The ruling came after an intersex person, who is neither a man nor woman according to chromosomal analysis, brought a legal challenge after attempting to change their registered sex to “inter” or “divers”.
Authorities rejected the original application because under German civil law a child must be listed as male or female, or the section left blank.
Judges sitting in Karlsruhe ruled that the current requirements are incompatible with Germany’s constitution, violating provisions on privacy and discrimination.
“The legislature [parliament] has until 31 December 2018 to create a new regulation,” the ruling said.
“Courts and administrative authorities are no longer allowed to apply the relevant standards, insofar as they amount to an obligation to indicate sex to persons whose sex development has variations in relation to female or male sexual development and who therefore do not permanently assign themselves to male or female sex.”
The Federal Constitutional Court said the assignment of a sex was “of paramount importance for individual identity”, for both a person’s self-worth and how they are perceived by others.
Judges ruled that forcing people who were neither male nor female to leave forms blank was “unjustified” as basic law does not require a binary definition of sex.
Foreshadowing a backlash from right-wing groups, they added that “by simply opening up the possibility of another sex entry nobody is forced to associate with” it.
“Bureaucratic and financial cost, or regulatory interests of the state, cannot justify the refusal of a new, positive option for registrations,” said a ruling published on Wednesday.
“The legislature could waive the entry of sex in the register.
“Instead, it may also give the affected persons the opportunity to choose another positive name for gender that is not male or female.”
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