In a recent decision of the Vienna Higher Regional Court (Oberlandesgericht Wien), a significant obstacle to claims made by US-based plaintiffs has been removed.
Securing litigation costs in Austria
In order to secure the plaintiff's obligation to reimburse the procedural costs in case of losing the proceeding, Section 57 of the Austrian Civil Procedure Code ("ZPO") provides that a foreign plaintiff that does not have a habitual residence or is seated in Austria must be ordered to provide sufficient security at the request of the defendant (aktorische Kaution – cautio iudicatum solvi).
If the plaintiff fails to provide the required security within a period allotted by the court of first instance, the defendant may, in principle, apply for the court to declare the civil action to be withdrawn (Section 60 para 3 ZPO).
Under certain circumstances, this can have significant consequences for the plaintiff, as the limitation period for a claim, which was interrupted by the filed civil action, could apply again.
As a general rule, however, there is no obligation to provide such a security if the Austrian court decision on the obligation to reimburse legal costs could be enforced in the plaintiff's state. For example, in case of a plaintiff seated in a member state of the EU, this is ensured by the Brussels I Regulation. But also in the relationship between Austria and the Russian Federation, there is a sufficient basis in international law making decisions on legal costs enforceable in the respective countries.
In the relationship between the USA and Austria, however, neither a multilateral nor a bilateral treaty on the enforcement of judgments on legal costs exists. In practice, this resulted in US plaintiffs usually providing a corresponding security (see e.g. Austrian Supreme Court's decision dated 21 December 1995 regarding a plaintiff based in Florida, 2 Ob 593/95).
Change in judicial practice?
However, a new decision by the Vienna Higher Regional Court seems to be breaking new ground in this context.
Two Austrian attorneys reported in a recent issue of an Austrian legal magazine about this potentially transformative decision by the Vienna Higher Regional Court (Alexander Koller and Mirjam Sorgo in ecolex 2019, 513; the decision dated 19 March 2019 with the court file no 5 R 28/19b. The text of this decision has not yet been officially published. For that reason, the following information is based on this article).
In the present case, the defendant lodged an application for security (in a six-digit euro amount) and argued that neither a multilateral or bilateral state treaty, as defined in Section 57 ZPO, or any other possibility would exist for the enforcement of a possible court decision ordering the plaintiff to reimburse legal costs in the USA.
The plaintiff, however, argued that the Laws of Delaware would provide for such a possibility (with reference to Title 10 Delaware Code, Chapter 48. Uniform Foreign-Country Money Judgements Recognition Act, Sections 4801-4812). The courts finally obtained a legal opinion by the Max Planck Institute for Comparative Public Law and International Law in Hamburg, Germany, which confirmed the plaintiff's view.
Based on this legal opinion, the court of first instance rejected the defendant's application. This decision was confirmed by the Vienna Higher Regional Court.
It will therefore be exciting to observe whether the Austrian courts will follow suit regarding plaintiffs from other US states. Nevertheless, the deterrent effect of a security deposit to initiate civil proceedings in Austria could be further eliminated for US plaintiffs.
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.