A German Highest State Court Pilloried A German Business Leader

Recent Trends In German Jurisprudence

In recent times, I observed several times that high courts in Germany (like the Bundesgerichtshof or Federal High Court of Justice) came out with decisions contravening common sense and are totally opposed to a free market economy.

My theory about those judges is that they are representatives of the so called APO (ausserparlamentarisch Opposition or the 1960/70s student revolts) generation who are now in high ranking positions of German society. They appear to belong to what is referred to in German as Gutmenschen (do gooders or starry-eyed idealists).

Ferdinand Piech Was The Latest Target Of German Judges

 In March 2012, the Highest State Court (Oberlandesgericht) of Justice in Baden-Württemberg (a south-western state of Germany famous for its cars like Mercedes) issued a verdict against one of Germany’s best known automobile business managers, i.e. Ferdinand Piech (he is a member of the Porsche family and part owner of Porsche). The judges of that court found he violated his primary duties as the chairman of the supervisory board (Aufsichtsrat) of Volkswagen AG when he made at one occasion some specific remarks to journalists about the failed attempt by Porsche to acquire Volkswagen. Thereby, he allegedly caused financial damage to Porsche.

This court also saw it necessary to deny appeal to their verdict so that the defendant is forced to file a petition with the highest civil court in Germany to appeal.

I admit readily, I do not know all the details of this case, but one cannot escape to notice from what has been reported in the media that this is a case of judges trying to pillorize a business manager. This verdict may well have a very chilling effect on what leading business managers can and cannot say in public and so on. The verdict appears also to have the character of a Monday morning quarterback or judges who try to second guess like judges who never ran a business in their lifetime.

Some Inconvenient Facts

I can only speculate that these judges may have overlooked or ignored a couple of salient facts in this case:

1) Mr. Piech owns about 10% of Porsche. He also reportedly owns stocks in Volkswagen.
I do not know how much other Porsche family members own. Thus, if Mr. Piech indeed caused financial damage to Porsche, he did it to himself.
2) Mr. Piech was at the relevant time the chairman of the supervisory board of the target company and he also was a member of the supervisory board of Porsche.
Thus, the whole acquisition attempt by Porsche put Mr. Piech in a very odd position. This odd situation appeared not to be material for the civil proceedings.
3) Mr. Piech was not the only member of the supervisory board of Porsche. I do not know whether any other member was sued.

Free Markets Vs Courts Of Justice

There are cases that are better left to the free markets to evaluate and judge. This probably was one of those cases.

Given these above mentioned inconvenient facts and, I suspect, there are more facts like this in this case, it would have been best to let the free markets sort out this instead of some high minded judges.