AUSTRIA

CONTACT

1. ARBITRATION

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 framework 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 will prevent lengthy challenge proceedings through all instances of appeal and, in addition, will warrant 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 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;

enforcement matters;

insolvency matters;

tenancy matters, including disputes on the termination of contracts regarding the lease of apartments and claims relating to the Non-Profit Housing Act;

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 on 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, 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 mandates 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;

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.

2. ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

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).

TYPE OF PROCEEDINGS

PROCEDURE AND ASSUMPTIONS

PRACTICE TIPS

ARBITRATION PROCEEDINGS

APPROXIMATE DURATION

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

APPROXIMATE COSTS

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.

PROCEDURAL COSTS

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).

SIMPLE CASE

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

Total costs: registration fee of EUR 2,000, administrative fees of EUR 11,000 and fees for a sole arbitrator of EUR 26,500.

COMPLEX CASE

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

Procedural costs: registration fee of EUR 2,000; administrative fees of EUR 20,500 and fees for a sole arbitrator of EUR 74,500.

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

APPROXIMATE ATTORNEYS’ FEES (NET)

SIMPLE CASE

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 ex- changes of submissions; review of corre- spondence with arbitral tribunal; assistance with the preparation of 4 witnesses; review of 4 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 100,000.

COMPLEX CASE

Assumptions based on an amount in dis- pute of EUR 1,000,000: review of 1000 pages of documents; no challenge to the ju- risdiction of the arbitral tribunal; two ex- changes of submissions; review of corre- spondence with arbitral tribunal; assistance with the preparation of 8 witnesses; review of 8 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.

DOCUMENT PRODUCTION

Limited. Usually the International Bar Association Rules on the Taking of Evidence

are applied which provide for a narrow document production.

ENFORCEMENT OF FOREIGN ARBITRAL AWARDS

APPROXIMATE DURATION

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.

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

CORT FEES

For a declaration of enforceability no court fees have to be paid. For specific execution actions court fees are based on the Court Fees Act.

ATTORNEY’S FEES (NET)

Application for recognition/enforcement:

SIMPLE CASE: EUR 400 to 600

COMPLEX CASE: EUR 2,000 to 5,000

CONTACT

MAIN OFFICE

Schubertring 6

A-1010 Vienna

+43 1 515 10

wien@wolftheiss.com

www.wolftheiss.com/offices/austria

CEYDA AKBAL SCHWIMANN

Consultant

Wolf Theiss, Austria

+43 1 51510 5752

ceyda.akbalschwimann@wolftheiss.com

VENUS VALENTINA WONG

Counsel

Wolf Theiss, Austria

+43 1 51510 5755

valentina.wong@wolftheiss.com