The lawsuit against Uber was filed by the public transportation organization Taxi Deutschland.
According to the court's decision, the company shall stop offering its low-cost service UberPop to passengers. Uber will be forced to pay a fine of up to €250,000 (roughly $327,800) per trip if the company violates the order.
The firm unveiled its UberPop service in Germany earlier this year and mainly operates in Berlin, Hamburg, Munich, Dusseldorf and Frankfurt.
An investigation on the company, however, revealed that the UberPop drivers are not directly employed by the firm and use their personal cars to transport passengers. The drivers only use Uber's software to provide the company's services, PC World has learned.
According to Anja Floetenmeyer, the spokesperson for Taxi Deutschland, the employment status of Uber's drivers raise concerns regarding insurance guidelines. She explained that insurance companies won't cover certain fees during an accident since they are considered as private drivers.
"In Germany there's insurance that applies to private drivers," Floetenmeyer said. "But if your insurer learns that you are driving for an app and you want to make money on that, they say this is a multiple risk and refuse to [pay] insurance on that."
"Uber doesn't care because security costs money," she added. "We don't believe it has interests of [German] drivers and citizens at heart."
Despite the court ruling, Uber remained persistent and said it will still continue to offer its services in Germany. The company's spokesperson in the country, Fabien Nestmann, said the ban on the company cannot be enforced yet since an appeal process is currently ongoing, Reuters reported.
"Germany is one of the fastest growing markets for Uber in Europe," Nestmann said. "We will continue to operate in Germany and will appeal the recent lawsuit filed by Taxi Deutschland in Frankfurt."
"You cannot put the brakes on progress," he added. "Uber will continue its operations and will offer UberPop ride-sharing services via its app throughout Germany."