Austria: Adjusting Contracts In Arbitration?

Arbitrators decide legal disputes – in lieu of state courts. But do arbitrators also enjoy the power to adapt contracts to changed circumstances?

Long-Term Contracts and the Need for Adaptation Over Time

Twenty or even thirty years can be a long time. Still, under many commercial contracts the parties agree to be bound to their bargain for such terms – be it in the field of energy, infrastructure, joint ventures, or others. Needless to say, these long-term contracts are inherently susceptible to change. A lot may happen in twenty or even thirty years: Governments rise and fall, the economy slows down and picks up again, society changes. All such changes may affect the original bargain of the parties. Typically, parties do expect circumstances to change. Hence, there is hardly a long-term contract which goes without some sort of "revision clause" (ie contractual adaptation clause).1

Once a change manifests itself, typically years after the contract was concluded, the parties generally do not happily agree on how to adapt their agreement – or on whether to adapt it at all. Since most (long-term) contracts of commercial weight refer disputes arising out of such contracts to arbitration, this is the point at which the parties turn to the arbitrator asking for an adjustment of their contract.

However, contrary to what one might expect, it is not at all clear whether a disagreement on how to adjust a contract on the basis of a contractual adaptation clause qualifies as a "legal dispute" and hence may be subjected to arbitration at all.

The Traditional View: Contract Adaptation by way of Expert Determination

Arbitration is dispute resolution. Accordingly, under the traditional Austrian view, an arbitrator can only "resolve legal disputes".2 Dispute resolution is understood as the act of adjudicating pre-existing rights. The creation of rights pro futuro would not fall under this traditional perception of arbitration.3

The Better View: Arbitrators can Adapt Contracts

Convincing arguments speak against this restrictive approach though: It is no longer true that rule-making would inherently be excluded from the judicial function exercised by judges and arbitrators. Rather, looking at the competences of state court judges, one can conclude that judges, too, enjoy certain rule-making powers and, importantly, powers of contract revision.4

An arbitrator will typically – disregarding for once the field of non-arbitrable subject matters such as family or tenancy law – enjoy at least the same decision-making competences as a state court judge. This is known as the principle of synchronized competences. Hence, arbitrators will enjoy at least the same power to adapt a contract as state court judges. But state courts' powers to adapt contracts are not undisputed: There is – still – a strong sentiment that "judges do not make contracts" (iudex non substituit). Judges should, under this approach, only interpret but not create or shape private contractual relationships.

Consequently, one must go one step further: The proposition is that an arbitrator's powers in general and those to revise contracts in particular can go beyond that of a state court judge. Indeed, the fact that arbitration is to the exclusion of state court litigation does not necessarily mean that an arbitrator's competences could not be wider than the excluded competences of the judge. This can be seen, most prominently, in Section 603 para 3 ACCP, which stipulates that arbitrators may decide ex aequo et bono if so authorized by the parties. State courts, on the other hand, cannot be authorized to decide "in equity".

Hence, it appears that arbitrators acting under the Austrian Code of Civil Procedure do enjoy the power to adapt contracts – even if and where the state courts' powers to do so end. And arbitral practice proves this right: As one recent example, a Vienna-seated tribunal modified a contractual price formula in a case between RWE and Gazprom.5

Primarily, the above holds true for contract adaptation on the basis of adaptation clauses that are sufficiently determined (ausreichend bestimmt) for the purposes of Austrian contract law.6 One might, however. even consider whether a "general" adaptation clause that would not be sufficiently determined under this standard might still be enforceable in arbitration: The argument would be that the arbitrator – but not the state court judge – can be empowered to decide ex aequo et bono, which means he/she can be released from the strict application of the law (including, possibly of Section 869 Austrian General Civil Code). It remains to be seen whether arbitral practice and the practice of the Austrian (annulment) courts would indeed subscribe to such approach.

Conclusion: The Parties have the Choice

Now that it has been established that arbitrators can enjoy the power to adapt contracts, what role will be left for expert determination in this area? The answer will likely be: the parties have the choice. The parties may either intend to have their contract revised by an arbitrator or else by an expert – depending on their expectation of the process, as well as of what happens if they are dissatisfied with the decision. Typically, the parties' interests in commercial long-term contracts will call for contract adaptation by arbitration.

Quote: Depending on the joint intention of the parties, contract adaptation on the basis of a contractual revision clause can either be effected in arbitration or expert determination.


[1] Contract revision may also be based, more generally, on the principle of clausula rebus sic stantibus (foremost on the doctrine fundamental change of the contractual foundation).

[2] Cf. Section 581 of the Austrian Code of Civil Procedure.

[3] Along these lines, the Austrian Supreme Court held in a decision of 1985 that "the adaptation of a long-term contract to changed circumstances" on the basis of a respective contractual clause would not be arbitration (i.e. Schiedsrichtertätigkeit), but rather expert determination (i.e. Schiedsgutachten); OGH, Feb 27, 1985, docket no. 1 Ob 504/85.

[4] Eg Irrtumsanpassung, Section 872 of the Austrian General Civil Code, or change of contractual foundation (Änderung der Geschäftsgrundlage).

[5] Award of 27 June 2013.

[6]  Section 869 of the Austrian General Civil Code.

This article was originally published in the schoenherr roadmap`14 - if you would like to receive a complimentary copy of this publication, please visit:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions