former judge of the Federal Court of Justice, and he denies it. A selective waiver of Sections 305 to 310 BGB sets aside nothing that the founding principles of the legal order treat as indispensable. The minimum protection against unreasonable disadvantage survives anyway, because a correction of pre-formulated clauses oriented on the demands of justice still takes place after the opt-out, to the extent public policy requires it.¹⁵ He therefore considers the opt-out effective even in purely domestic cases.¹⁸

And the Federal Court of Justice? It had the question before it in January 2025: German law, an arbitration clause of the German Arbitration Institute, seat in Berlin, a construction project in the Netherlands, and the parties’ express declaration to waive the application of Sections 305 to 310 BGB. It upheld the arbitration agreement, because that agreement is independent of the agreement on the waiver, and expressly left open whether the waiver itself is effective. Its dictum is nevertheless the most important sentence on the topic: regardless of whether the standard-terms provisions belong to public policy, their non-application may in the individual case produce a result that offends it, namely where the tribunal upholds a contractual arrangement whose formation can no longer be understood as an expression of contractual self-determination, or which leads to plainly intolerable consequences.¹⁹

That sets the frame. The opt-out shifts the review; it does not abolish it. What remains is public policy, Section 242 BGB and, where German law governs the arbitration agreement, review of the arbitration clause itself. What disappears is the cardinal-duties casuistry, not the reasonableness test.

My line in advising clients is clear. This construction belongs in contracts with a genuine international element, with a counterparty of equal standing, and with a liability regime that would still pass as reasonable without the opt-out. For purely domestic contracts, the outcome is uncertain. Whether Article 3(3) Rome I Regulation applies there is undecided, and the dissenting views are substantial.¹⁸ Anyone who writes the opt-out into standard terms of sale for every customer has misunderstood the instrument. In the end they risk both: the liability clause, and the arbitration clause meant to enforce it.

What you should do

1. Audit your terms. Take your terms of sale and service. If the liability clause contains a blanket exclusion of consequential damages, or a cap without the carve-backs listed above, it is very likely invalid, and the unlimited statutory liability applies.
2. Rebuild the clause on the model upheld by the Federal Court of Justice. Fault-based tiers, the cardinal-duties carve-back, a cap only in the permissible segment, aligned with insurance coverage. No overreaching exclusions that endanger the whole clause.
3. Treat the statement of work as a liability instrument. Precise, exhaustive, measurable. The drafting freedom that content review does not reach lies in the narrow core of the statement of work.
4. Use the governing-law level in international contracts. As a seller, keep and shape the CISG deliberately; where the negotiating position allows, consider Swiss law with an arbitration clause. Under Swiss law, expressly point out the limitation of liability and its scope, at least to customers from outside the industry, or negotiate it.
5. Decide the forum as well. The arbitration clause is not a closing formality but a liability decision: institution, seat, number of arbitrators, language, and applicable law all need to be set deliberately. In high-value contracts with an international element, consider opting out of standard-terms law, but only with the right law governing the arbitration agreement, and only where the liability regime stays reasonable without it.
6. Reconcile insurance and residual risk. What cannot be limited legally must be insured or priced in. A liability clause is no substitute for risk management.

The invalid liability clause is only the most expensive of several items. Where contracts lose money after signature in every other way is set out in the article “Contract management decides your margin”. The liability clause taken from a template or a generator is therefore the first one to question; why generic text fails here first is covered in the article “Standard terms: template, generator, or lawyer?”.

Frequently asked questions

Can liability be limited in standard terms under German law?

Only within narrow limits. Liability for intent of the user itself (the party that imposes the terms) and for injury to life, body, and health can be neither excluded nor limited. Liability for gross negligence, and for intent of employees and other vicarious agents, cannot be excluded; how far a limitation holds between businesses has not been conclusively settled by the Federal Court of Justice; toward consumers, a limitation is invalid as well (Section 309 No. 7(b) BGB). For a simply negligent breach of essential contractual obligations (cardinal duties), liability for foreseeable, contract-typical damages must remain intact. What can be freely limited is essentially only liability for simply negligent breaches of non-essential duties. The commercially relevant risks are precisely the ones that standard terms cannot cap.

Does Section 309 No. 7 BGB apply between businesses?

In substance, yes. The specific prohibitions of Section 309 BGB do not apply directly in B2B contracts, but the Federal Court of Justice treats them as indicative. An exclusion of liability for gross fault and any exclusion or limitation for injury to life, body, and health therefore fail in B2B standard terms as well, via Section 307 BGB.

Is intense negotiation enough to make the liability clause an individually negotiated term?

No. Negotiating a term individually means more than negotiating. The party that imposes the clause must genuinely put the part of the clause that departs from the statute up for discussion. Negotiations about other parts of the contract do not affect the liability clause, and a signed confirmation that the clause was individually negotiated is legally ineffective.

Is a monetary liability cap permitted in German standard terms?

Only in a narrow segment. A cap must not cover liability for injury to life, body, and health; a safe cap also leaves liability for gross fault untouched. Nor may it undercut liability for foreseeable, contract-typical damages from the breach of essential obligations. It remains permissible for simply negligent breaches of essential duties if it covers the contract-typical damage, for example aligned with the coverage of the user’s business liability insurance.

What role does the CISG play for limitations of liability?

A major one. Where the CISG applies, liability clauses are measured against the Convention’s flexible framework rather than the strict BGB model. In my view, a genuine limitation of liability, at least for simple negligence, becomes achievable. For exporters this is one of the strongest reasons not to exclude the CISG.

Does an arbitration clause defeat German standard-terms review?

Not in the way it is usually claimed. If German law governs, an arbitral tribunal applies Sections 305 et seq. BGB as well, and in a survey 62% of the 54 most experienced participants considered that tribunals follow the cardinal-duties case law of the Federal Court of Justice. The advantage is a different one. In the experience of most of those surveyed, tribunals already treat a clause as individually negotiated where the parties negotiated intensely and the clause changed from the first draft. The arbitration clause shifts the threshold of review; it does not eliminate the review.

Can German standard-terms law be excluded?

Not within German law, because Sections 305 et seq. BGB are mandatory. Through conflict of laws it can. In arbitration, the parties may choose rules of law rather than an entire legal system, and therefore German law without Sections 305 to 310 BGB, at least where the transaction is genuinely international. With a seat in Germany, Section 1051(1) sentence 1 ZPO allows this; with a seat in Switzerland, Article 187(1) of the Swiss Private International Law Act does. The construction is usually combined with a seat in Switzerland, where an arbitral tribunal does not apply the Rome I Regulation. Only a national law can govern the arbitration agreement itself; Swiss law is chosen for it because it knows no open content review between businesses. The Federal Court of Justice expressly left the question of effectiveness open in 2025, and review via public policy remains in place either way.

Notes

1. Leuschner/Meyer, final report of the research project “AGB-Recht für Verträge zwischen Unternehmen”, commissioned by the Federal Ministry of Justice, 2014, pp. 9, 170: limiting liability rated important by 79 percent across all company sizes. Results summarized in Leuschner, NJW 2016, 1222 (1224 f.): limiting liability rated important by 81 and 89 percent of large companies; 32 percent believe the individually-negotiated status can simply be agreed; 40.6 and 47.4 percent consider intense contract negotiations sufficient. ↩^{1 2}

2. Leuschner, Die Kontrollstrenge des AGB-Rechts, NJW 2016, 1222 (1223): effective limitations of liability are “nearly impossible” (“nahezu unmöglich”) on this basis. ↩^{1 2}

3. That most disputes between businesses are resolved before arbitral tribunals: Leuschner, NJW 2016, 1222 (1225), citing Leuschner/Meyer, final report (fn. 1), pp. 137 et seq.; on the more liberal tendencies of arbitral tribunals ibid., pp. 146, 148. ↩

4. On the standard, settled case law, for example BGH, judgment of 22 November 2012 – VII ZR 222/12 (“Bring or Pay”): no individual negotiation despite extensive negotiations and legal review, because the core content was not genuinely put up for discussion. On liability clauses, Leuschner, NJW 2016, 1222 (1223). ↩

5. BGH, judgment of 20 March 2014 – VII ZR 248/13: the application of Sections 305 et seq. BGB is not at the parties’ disposal; a mutually signed “individually negotiated” confirmation is ineffective. ↩^{1 2}

6. BGH, default judgment of 19 September 2007 – VIII ZR 141/06; settled case law on the indicative effect of Section 309 BGB between businesses. ↩

7. Foreseeability formula: settled case law, for example BGH, judgment of 23 February 1984 – VII ZR 274/82; BGH, judgment of 11 November 1992 – VIII ZR 238/91; summarizing Leuschner, NJW 2016, 1222 (1223 f.). ↩

8. BGH, judgment of 22 September 2015 – II ZR 340/14. ↩

9. BGH, judgment of 5 October 2005 – VIII ZR 16/05 “Baumarkt”. ↩

10. BGH, judgment of 18 July 2012 – VIII ZR 337/11, paras. 1 f., 39: an action by a consumer association against an energy supplier’s electricity terms for consumers. The action targeted clause 9.2 sentence 3, first half-sentence, but only the limitation to the damage foreseeable at the time of contracting and typical for this type of contract was in dispute; the claimant had not objected to the other sentences of the clause or to the definition of essential contractual obligations. The clause names the supplier “e.”; the square brackets in the translation replace that abbreviation. ↩

11. BGH, judgment of 5 October 2017 – III ZR 56/17, paras. 15, 27. ↩

12. For a comparative treatment of the construction and validity of exemption clauses under German, Swiss, and English law, see Patrick Ostendorf, RabelsZ Online First 3/2025 (open access). Under Article 100(2) of the Swiss Code of Obligations, a court may, at its discretion, treat an advance waiver of liability for slight fault as void where the waiving party was in the service of the other party when making the declaration, or where the liability arises from the operation of a business licensed by the authorities; according to Ostendorf, section IV.3.a, the provision does not apply between two licensed businesses. Under Article 101(2) of the Code of Obligations, liability for auxiliary persons may be limited or excluded even for intent and gross negligence; where the waiving party was in the service of the other party, or the liability arises from the operation of a business licensed by the authorities, Article 101(3) permits an exclusion only for slight fault (Ostendorf, section IV.3.a). Exemption clauses are in principle construed narrowly under Swiss law (Ostendorf, section IV.2.a); according to Ostendorf, section IV.2.b, the Federal Supreme Court requires for standard terms, for example, an unambiguous provision that the exemption also covers liability for auxiliary persons (BGE 124 III 155 consid. 3c). ↩

13. BGer, judgment of 2 July 2025 – 4A_287/2024, on the limitation of liability in the terms of the Swiss forwarding and logistics association, relied on against a pharmaceutical trader. Consid. 5.2.1: standard terms apply only if the party had at least a reasonable opportunity to take notice of their content when the contract was concluded; an individual agreement takes precedence over them. Consid. 5.2.2: where a party accepts the terms as a whole, that is, without reading them, taking note of them, or understanding their implications, unusual clauses are excluded unless the party was expressly told that they exist. Whether a clause is unusual depends on the business experience and industry knowledge of the party that accepts it: what is customary in one industry can be unusual for someone outside it, and in some circumstances a clause can be unusual even for someone with business experience or industry knowledge. Objectively, the clause must change the nature of the contract substantially or depart significantly from the statutory framework for that type of contract, and the more a clause affects a party’s legal position, the more unusual it is. Consid. 5.3.4.1 and 5.3.4.2: the terms capped liability for loss of or damage to goods at 8.33 special drawing rights per kilogram of gross weight and at 20,000 special drawing rights per event, whereas under Article 447(1) of the Code of Obligations a carrier must in principle compensate the full value of lost goods. For the pharmaceutical trader this was unusual, and the logistics company had not expressly told it that the clauses exist and what they cover. There the terms had not been validly incorporated in the first place, because the reference to them stood in tiny print at the end of the emails, after the sign-off and sender details (consid. 5.3.2); whoever does not hand over its terms must refer to them clearly (consid. 5.3.3). ↩

14. Like state courts, arbitral tribunals are bound by the law, but not by the case law of the Federal Court of Justice: Kästle, NZG 2014, 288 (295). The empirical basis is a survey of the members of the German Arbitration Institute (190 usable responses), not an analysis of awards, which are not published: Leuschner/Meyer, SchiedsVZ 2016, 156 (158 et seq.). The figures refer to the 54 respondents with the most arbitration experience. According to them, the standard-terms objection was raised in 31 percent of the proceedings governed by German law; 96 percent named limitations and exclusions of liability among the three types of clause most often challenged, and 62 percent agreed or tended to agree that tribunals follow the cardinal-duties case law. On the more generous understanding of individual negotiation ibid. (159): as circumstances in which tribunals, in their experience, treat a clause as individually negotiated, 76 percent named intense negotiations and 69 percent a textual change from the first draft; see also ICC, interim and partial award of 29 January 2001 – arbitration no. 10279, SchiedsVZ 2005, 108. ↩^{1 2}

15. Sections 305 et seq. BGB are mandatory as a matter of substantive law, but they are not overriding mandatory provisions within the meaning of Article 9 Rome I Regulation; their exclusion by way of conflict of laws therefore remains possible: Leupertz, RInPrax 2025, 2; Ostendorf, ZIP 2022, 730 (731). On public policy Leupertz, ibid.: the parties’ selective waiver of Sections 305 to 310 BGB does not collide with public policy. The author is a former judge of the Federal Court of Justice. ↩^{1 2}

16. Section 1051(1) sentence 1 ZPO speaks of “rules of law”, not of a legal system; Article 187(1) of the Swiss Private International Law Act permits the same at a Swiss seat. On the whole question including the law governing the arbitration agreement Ostendorf, ZIP 2022, 730 (732 et seq.), noting that for the arbitration agreement itself German law minus Sections 305 et seq. BGB cannot be chosen; further Pfeiffer, NJW 2012, 1169 (1170) and NJW 2025, 866; Kästle, NZG 2014, 288 (295); Zons, RInPrax 2025, 172. According to von Westphalen, NJW 2025, 2216 (2217), the opt-out achieves nothing, because review under Section 242 BGB leads to the same results. Where the case has a foreign element, the law governing the arbitration agreement follows, by analogous application of Article V(1)(a) of the New York Convention, primarily the chosen law and, failing that, the law of the seat (BGH, order of 9 January 2025 – I ZB 48/24). ↩^{1 2}

17. The Rome I Regulation does not apply to arbitration agreements (Article 1(2)(e) Rome I Regulation); that it does not govern the substance in arbitration either follows, on the prevailing view, from the fact that private arbitral tribunals are not “courts of a Member State” (Nueber, SchiedsVZ 2014, 186 [188 et seq.], citing ECJ, judgment of 23 March 1982 – 102/81 [Nordsee], and ECJ, judgment of 27 January 2005 – C-125/04 [Denuit], under which a contractual arbitral tribunal is not a court of a Member State that may refer questions to the Court of Justice). There is no ruling of the Court of Justice on the Rome I Regulation in arbitration, and the opposing view is gaining ground (see Ostendorf, ZIP 2022, 730 [731]). ↩

18. In favor of effectiveness even in purely domestic cases Leupertz, RInPrax 2025, 2, and Pfeiffer, NJW 2012, 1169; likewise Zons, RInPrax 2025, 172. More cautious Ostendorf, ZIP 2022, 730 (735), who sees good arguments for effectiveness even in purely domestic cases with a Swiss seat and Swiss law governing the arbitration agreement, but residual risks; undecided Schulzweida/Deger, IHR 2025, 185 (189); against the authors listed as opposing in Pfeiffer, NJW 2025, 866 (867 fn. 6), among them Stoffels, AGB-Recht, 5th ed. 2024, para. 1076. There is no case law on the point. ↩^{1 2}

19. BGH, order of 9 January 2025 – I ZB 48/24, para. 42 (the effectiveness of the exclusion is expressly left open): regardless of whether the standard-terms provisions form part of German public policy, the recognition or enforcement of an award may, because the standard-terms provisions were not applied in the arbitration, lead to a result that offends public policy, for instance where the tribunal upholds a contractual arrangement whose formation can no longer be understood as an expression of contractual self-determination, or where a contractual arrangement leads to plainly intolerable consequences. ↩

Reference: Poleacov, P. (2026). Why your limitation of liability in B2B contracts fails. INN.LAW. https://inn.law/en/perspectives/limitation-of-liability/

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