A. LEGISLATION AND RULES
A.1 Legislation
Sections 577 to 618 of the Austrian Code of Civil Procedure (ZPO) govern Austrian arbitration law. This legal framework does not differentiate between domestic and international arbitral proceedings and is applicable to disputes in both commercial and other matters. The last significant amendment dates back to 2013, establishing the Austrian Supreme Court (OGH) as the sole court that can set aside an award under section 615 ZPO, while section 611 ZPO provides limited grounds for annulment. Moreover, under section 584 ZPO, Austrian state courts are required to dismiss a claim when the matter is subject to an arbitration agreement. Austria is thus perceived as an arbitration-friendly jurisdiction.
Nonetheless, Austrian arbitration imposes significant restrictions when it comes to resolving disputes with consumers through arbitration: Section 617 ZPO stipulates that an arbitration agreement between an entrepreneur and a consumer can only be validly concluded for disputes that have already occurred. An amendment of this provision is expected in the near future to further promote Austria’s reputation as a hub for arbitration proceedings. The proposal is to exclude legal and natural persons, who despite being classified as consumers actually operate as entrepreneurs, from the scope of section 617 ZPO. This is particularly crucial for arbitration agreements with private foundations that may qualify as natural persons under Austrian law.
A.2 Institutions, rules and infrastructure
The Vienna International Arbitral Center (VIAC) is the leading Austrian arbitration institution and is considered the most important arbitration institution in Central and Eastern Europe. Founded in 1975 as a department of the Austrian Federal Economic Chamber, VIAC’s caseload has steadily increased in recent years, involving parties from Europe, the Americas and Asia.
In July 2019, VIAC became the first European foreign arbitral institution recognized as a “permanent arbitration institution” in Russia, authorizing VIAC to administer certain types of Russian corporate and procurement as well as domestic disputes in the Russian Federation.
On 1 July 2021, VIAC released an updated version of the Arbitration and Mediation Rules, along with the introduction of the Vienna Investment Arbitration Rules. Both sets of rules apply to proceedings initiated after 30 June 2021. The revised Vienna Rules incorporate the use of virtual hearings and electronic communication in arbitral proceedings via the newly introduced VIAC Portal, an online case management platform. The Investment Arbitration Rules make VIAC an affordable alternative for lower-value disputes between investors and states.
In addition, VIAC has several ongoing initiatives to promote arbitration: In October 2022, VIAC launched a Legal Tech Think Tank, a group of experts from the technology industry and ADR field, with the purpose of generating and collaborating on innovative solutions to emerging challenges. Furthermore, VIAC initiated the Community Ambassador Network. This network of dispute resolution practitioners in CEE/SEE aims at increasing awareness about ADR and VIAC in the region. VIAC was also an early adopter of the Equal Representation Pledge, a commitment to promote diversity and inclusion in arbitration by actively increasing the representation of female arbitrators.
B. CASES
In 2023, the number of arbitration-related cases handled by the OGH was notably reduced compared with the previous year. To present relevant case law, the following three cases therefore date from the current and previous year.
In the first case, the OGH dealt with an application to set aside an award based on the grounds that the arbitration agreement was invalid as it was contained in a forged contract (see B.1). In the second case, the OGH held that the application to set aside the award was time-barred as it was electronically submitted to the wrong court (see B.2). In the third case, the OGH dismissed state court proceedings in a matter subject to arbitration that had not yet been formally terminated (see B.3).
B.1 OGH upholds award due to valid arbitration agreement despite forged contract
The decision of the OGH dated 11 January 2023 is based on the following facts[1]:
The respondent sold face masks to the claimant via an intermediary, who received cheap blue disposable masks instead of FFP3 masks. The claimant initiated arbitral proceedings based on an arbitration clause in the sales contract. The arbitral tribunal decided in favor of the claimant.
The respondent challenged the award, alleging that the contract containing the arbitration agreement was forged as the original contract only foresaw the sale of blue disposable masks. Both contracts included an identical arbitration clause.
The OGH dismissed the application to set aside the award, stating that the dispute over the type of masks owed under the contract did not impact the validity of the arbitration clause in the sales contract. The OGH noted that the existence of a contract was not undisputed. Since both versions of the contract contained an identical arbitration clause, the arbitration agreement was deemed valid. Consequently, the application to set aside the award based on section 611 paragraph 2 cif 1 ZPO was dismissed.
B.2 OGH dismisses application to set aside award because deadline has expired as a result of electronically submitting it to the wrong court
The decision of the OGH dated 16 September 2022 is based on the following facts[2]:
Section 611 paragraph 4 ZPO limits the deadline for filing an application to set aside an award to three months from the day after the award was received. This deadline is final and cannot be extended.
The claimant received the award on 3 June 2022 and electronically submitted its application to set aside the award on 5 September 2022 to the Commercial Court in Vienna. The claimant contended that the application could not be submitted to the OGH due to a malfunction of the electronic filing platform. On 6 September 2022, the claimant requested the Commercial Court to transfer its application to the OGH, which received it on 8 September 2022.
The OGH rejected the application on the grounds that the deadline had expired on 5 September 2022. It clarified that the period for transferring a submission is typically not included in the deadline calculation. However, this rule only applies if the submission was initially addressed to the competent court. In the present case, the claimant electronically submitted the application to the Commercial Court instead of the OGH. The duration of the transfer between the Commercial Court and the OGH was included in the calculation of the deadline, resulting in the application being time-barred. The claimant’s attempt to justify the malfunctioning of the electronic filing platform was deemed irrelevant. The OGH clarified that addressing the document itself to the OGH does not change the outcome, as only the court indicated on the electronic filing platform is decisive, which in the present case was not the OGH but the Commercial Court.
B.3 OGH dismisses state court proceedings because arbitration was still pending
The decision of the OGH dated 29 June 2022 is based on the following facts[3]:
The claimant initiated a VIAC arbitration against a company and requested to additionally include the respondent in this arbitration proceedings. The respondent received the Request for Arbitration and the invitation to participate in the appointment of the arbitrators. The claimant then withdrew its application to include the respondent and filed a claim against the respondent in the Austrian state court. The respondent argued that the pending arbitral proceedings prevent the initiation of state court proceedings and requested the claim to be dismissed.
The court of first instance dismissed the claim, stating that the arbitration was still pending as the arbitral tribunal had not yet decided on the claimant’s withdrawal of the request to include the respondent. The court of appeal confirmed this decision, which the claimant subsequently appealed at the OGH.
The OGH upheld the decisions of the lower courts, stating that a pending arbitration prevents the initiation of court proceedings in the same matter. The initiation of court proceedings would require that the arbitral tribunal or the Secretary General of VIAC had formally declared the arbitration terminated. The existence of such a decision was not evidenced in the first instance court proceedings and cannot be invoked at a subsequent stage of the proceedings due to the limitation on the introduction of new facts.
[1] OGH, 11 January 2023, docket no. 18 OCg 2/22a.
[2] OGH, 16 September 2022, docket no. 18 OCg 2/22a.
[3] OGH, 29 June 2022, docket no. 7 Ob 79/22a.
