This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in Austria including arbitration agreements, tribunals, proceedings as well as costs, awards and the hot topics concerning this country at present.
This Q&A is part of the global guide to Arbitration.
For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/arbitration/
What legislation applies to arbitration in your country? Are there any mandatory laws?
The Austrian arbitration law is set out in sections 577 to 618 of the Austrian Code of Civil Procedure (‘ACCP’). Austrian arbitration law contains optional as well as mandatory provisions, the latter of which mainly concern the most essential aspects of arbitration, such as certain provisions on the conduct of the proceedings (e.g. right to be heard, arbitrator’s impartiality and liability as well as the relation between domestic courts and arbitral tribunals).
Consequently, around these procedural pillars the parties are free to agree on the rules of procedure. In the absence of an agreement of the parties, arbitrators may conduct the proceedings in a way they deem appropriate.
Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
Austria acceded to the New York Convention on 2 May 1961. An initial reservation made was withdrawn in 1988. Hence, the Convention applies with no reservation.
What other arbitration-related treaties and conventions is your country a party to?
Since 4 June 1964, Austria is a party to the European Convention on International Commercial Arbitration of 21 April 1961, particularly significant for its rules on curing pathological arbitral agreements (Art IV).
As regards investment arbitration instruments, Austria is a party to the ICSID Convention (in force since 24 June 1971), the Energy Charter Treaty (in force since 16 April 1998) and some 60 odd Bilateral Investment Treaties.
Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?
Yes. Since 2006, Austria is a ‘model law country’. As regards the structure save for a few national particularities, Austrian law is largely based on the UNCITRAL Model Law. In particular, the Austrian arbitration law equally applies to international and domestic arbitrations and further does not distinguish between commercial and non-commercial matters. The legislator introduced specific provisions for consumer and employment related disputes.
Are there any impending plans to reform the arbitration laws in your country?
The latest reform to the arbitration law in 2013 reduced the number of instances in the arbitration related litigation before national courts. The previous three-staged process was replaced by a one-tier system with the Austrian Supreme Court as court of first and last instance (see question 28 below). At present, there are no further reforms planned.
What arbitral institutions (if any) exist in your country?
The main arbitral institution Austria is the Vienna International Arbitral Centre (‘VIAC’), which is a separate entity of the Austrian Chamber of Commerce (www.viac.eu). Since its founding in 1975, it has enjoyed a vivid role in administrating commercial arbitrations in the region. The VIAC administers international cases involving at least one party with its place of business or normal residence outside of Austria or cases concerning disputes with an international character. The procedural rules governing arbitration proceedings instututed with the VIAC are called the Vienna Rules.
For disputes of solely national character, all of the economic chambers located in each of the nine Austrian States serve as administrative institutions.
What are the validity requirements for an arbitration agreement under the laws of your country?
The requirements as to arbitration agreements in Austria are very much akin to those stipulated in the Model Law and in the New York Convention. The arbitration agreement must contain the following minimum requirements:
(a) The parties to the agreement must be determinable; (b) the subject matter of the dispute or the legal basis for future disputes must be be determinable; and (c) the parties must agree to submit their disputes to arbitration, i.e. a final and binding decision under the exclusion of domestic courts.
As regards the form of the agreement, an arbitration agreement must be concluded in writing. A reference to general terms and conditions of a party including an arbitration clause is sufficient to comply with the form requirement. Defects of form may be remedied if the parties enter into the proceedings without objecting thereto.
As stated above under question 4, the Austrian arbitration law contains specific provision for arbitration in consumer and employment related disputes. These include several additional formal requirements of the arbitration agreements.
Are arbitration clauses considered separable from the main contract?
Yes. Arbitration agreements contained as clauses in a main contract are considered separable under Austrian law: Arbitration clauses qualify as independent agreements and thus are in most cases considered detached from to main contract. Arbitration agreements are considered procedural contracts. Hence, regardless of the law applicable to the main contract, the arbitration agreement is governed by Austrian law. In essence, therefore, Austrian case law leads to mainly the same conclusions as the international doctrine of separability.
Can claims under more than one contract be brought in the one arbitral proceeding? Can an arbitral tribunal with its seat in your country consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?
Absent an agreement to the contrary, parties may bring claims under several contracts in one proceeding as long as the arbitration agreements are compatible.
The Austrian arbitration law contains no provisions on the consolidation of proceedings. The parties are free to agree on such consolidation, e.g. by agreeing on rules, which provide for this. Without express authorisation by the parties, however, the arbitral tribunal cannot consolidate two separate proceedings, as the law limits the arbitral tribunal’s discretion to structure and conduct (section 594(1) ACCP) to that very proceedings.
Nevertheless, an agreement to consolidate proceedings is provided for in the Vienna Rules if their application is agreed on. Art 15 stipulates that the secretary general of VIAC decides on a party’s request to consolidate proceedings if the designated/appointed arbitrators and the place of arbitration are identical.
How is the law applicable to the substance determined?
Regularly, the parties to the arbitration agreement are free to agree on the law applicable to the arbitration agreement. A parties’ choice of law regarding the main contract does not necessarily coincide with the law applicable to the (separable) arbitration clause.
In the absence of such a parties’ choice of law applicable to the arbitration agreement, according to the Austrian Supreme Court, the validity of an arbitration agreement is assessed in accordance with the law of the place of arbitration (lex fori). The personal capacity to conclude an arbitration agreement (subjective arbitrability) is determined according to the personal law of a party in question. The objective arbitrability of the subject matter of a dispute is determined by the lex fori.
Are any types of dispute considered non-arbitrable? What is the approach used in determining whether or not a dispute is arbitrable?
Austrian law determines that in principle all proprietary claims are arbitrable (section 582 ACCP). Non-proprietary claims are still arbitrable, however, if the parties are entitled by law to settle these claims.
The law expressly excludes the arbitrability of claims in family law matters as well as in certain disputes regarding tenancy law. Also social security law claims are not arbitrable.
Consumer related and some employment related matters are in principle arbitrable.
However, the arbitration agreement may only validly be concluded after the dispute has arisen. This de facto excludes the ‘arbitrability’ in such matters.
In your country, are there any restrictions in the appointment of arbitrators?
According to Austrian law, there are few requirements as to the capacity to serve as an arbitrator. It is, however, necessary to be a legally competent and natural person (no legal persons). Further qualifications are not necessary. Active Austrian judges cannot serve as arbitrators.
Are there any default requirements as to the selection of a tribunal?
Failing the parties’ agreement on a selection mechanism either directly or implicitly through the application of institutional rules, the ACCP provides for a default mechanism (section 587). Based on Art 11 of the Model Law, these rules stipulate a four weeks deadline for the mutual appointment, the number and the method of selecting arbitrators by each party and a subsidiary mechanism for the arbitrator selection by domestic courts. Such a decision on the selection by domestic courts is not subject to appeal. In addition, the Austrian arbitration law stipulates rules for the selection of arbitrators in multi-party arbitration. Regardless of the parties’ agreement, a tribunal must always be composed of an odd number of arbitrators.
Can the local courts intervene in the selection of arbitrators? If so, how?
The role of domestic courts in arbitral proceedings is strictly limited under Austrian law. Except where the law so provides, courts shall refrain from intervening in arbitration matters. Thus, Austrian domestic courts only intervene in the arbitrator selection process when (a) called upon after the selection procedure for all arbitrators has failed and when (b) called upon in a challenge of an arbitrator initiated by one party.
Can the appointment of an arbitrator be challenged? Can an arbitrator be disqualified? What is the procedure for such challenge?
The procedure for the challenge of an arbitrator under Austrian arbitration law is comparable with the system of the Model Law. In general, therefore, before as well as after his/her selection, an arbitrator is required to disclose to the parties any circumstances that are likely to give rise to justifiable doubts as to his/her impartiality or independence or that could be in conflict with the parties’ agreement. Should such circumstances exist, any party may challenge an arbitrator within four weeks after becoming aware of them or after becoming aware of the constitution of the arbitral tribunal. Unless the challenged arbitrator resigns, the arbitral tribunals decides on the parties’ motion for challenge. Should the challenge be unsuccessful, in a second step the challenging party may invoke within four weeks a decision of the competent domestic court in that matter (Supreme Court). The arbitral proceedings may continue while such a motion is pending before the court.
In any case, a party cannot challenge an arbitrator in whose appointment it was involved, unless it became aware of the relevant circumstances after the appointment.
Are arbitrators immune from liability?
No. Section 594(4) ACCP stipulates that an arbitrator shall be liable to the parties for all losses caused if he/she does not or in an untimely manner fulfil his/her obligations assumed under the appointment. However, according to the case law of the Austrian Supreme Court regarding this provision – bar cases of wrongful refusal or delay – the setting aside of the award rendered by the arbitrator is a prerequisite for his/her liability. Conversely, the annulment of an award does not automatically entail an arbitrator’s liability.
Is the principle of competence-competence recognised in your country? What is the approach of local courts towards a party commencing arbitration in apparent breach of an arbitration agreement?
Yes. According to section 584 ACCP, the arbitral tribunal decides on its jurisdiction over a certain dispute and the validity of an arbitration agreement. In case a dispute, subject to an arbitration agreement, is brought before the national courts, the latter are obliged to reject the claim without further review, unless the respondent enters into the dispute without raising objections.
How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods of which the parties should be aware?
Unlike many institutional rules, statutory rules neither expressly state the commencement of the proceedings nor of lis pendens. Prevalent authority suggests that service of the reasoned statement of claims with respondent effects lis pendens and hence bars parallel court proceedings in that matter.
Art 7(1) Vienna Rules states that the arbitral proceedings commence after the VIAC secretariat receives a statement of claim complying with the stipulated minimum requirements. As regards ad-hoc proceedings, arguably the proceedings commence with the service of a reasoned request for arbitration with respondent including the appointment of an arbitrator and the request to the respondent equally to appoint an arbitrator.
There are no specific arbitration related limitation periods under Austrian law. Hence, the statutes of limitations stipulated in the substantive law applicable to the dispute are highly decisive for the timing of the initiation of the proceedings. As regards Austrian law, in institutional arbitrations, the commencement of proceedings in accordance with the applicable rules and the delivery of the initial writ to respondent suffice to stay limitation periods.
What is the applicable law (and prevailing practice) where a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate? Can they order third parties to participate in arbitration proceedings?
Austrian statutes provide for a series of provisions to ensure that a respondent’s failure to participate in arbitral proceedings does not obstruct their further progress. Among these, the ACCP provides for the substitute selection of arbitrators before the tribunal is constituted and a general clause that the proceedings shall continue, if without showing sufficient cause, a party fails to participate in any way. Parties, however, cannot be compelled to arbitrate.
As explained above, local courts only intervene in arbitrations were the law expressly so provides. In general, third parties cannot be compelled to participate in arbitral proceedings. By way of judicial assistance of national courts, however, arbitral tribunals may request that, in accordance with Austrian civil procedure, witnesses may be ordered to appear before the tribunal and, failing their appearance, be penalised by the court.
In what instances can third parties or non-signatories be bound by an arbitration agreement or award (e.g. by joinder)?
In general, without consent, no one can be bound by an arbitration agreement. Thus, Austrian courts are very reluctant to assume that a party is bound by the arbitration agreement without signing it and do not apply the group of companies doctrine or the piercing the corporate veil theory. There are exceptions, however, including legal successors, third party beneficiary contracts and debt as well as contract assumptions.
As regards awards, section 607 ACCP stipulates that arbitral awards shall have the legal effect of legally binding judgments of domestic courts between the parties of the proceedings. The Austrian Supreme Court ruled that the legal effect of an award only binds the parties that submitted themselves to arbitration in an arbitration agreement. Thus, disputes regarding persons that are not parties to the arbitration agreement allegedly lack arbitrability.
What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
Under Austrian law, both domestic district courts as well as arbitral tribunals have jurisdiction to grant interim measures to support the arbitral proceedings. The parties can exclude a tribunal’s jurisdiction on interim measures. The district courts have sole jurisdiction to order the execution of interim measures. The domestic courts can issue and enforce interim measures pending the constitution of the arbitral tribunal. Interim measures issued by the arbitral tribunal are only available against parties to the arbitration.
Since Austrian law does not provide for a definition of interim measures, in principle, the arbitral tribunal may order any interim measure as long as the endangered party can demonstrate an irreparable harm or a significant impediment of the claim (section 593 ACCP). However, in order to enforce these measures through Austrian courts, the interim measures selected to the parties must be comparable to those granted in national litigation. Such measures encompass taking money or chattel into the court’s custody; prohibition to dispose of or pledge chattel; prohibition vis-à-vis a third party to dispose of the debtor’s claims; administration of immovable property etc.
Austrian law allows for the enforcement of interim measures granted by foreign tribunals irrespective of enforcement treaties or reciprocity. It is necessary, however, that either the ordered measure corresponds to nationally available measures or that a request is raised to apply that measure which closest approximates the granted measure.
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?
Since there are no rules on the taking of evidence in Austrian arbitral proceedings, the parties are free to agree on any such rules. In the absence of an agreement and within the boundaries of the parties’ basic procedural rights, a arbitral tribunal may freely carry out and rule upon the admissibility of the taking of evidence.
Since the arbitral tribunal lacks the coercive power to enforce its own decisions, it may request judicial assistance from the competent state court (section 602 ACCP). Such assistance may concern e.g. the summoning of a witness, the hearing of a witness testimony under oath or the enforcement of document production orders.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?
Absent an agreement between the parties, international lawyers acting as counsel in Austrian arbitrations are not subject to any particular codes of conduct. Austrian attorneys, however, are bound by the ethical codes of the Austrian bar association regardless of their function in an international arbitration and the respective place of arbitration. European attorneys acting as counsel in Austria must adhere to the CCBE code of conduct and, if applicable, to their own professional standards..
How are the costs of arbitration proceedings estimated and allocated?
Section 609 ACCP determines the procedure for the decision as to costs. In general, arbitral tribunals enjoy wide discretion in deciding on the allocation of costs. Tribunals shall take into account the specific circumstances of each case, in particular the outcome of the proceedings. In principal, all costs are reimbursable that are found to be reasonably incurred in pursuing the claims.
In practice, arbitral tribunals tend to be more generous than Austrian courts in determining whether a parties’ costs were reasonable incurred. As opposed to proceedings before Austrian domestic courts, it also is common that arbitral tribunals award the reimbursement of counsel fees based on hourly rates.
Can interest be included on the principal claim and costs incurred?
The question, whether an arbitral tribunal can award interest on the principal and the costs is determined by the claims raised and the law applicable to the substance of the dispute. Without a specific request, an arbitral tribunal cannot award interest neither on the principal nor on the costs.
Under Austrian civil law the statutory interest rate for default payment amounts to a minimum of 4% per year. Special interest rates exist for reproachable default between entrepreneurs (9.2% above the base interest rate) and for bills of exchange (6%).
Interest for costs cannot be included in an award under Austrian law: A party’s claim for reimbursement of costs falls due and payable at the same time when the arbitral award is enforceable. Under Austrian law, hence, interest on the costs of the arbitration start to accrue after the award is rendered and can only be recovered, if at all, in the enforcement proceedings.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?
In this respect, Austrian law does not distinguish between proceedings between arbitral tribunals and domestic courts. Hence, all remedies available before the latter – i.e. declaratory relief, performance claims (action or omission) or claims to amending a legal relationship – are available before arbitral tribunals. Consequently, the available remedies are also enforceable, just as if they were granted by domestic courts.
What legal requirements are there in your country for the recognition of an award?
Domestic arbitral awards and arbitral settlements are directly enforceable in Austria. Section 614 ACCP, which governs the recognition and enforcement of foreign arbitral awards, contains no specific enforcement procedure for arbitral awards but refers to national legislation or overriding international or European legal acts.
Foreign awards that have not been recognised by Austrian courts have no legal effect in Austria. However, Austria is party to a number of multilateral treaties on the recognition and enforcement of foreign awards, the by far most relevant being the New York (‘NYC’). The recognition proceedings are initiated by an application for recognition and confirmation of the enforceability of the award. In practice, such an application regularly is combined with an application for the enforcement of the award. The applicant must submit an original award or a certified copy thereof. According to the Austrian Supreme Court, an officer of the arbitral institution under some circumstances may provide the authentication of the award required under the NYC. Additionally, the arbitration agreement need only be submitted to the court upon the court’s request. Austrian law is therefore more lenient in this regard than the NYC. The court will render a decision on the application without an oral hearing and without hearing the other party. The court will not investigate ex officio whether there are grounds for refusing recognition but will consider evident grounds.
Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?
An award rendered in Austria cannot be challenged on the merits before the domestic courts. On the limited grounds stipulated in section 611 ACCP parties may bring an action to set aside decisions of arbitral tribunals, including both decisions on the merits and on jurisdiction.
The grounds for setting aside an arbitral award comprise all of those provided for in Art 34 of the Model Law, encompassing cases in which a valid arbitration agreement does not exist, the dispute dealt with in the award s not falling within the scope of the arbitration agreement or the matter is not arbitrable under Austrian law.
Additionally, an award may be set aside in cases in which the legal procedure was conducted in a way that is violating Austrian (procedural) public policy or in cases in which the preconditions for re-opening proceedings under national courts would be justified.
Arbitration related litigation, such as substitute appointments of arbitrators or the here interesting setting aside proceedings is, as of 1 January 2014, concentrated at the Austrian Supreme Court. It decides as court of first and last instance in specialized senates. This allows for an expeditious and efficient decision-making process. The applications to set aside arbitral awards must be filed within three months after the decision was rendered. Since the setting aside proceedings are governed by the procedural rules provided for courts of first instance, this means that in fact setting aside proceedings may lead to the taking of evidence and depositions before the Supreme Court judges
Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?
No, an agreement to waive a right to an appeal before the dispute has arisen (pactum de non petendo) are generally invalid under Austrian law.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
Since no express provisions of statutory laws as to the extent of sovereign immunity exist, the local courts responsible for the enforcement proceedings apply public international law, and particularly customary international law. The question, whether a state may claim immunity at the enforcement stage depends on whether it has separately waived its immunity for these proceedings. If so, the Austrian Supreme Court rules that only such property of a state is subject to enforcement proceedings, which is destined for a business and not a sovereign purpose (res extra commercium). Under case law, eg the proof that a bank account is kept by a consular or diplomatic mission bars its funds from enforcement.
Are there rules or restrictions on third-party funders in your country?
As far as lawyers are concerned, Austrian law prohibits the conclusion of quota litis agreements, ie to accept a percentage of the amount awarded in the proceedings. Subject to very strict limitations, lawyers are permitted to act on the basis of a contingency fee. First, the fee may not correspond to a proportion of the amount awarded. Second, the fee must be reasonably in proportion to the efforts of the lawyer and shall not exceed the remuneration provided for in the Lawyer’s Tariff Act by far. Hence, contingency fees are most uncommon.
Regarding conventional litigation/arbitration funding by third parties, the law is not clear as the validity of such agreements has not been subject to a decision of the Supreme Court. Although some scholars argue that the rules on quota litis described above may apply to third party funders, it can well be argued that as long as the funder provides no legal services, has no influence on the strategy of the proceedings and no involvement in the case, funding is generally permissible in Austria.
Is there a concept in your country providing for class-action or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?
No such particular rules exist in Austria. Hence, also for arbitrations with more than two parties, all parties must to be bound by the same arbitration agreement. See question 20 above on third party participation in Austrian arbitrations.
Is diversity in the choice of arbitrators (e.g. gender, age, origin) actively promoted in your country? If so, how?
ArbitralWomen is active in Austria and, in cooperation with VIAC, seeks to promote women in arbitration by e.g. regularly organising workshops and the like (www.arbitralwomen.org).
Also, the YAAP, the section of young arbitration practitioner within the Austrian Arbitration Association, ArbAUT, seeks to support young arbitration practitioners (www.yaap.at).
Is emergency arbitrator relief available in your country? Is this actively used?
Neither the Austrian arbitration law nor the VIAC’s Vienna Rules provide for access to an emergency arbitrator.
Art 45 Vienna Rules stipulate rules for an expedited procedure. Their application is subject to the parties’ consent either in the arbitration agreement or by subsequent agreement. The rules on the expedited procedure reduce the time limits of the arbitration (15 days for the payment of the advance on costs; nomination of arbitrator within 15 days; final award rendered after six months after transmission of the file etc) and provide for a streamlined arbitral process (eg only one full submission for each party and no post-hearing briefs). The practical application of the provisions on the expedited procedure is rather limited.
Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?
The VIAC has published a selection of 60 anonymised awards rendered under the Vienna Rules to provide insight into various procedural and substantive issues, which have arisen over the last years in commercial arbitration. This publication of selected arbitral awards is a response to the increased call for measures to ensure greater transparency of arbitral proceedings by way of enhanced access to reasoned arbitral awards.
Are efforts being made by arbitration institutions or local courts to impose strict deadlines for the rendering of awards?
Local courts have no competence to influence the time period arbitral tribunals use for rendering awards. However, extraordinarily lengthy proceedings may violate the right to a fair trial of a party and thus constitute a reason for setting-aside the award.
The Vienna Rules foresee no general deadlines for the rendering of awards. However, the arbitrators are required to inform the secretary general of the anticipated day of the rendering of the award once the proceedings are closed (Art 32). In practice, the average duration of arbitrations administered by the VIAC is one year.
Have steps been taken in your country to publish reasoned decisions on arbitrator challenges and provide more insight into the drivers behind arbitrator selection by institutions?
The publication of selected arbitral awards referred to under ‘hot topic’ no. 5 above does not contain decisions on the here relevant topics. In Austria, final court decisions are regularly published online through the legal information system ‘RIS’ administrated by the federal chancellery (www.ris.bka.gv.at). Until 2014, the competent court to decide on the challenges of arbitrators were courts of first instance, the judgments of which were generally not published. Since the 1 January 2014, the Austrian Supreme Court is the sole competent court to render such decisions. Its judgements are published in the above-described manner.
Are there arbitral laws or arbitration institutional rules in your country providing for simplified procedures for claims under a certain value?
No, there is no such system in place in Austria.