Preserving evidence in commercial disputes

When should the preservation of evidence begin?

The preservation of evidence should begin sooner rather than later. At the very latest, once a claim is being seriously considered, a breach of contract is specifically alleged or legal proceedings are foreseeable, relevant deletion and overwriting processes should be halted. This applies not only to email inboxes, but also to chat systems, mobile devices, shared drives, CRM and ERP data, backups and local files belonging to former employees.

Such a preservation order is often referred to as a ‘legal hold’. This is an organisational measure and not a statutory requirement under German civil procedure law. Its purpose is to protect potentially relevant information from loss or alteration. The scope and duration of the measure must be tailored to the specific dispute. A blanket, indefinite retention of all company data is neither necessary nor sensible.

At the same time, statutory retention obligations must be observed. For example, Section 257 of the German Commercial Code (HGB) and Section 147 of the German Fiscal Code (AO) govern the retention of commercial and tax documents. However, these obligations do not replace the legal hold, as information relevant to legal proceedings may also fall outside the statutory categories, and automatic retention periods are sometimes shorter. 

How is a legal hold implemented in practice?

The first step is to draw up a clear description of the subject matter of the dispute. Which contracts, projects, individuals, companies and time periods are affected? Based on this, data sources and so-called custodians – that is, individuals from whom relevant information is likely to be obtained – are identified. The instruction should clearly explain which data must not be deleted or altered, and who to contact in the event of any queries.

The IT department must check which systems have automatic deletion, storage limits or overwriting functions. Private archives, local PST files, messaging histories and data on mobile phones must not be overlooked. In the case of former employees, it must be clarified whether their mailboxes and end devices still exist and whether access to them is legally permissible.

A legal hold requires documented control. The service of the notice, the acknowledgement of receipt, the technical measures and any subsequent updates should be traceable. If the subject matter of the dispute changes, the scope of the data may be expanded or narrowed accordingly. Once the dispute has been finally resolved, it must be assessed which backups can be removed and which data must continue to be retained due to other obligations.

What significance do emails and digital documents have?

Emails are often particularly revealing in commercial disputes, as they are usually created shortly before a decision is made. At the same time, individual phrases must not be taken out of context. This is because the course of the conversation, attachments, earlier versions and parallel channels of communication can completely alter one’s understanding.

For this reason, the preservation of digital evidence should, where possible, retain the original file, including its metadata. Whilst a screenshot may reveal the content, it often only partially captures sender details, file properties or subsequent alterations. Under Section 371 of the German Code of Civil Procedure (ZPO), the presentation or transmission of the file is intended to serve as evidence by way of visual inspection for electronic documents.

The updated Section 371a of the German Code of Civil Procedure (ZPO) extends the rules on the probative value of private documents to private electronic documents bearing a qualified electronic signature, a notarised electronic signature or a handwritten signature duly certified. In the case of a qualified electronic signature, the prima facie evidence of authenticity resulting from the signature verification can only be rebutted by facts that give rise to serious doubts as to whether the declaration was made by the person responsible. However, this is not an irrefutable guarantee of the document’s factual accuracy, as technical authenticity and factual content are two separate matters.

Even a genuine email may be worded in a misleading, ironic or incomplete manner. Conversely, the absence of a digital signature mechanism does not automatically mean that the document lacks probative value. The court assesses the evidence in its overall context in accordance with Section 286 of the Code of Civil Procedure (ZPO).

How are documents organised and analysed?

A large volume of data does not in itself constitute a strong body of evidence. First, a chronology should be drawn up linking the events, the parties involved and the relevant documents. On this basis, it is then possible to identify groups of facts, such as the conclusion of a contract, performance, notification of defects, internal knowledge, the development of damages and settlement negotiations.

In the case of extensive proceedings, it is advisable to maintain a standardised document register. Each document is given a unique reference number and a brief summary of its contents. In addition, the date, sender, recipient and relevance to the subject matter of the evidence must be recorded. Duplicates and virtually identical versions of contracts must remain identifiable, as even minor changes can be decisive.

When analysing the evidence, one should not limit oneself to collecting incriminating documents. Contradictory documents, missing responses and unfavourable internal assessments must also be brought to light at an early stage. They do not disappear simply because they are ignored in one’s own analysis. Only when one’s own body of evidence is scrutinised as critically as that of the opposing party can a realistic litigation strategy be developed.

What role do witnesses play?

Witnesses give an account of their own observations, not a legal assessment of an event. In commercial proceedings, relevant witnesses often include employees, former managing directors, consultants, customers or suppliers. Over time, their memories may fade, and key individuals may leave the company or move abroad. It is therefore important to identify potential witnesses at an early stage and question them about the actual course of events.

Internal interviews serve to establish the facts and must not be used to coerce a particular statement. Open-ended questions are generally more productive than asking a witness to confirm a theory that has already been formulated. The interview should be documented promptly, whilst ensuring it is clear whether the document is a working paper for a solicitor or a statement confirmed by the witness.

In accordance with Section 373 of the German Code of Civil Procedure (ZPO), a request for evidence in civil proceedings must specify the witness and the specific fact on which they are to be examined. Simply naming a person ‘in relation to the entire facts of the case’ does not constitute sound preparation for proceedings. It should therefore be established in advance for each witness what contribution they can make to which specific point of evidence.

When are expert witnesses required?

Experts appointed by the court assist the court or arbitral tribunal with matters requiring specialist knowledge. In commercial disputes, this often relates to business valuations, accounting, construction and technical issues, IT systems, manufacturing defects or complex calculations of damages. However, an expert witness does not replace the party’s presentation of the facts. If the so-called ‘facts of the case’ are missing, the expert witness cannot and must not investigate an unclear set of facts on their own initiative.

A privately commissioned expert report (party-commissioned report) primarily constitutes a qualified submission by a party. It can help to understand technical contexts, prepare questions for a court-appointed expert and quantify one’s own position in economic terms. Its persuasiveness depends on transparent assumptions, complete data, a comprehensible methodology and, not least, the expert’s professional competence and reputation.

When is the independent evidence procedure under Section 485 of the German Code of Civil Procedure (ZPO) useful?

Where there is a risk of evidence being lost, independent evidence proceedings under Section 485 of the German Code of Civil Procedure (ZPO) may be considered. During or outside ongoing proceedings, an on-site inspection, the examination of witnesses or an expert assessment may, in particular, be ordered if the opposing party consents or if there is a risk that the evidence will be lost or its use impeded.

In addition, Section 485(2) of the ZPO provides for evidentiary proceedings in respect of certain factual circumstances and causes where there is a legal interest, in particular to avoid a legal dispute. Typical cases include changing technical conditions, construction or manufacturing defects, and causes of damage. However, the procedure is neither intended nor suitable for a general collection of documents or an indefinite investigation of the facts.

The application must specifically identify the facts to be proven and the admissible means of evidence. In accordance with Section 493 of the German Code of Civil Procedure (ZPO), the outcome may, in principle, be used in subsequent proceedings in the same way as evidence taken during those proceedings.

Can the other party be compelled to produce documents?

There is no general discovery procedure in German civil proceedings. Court orders to produce documents are targeted instruments for specifically identified documents that are relevant to the decision. They are not intended for an indefinite search for potentially helpful information.

• Section 142 of the German Code of Civil Procedure (ZPO) – targeted production of documents The court may order a party or a third party to produce specific documents and other records. This requires a specific connection to the matter in dispute and a sufficiently precise description. A mere category of documents without a tangible link is not sufficient.
• Section 258 of the German Commercial Code (HGB) – Commercial books in legal proceedings: Under Section 258 HGB, the court may, in ongoing legal proceedings, order the production of a party’s commercial books, either upon application or of its own motion. In accordance with Section 259 of the German Commercial Code (HGB), access is, in principle, limited to the content relevant to the dispute.
• No discovery: Neither of these provisions replaces the court’s own investigation of the facts nor the contractual rights to information. In order to secure production, it should be possible to explain which document or accounting record exists, why this is to be assumed, and which specific fact is to be proven by it.

To protect trade secrets, personal data and the rights of third parties, protective measures, redactions or restricted access may be necessary. However, confidentiality does not automatically justify a complete refusal to comply with a lawfully ordered production. The court must balance the interest in evidence, the relevance to the decision and the necessity of the production against the interest in confidentiality and the opposing party’s right to a fair hearing and due process. Since 1 April 2025, however, the Code of Civil Procedure (ZPO) has contained a statutory basis for the protection of trade secrets in Section 273a ZPO. Under this provision, the court may, at the request of a party, classify information at the centre of the dispute, in whole or in part, as requiring confidentiality if it may constitute a trade secret within the meaning of Section 2(1) of the Trade Secrets Act (GeschGehG). 

What are the consequences of destroying or withholding evidence?

Anyone who destroys, withholds or hinders the use of relevant evidence risks procedural disadvantages. The Federal Court of Justice defines the aforementioned obstruction of evidence as conduct whereby a party culpably makes it impossible or more difficult for the opposing party, who bears the burden of proof, to adduce evidence. The consequences depend on the degree of fault and the significance of the evidence. They may extend as far as a relaxation of the burden of proof for the aggrieved party.

Not every instance of data loss constitutes obstruction of evidence. Companies may apply their standard data deletion policies provided there is no specific reason to retain data and they comply with their statutory retention obligations. However, if a dispute becomes apparent and the automatic deletion process continues unchanged, the situation may need to be assessed differently.

Retrospective ‘cleaning up’ of internal communications is also risky. In addition to procedural consequences, it may damage the credibility of the individuals involved as well as that of the company. The safest course of action is to leave existing information unchanged and to assess its legal significance at a later stage.

How are data protection and confidentiality taken into account?

The preservation of evidence does not permit unrestricted access to personal data. A sound legal basis is required for any processing. In the case of private companies, Article 6(1)(f) of the GDPR, based on legitimate interests, is often applicable for the preservation and analysis of data for the purpose of asserting or defending claims. Depending on the circumstances, Article 6(1)(c) of the GDPR may also be relevant where there is a legal obligation. The legal basis must be documented in relation to the specific purpose, the group of individuals concerned and the scope of the data.

If the documents contain special categories of personal data, such as health data, an exception under Article 9(2) of the GDPR is also required. Under Article 9(2)(f) of the GDPR, processing is permitted where it is necessary for the establishment, exercise or defence of legal claims. However, this provision is not a carte blanche: data minimisation, purpose limitation, access restrictions and appropriate technical safeguards remain necessary.

Search terms, groups of individuals and time periods should therefore be selected in such a way that the review is limited to what is strictly necessary. Additional requirements under employment and data protection law may apply to employee data, private content or particularly sensitive information. Access rights must be restricted to the necessary team, and data transfers must be documented.

In cross-border proceedings, data exports and access from third countries may raise additional issues. Cloud locations, local employment laws and professional confidentiality must be taken into account. Confidentiality interests can often be safeguarded through tiered review processes, secure data rooms, confidentiality agreements or court-ordered protective measures. The aim is not to withhold relevant evidence, but to restrict its use to the specific purpose of the proceedings.