Austria: Another Win For European Commercial Agents: Overriding Mandatory Austrian Law Provisions To Supersede Arbitration Agreement

On 1 March 2017 the Austrian Supreme Court (Oberster Gerichtshof) ruled on whether potential claims under the Austrian Commercial Agents Act (Handelsvertretergesetz) can be brought before an Austrian court even if the underlying agency agreement contains an arbitration clause and is governed by the laws of New York (OGH 1.3.2017, 5 Ob 72/16y). The judgment addresses international overriding mandatory provisions on the compensation of commercial agents and builds on two related ECJ decisions.

As early as the year 2000, the European Court of Justice ("ECJ") ruled in its judgment Ingmar (9.11.2000, C-381/98) that Articles 17 and 18 of Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents (the "Directive"), "which guarantee certain rights to commercial agents after termination of agency contracts, must be applied where the commercial agent carried on his activity in a Member State although the principal is established in a non-member country and a clause of the contract stipulates that the contract is to be governed by the law of that country." Thereby, the ECJ established the international overriding mandatory applicability of Articles 17 and 18 of the Directive.

However, as some Member States made use of the possibility to extend the scope of the Directive in their transposition into national law, the ECJ was eventually concerned with a follow-up question in that respect. In its judgment Unamar (17.10.2013, C-184/12) the ECJ declared that national law provisions which go beyond the scope of the Directive also may be regarded as overriding mandatory national law "if the court before which the case has been brought finds, on the basis of a detailed assessment, that the legislature of the State of the forum held it to be crucial, in the legal order concerned, to grant the commercial agent protection going beyond that provided for by [the Directive], taking account in that regard of the nature and of the objective of such mandatory provisions." This principle shall also be relevant vis-à-vis Member States of the European Union which decided to transpose the minimum protection requirements laid down by the Directive.

In the case recently decided by the Austrian Supreme Court, an Austrian limited liability company (the "Agent") entered into an agency agreement in order to provide for the procurement of sea freight business in Austria and other Member States of the European Union for a New York based principal (the "Principal"). The agency agreement contained a choice of law and an arbitration clause stipulating that the agreement will be governed by the laws of New York and all disputes arising from it will be settled by an arbitral tribunal in New York in accordance with the rules of the Society of Maritime Arbitrators. The Principal terminated the agency agreement and filed a claim against the Agent for outstanding accounts and damages before a New York based arbitral tribunal. In the arbitral proceedings, the arbitral tribunal refused to consider the Agent's counter-claim for compensation as a commercial agent resulting from the allegedly wrongful termination of the agency agreement.

The Agent therefore filed a lawsuit against the Principal before an Austrian court, seeking compensation under Section 24 of the Austrian Commercial Agents Act, as the Principal allegedly terminated the agency agreement unlawfully. Section 24 of the Austrian Commercial Agents Act is rooted in Articles 17 and 18 of the Directive. Also, the Austrian legislator extended the scope of the applicability of the compensation provisions in its transposition of the Directive into national law. Whereas the Directive defines the term commercial agent as "a self-employed intermediary who has the continuing authority to negotiate the sale or purchase of goods on behalf of another person", the Austrian definition in Section 24 is broader and applies to anyone who is commissioned and authorised to convey or conclude business transactions in another person's name and account.

In accordance with Article II Paragraph 3 of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("NYC") and Section 584 Paragraph 1 of the Austrian Code of Civil Procedure, an Austrian court shall not abandon a lawsuit if it finds that the arbitration agreement is non-existent or unenforceable. An arbitration clause shall be unenforceable if it aims to circumvent the applicability of mandatory procedural or material law provisions to the governed contract. In the present case, the Austrian Supreme Court concluded that there "cannot remain reasonable doubt that the Agent, who mainly acted in the territory of the European Union, is entitled to a mandatory compensatory claim in accordance with Articles 17 and 18 of the Directive which have been transposed by Section 24 Austrian Commercial Agents Act." As the applicable laws of New York do not offer a comparable compensation regime for commercial agents and the arbitral tribunal refused to apply the relevant overriding mandatory Austrian law provision, the Austrian Supreme Court declared that "the refusal of recognition of the arbitration clause remains the only possibility to secure the international mandatory scope of application of Articles 17 and 18 of the Directive in favour of the Agent, who shall be protected by the provisions of the Directive and its transposition in Section 24 Austrian Commercial Agents Act." Therefore, the arbitration clause in the agency agreement must be deemed invalid and must not oppose the lawsuit filed by the Agent.

The Supreme Court's reasoning is not entirely uncontroversial. The Agent conducted the procurement of sea freight business in Austria and other countries of the European Union for the Principal. Whilst the territorial scope of the Agent's activities complies with the conditions for the international overriding mandatory applicability of the compensation provisions of the Directive as set out by the ECJ in Ingmar, the procurement of business is not covered by the relevant definition in the Directive, which only refers to the sale or purchase of goods. As already pointed out above, the ECJ in Unamar opened the door for Member States to consider transposed Directive provisions with an extended scope of applicability as national overriding mandatory principles if the national court holds such provisions to be crucial after a detailed assessment. As Eckardt (IHR 2017, 123 et seq) correctly remarks, no such detailed assessment can be found in the reasoning of the Austrian Supreme Court judgment. The court in fact based its judgment on the general statement of the ECJ that such provisions can be national overriding mandatory law if this is crucial in the relevant legal order. Hence, the judgment does not provide an assessment and explanation of why it would be crucial, from an Austrian law perspective, that agents conducting the procurement of business should also be entitled to a compensatory claim on the basis of a national overriding mandatory provision. The justification that such a compensatory claim of the Agent is rooted in Articles 17 and 18 of the Directive is therefore not convincing.

The present case shows the power of overriding mandatory law, but also the power of national courts when interpreting such provisions in the context of international arbitration. Therefore, and especially when it comes to European Union law and the respective transposed national law provisions, it is advisable to look more closely and check whether international or national overriding mandatory law could be an issue.

This article was first published on

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