This country-specific Q&A provides an overview of the legal framework and key issues surrounding arbitration law in the Austria.
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?
If the seat of the arbitration is in Austria, the arbitration proceedings will be governed by Austrian arbitration law, which is contained in the Fourth Chapter of the Austrian Code of Civil Procedure (sections 577–618).
Austrian arbitration law grants the parties extensive autonomy with only few mandatory legal provisions that cannot be waived by agreement of the parties. The parties are largely free to agree on the manner in which their arbitration proceedings shall be conducted. In the absence of such an agreement (which may also be a reference to a set of rules provided by an arbitral institution), Austrian arbitration law applies as default rule. If the agreement of the parties and the Austrian arbitration law are silent, the arbitrators are free to conduct the proceedings at their discretion limited by mandatory law and the fundamental principles of fairness and the right to be heard.
Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?
Austria has ratified the New York Convention without any reservations.
What other arbitration-related treaties and conventions is your country a party to?
Austria is a party to the Geneva Convention on the Execution of Foreign Arbitral Awards, the European Convention on International Commercial Arbitration, the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention), and 58 Bilateral Investment Treaties (in force, October 2018).
Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?
Since 2006, the Austrian arbitration law is based on the UNCITRAL Model Law with a few minor deviations. Significantly, Austrian arbitration law does not differentiate between domestic and international arbitration.
Are there any impending plans to reform the arbitration laws in your country?
No. The most recent amendment (in force since 1 January 2014) to the legislation governing arbitration in Austria was to establish direct recourse to a specialised chamber of the Austrian Supreme Court as the first and final instance regarding proceedings to set aside an arbitral award.
What arbitral institutions (if any) exist in your country? Have there been any amendments to their rules or are there any being considered?
The Vienna International Arbitral Centre of the Federal Economic Chamber (VIAC) was founded in 1975 and provides excellent administration of international and domestic arbitrations. Since the recent amendment of the Austrian Federal Act on Economic Chambers in June 2017, the VIAC also administers purely domestic arbitrations.
A new version of the VIAC Rules of Arbitration and Mediation entered into force on 1 January 2018 (“Vienna Rules and Vienna Mediation Rules 2018“). The recently revised Vienna Rules 2018 apply to all proceedings that commenced after 31 December 2017.
What are the validity requirements for an arbitration agreement under the laws of your country?
Austrian law requires that the arbitration agreement must identify the parties and a defined legal relationship which are to be submitted to arbitration. The arbitration agreement must be in writing, either as a part of a document signed by the parties or as an exchange of letters, telefax, emails or any other means of communication that provide a record of the arbitration agreement. Regarding the exchange of documents, the Austrian Supreme Court (OGH 18 OCg 1/15v) has clarified that “exchanged documents” do not need to be signed irrespective of the means of communication used. Additional formal requirements must be met if consumers or employees are parties to the arbitration agreement.
Are arbitration clauses considered separable from the main contract?
Although legislation governing arbitration in Austria is based on the UNCITRAL Model Law on International Commercial Arbitration, the specific wording of Article 16 (1) of the Model Law regarding separability was not adopted. The doctrine of separability is, however, recognised by the courts, which evaluate the question of the validity of an arbitration clause and the main contract in which the arbitration clause was inserted contained in an invalid contract on a case-by-case basis by interpreting the intention of the parties. In practice, this may lead to the result that the parties’ intent was that the arbitration agreement remains valid where the contract is null and void or was terminated. In cases of consensual termination of the main contract, courts have held that the arbitration clause contained in the contract may also be considered terminated if the parties’ intention was to terminate the entire contractual relationship.
Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?
There are no particular rules on multi-party or multi-contract arbitration in the Austrian Arbitration law.
Pursuant to Article 14 Vienna Rules 2018, the arbitral tribunal may decide on the joinder of third parties upon request of a party or the third party after hearing all parties and the third party. The joinder to an arbitration as additional party is only possible if the arbitral tribunal also has jurisdiction with regard to that third party. In deciding on the joinder, the arbitral tribunal will generally consider whether all parties have (implicitly) consented to joint proceedings.
Article 15 Vienna Rules 2018 provides that the Board of the VIAC, upon request by a party and after hearing the parties and the arbitrators already appointed, may consolidate two or more proceedings where the place of arbitration is the same and either the parties agree to the consolidation or the same arbitral tribunal was nominated.
Article 18 of the Vienna Rules 2018 sets out the applicable rule for the constitution of the arbitral tribunal in multi-party proceedings. If there is more than one party on the side of Claimant or Respondent, they shall generally jointly nominate an arbitrator.
How is the law applicable to the substance determined? Is there a specific set of choice of law rules in your country?
Section 603 of the Austrian Code of Civil Procedure stipulates that the parties are free to choose the law applicable to the substance of the dispute. Unless otherwise agreed by the parties, the choice of a specific domestic law only refers to the substantive law (voie directe) and does not include the conflict of law rules (voie indirecte). In the absence of an agreement by the parties, the arbitral tribunal may choose the law it deems appropriate. Although the tribunal is not bound to apply any conflict of laws rule, it must choose the applicable law based on objective criteria. The tribunal may only decide on the dispute ex aequo et bono subject to an explicit authorisation by the parties.
Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?
Any pecuniary claim that lies within the jurisdiction of the courts may be submitted to arbitration. Non-pecuniary claims may be submitted to arbitration to the extent parties are able to conclude a settlement agreement on the matter in dispute. Disputes that fall into the competence of the administrative authorities are not arbitrable.
Family law matters as well as all claims based on contracts that are — even only partly — subject to the Tenancy Act (Mietrechtsgesetz) or to the Non-Profit Housing Act (Wohnungsgemeinnützigkeitsgesetz) as well as all claims concerning condominium property may not be made the subject of an arbitration agreement. In addition, certain (collective) labour and social security matters are not arbitrable.
Disputes involving consumers or employees may only be submitted to arbitration (with additional formal requirements) after the dispute has arisen. The additional formal requirements are extensive, rendering arbitration agreements in these areas highly impracticable.
In your country, are there any restrictions in the appointment of arbitrators?
The parties are free to agree on a procedure to select the arbitrators. The only prerequisite is that an arbitral tribunal may not consist of an even number of arbitrators. There are no restrictions regarding the choice of an arbitrator. Specifically, also non-lawyers may be appointed as arbitrators.
Are there any default requirements as to the selection of a tribunal?
Austrian law provides for a default procedure if the parties have failed to agree on a method for selecting arbitrators or if the chosen selection procedure fails. However, in most cases, the parties will have chosen a set of rules that deals with this issue.
The default provision foresees a procedure for the appointment of a sole arbitrator (by agreement of the parties) or an arbitral tribunal (with each party appointing one arbitrator and the two party-appointed arbitrators appointing the chairman). If a party fails to appoint an arbitrator, or if no agreement can be found regarding the appointment of a sole arbitrator or the chairman of the arbitral tribunal, the parties may apply to the state courts for a default appointment.
Can the local courts intervene in the selection of arbitrators? If so, how?
Courts are only involved in the appointment of arbitrators upon application of a party in case the applicable mechanism to appoint the arbitral tribunal has failed. Courts may also be called upon to decide on the application to remove an arbitrator, e.g. due to lack of independence or impartiality.
Can the appointment of an arbitrator be challenged? What are the grounds for such challenge? What is the procedure for such challenge? Has there been an increase in number of challenges in your jurisdiction?
The Austrian Code of Civil Procedure and the Vienna Rules provide that arbitrators may only be challenged based on justifiable doubts as to their impartiality and independence or on the ground that the arbitrator does not fulfil the requirements of the agreement of the parties.
Austrian law provides for a default procedure if the parties have failed to determine a challenge procedure by agreement: A party shall first submit a written statement of the reasons for the challenge to the arbitral tribunal. This gives the challenged arbitrator the opportunity to resign from office or the other party may agree to the removal of the challenged arbitrator. If the challenged arbitrator does not resign or is not removed upon mutual agreement of the parties, the sole arbitrator respectively the arbitral tribunal shall decide on the challenge. If the challenge before the sole arbitrator respectively the arbitral tribunal is unsuccessful, the challenging party may apply to the Austrian Supreme Court as first and last instance to decide on the challenge.
The prevailing impression is that challenges have not increased in number.
What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?
If the tribunal is truncated, a new tribunal member has to be appointed pursuant to the rules applicable to the initial appointment of the removed arbitrator. Absent an agreement by the parties, the arbitral may proceed with the proceedings on the basis of the results of the proceedings until the termination of the mandate of the replaced arbitrator.
Are arbitrators immune from liability?
Arbitrators are subject to civil liability if they culpably do not fulfil, or do not timely fulfil, the obligations of their mandate. However, based on jurisprudence, the setting aside of the award is a prerequisite for any the liability of the arbitrators.
Is the principle of competence-competence recognised in your country?
Austrian arbitration law recognises the principle of “competence-competence”. Thus, the arbitral tribunal may rule on a party’s challenge to the arbitral tribunal’s own jurisdiction. Lack of jurisdiction of the arbitral tribunal may be raised as a ground to set aside an arbitral award. If such proceedings are initiated, the question of jurisdiction will be reviewed by the Austrian Supreme Court.
What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?
The approach of Austrian courts towards a party who commences court proceedings in breach of an arbitration agreement will simply be to dismiss the action, unless the other party enters into the merits of the dispute without raising a jurisdictional objection, or if — after an objection has been raised — the court finds that the arbitration agreement does not exist or is incapable of being performed. If arbitral proceedings are already pending, no parallel court proceeding regarding the same matter may be initiated and any court action will generally be dismissed.
How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?
The request for arbitration must be in writing and must contain a reference to the relevant arbitration agreement and further sufficiently indicate the claims raised. In ad-hoc arbitrations, the proceeding is commenced once the respondent receives the request for arbitration. The applicable statutory period of limitation is thereby interrupted. In arbitrations under the Vienna Rules, proceedings are commenced upon receipt of the request for arbitration by the Secretariat.
What happens when a respondent fails to participate in the arbitration? Can the local courts compel parties to arbitrate?
Under Austrian arbitration law, if a party refuses or fails to participate in the arbitration, the tribunal shall continue with the proceedings. It may not treat the non-participation as consent to the assertions of the other party. Local courts may not compel a party to participate in an arbitration.
In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?
If a state enters into an arbitration agreement, it may be deemed as a waiver of immunity in relation to sovereign acts (acta iure imperii). Austria is party to the European Convention on State Immunity, which provides that a state which is a party to an arbitration agreement may not invoke state immunity in relation to proceedings concerning the arbitration agreement. In general, the doctrine of restrictive immunity is recognised in Austria, according to which state immunity is applied only in relation to sovereign acts but not to activities of a commercial nature (acta iure gestionis).
In what instances can third parties or non-signatories be bound by an arbitration agreement or award? Can local courts order third parties to participate in arbitration proceedings in your country?
Austrian law does not contain statutory provisions allowing an arbitral tribunal to assume jurisdiction over individuals or entities which are neither party to an arbitration agreement nor signatories to the contract containing the arbitration agreement. However, case law has established that both single and universal legal successors (e.g. in case of assignment) and the beneficiaries of contracts explicitly concluded to the benefit of a third party are bound by an arbitration agreement even if they are not signatories to the contract.
Third parties may not be ordered by courts to participate in arbitration proceedings.
What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?
Austrian arbitration law does not contain any limitations on the available types of preliminary or interim measures. Unless otherwise agreed by the parties, arbitral tribunals may, upon application of a party, award preliminary or interim relief in respect of the subject-matter in dispute. Interim relief may only be awarded after giving the other party an opportunity to be heard and under the condition that enforcement of a claim would otherwise be frustrated or if there is danger that one of the parties may suffer irreparable damage.
Local courts may be called upon to grant preliminary or interim relief upon application of a party both before and after constitution of the arbitral tribunal. Preliminary or interim relief granted by a court can only be lifted by the courts and cannot be reversed by an arbitral tribunal.
Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence?
Austrian arbitration law does not contain any particular provisions regarding the collection and submission of evidence. It is up to the arbitral tribunal to decide upon the admissibility of evidence, and to determine its relevance, materiality and weight.
In practice, extensive discovery is rare in international arbitrations conducted in Austria; whereas document production, the use of written witness statements and cross-examination are widely practiced. Often, the IBA Rules on the Taking of Evidence in International Arbitration are referred to as guidelines.
In general, arbitral tribunals do not have any powers of compulsion but may instead request the courts’ assistance regarding judicial acts, including the collection of evidence or interrogation of a witness. Court assistance includes requesting legal assistance by a foreign court or by another authority on behalf of an arbitral tribunal.
What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?
The Professional Code of Conduct for Lawyers applies to all members of the Austrian Bar, including those members who act as arbitrators or counsel in an arbitration. There are no specific ethical codes applicable specifically to counsel and arbitrators in an arbitration in Austria.
How are the costs of arbitration proceedings estimated and allocated?
Unless the parties have agreed otherwise, they are entitled to recover legal costs (encompassing the reasonable costs of legal representation, the fees of the arbitrators and — where applicable — the administrative costs charged by the institution). Both Austrian law and the Vienna Rules foresee that the arbitral tribunal must render a decision on costs upon termination of the proceedings. The general practice with regard to allocating costs between the parties is to take into account all circumstances of the case, with a particular focus on the outcome of the proceedings.
Can pre- and post-award interest be included on the principal claim and costs incurred?
Austrian arbitration law does not contain any explicit provisions on whether the parties are entitled to recover interest. In most cases, this will be considered as dependent on the law applicable to the merits of the dispute.
What legal requirements are there in your country for the recognition of an award?
Under Austrian law, arbitral awards are deemed equivalent to judgments of state courts and, thus, will be enforced the same way by means of an application to the District Court ("Bezirksgericht") of the district (a) where the respondent has its seat, or (b) where the object, asset, third-party debtor which shall serve to satisfy the claimant's request for enforcement is registered or located.
An authenticated original or a duly certified copy of the award must be submitted together with the application for enforcement. The original or a certified copy of the arbitration agreement must only be presented upon a respective request by the court.
What is the estimated timeframe for the recognition and enforcement of an award? May a party bring a motion for the recognition and enforcement of an award on an ex parte basis?
Recognition and enforcement proceedings under Austrian law are initially conducted on an ex parte basis. The court initially decides on the recognition and enforcement of an award on a documents-only basis, without conducting a hearing or involving the award debtor. The estimated timeframe for this decision is very short, i.e. one to three months.
The court will serve its decision (Beschluss) on the respondent, who has the possibility to appeal (Rekurs) against this decision within four weeks, and bring forward all objections against the decision on recognition and enforcement.
Does the arbitration law of your country provide a different standard of review for recognition and enforcement of a foreign award compared with a domestic award?
Under Austrian law, domestic arbitral awards (i.e. where the seat of arbitration was in Austria) are deemed equivalent to judgments of state courts and, thus, will be enforced the same way by means of application to the District Court ("Bezirksgericht") of the district (a) where the respondent has its seat, or (b) where the object, asset, third-party debtor which shall serve to satisfy the claimant's request for enforcement is registered or located. Domestic awards are only reviewed in setting aside proceedings.
Recognition and enforcement of foreign arbitral awards (i.e. where the seat of arbitration was outside Austria) are governed by international treaties to which Austria is a party, including the Geneva Convention on the Execution of Foreign Arbitral Awards, the European Convention on International Commercial Arbitration, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Washington Convention on Settlement of Investment Disputes between States and Nationals of Other States.
Once a court order on recognition is issued, a foreign arbitral award is treated in the same way as a domestic arbitral award.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the local courts?
Austrian arbitration law does not contain any explicit provisions on the types of remedies that an arbitral tribunal may award. Punitive damages are not foreseen under Austrian law and it is likely that the Austrian courts would consider the award of punitive damages contrary to public policy.
Can arbitration proceedings and awards be appealed or challenged in local courts? What are the grounds and procedure?
Within three months after the receipt of the arbitral award, a party is entitled to file an action that the award may be set aside based on one (or more) of the following grounds:
- a valid arbitration agreement does not exist, or the arbitral tribunal has denied its jurisdiction despite the existence of a valid arbitration agreement, or a party was under an incapacity to conclude a valid arbitration agreement under the law governing its personal status;
- a party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was for other reasons unable to present its case;
- the award deals with a dispute not covered by the arbitration agreement, or contains decisions on matters beyond the scope of the arbitration agreement or the plea of the parties for legal protection; if the default concerns only a part of the award that can be separated, only that part of the award shall be set aside;
- the composition or constitution of the arbitral tribunal was not in accordance with a provision of this chapter or with an admissible agreement of the parties;
- the arbitral proceedings were conducted in a manner that conflicts with the fundamental values of the Austrian legal system (ordre public);
- the requirements according to which a court judgment can be appealed by an action for revision under section 530 paragraph (1) numbers 1 – 5 have been met; [note that the grounds referred to here all relate to the circumstance that the decision was based on a fraudulent action or forged document or a criminal verdict that has since been reversed [note that the three-month time period to file the action for setting aside does not apply to this ground];
- the subject-matter of the dispute is not arbitrable under Austrian law;
- the arbitral award conflicts with the fundamental values of the Austrian legal system (ordre public).
Additional grounds are available to set aside an arbitral award rendered in arbitral proceedings in which either a consumer or an employee was involved.
The action to set aside an award is to be filed with the Austrian Supreme Court, which will decide as first and last instance, i.e. without possibility of a further appeal.
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)?
Parties cannot, under Austrian law, agree to exclude or expand the scope of appeal or challenge.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
In general, the doctrine of restrictive immunity is recognised in Austria, according to which state immunity is applied only in relation to sovereign acts but not to activities of a commercial nature (acta iure gestionis). Moreover, if a state files an action for annulment or a motion under the Austrian Code of Civil Procedure Code, that action may be regarded as a waiver of immunity.
To what extent might a third party challenge the recognition of an award?
There is, as a general rule, no right of a third party to challenge the recognition of an award. A third party conceivably may only challenge the recognition of an award if it is the award debtor. In practice, it seems very unlikely that this situation could arise.
Have there been any significant developments with regard to third party funding in your jurisdiction recently?
Based on anecdotal evidence, the use of third party funders has become considerably more frequent. There is, however, no reliable data available on how often parties finance arbitration proceedings through third-party funders.
Is emergency arbitrator relief available in your country? Is this frequently used?
The concept of an emergency arbitrator is not specifically regulated in Austrian arbitration law.
Are there arbitral laws or arbitration institutional rules in your country providing for simplified or expedited procedures for claims under a certain value? Are they often used?
The Vienna Rules provide for expedited proceedings (Article 45), subject to an agreement by the parties (opt-in concept).
Have there been any mass (arbitration) claims in your jurisdiction?
Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?
VIAC has published a selection of awards in an anonymised form to increase transparency. As of 1 January 2017, VIAC is publishing the names of the arbitrators sitting on pending cases.
Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted in your country? If so, how?
VIAC is actively promoting diversity in the selection of arbitrators and has signed the Equal Representation in Arbitration Pledge. It may be noted that VIAC is now headed by two female professionals as Secretary General and Deputy Secretary General.
Have there been any developments regarding mediation in your jurisdiction?
VIAC also provides for rules on mediation and actively promotes the use of mediation. There are other institutions with the seat in Austria such as the Energy Community that also promote the use of mediation.
Have there been any recent court decisions in your country considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?
There is no such recent decision.
Is corruption an issue that is regularly raised in your jurisdiction? What standard do local courts apply for proving of corruption?
There is no reliable data on how often the issue of corruption is raised in arbitration proceedings in Austria. The standard of proof required to establish corruption is not different than the otherwise applicable standard of proof.