German Federal Court of Justice issues rulings on liability and guarantees

The German Federal Court of Justice (BGH) has issued two significant rulings regarding corporate liability and guarantee rights.

In the first case, the BGH addressed the validity of a limited waiver of the statute of limitations. A former managing director of a GmbH, facing claims totaling approximately 3.972 million euros following insolvency proceedings, had issued a time-limited waiver of the statute of limitations defense to the insolvency administrator. When the administrator assigned these claims to a third party, the third party sued for payment. The BGH overturned a lower court decision, ruling that a debtor's limited waiver of the statute of limitations defense cannot be ignored by the assignee, as attempting to invoke the defense would constitute an impermissible exercise of rights.

In a separate decision, the BGH ruled that shareholder guarantors do not have a right of withdrawal under EU Directive 2011/83/EU or German civil law (§ 312g BGB), even if the guarantee was concluded via distance selling or outside of business premises. This case involved a shareholder who had provided a personal guarantee for a credit line of up to 1.425 million euros for a GmbH. Following the company's insolvency, the creditor sought to enforce the guarantee. The court found no legal necessity to deviate from previous jurisprudence regarding the lack of withdrawal rights for such guarantors.