Austria: Dispute Resolution Insider - 11th Edition

Welcome to the 11th edition of the DRInsider, the quarterly Newsletter of the Wolf Theiss Disputes team, in which we provide an overview of recent developments in CEE/SEE.

We present a selection of Austrian Supreme Court case law focusing on effects of a private joinder on limitation periods, the balance between an individual's personality right and medical research interests and also the question whether the public prosecutor may order the preservation of outsourced data in the course of a house search.   

Since the adoption of the controversial Polish Act on Claims for Redress of Injury Caused by Violation of Competition Law, legal practitioners are discussing if this new legal remedy will be abused by parties in order to obtain confidential information.

With regard to EU law, the ECJ has issued an interesting judgment in which it is interpreting the objective of the EU Directive relating to self-employed commercial agents saying that an agent has a right to indemnity or compensation even if the contract has been terminated during the trial period.

We wish you a really nice and relaxing summer.

CARTEL LITIGATION

Disclosure Of Unfavourable Evidence - New Rules Governing Actions For Damages For Competition Law Infringement

By Ewa Parczewska and Damian Majda

The Act on Claims for Redress of Injury Caused by Violation of Competition Law that entered into force in Poland in 2017:

The new Act was imposed by Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014. This new rule is particularly unusual in Polish civil procedure and has prompted discussion among legal practitioners and scholars because the structure of the new procedure is close to the concepts of discovery or disclosure in common law jurisdictions.

What is so controversial?

Under the Polish Code on Civil Procedure a party can request the court to disclose evidence which is in the other's party possession. In order to do so the claiming party needs to prove that the evidence that is being requested to be disclosed has significant value for the court proceeding. Additionally, the claiming party has to precisely name the evidence that is requested to be disclosed. However, in antitrust cases, protection of a party's rights to claim damages was expanded by the possibility of applying for disclosure of evidence. This may also happen in a situation in which the plaintiff presumes that certain evidence exists. This means that the opposing party may be forced to submit evidence that is counteractive to its own statements.

Pros and cons?

Before the new law entered into force, it was extremely difficult for a plaintiff to prove its claims. The solution introduced by the new Act aims to create a mechanism which enables a plaintiff to obtain relevant evidence. However, there is a risk that the new procedure may be abused by parties in order to obtain confidential information, such as trade secrets, lists of clients, or other information that could provide a basis for additional litigation.

Everything in the "Court's hands"

The court may decide to limit the scope of information that is able to be disclosed, to deny the disclosure of a specific piece of evidence or to impose a court fee on a party filing a motion in bad faith. When deciding whether a certain motion should be accepted, the courts apply the rule of proportionality. This means that the court establishes whether the information that is going to be obtained is valuable enough to be disclosed. Additionally, on the basis of the same rule, the court decides whether the disclosure of evidence is not too expensive or time-consuming.

It will be necessary to observe the future decisions of Polish courts as they will have significant impact on the future scope of disclosure of evidence.

LITIGATION

Changes To Provisions On Public Procurement Disputes

By Andreea Zvac and Andreea Anton

On 4 June 2018, the Romanian Official Gazette published Government Emergency Ordinance no. 45/2018 ("GEO 45/2018") bringing a series of changes with regard to the current public procurement regulation.

Among the major amendments brought to the public procurement legislation there are certain significant changes made to the provisions regarding the conduct of disputes in this area.

The explanatory memorandum issued by the Romanian Government states that such changes were implemented in order to reduce the number of complaints initiated by the participants to public procurement procedures, which may hinder the execution of the contract.

The restructuring of challenge proceedings

The Romanian Government simplified the challenge procedure by removing the initial preliminary notification that was sent to the contracting authority. Hence, the National Council for Solving Complaints ("NCSC") and the national courts will be able to issue decisions settling complaints against deeds issued in public procurement procedures more quickly.

Furthermore, GEO 45/2018 brings changes with regard to the experience of members of the NCSC, namely that at least one of those solving a complaint shall have at least nine (9) years' experience in the legal field.

New conditions for submitting complaints

In order to reduce the number of complaints initiated by participants to public procurement procedures, GEO 45/2018 established several obligations for claimants, namely:

  1. to pay a guarantee for any complaint (which can reach up to EUR 195,000), including those submitted directly to the competent court; and
  2. an increase in the stamp fees.

With regard to the amount of the guarantee, the new regulation states that it must be 2% of the estimated value of the contract to be awarded (for ongoing proceedings) or of the awarded contract's value.

The 2% of the estimated value of the framework agreement will be established based upon the value of the highest subsequent value.

An additional stamp fee shall be paid for disputes involving a damage claim or disputes resulting from the performance, annulment or termination of public procurement contracts, including public works contracts based on FIDIC Conditions of Contract.

The stamp fees were increased significantly, to 2% of the estimated value of the contract that surpasses RON 100,000,000 or 1% if the contract's value is under such amount.

Time limits for claims submitted to the court

The previous public procurement regulation was not in accordance with administrative law: which provided for a six (6) months period for claims regarding public procurement contracts.

To prevent misinterpretations the GEO 45/2018 provides:

  1. a 1-year limitation period for claims for damages caused by public awarding proceedings: and
  2. a 3-year limitation period for claims resulted from the performance, annulment or termination of public procurement contracts,

which will run in accordance with article 7 (6) of Law no. 554/2004 on administrative law.

The changes are applicable to public procurement proceedings and challenges that started after the entry into force of GEO 45/2018, respectively after 4 June 2018.

CRIMINAL LAW

Preservation Order For Outsourced Data – May The Public Prosecutor Order The Preservation Of Outsourced Data In The Course Of A House Search?

By Patrick Mittlboeck

Due to the complexity of white collar crime nowadays, the public prosecutor requires a lot of information in order to understand and prosecute the case. In many cases the prosecutor orders the investigative measure of a house search to enable the preservation of necessary information.

According to Article 119 para 1 Austrian Criminal Procedure Code ("ACPC") the order of a house search is inter alia admissible if, due to certain facts, it can be assumed that objects that have to be secured or evaluated are located at the premises. Apart from the prosecutor issuing the order for a house search - which has to be granted by the court - the prosecutor has to issue an order to preserve the objects he or she aims to secure.

In general a preservation order according to Article l 09 para la ACPC covers the preliminary control over an object for reasons of evidence, preservation of private claims or pecuniary measures (Article 110 para l ACPC). As documents are mostly stored electronically (on laptops, mobile phones, USE sticks etc.), Article 111 para 2 ACPC states that following a preservation order any person is obliged to provide access to information that is stored on a data storage medium. The preservation order generally allows the prosecutor to secure the storage medium itself as the object - including of course the information stored on it. The question is whether the preservation order covers access to information that is stored on a server or cloud storage network by using encrypting software or the login data accessible on the preserved storage unit.

The legislative materials to Article 111 ACPC explicitly state that information stored on a server or a cloud network can be subject to a preservation order.

However, it has to be noted that the preservation according to Article l 09 et seqq ACPC is not a secret investigative measure. Therefore the preservation of outsourced data is only admissible if the person authorized to access the data is informed and is given the chance to hand over a copy of the relevant information upfront (Article 111 para 2 ACPC) Furthermore the access for the prosecutor is only permissible once: considering that preservation is not a constant surveillance investigative measure.

The Private Party's Joinder In Criminal Proceedings And Its Effects On Limitation Periods Under Civil Law

By Claudia Brewi

A private party's joinder in Austrian criminal proceedings can affect the lawful interruption of the period of limitation in civil proceedings. However, the private party's joinder must fulfill certain requirements.

In general, the joinder of a private party in criminal proceedings can cause an interruption of the period of limitation to the effect that no claim has to be filed at the civil court yet. This gives the injured party the possibility to lower his/her cost risk as well as simplifying the decision to file a claim based on the criminal proceedings and the judgment of the criminal court.

However, certain criteria have to be fulfilled:

  • The damages claim in the joinder has to be sufficiently individualized (liable person) and concretised (claimed amount) by the private party within three years of the knowledge of the damage and the damaging party (limitation period).
  • According to the Austrian Criminal Procedure Code, the private joinder has to be in written form.
  • There has to be a connection between the criminal charge and the damages claim. The claim must be based on the same facts and circumstances, however, it does not need to be based on the same legal grounds. The legal classification and sentence of the criminal court is thus not of importance for subsequent civil proceedings.
  • The subsequent civil claim - in case the private joinder has not been decided upon - has to be filed at the civil court within a reasonable time after the judgment of the criminal court has been rendered.
  • Moreover, the private joinder and the civil claim must both address the same financial disadvantage.

Latest Supreme Court decision (OGH 10 Ob 45/17s, 14 November 2017)

In its latest decision on private party joinders, the Supreme Court had to decide on the validity of a joinder, and thus its interruption effect for the civil proceeding, in a case with 7,880 Claimants of which only one name has been explicitly mentioned in the written submission. With regard to the rest, only reference was made to their names and claimed amounts on an additionally enclosed CD. The Claimant in the respective Supreme Court case was one of those with only his/her name on the CD.

The main question that arose was, whether a mere reference to an enclosed CD replaces the required written submission of the private joinder and if this serves as sufficient individualization and concretization. The court's response was as follows.

The private joinder was not rejected in the criminal proceedings. In addition, the names and claimed amounts of damages have been put on paper by the Prosecution and have subsequently been registered/taken into the official criminal file. Hence, the requirement of written form has been fulfilled by this act As a result, the private joinder did cause an effective interruption of the limitation period.

Summarized, it should already be sufficient in future cases to argue a sufficient individualization, concretization and substantiation of the private joinder in an exhibit to a submission as long as this is written on paper and becomes part of the official criminal file.

HIGHLIGHTS FROM THE AUSTRIAN SUPREME COURT

By Patrick Winter

An "illegally" bad golf handicap

A golf player hits a hiker with his tee shot resulting in claims against the golfer as well as the owner of the golf course.

Right before the fatal swing the golfer asked his victim-to-be if there are any more hikers on the trail. When the hiker negated the question, the golfer returned to the tee and assumed that the hiker had gone in the meantime. Unfortunately the following swing was a total disaster and directed the ball right into nearby bushes, behind which the hiker was still present. The injured hiker consequently raised damage claims against the golfer and the owner of the golf club.

The court of first instance dismissed the claim. In favour of the club operator, the court decided that the warning signs placed around the golf course were more than enough to fulfil the obligation regarding safety precautions. Regarding the player, the court found that he took all precautions for a safe swing. The failed attempt was to be seen as an "inevitable event".

The court of second instance then flipped the script; finding that the golf player should have checked and not merely speculate about the whereabouts of the hiker. This therefore is to be seen as careless behaviour. Regarding the golf club itself, the warning signs were dismissed as an appropriate way of preventing harm.

The Austrian Supreme Court agreed with the decision of the second instance regarding the golf player. He violated his duty of care. Regarding the golf course operator, the Supreme Court was of a different opinion. "The general rules regarding safety obligations mustn't be overextended", the judge stated. The endangerment of hikers caused by the nature and pace of golf balls is in accordance with the general experience of life.

To prevent such an incident an operator would need to erect barriers around the courses. In the judge's view this would surpass the limit of reason. (l Ob 4/18x)

COMMERCIAL LAW

The Agent's Indemnity / Compensation Claim Vs. "The Principal's Trial Period"

By Florian Pechhacker

Article 17 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 (as amended from time to time, ''the Directive'') stipulating the indemnity or compensation of a commercial agent after the termination of an agency contract is a good example how harmonization is achieved between the Member States of the European Union.

In its evaluation report dated 16 July 2015, the European Commission concluded that the "Directive seems to have been effective in achieving its objective to facilitate cross­ border operations in commercial representation" and "it is recommended that the Directive is maintained in its current form."

Article 17 of the Directive is the Directive's best known provision and its interpretation (respectively the interpretation of its transposition into national law) is subject to numerous disputes before national courts and the ECJ.

Recently, the ECJ (C-645/16) dealt with a request for a preliminary ruling under Article 267 TFEU from the Cour de cassation (Court of Cassation, France).

The respective agency contract behind the dispute stipulated that the contract was entered into for a trial period of 12 months, at the end of which the contract would be deemed to last for an indefinite period. Each party had the right to terminate during the course of the trial period, subject to giving 15 days' notice during the first month and one month's notice thereafter.

French courts ruled on the basis of French case law that there is, by way of exception, no right to compensation where a commercial agency contract is terminated during the trial period, especially because the agency contract has not yet been definitively concluded during the trial period.

Since, inter alia, the Directive does not refer to any trial period the French Court of Cassation asked whether Article 17 of the Directive also applies where termination of the commercial agency contract occurs during a trial period.

The ECJ came in particular to the following conclusions:

  • The Directive makes no reference to the concept of a 'trial period': therefore, it must be considered that such a provision is not as such prohibited by the Directive.
  • The termination during the specific trial period constitutes a termination within the meaning of Article 17(1) and (3) of the Directive: the interpretation that the agency contract has not yet been definitively concluded during the trial period has no basis in the Directive.
  • The indemnity and compensation regimes laid down by the Directive are not intended to penalize termination but to indemnify/compensate the Agent for his/her services in the past. The Agent's claims cannot be denied if the conditions set out in Article 17(2) and (3) are satisfied.
  • Furthermore, the Directive shall protect the Agent. In the light of the aim of the Directive any interpretation of Article l 7 which may prove to be detrimental to the commercial agent is not permissible.
  • The interpretation of the French courts that there is no right to compensation in case the contract is terminated during the trial period is therefore contrary to the objective of the Directive.

As a result, the ECJ ruled that the Agent may also be entitled to indemnity or compensation according to Article 17 paragraphs 2 and 3 of the Directive in the event, that the contract is terminated during a trial period.

CONSTITUTIONAL LAW

Croatian Constitutional Court Rules On Lex Agrokor

By Lucia Močibob and Mario Vrdoljak

On 2 May 2018 the Croatian Constitutional Court ("Constitutional Court") upheld the Law on Extraordinary Administration Procedure for Companies of Systematic Importance for Croatia, better known as "Lex Agrokor".

With this decision, the court rejected twelve proposals requesting a review of Lex Agrokor and its conformity with the Constitution. The Constitutional Court's decision was not unanimous. Three out of the full panel of thirteen judges dissented: expressing their opinion that a significant number of Lex Agrokor provisions were not in line with the Croatian Constitution.

In its decision, the Constitutional Court stated that the provisions of Lex Agrokor did not constitute a violation of ownership rights or entrepreneurial and market freedoms. In its explanation, the Constitutional Court stated that entrepreneurial and market freedoms are not absolute, but rather that they can be limited by law provided that there is a legitimate goal and that the limitation is proportional to the goal to be achieved. As to the legitimate goal, the Constitutional Court accepted the Government's view that the adoption of Lex Agrokor was aimed at, among others, preserving the stability and viability of Croatia's economy, protecting and preventing the bankruptcy of various involved market participants and preventing the loss of jobs. Ultimately, the Constitutional Court determined that the limitations envisaged by Lex Agrokor are proportional to the legitimate goal.

The Constitutional Court also accepted the Government's view that Lex Agrokor was needed to prevent an escalation of Agrokor's problems. Namely, it accepted the Government's position that the existing legal framework containing pre-bankruptcy and bankruptcy proceedings was, by virtue of its legal nature, dynamics and duration, inadequate and ineffective and thus inapplicable in this case. Consequently, the Constitutional Court considered that in such circumstances the adoption of Lex Agrokor was necessary to attain the legitimate goal.

With this ruling the Constitutional Court cleared the legal avenue for completion of the state-administered debt restructuring of the food processing and production giant Agrokor. The only question that now remains unanswered is whether all the stakeholders will accept the settlement that has been offered to them.

FOCUS: LIFE SCIENCES & HEALTH CARE

Dispute Over The Ownership Of Our Most Important Organ The Human Brain

By Claudia Brewi

The Austrian Supreme Court had to deal with a rather rare dispute recently over the balance between an individual's personality right and medical research interests (OGH 8 Ob 56/l7v, 23 March 2018).

The dispute arose when a husband demanded the handover of his dead wife's brain from an Austrian university. Due to suspected Creutzfeldt-Jakob Disease ("CJD"), an autopsy had taken place confirming the infection. The forensic doctors at the respective university then extracted her brain for scientific and preventative reasons according to the following rules.

In Austria CJD is legally classified as a notifiable, communicable disease under Section l para l no l of the Austrian Law on Epidemics. Moreover, under the authority of the Austrian Ministry of Health a reference center for prion diseases has been established since 1990/91 in which brains of persons who died as a result of CJD are preserved for 30 years and scientifically studied.

In this case, as the husband was the sole heir, he based his surrender claim on the exercise of his wife's lasting personality rights. The university, however, argued that it had the right to preserve the human organ to serve public interest and in accordance with the Austrian Law on Epidemics as well as on the Ministry's order.

The woman herself had never decided what should happen to her body after her death. With respect to organs, an opt-out system applies to organ donation in Austria. However, this case could not be classified as a donation.

The findings of the instances

The court of first instance decided in favour of the Claimant due to his wife's missing consent and his present right to exercise her lasting personality rights.

Following and affirming the first court's decision, the second court nevertheless agreed to a revision by the Austrian Supreme Court due to the lack of jurisprudence on the extent to which a university's right to follow a research assignment exists.

The "final" judgment of the Supreme Court

In its revision presented to the Supreme Court the Defendant, the university, claimed for the first time that the legal proceedings in front of the national courts were inadmissible as the autopsy as well as the government order on the preservation of the brain are state administration issues. Thus, the administrative courts are competent.

The Supreme Court came to the conclusion that the university in fact did act as a contractual agent for the reference centre for prion diseases in the healthcare sector, and hence, for the state administration. However, the court also found that the Claimant may file a request for burial by which he would have a legal remedy for claiming the termination of the autopsy and preservation in administrative proceedings.

In line with the above, the Supreme Court found the former proceedings in front of the national courts to be null and finally dismissed the original claim.

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.

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