master.xml

<data>
 <params>
   <root>http://example.com</root>
   <ds-toc-projects>
      <item handle="project1">project1</item>
     <item handle="project2">project2</item>
     <item handle="project3">project3</item>
   </ds-toc-projects>
   <ds-toc-whatever>
      <item handle="whatever1">whatever1</item>
     <item handle="whatever2">whatever2</item>
     <item handle="whatever3">whatever3</item>
   </ds-toc-whatever>   
   <url-language>de</url-language>
  </params>
  <!-- this is your navigation DS -->
 <navigation>
    <page handle="projects" id="3">
      <item lang="de" handle="projekte">Projekte</item>
     <types>
        <type>index</type>
        <type>main</type>
     </types>
    </page>
   <page handle="about" id="10">
      <item lang="de" handle="ueber">Über</item>
     <types>
        <type>main</type>
     </types>
    </page>
   <page handle="blog" id="1">
      <item lang="de" handle="blog">Blog</item>
     <types>
        <type>main</type>
     </types>
    </page>
   <page handle="contact" id="9">
     <item lang="de" handle="kontakt">Kontakt</item>
     <types>
        <type>main</type>
     </types>
    </page>
 </navigation>
</data>

master.xsl

<?xml version="1.0" encoding="UTF-8"?>
<xsl:stylesheet xmlns:xsl="http://www.w3.org/1999/XSL/Transform"
	xmlns:dyn="http://exslt.org/dynamic"
	extension-element-prefixes="dyn"
	version="1.0" >
          
        <!-- this is normally done in your master stylesheet -->  
        <xsl:apply-templates mode="navigation"/>  
          
	<!-- ensure lang var exists -->
	<xsl:variable name="lang">
	  <xsl:choose>
	    <xsl:when test="/data/params/url-language">
	      <xsl:value-of select="$url-language"/>
	    </xsl:when>
	   <xsl:otherwise>en</xsl:otherwise>
	  </xsl:choose>
	</xsl:variable>
          
	<xsl:template match="data" mode="navigation">
		<nav>
			<ul class="clear lang">
				<xsl:apply-templates select="events/language-redirect"/>
			</ul>
			<ul class="clear main">
				<xsl:apply-templates select="toc-pagesection/page"/>
			</ul>
		</nav>
	</xsl:template>
	<xsl:template match="page">
		<xsl:variable name="subname">
			<xsl:value-of select="concat('/data/params/ds-toc-', @handle)"/>
		</xsl:variable>
		<li>
			<xsl:attribute name="id">
				<xsl:value-of select="concat('navigation-', @handle)"/>
			</xsl:attribute>

			<a href="{$root}/{$lang}/{@handle}/" class="xhr"><xsl:value-of select="item"/></a>

			<xsl:if test="dyn:evaluate($subname)">
				<xsl:apply-templates select="dyn:evaluate($subname)" mode="sub">
					<xsl:with-param name="parent" select="@handle"/>
				</xsl:apply-templates>
			</xsl:if>

		</li>
	</xsl:template>
	<xsl:template match="*" mode="sub">
		<xsl:param name="parent"/>
		<ul class="sub clear">
			<xsl:for-each select="item">
				<li>
					<a href="{$root}/{$lang}/{$parent}/{@handle}/" class="xhr"><xsl:value-of select="."/>
					</a>
				</li>
			</xsl:for-each>

		</ul>
	</xsl:template>

	<xsl:template match="language-redirect">
		<xsl:for-each select="supported-languages/item">
			<xsl:variable name="url">
				<xsl:value-of select="concat($root, '/', @handle, substring($current-url, string-length($root)+4))"/>
			</xsl:variable>
			<li>
				<a>
					<xsl:attribute name="href">
						<xsl:value-of select="$url"/>
					</xsl:attribute>
					<xsl:attribute name="class">
						<xsl:text>lang</xsl:text>
						<xsl:if test="@handle = $url-language">
							<xsl:value-of select="' active'"/>
						</xsl:if>
					</xsl:attribute>
					<xsl:value-of select="@handle"/>
				</a>

			</li>
		</xsl:for-each>
	</xsl:template>

</xsl:stylesheet>