Background
A financial adviser had worked for the defendant under a commercial agency agreement since 1995. In 2021, employees of important product partners reported that he had insulted personnel, sent dubious communications, and circulated material associated with “Reichsbürger” ideology and conspiracy theories. Other concerns included his failure to complete anti-money-laundering training and an adverse SCHUFA credit report. The defendant terminated the agency agreement without notice, alternatively giving ordinary notice effective at the next permissible date.
The adviser sought declarations that the summary termination had not ended the relationship and that the defendant owed damages. After hearing witnesses, the Frankfurt Regional Court dismissed the action and upheld the summary termination. The Frankfurt Higher Regional Court largely reversed, finding that the agreement continued until December 31, 2023 under the ordinary termination and awarding damages resulting from the unjustified summary termination, except for claimed interest losses. It denied permission to appeal.
The Court’s Holding
The Federal Court of Justice granted the defendant’s complaint against the denial of permission to appeal, vacated the appellate judgment under § 544(9) of the Code of Civil Procedure, and remanded the case. It held that the appellate court had materially violated the defendant’s constitutional right to be heard under Article 103(1) of the Basic Law.
The appellate court rejected the Regional Court’s assessment of testimony concerning allegations that the adviser had severely berated and personally insulted an employee of a product partner. Because that rejection rested on the witness’s inability to recall the specific remarks—and therefore implicated the witness’s memory and the completeness and reliability of his testimony—the appellate court could not reassess the recorded testimony without rehearing him. This rule also applies to hearsay witnesses, whose evidence is admissible but requires particularly careful evaluation.
The error could have affected the outcome. A renewed examination might support a finding that the alleged conduct, alone or together with other incidents, justified immediate termination and possibly made a prior warning unnecessary. The Federal Court did not decide whether the termination was valid or whether damages were owed; those issues remain for the appellate court on remand.
Key Takeaways
- An appellate court generally must rehear a trial witness before interpreting or evaluating that witness’s testimony differently on matters involving memory, credibility, completeness, or consistency.
- Hearsay testimony is not categorically inadmissible or unsuitable under German civil procedure, although it requires especially rigorous evaluation.
- The decision resolves a procedural due-process issue, not the ultimate validity of the commercial agent’s summary termination.
Why It Matters
The ruling reinforces the limits on appellate reassessment of witness evidence in German civil litigation. An appellate court may not overturn a trial court’s factfinding based on perceived deficiencies in a witness’s memory or account while relying solely on the written record.
For commercial-agency disputes, the decision also leaves open whether serious misconduct toward key business partners can justify termination without notice, either independently or cumulatively, and whether the circumstances can dispense with a prior warning.