1. LEGAL SYSTEM

The Austrian legal system is based on codified principles of civil law. Judicial precedents are not binding, but are strongly taken into consideration by courts and the parties in dispute.

In Austria, all courts are federal courts. Austria's court system is composed of District Courts (Bezirksgerichte), Regional Courts (Landesgerichte), Courts of Appeal (Oberlandesgericht) and the Austrian Supreme Court (Oberster Gerichtshof). In addition to the general court system, there are specialized courts that rule on specific subject matters, for example commercial law or labour and employment law disputes.

Currently, there are in total 116 District Courts, 20 Regional Courts, 4 Courts of Appeal and the Supreme Court in Austria.

Generally, minor cases, i.e., cases valued up to EUR 15,000, are heard before the District Courts in the first instance and the Regional Courts act as the appellate courts. Major cases, i.e., cases with amounts in dispute higher than EUR 15,000 are heard before the Regional Courts in the first instance and appeals are decided by the Courts of Appeal in second instance. In general, proceedings consist of maximum three stages; with a Court of Appeal or the Austrian Supreme Court acting as the third instance.

In the first instance, in addition to low value cases, District Courts also handle all cases with the following types of matters: (i) claims for alimony and child support as well as disputes over the establishment or contestation of paternity; (ii) marital disputes; and (iii) all civil cases concerning the disturbance of possession or property, easements, lease or tenancy relationships.

Additionally, in Vienna there is a special District Court for commercial matters (Bezirksgericht für Handelssachen Wien) as well as the Commercial Court of Vienna (Handelsgericht Wien) on a regional level. Both are dealing with all commercial matters i.e. shareholder disputes, business acquisitions or disputes between businesses. Furthermore, there is the Labour and Social Court of Vienna that has jurisdiction to rule on matters expressly provided for by law regarding employment relationships and social security issues.

If commercial, labour or social security disputes arise that are not within the competency of the Viennese courts, the general courts are competent and the rules of competency of District and Regional Courts, as set out above, apply.

The Austrian Supreme Court is at the top of the judicial hierarchy in Austria. It primarily serves as a court of cassation. It is the court with appellate jurisdiction in criminal and civil cases, commercial matters, cases of administrative review and labour and social security disputes. In almost all civil cases it is the court of third instance. However, grounds of appeal to the Austrian Supreme Court are limited to substantial legal issues concerning substantive and/or procedural law.

The Austrian court system is rather efficient in European and international comparison. Civil proceedings are commenced by the filing of a claim with the competent court. The claim must contain the facts of the case and offer supporting evidence. Under Austrian law, the claimant must also include the relief or remedy sought in the matter. Remedies which the claimant may request include the following:

-a decision on performance of an obligation; holding the defendant liable to pay a certain amount of money, deliver or surrender moveable property, pay damages or to cease and desist (i.e., acts of unfair competition);

-a declaratory decision; a judgment determining the existence or non-existence of a legal relationship or right, including the authenticity of a document; or

-a decision that leads to the creation, amendment or cancellation of  a legal relationship.

After a claim is filed, the court considers whether it has jurisdiction over the claim. If it has jurisdiction over the dispute, it serves the claim to the defendant, along with an order for the defendant to submit a statement of defence within a specified period of time. The defendant's statement of defence must include an explanation of the facts and evidence which it relies on, including the judgment sought in response to the claim, i.e. dismissal of the claim in whole or in part. Moreover, the defendant may also raise set-off claims.

Once the defendant submitted its statement of defence, the court initiates the court proceedings which typically consist of several oral hearings. In Austria, jury trials do not exist in civil proceedings. The trial is held before and decided by either a judge or a panel of judges, depending on the type and stage of the proceedings.

Trials serve the highly important purpose of allowing the presentation and gathering of evidence. Evidence presented by the parties during the proceedings may include documents, witnesses, expert witnesses, and testimony of the parties involved in the dispute. The approved witnesses are questioned by the judge first and can then be further examined by the parties' attorneys. After the hearing and taking of evidence has been concluded, the judge will close the proceedings and issue his/her judgment, usually in writing.

According to the available statistics, first instance proceedings pending before a District Court take on average 6 (six) months; in Regional Courts, the average time is 13 (thirteen) months. Only 2.3% of dispute resolution proceedings take longer than 3 (three) years. In appellate proceedings, evidence is generally not re-examined and new evidence or new allegations are not admitted. Appellate proceedings may take between 6 (six) months and 1 (one) year. The Supreme Court usually renders its judgment within 1 (one) year.

A party may also request interim remedies. A court may order a preliminary injunction to secure inter alia money claims either before or during litigation proceedings. In order to have a request for a preliminary injunction granted, the court must have a sufficient reason to believe that (i) the defendant will prevent or endanger the enforcement of a potential judgment by destroying, concealing or transferring assets; or, (ii) the judgment would otherwise have to be enforced in a state in which enforcement is not guaranteed by international treaties or by the laws of the European Union. Potential preliminary injunctions may include an order for the freezing of bank accounts or attachment of the defendant's assets, including real estate. The court may even extend an injunction to order a third party not to pay accounts receivable to the defendant.

The final judgment issued by the court also includes an order specifying which party has to bear the costs of the proceedings. Litigation costs are mainly composed of court and attorneys' fees, expenses for expert opinions and travel expenses for witnesses. Generally, litigation costs are awarded against the losing party who must reimburse the winning party. However, if either party prevails with a portion of their claim, the costs are divided on a pro-rata basis.

The calculation of litigation costs is based on the Austrian Act on Attorneys' Tariffs (Rechtsanwaltstarifgesetz) and the Act on Court Fees (Gerichtsgebührengesetz). It is important to note that the winning party is only entitled to attorneys' fees on the basis of the Austrian Act on Attorneys' Tariffs (Rechtsanwaltstarifgesetz). Higher Fees paid to the attorney on the basis of a separate fee agreement (e.g. on the basis of hourly rates) are not subject to reimbursement in the course of civil proceedings.

In Austria, both contingency fees that entitle an attorney to a certain percentage of the amount obtained by the claimant as well as the quota litis (an agreement by which the creditor of a sum difficult to recover promises a portion to the person who undertakes to recover it) are prohibited.

Over the past years, criminal authorities have become more interested and better equipped to start investigations in business crime matters. In fact, criminal proceedings are often conducted parallel to civil proceedings. Criminal proceedings can be a powerful tool for recovering or securing assets or any other funds that are derived from criminal offences.

Furthermore, since the Austrian Code of Civil Procedure (CCP; Zivilprozessordnung), is characterized by rather restrictive disclosure rules, criminal proceedings represent an effective tool to obtain evidence, which would otherwise not be accessible, from the opposing party. In addition, a criminal court may also decide on civil claims brought against the accused by issuing a binding and enforceable decision, thereby avoiding time-consuming and costly civil proceedings that bear a substantial cost risk for the parties. Under Austrian law, both individuals as well as legal entities can be subject to criminal prosecution.

The criminal investigation is usually conducted by the criminal investigation department of the police (Kriminalpolizei) under the supervision of the public prosecution (Staatsanwalt). For corruption matters and large volume white-collar crime cases, a special prosecution authority is competent; the Public Prosecution Authority for Cases of White-collar Crime and Corruption (Wirtschafts- und Korruptionsstaatsanwaltschaft). The overseeing judge (Haft- und Rechtsschutzrichter) at the local Regional Court (Landesgericht) decides upon objections to investigative measures as well as requests to impose or terminate investigative custody. Certain investigative measures require the overseeing judge's approval; in particular measures with coercive character (e.g. house searches).

A conviction can be avoided (also, a potential penalty can be reduced) by cooperating with the public prosecution, e.g. as chief witness (Kronzeugenregelung). The benefit derived from such cooperation varies depending on the stage of the investigation. If the public prosecution finds that there is sufficient basis for a conviction, main criminal proceedings (Hauptverhandlung) are initiated by filing an indictment. In other words: The case is brought to public trial.

The first instance main criminal proceedings are conducted by District Courts (Bezirksgericht), in minor cases (with penalties of up to 1 (one) year of imprisonment) and Regional Courts (Landesgericht). While District Court trials are held by single judges, the composition of the Regional Court varies depending on the charges: single judge; panel of one judge and two lay judges; panel of three judges and a jury of eight persons.

Austrian criminal procedural law provides for a rather complicated system of two instances. Either the Court of Appeal or the Austrian Supreme Court is on the top of the pyramid.

As of 1 January 2015, parties to criminal proceedings may also file a complaint with the Constitutional Court (Verfassungsgerichtshof) if the parties consider the statutes applied to the case unconstitutional. Such complaints may only be filed in connection with an appeal against a first instance decision.

Potential victims of a criminal offence are distinctly recognized as parties to criminal proceedings; this enables potential victims access to information that can also be used in the pursuit of their civil claims. Potential victims may, inter alia:

-have access to the files (which may be subject to restriction);

-participate in certain phases of the criminal investigation;

-participate in the main proceedings (trial) with the right to ask direct questions to the accused, to witnesses and to expert witnesses; and

-request that the criminal investigation be continued if the public prosecutor decides to terminate the investigation.

Any victim (legal entities as well as natural persons) may also join criminal proceedings as a “private party” (Privatbeteiligter) via a formal statement of accession (Privatbeteiligtenanschluss). In addition to the aforementioned rights, a private party is also entitled to, inter alia:

-formally request the collection of evidence;

-act as a subsidiary prosecutor if the public prosecutor drops the charges;

-file a complaint if the criminal court terminates the criminal proceedings;

-present its civil claims against the accused and request that the criminal court decide upon its civil claims; and

-file an appeal if the criminal court fails to decide on (or finds in favour of) its civil claims.

While criminal proceedings are a powerful tool to gain information otherwise inaccessible through civil proceedings, criminal courts are reluctant to actually award civil claims (in total). Even in cases of convictions, victims are often relegated to the civil courts.

The Austrian Insolvency Act (Insolvenzordnung) which came into force on 1 July 2010 distinguishes between three types of insolvency proceedings:

-bankruptcy proceedings (Konkursverfahren);

-restructuring proceedings where a bankruptcy receiver is appointed

(Sanierungsverfahren ohne Eigenverwaltung); and

-restructuring proceedings where the debtor retains the right to self-administration

(Sanierungsverfahren mit Eigenverwaltung).

While bankruptcy proceedings usually lead to a realisation or winding-up of the debtor's estate and the distribution of the proceeds of its assets among its creditors, the aim of restructuring proceedings is to enable the debtor to continue its business and to be discharged from its debts (Restschuldbefreiung).

Further, the Austria Business Reorganisation Act (Unternehmensreorganisationsgesetz) provides for a type of proceedings which are not technically insolvency proceedings, but which enable the debtor to reorganize its business.

Precondition for the opening of insolvency (bankruptcy or restructuring) proceedings is that the debtor is illiquid, or in cases where the debtor is a corporate entity, either illiquid or over-indebted in terms of insolvency laws. Illiquidity (Zahlungsunfähigkeit) means that the debtor is unable to pay its debts in due time and is not in a position to acquire the necessary funds to satisfy its due liabilities within a reasonable period of time. If a corporate entity's liabilities exceed its assets and the company has a negative prospect, the company is considered to be over-indebted in terms of the insolvency law (insolvenzrechtliche Überschuldung).

Both debtors and creditors have the right to file a petition for bankruptcy; however, a petition for the commencement of restructuring proceedings can only be filed by the debtor. In addition, once it is apparent that the criteria for commencing bankruptcy proceedings are fulfilled, the debtor is obliged to apply for the opening of bankruptcy or restructuring proceedings without culpable delay, and in any case, no later than 60 (sixty) days. The debtor may already file for the opening of restructuring proceedings in case of threatened illiquidity. Late filing for bankruptcy or omission to do so may result in civil and/or criminal liability.

The purpose of bankruptcy proceedings is to determine the value of the debtor's estate (Konkursmasse), to realize the debtor's assets and to distribute the proceeds among its creditors. The rights of secured creditors remain in principle unaffected. The costs of the insolvency proceedings including the court- appointed bankruptcy receiver's fees rank as priority claims. In effect, the unsecured creditors bear the costs of the proceedings. After liquidation and distribution of the debtor's estate the bankruptcy proceedings are terminated by court order.

However, termination of the bankruptcy proceedings does not have the effect of discharging the unsatisfied claims of creditors which have not been satisfied in full. Creditors with remaining claims which have been verified by the receiver, or by a court order, may enforce their rights against the debtor with respect to the unsettled portion of their claim for a period of 30 (thirty) years, provided the debtor within such period, comes into possession of any assets. In the case of a corporate debtor, bankruptcy usually leads to the ultimate dissolution of the company, thus preventing later recourse to the debtor for payment of outstanding amounts.

Restructuring proceedings enable the illiquid or over-indebted debtor to continue its business and to be discharged from its debts (Restschuldbefreiung) by paying a certain part of the debts. The debtor has to offer a restructuring plan (Sanierungsplan) which must be approved by the majority of its (unsecured) creditors and the insolvency court. Rights of secured creditors remain in principle unaffected. The Insolvency Act provides for the following two types of restructuring proceedings:

-In restructuring proceedings where a bankruptcy receiver is appointed (Sanierungsverfahren ohne Eigenverwaltung) the debtor loses its right to dispose over its assets and the court-appointed bankruptcy receiver manages the insolvency estate. The debtor must offer a minimum payment of 20% of the debts within a period of 2 (two) years to its unsecured creditors.

-In restructuring proceedings where the debtor retains the right to self-administration (Sanierungsverfahren mit Eigenverwaltung) the insolvency court appoints a restructuring administrator that supervises the debtor and has to approve certain transactions. The debtor can be discharged from its debts by paying a minimum quota of 30% to its unsecured creditors within a period of 2 (two) years. Further since 1995, a special insolvency regime has applied to natural persons (entrepreneurs and private individuals). This special insolvency regime became necessary as natural persons facing financial difficulties were often unable to meet the requirements for a restructuring plan and were thus denied the benefit of discharging any claims that exceeded the settlement quota (Restschuldbefreiung). At the same time, bankruptcy proceedings did not offer a satisfactory solution to solving their debt problems, since creditors would be able to enforce their rights with respect to unsettled claims against the debtor for a period of 30 (thirty) years. The Insolvency Law Amendment Act 2017 enacted amendments to this special insolvency regime aiming to further facilitate the debt discharge of natural persons.

Insolvency proceedings are conducted by the insolvency court, which is a special unit within each court of first instance (Gerichtshof 1. Instanz); except for insolvency proceedings of private individuals which are conducted before the district court (Bezirksgericht). A regional exception exists for Vienna where the competent insolvency court is the Commercial Court of Vienna (Handelsgericht Wien).

In all types of insolvency proceedings unsecured creditors have to file their insolvency claims within a deadline set by the insolvency court. If a creditor fails to meet this deadline, a further creditor's hearing may be scheduled at the expense of the creditor who failed to meet the deadline.

Vienna, Austria’s capital city, is a major hub for arbitration in Europe, and the Vienna International Arbitral Centre of the Federal Economic Chamber (VIAC) is not only the most important arbitration institution in Austria, but also one of the leading arbitration institutions in Europe, especially regarding disputes relating to Central, Eastern and Southeastern Europe. In addition to VIAC, Vienna also boasts a specialized arbitral panel established by the Vienna Stock and Commodity Exchange. This is a permanent specialized arbitral panel that has exclusive jurisdiction over disputes arising from exchange transactions, i.e., disputes between members of the Vienna Stock and Commodity Exchange and disputes concerning merchandise contracts related to the Vienna Stock and Commodity Exchange.

Internationally, dispute resolution through arbitration has several advantages. In particular, arbitration allows for expeditious proceedings to obtain a final decision. Arbitral awards rendered in Austria are granted the same effect as a court judgment under Austrian law, while the international treaties signed by Austria facilitate transnational recognition and enforceability of such arbitral awards in more than 150 countries worldwide.

Arbitration in Austria is governed by Chapter 6, Part 4 of the CCP, which defines the prerequisites for arbitration including the validity of arbitration agreements and the minimum standards that must be observed for a fair trial.

The original text of the law dates back to 1895 and, by virtue of the flexibility of the provisions, helped establish Austria as an attractive seat for arbitration proceedings. In order to keep the law in line with international developments in the field of arbitration, these provisions were fully revised on the basis of the United Nations Commission on International Trade Law (UNCITRAL) Model Law in 2006. Thus, arbitration in Austria takes place in a frame-work that is familiar to all international practitioners. The new Arbitration Act applies to arbitration proceedings initiated on or after 1 July 2006 as well as to arbitration agreements concluded on or after this date. In 2013, the Austrian legislator even went a step further to ensure the celerity of arbitral proceedings by, inter alia, providing that challenges to an arbitral award rendered in Austria are to be submitted directly to the Austrian Supreme Court as first and final instance. Effective as of 1 January 2014, this amendment helps prevent lengthy challenge proceedings through all instances of appeal and, in addition, warrants that a highly qualified and specialized judicial senate (consisting of five Supreme Court judges) hears such cases. Furthermore, since the revision of 2013, all matters relating to the constitution of the arbitral tribunal (including challenge and replacement of arbitrators) are also submitted to this specialized senate of the Supreme Court. This will undoubtedly further enhance Austria’s international reputation in arbitration.

Generally, an arbitration agreement may be concluded between parties for both existing and future civil claims that may arise out of or in connection with a defined legal relationship. Exceptions include:

-public law matters, including marital and family matters;

-penal law matters;

-tenancy matters, including disputes on the termination of contracts regarding the lease of apartments and

-claims relating to the Non-Profit Housing Act; and

-collective labour matters and social security law matters.

In addition, arbitration agreements relating to an employment contract (except for managing directors of limited liability companies and stock corporations) and arbitration agreements between a business and a consumer have stricter form and content requirements. First, the arbitration agreement may only be concluded for existing disputes. Moreover, the agreement to arbitrate must be contained in a separate document and be personally signed by the consumer/employee (by hand). The seat of arbitration must be explicitly stipulated. Prior to conclusion of the arbitration agreement, the consumer/employee must have been provided with a written notice explaining the significant differences between arbitration and court proceedings. However, individual negotiation of the arbitration agreement is not required.

The standard prerequisites for the valid conclusion of a legally binding arbitration agreement (if neither an employee nor a consumer is involved) are by far more lenient: The arbitration agreement must be in writing and indicate the parties’ intention to submit (certain or any) disputes arising out of a defined legal relationship to arbitration. Further, the parties may determine the specifics of the arbitral procedure; this is usually done by referring to the rules of a specific arbitral institution, such as VIAC (Vienna Rules), the International Chamber of Commerce (ICC) or the London Court of International Arbitration (LCIA).

If the parties do not stipulate a specific procedure (be it individually negotiated or by reference to the rules of an arbitral institution), Austrian law contains a number of default provisions regulating the most important procedural aspects. For example, Austrian law foresees that where there is no agreement between the parties, the number of arbitrators shall be three; each party shall appoint one arbitrator and the two party-appointed arbitrators shall appoint the third arbitrator, who shall serve as the chair of the arbitral tribunal. Should (one of) the parties fail to appoint an arbitrator or the two party-appointed arbitrators fail to appoint a chair, either party may file a request to the Supreme Court to make the necessary appointment. Austrian law requires that arbitrators must be impartial and independent. The only other restriction that parties must observe is that Austrian judges may not accept appointments as arbitrators. Otherwise, the arbitrators may be freely chosen by the parties to the dispute.

Regarding interim measures, Austrian law foresees that an arbitral tribunal’s competence includes the issuance of interim protective measures, unless the parties have agreed otherwise. Any interim measures shall be issued in writing. However, the arbitral tribunal may ask the requesting party to provide appropriate security prior to ordering interim measures. The competence of an arbitral tribunal to issue interim protective measures does not affect or limit a party’s right to request a state court to order interim measures. In any case, arbitral tribunals have no authority to enforce interim measures.

Interim measures must always be enforced by the state courts. Specifically, the competent district court shall enforce such measures upon the request of a party. Where an order for an interim measure provides for a means of protection unknown under Austrian law, the district court may upon request enforce such order nonetheless by means of the legal instrument under Austrian law which comes closest to the measure ordered by the arbitral tribunal.

Austrian courts generally enforce interim measures issued by arbitral tribunals, regardless of whether or not the seat of arbitration is within Austria. The list of grounds for refusal is limited and a district court may only refuse enforcement if:

-the seat of arbitration is in Austria and the measure suffers from a defect which constitutes grounds for setting aside an arbitral award;

-the seat of arbitration is not in Austria and the measure suffers from a defect which would constitute grounds for refusal to recognise and enforce a foreign arbitral award;

-the enforcement would be incompatible with an earlier Austrian or foreign court measure; or

-the means of protection is unknown under Austrian law and no appropriate means as provided by Austrian law were requested.

Upon request of a party, the district court shall set aside the enforcement if:

-the term of the measure as set by the arbitral tribunal has expired;

-the arbitral tribunal has limited the scope of or set aside the measure;

-a change of circumstances has made the order unnecessary (including that the claim to be secured has been found to be unjustified); or

-security was provided, making the enforcement unnecessary.

Austrian law contains an exhaustive list of the grounds for challenging arbitral awards (Section 611 CCP). Such grounds for challenge include:

-lack of jurisdiction;

-ultra petita;

-lack of due process;

-improper composition of the arbitral tribunal;

-violation of the Austrian procedural ordre public;

-non-arbitrability of the subject matter;

-grounds for retrial under civil procedural law; and

-violation of the Austrian substantive ordre public.

A challenge must be filed within 3 (three) months from the notification of the award.

Overall, Austrian courts have a very friendly attitude towards arbitration. Consequently, Austrian businesses are generally willing to conclude an arbitration agreement, especially in the context of international business transactions.

Taking effect as of 1 January 2018, VIAC has introduced revised arbitration rules (Vienna Rules) and mediation rules (Vienna Mediation Rules). The most significant amendment is VIAC's new competence to administer domestic disputes. In this context, VIAC has adjusted its administration fees (i.e. reduced its fees for smaller amounts in dispute and enhanced its fees for larger amounts in dispute) and grants the Secretary General a wider discretion to determine the fees for the institution and the arbitrators depending on the specific circumstances of a case. Finally, the simultaneous revision of the mediation rules demonstrates VIAC's commitment to offer both arbitration and mediation services as well as a combination thereof.

The enforcement of foreign judgments (i.e., non-EU judgments) in Austria is contingent on the issuance of a declaration of enforceability by the competent Austrian court. The enforcement proceedings are governed by the Austrian Enforcement Act (Exekutionsordnung).

By virtue of its membership in the EU, the procedure for the enforcement of EU judgments in Austria is subject to a standardized and simplified procedure, which is presently governed by the European Parliament and Council Regulation No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters applicable to proceedings instituted, authentic instruments formally drawn up or registered, and court settlements approved or concluded on or after 10 January 2015. For matters before that date, the former Council Regulation No. 44/2001 still applies.

One of the main aims of European Regulation No. 1215/2012 was to limit the scope of forum shopping. The former legal situation allowed parties to stall anticipated proceedings by pre-emptively initiating proceedings in other jurisdictions known for overly lengthy proceedings. For the time the pre-emptively addressed court takes to decide upon its (non)competence over the matter, all other EU Courts are prevented from hearing the case. The amendment battles this strategy (known as the "Italian Torpedo") by strengthening the procedural effect of choice of forum agreements. Consequently, the amendments of the new Regulation have to be taken into account in the wording of contracts.

As a general rule, a judgment rendered in a Member State of the EU is recognized in any other Member State without any special procedure. Notwithstanding this, there are a number of limited grounds on which recognition of a foreign judgment can be denied. These exceptions include cases in which the recognition of a given judgment is manifestly contrary to the ordre public of the Member State in which recognition is sought, or when the judgment was rendered in violation of due process.

Other grounds for the denial of recognition are, inter alia, if the decision is "irreconcilable with a judgment given between the same parties in the Member State in which recognition is sought", or if the judgment is "irreconcilable with an earlier judgment given in another Member State or in a third State involving the same cause of action and between the same parties", provided that the earlier judgment can be enforced in the Member State in which recognition is sought.

According to the Austrian Supreme Court, the requirement that the foreign judgment be enforceable in the state of origin does not imply a requirement that the title be executed in the country in which it was rendered, but rather that such judgment is only formally enforceable.

Specifically, in order to determine the authenticity of a judgment to be enforced in a given Member State, the party seeking recognition must provide a copy of the judgment, accompanied by a Certificate of Authenticity issued by the court that rendered the decision in the country of origin using the form set out in Annex I of European Regulation No. 1215/2012. The translation of judgments and accompanying documents is not mandatory. However, the court may still order the party to produce a (certified) translation of the judgment and the accompanying documents in the official language of that Member State. Thus, in order to avoid such a delay, attaching a certified translation is highly recommended.

With respect to judgments of foreign/non-EU Member States, the requirement to have the judgment declared enforceable prior to the actual enforcement may turn out to be a rather cumbersome procedure depending on the origin of the judgment. If reciprocity cannot be established, meaning that the foreign state does not enforce Austrian judgments, success is unlikely.

Any decision by a foreign/non-EU court must be declared enforceable by an Austrian court in order for the decision to be enforceable in Austria. The general requirements for the issuance of a declaration of enforceability are:

-the foreign judgment is enforceable in the state in which it was rendered; and,

-reciprocity with the state of origin is established by bilateral treaties or other instruments.

The party must request the declaration of enforceability from the competent District Court, i.e., in general, the District Court of the opposing party's domicile. In addition, the party is required to enclose certified copies of all relevant documents.

However, even if the requirements for enforceability are met, the declaration of enforceability may still be refused if:

-pursuant to Austrian rules on jurisdiction, the foreign court would, under no circumstances, have jurisdiction over the legal matter;

-the opposing party was not properly served with the document that initiated the foreign proceedings;

-the judgment is not formally enforceable;

-the opposing party could not properly participate in the foreign proceedings due to irregularities in the proceedings; or

-the judgment and/or its enforcement violate(s) basic principles of Austrian law (ordre public).

The court issues its decision without hearing the opponent. However, the opponent (as well as the requesting party, if enforceability was refused) may file an appeal against the decision within 1 (one) month.

Once the declaration of enforceability is effective, the foreign judgment may be considered equal to domestic enforceable titles. Thus, the request for enforcement of the decision can be submitted to the court and, if approved, the enforcement of the judgment finally takes place. However, it is also possible to include the request for enforcement already in the request for declaration of enforceability. In this case, the court has to decide on both requests at the same time.

Regarding the enforcement of foreign arbitral awards, Austria is party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Austria acceded to the Convention in 1961, with the reservation that the Convention will only be applied to the recognition and enforcement of awards made in the territory of another contracting State. However, in 1988, Austria withdrew this reservation. Furthermore, Austria is also party to the 1961 European Convention on International Commercial Arbitration. Thus, if both Conventions are applicable to an arbitral award to be recognised and enforced in Austria, Article IX of the European Convention stipulates as follows: if the arbitral award was set aside in the country where it was made, only certain grounds of setting aside justify the refusal of recognition and enforcement. In particular, the violation of the ordre public is not such a ground and is thus not a legal obstacle for recognition and enforcement. Finally, Austria is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

2. LITIGATION

3. BUSINESS CRIME

4. INSOLVENCY

5. ARBITRATION

6. ENFORCEMENT OF FOREIGN JUDGMENTS AND ARBITRAL AWARDS

7. PRACTICE TIPS

TYPE OF PROCEEDINGS

PRACTICE TIPS

PROCEDURE AND ASSUMPTIONS

There is legal aid for natural persons as well as legal entities who cannot afford the costs of legal proceedings.

Document Production

There are no civil jury trials in Austria.

-Litigation costs include court fees, attorneys' fees and expenses for expert opinions and witnesses.

-Court fees have to be paid upon filing the claim.

-Court fees in the first and second instance are to be paid by the party filing the claim/appeal.

-If a claim is filed by a foreign party and enforcement of a decision on reimbursement of litigation costs is not safeguarded, the foreign party can be ordered to pay a security deposit.

-Litigation costs are awarded against the losing party who must reimburse the winning party.

-If a claimant has been partially successful, the costs of both sides are divided on a pro- rata basis. However, reimbursement of attorney fees will only be made on the basis of the fees provided for in the Act on Attorneys' Tariffs.

-The actual attorney fees of a party (depending on the fee agreement between attorney and client) may be substantially higher, but are not part of the reimbursement.

-Agreements on Quota litis and contingency fees are generally prohibited for Austrian lawyers in all types of proceedings.

STANDARD CIVIL PROCEEDINGS


Approximate Costs

COURT FEES

ATTORNEYS’

FEES (NET)

Simple case

Complex case

Yes.

Court fees are based on the Court Fees Act and depend on the amount in dispute. Examples:

Amount in dispute EUR 500,000: Court fees: EUR 9,488 in first instance;

Amount in dispute EUR 1,000,000: Court fees: EUR 15,488 in first instance;

Amount in dispute EUR 5,000,000: Court fees: EUR 63,488 in first instance.

Assumptions based on an amount in dispute of EUR 1,000,000 (based on the Austrian Act on Attorneys' Tariffs plus hourly rates):

First instance: in total EUR 35,000 to 50,000, incl. preparation of two briefs, four hearings with a duration of 1h, 2h, 4h, and 6h, preparation of hearings/meetings with client, witnesses, correspondence with client; Second instance: in total EUR 8,000 to 20,000; incl. one brief, no hearing; Third instance: in total EUR 7,000 to 18,000; incl. one brief, no hearing.

Assumptions based on an amount in dispute of EUR 10,000,000 (based on the Austrian Act on Attorneys' Tariffs plus hourly rates):

First instance: in total EUR 75,000 to 250,000, incl. preparation of 4 comprehensive briefs, six hearings with duration of 2h, 4h, and 4 x 8h, preparation of hearings/meetings with client, witnesses, correspondence with client; Second instance: in total EUR 30,000 to 60,000, incl. one brief, no hearing; Third instance: in total EUR 25,000 to 50,000, incl. one brief, no hearing.

Pro Bono System

class actions

Approximate Duration

jury trials

Simple cases: first instance: 1 year; second instance: 6 to 12 months; third instance: within

1 year.

Complex cases: first instance: 1 to 3 years; second instance: 8 to 18 months; third instance:

10 to 18 months.

-There is no formal discovery system in Austria.

-Documents are subject to disclosure if a party itself referred to the document in the course of the proceedings. The party is obliged to hand over the document by substantive law, or the document is qualified as a "joint deed" between the parties.

-A court order to produce such documents is not enforceable. Failure to comply with a court order can only be considered by the court in its evaluation of the case.

Generally, yes.

Limited.

Mandatory Representation

by Counsel

Limited.

-In cases before District Courts where the amount in dispute is lower than EUR 5,000, or in matters where District Courts have exclusive jurisdiction (e.g. family matters, tenancy), representation by an attorney at law is not mandatory.

-In matters where District Courts have exclusive jurisdiction representation is not mandatory, however, if representation is wanted it must be by an attorney at law. In other cases, the person can be represented by a non-lawyer.

It is close to impossible to provide a general and serious estimation of the costs of criminal proceedings. The complexity of the case is a major factor but also

-whether the investigation is closed or the case is actually tried;

-the location of the office of the public prosecution authority conducting the investigation/of the court conducting the main proceedings;

-the number of suspects and other parties;

-the necessity of private expert opinions/expert testimony (e.g., forensic accountants);

-the necessity of translations and/or international judicial assistance;

-whether the case is in the public eye, etc.

The following approximate costs are based on the assumption that no expert opinions or expert testimonies are required:

For the party initiating and joining such proceedings as an injured party, the costs for the criminal investigation as well as the first instance proceedings may easily range from EUR 10,000 to EUR 50,000 and from EUR 5,000 to 20,000 for potential appellate proceedings. There are no court fees.

For the party subject to criminal proceedings, the costs for the criminal investigation may easily range from EUR 75,000 to EUR 250,000; for the first instance proceedings from EUR 50,000 to EUR150,000, and for appellate proceedings from EUR 30.000 to EUR 75,000. Suspects who are (fully) acquitted are eligible for a "contribution" to his/her legal fees; the maximum contribution is limited to EUR 5,000 (irrespective of the actual costs) plus cash outlays (e.g. costs for copies of the file).

Document Production

Yes. Certain evidence may not be gathered by (order of) the prosecution without prior court approval (e.g. banking information).

There are no statistics available regarding the duration of criminal proceedings concerning charges of business crime and/or corruption. In general, criminal investigations may take 1 to 3 years; first instance proceedings (calculated from the indictment to the first instance court's decision in writing) may take 6 to 12 months; appellate proceedings may take another 6 to 18 months. If the matter is remitted to the first instance, the entire case will have to be reheard by another judge/panel.

It has to be stressed that complex cases regarding charges of business crime and corruption may easily take 5 to 10 years.

Pro Bono System

Yes. There is legal aid for natural persons as well as legal entities who cannot afford the costs of legal proceedings.

Mandatory Representation

by Counsel

Approximate Duration

Business Crime

class actions

Limited privilege: Austria provides only limited legal privilege regarding attorney work products and client-attorney correspondence. Such documents will only enjoy privilege if they are physically located within the realm of the attorney. Consequently, if such document is found e.g. in the offices of the client, it will not be protected by professional legal privilege.

jury trials

Presentation by counsel is mandatory in (a) the criminal investigation for as long as the suspect is held in investigative custody; (b) in the main proceedings if the potential penalty exceeds three years of imprisonment; and (c) in (most) appellate proceedings.

Approximate Costs

Not applicable in criminal proceedings.

Most cases of corruption and/or business crime are heard by a single judge or a panel consisting of one professional judge and two lay judges. In general, only capital offenses and certain political offenses will be heard by a jury.

Approximate Duration

If the request for a preliminary injunction is applied for with the original complaint, no extra court fees have to be paid. If the request for a preliminary injunction is filed outside the main proceedings, the court fees are reduced to half in first instance. Only in some exceptional cases, the full court fees of second and third instance apply for appeals.

Assumptions: only the request for a preliminary injunction is filed, the court renders its decision without hearing the opponent: EUR 4,000 to 8,000 in first instance; second instance: one brief, no hearing: EUR 6,000 to 10,000; third instance: one brief, no hearing: EUR 6,000 to 10,000.

Assumptions: apart from filing the request for a preliminary injunction, two comprehensive counter statements are filed in reply to two statements of opponent; witnesses are heard: total costs (including meetings with client/witnesses) of first instance: EUR 30,000 to 50,000; second instance: one brief, no hearing: EUR 20,000 to 45,000; third instance: one brief, no hearing: EUR 20,000 to 45,000.

Generally, a decision on a request for a preliminary injunction is rendered between 1 day and 3 weeks.

Appellate proceedings: 1 to 3 months in second instance and 2 to 4 months in third instance.

APPROXIMATE COSTS

COURT FEES

ATTORNEYS’

FEES (NET)

Simple case

Complex case

-With the request for a preliminary injunction, the applicant must provide available evidence, such as documentary evidence and affidavits that can be immediately examined by the court.

-Foreign-language documents should be presented with German translations.

Preliminary Injunction Proceedings

-Witnesses should be readily available, so that they can appear on short notice before the court.

-The court may order the applicant to pay a security deposit. In practice, it is advisable to offer a security deposit if the demonstration of the claim faces challenges.

-No litigation costs will be awarded to the applicant in preliminary injunction proceedings.

-Costs incurred by a successful applicant in preliminary injunction matters can only be sought in the main proceedings.

Limited. Usually the International Bar Association Rules on the Taking of Evidence are applied which provide for a narrow document production.

Arbitration Proceedings

Document Production

The usual duration of arbitration proceedings is between 8 months and 2 years.

-The costs of arbitration to a large extent depend on the arbitration agreement and the amount in dispute, the amount of documents, number of witnesses and whether expert opinions are required. The costs of arbitration also include the fees of arbitrators and administrative charges.

-The arbitrators usually have large discretion regarding the award of costs. However, in practice the award on costs often depends on the outcome of the case. The award of legal fees is usually not determined by reference to a statutory tariff.

APPROXIMATE COSTS

Procedural Costs

Simple case

Complex case

ATTORNEYS’

FEES (NET)

Simple case

Complex case

The procedural costs depend on whether a sole arbitrator or an arbitral tribunal of three members is appointed, the complexity of the case and the administrative charges. The following two estimates are based on the procedural costs of the Rules of Arbitration and Conciliation of the Vienna International Arbitral Centre (VIAC).

Assumption: sole arbitrator appointed and an amount in dispute of EUR 1,000,000

Total costs: registration fee of EUR 1,500, administrative fees of EUR 13,000 and fees for a sole arbitrator between EUR 26,500 and EUR 37,100.

Assumption: sole arbitrator and an amount in dispute of EUR 10,000,000

Procedural costs: registration fee of EUR 1,500; administrative fees of EUR 24,900 and fees for a sole arbitrator between EUR 74,500 and EUR 104,300.

In the case there is an arbitral tribunal with three arbitrators, it may be that the fees for the arbitrators triple.

Assumptions based on an amount in dispute of EUR 1,000,000: review of 100 pages of documents; no challenge to the jurisdiction of the arbitral tribunal; two exchanges of submissions; review of correspondence with arbitral tribunal; assistance with the preparation of 3 witnesses; review of 3 written witness statements; no experts; preparation of oral hearing and participation in an oral hearing; preparation and review of one post hearing brief.  Total approximate cost: EUR 120,000.

Assumptions based on an amount in dispute of EUR 10,000,000: review of 1000 pages of documents; no challenge to the jurisdiction of the arbitral tribunal; two exchanges of submissions; review of correspondence with arbitral tribunal; assistance with the preparation of 5 witnesses; review of 5 written witness statements; document production up to 500 pages; preparation and review of expert opinions; preparation of oral hearing and participation in an oral hearing; preparation and review of one post hearing brief. Total approximate cost: EUR 250,000.

Approximate Duration

Enforcement of Foreign Judgments and Arbitral Awards

The court fees for declaration of enforceability (and execution) are the same as those for execution of domestic judgments. They depend on the amount in dispute and whether the creditor seeks execution in movable and/or immovable assets. As a rule of thumb, for disputes above EUR 70,000, the court fees vary between 0.25% and 0.60% of the amount in dispute.

Application for recognition/enforcement:

Simple case: up to EUR 2,000

Complex case: up to EUR 10,000

Approximate Duration

It takes around 1 to 2 months until a decision on recognition and enforcement is rendered in first instance.  3 to 6 months if the decision is appealed.

The duration of execution proceedings depends mainly on whether the debtor has executable assets and whether execution measures are opposed by the debtor.

-Judgments that fall outside the scope of the application of the European Regulation must be submitted in original form or in copy issued by the court that rendered the judgment.

-Furthermore, a certified translation of the judgment must be submitted.

-For enforcement of awards under the New York Convention, the creditor must provide

the court with the authenticated original award or a duly certified copy thereof and the original of the arbitration agreement or a duly certified copy thereof.

APPROXIMATE COSTS

COURT FEES

ATTORNEYS’

FEES (NET)

-Under the European Regulation No. 1215/2012, the party that seeks recognition/enforcement must submit a copy of the judgment which should be accompanied by a Certificate of Authenticity issued by the court that rendered the judgment.

-It is highly recommended to attach a translation of the judgment in order to avoid any delays.

Filing of Insolvency Claims by Creditors

Insolvency Proceedings


Approximate Duration

Court fees of EUR 23 for each filing.

Filing of insolvency claim:

Simple case: EUR 500 to 1,000.

Complex case: EUR 3,000 to 10,000.

APPROXIMATE COSTS

COURT FEES

ATTORNEYS’

FEES (NET)

1 year to several years; in very complex cases, a duration of more than 10 years is possible.

The commencement of insolvency proceedings is published by edict on the website of the Austrian Ministry of Justice under http://www.edikte.justiz.gv.at. In the edict, the period for filing of insolvency claims is set.

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