Recent developments in the Wirecard and Bayer litigations have turned claim disaggregation, i.e., the separation of bundled claims into individual proceedings, from a theoretical risk into a tangible strategic concern in German investor litigation. While KapMuG remains a viable framework for collective redress, aggregation can no longer be assumed and must be actively managed through careful claim structuring from the outset.
For many years, Germany has offered a pragmatic – if imperfect – framework for collective investor redress. The KapMuG regime was never designed as a class action system in the U.S. sense, yet it provided something equally important in practice: a workable mechanism to aggregate claims, streamline proceedings, and, above all, contain cost exposure.
To a certain extent, the Wirecard and Bayer litigations have placed that assumption under pressure. Disaggregation (the separation of previously bundled claims into multiple individual proceedings) has moved from a largely theoretical possibility to a tangible litigation risk. As a result, investors and funders are increasingly reassessing the structural reliability of aggregation in Germany.
Disaggregation: from risk to reality…to a manageable risk
Under German procedural law, courts have always had the power to separate claims. Section 145 ZPO allows for such separation where factual reasons justify it, leaving the decision largely within the court’s discretion. Historically, however, this tool was rarely used in investor litigation, as the logic of KapMuG, centralising common factual and legal questions generally militates against fragmentation.
The Wirecard proceedings marked a notable departure from that practice. Groups of institutional investors, whose claims were broadly aligned in both factual and legal terms, were nevertheless separated into individual proceedings. This transformed a coordinated group action into multiple standalone cases, each carrying its own procedural and financial implications. While such instances remain rare, their impact has been significant. At the same time, these developments offer the opportunity to adjust litigation strategies, moving the realised risk to a manageable one.
The economic impact of separation
The importance of disaggregation lies less in its procedural nature than in its economic consequences. The efficiency of KapMuG proceedings is closely tied to their ability to concentrate cost exposure. Aggregation allows for a single set of court fees and a coordinated litigation process, with statutory mechanisms effectively capping overall risk.
Once proceedings are separated, this structure is lost. Each claim is treated independently, and costs are calculated on an individual basis. This can lead to a substantial increase in overall litigation costs, potentially rendering a previously viable case economically unsustainable.
The Bayer litigation illustrates how seriously this risk is now taken in practice. Faced with a pending request to separate several hundred investor claims, and the resulting prospect of a significant increase in cost exposure, a claimant group ultimately withdrew the action before the court rendered a decision. This development underscores that disaggregation is not merely a procedural consideration, but a factor capable of influencing fundamental litigation strategy.
Why now?
Several factors help explain why disaggregation has gained prominence in recent cases. First, the discretion afforded to courts under Section 145 ZPO is broad, and decisions to separate proceedings are difficult to challenge effectively. As long as a court can point to potential efficiency gains, such as simplifying evidentiary issues or accelerating the resolution of individual claims, its decision is likely to withstand appellate scrutiny.
Second, timing within the KapMuG process appears to play a decisive role. The risk of separation is most pronounced before claims have been formally stayed and integrated into the model proceedings. Until that point, claims remain procedurally exposed and can be targeted for separation. In both Wirecard and Bayer, this window of vulnerability proved critical.
Third, procedural delays in the early stages of litigation may contribute to the problem. German courts have traditionally applied stringent requirements when assessing claimants’ standing before granting a stay, which can delay the transition into the protective framework of KapMuG. Recent legislative reforms aim to address this issue by allowing courts to stay claims at an earlier stage based on a preliminary assessment of standing. While these changes are likely to reduce the risk of disaggregation going forward, their practical impact remains to be seen.
A broader procedural trend
Disaggregation is not entirely new as a procedural concept. German courts have employed similar mechanisms in other areas of complex litigation, including consumer and antitrust cases, particularly where large and heterogeneous claim groups are involved. What is new is its application in large-scale investor litigation and the extent to which it is now being used strategically.
Defendants have increasingly recognised the leverage that disaggregation can provide. By raising cost exposure and procedural complexity, it can place significant pressure on claimant groups and their funders, potentially altering the course of litigation.
Managing the risk through structure
In response, claimants and funders have begun to place greater emphasis on how claims are structured from the outset. The homogeneity of claims has become a central consideration, as courts are less likely to separate claims that share a common factual and legal basis.
Alternative structures, such as assignment models in which claims are bundled into a single claimant entity, are also being explored as a means of reducing disaggregation risk. While such models have been recognised in principle by German courts, they introduce additional complexities, including regulatory considerations and potential challenges to the validity of assignments.
Not a systemic shift, but a real risk
Despite these developments, it would be premature to conclude that disaggregation represents a systemic shift in German investor litigation. The vast majority of KapMuG proceedings have not been affected, and major cases such as Volkswagen and Daimler have proceeded without fragmentation. Moreover, recent reforms to the KapMuG framework are expressly aimed at strengthening its effectiveness and reducing procedural inefficiencies.
The more balanced conclusion is that the risk landscape has evolved rather than fundamentally changed. Disaggregation remains an exception, but it is no longer a remote one. It has demonstrated its potential to disrupt the economics of large-scale litigation and to influence strategic decision-making at an early stage.
Conclusion
KapMuG continues to provide a viable framework for collective redress in Germany. However, its practical effectiveness increasingly depends on how well claims are structured to withstand procedural dynamics that have become more visible in the wake of Wirecard and Bayer. For investors and funders, aggregation can no longer be assumed. It must be actively managed.
