Originally published by European Law Office.

1. Introduction – Legal framework

In Austria, arbitration is mainly governed by the fourth chapter of the Code on Civil Procedure (ZPO). The law defines the limits of arbitration – e.g. the validity of arbitration agreements or the minimum standards of a fair trial – and in addition to this it provides procedural rules which apply in the absence of a respective agreement between the parties. As of today, Austrian arbitration law is not based on the UNCITRAL Model Law, but a working group recently proposed draft legislation to change the respective chapter, adapt it to the Model Law, and provide an even better environment for arbitration than it is right now.

2. The Arbitration Agreement

2.1 Subject matter

Arbitration agreements can generally be concluded in all civil matters, either for present disputes or for future disputes concerning a sufficiently determined legal relationship between the parties (Section 577 (2) ZPO). Exceptions include marital and family law matters or disputes on the termination of contracts regarding the lease of apartments, claims for the contribution of the share capital of a limited liability company, and future employment law disputes, except disputes arising from employment contracts of managing directors of limited liability companies and stock corporations.

2.2 Required form

The arbitration agreement must be concluded in writing, but electronic data transmission such as e-mail or fax fulfills the requirement (Section 577 (3) ZPO). A reference to general business terms is insufficient, unless these documents are attached to the signed contract and there is a special reference to the arbitration clause in the contract. The signing of the arbitration agreement by agents or attorneys-at-law requires a special power of attorney.

3. The Arbitrators

The arbitrators can be freely chosen, but active judges must not accept appointment as arbitrators (Section 578 ZPO). If there are no relevant rules in the arbitration agreement, each party must appoint one arbitrator. These two arbitrators then appoint a third person as the chairman of the arbitral tribunal (Section 580 ZPO).

If the parties fail to appoint an arbitrator or the arbitrators fail to appoint the chairman, the arbitrator or the chairman will be appointed by the court (Section 582 (1) ZPO).

At the VIAC, the arbitrators can also be chosen by the parties (Art 5 (1) Vienna Rules). The parties can agree on a sole arbitrator or an arbitral tribunal consisting of three arbitrators. A list of possible arbitrators facilitates the search but does not constitute a limitation of admissible arbitrators. If the parties fail to choose the arbitrators, they are appointed by the Board of the VIAC (Art 9 Vienna Rules).

An arbitrator can be challenged for the same reasons as a judge, thus if he is closely related to one of the parties of the arbitration, or if there is sufficient reason to believe that an arbitrator will act in a partisan way (Section 586 (1) ZPO).

4. Procedure

Generally, the procedural rules are set by the arbitrators unless the parties have agreed otherwise. Austrian law only provides minimum standards of due process. By doing so, it stipulates that both parties must be heard and that the arbitrators must establish the relevant facts of the case. Default judgments are not permissible (Section 587 (1) and (2) ZPO).

In certain respects, Austrian law expressly limits the power of the arbitrators. They may not apply coercive measures or impose fines against parties or other persons, and they are not entitled to put any person under oath (Section 588 ZPO). Also, arbitrators cannot force witnesses to appear before the arbitral tribunal.

Court intervention is very limited. The courts may assist the arbitrators where the latter's power is limited, eg in issuing subpoenas to witnesses (Section 589(1) ZPO; Art XIII EGJN-Introductory Act to the Jurisdiction Code).

Unless the arbitration agreement states otherwise, the arbitrators have to decide by majority vote (Section 590 ZPO).

Apart from these basic principles, the parties are free to agree on the procedural rules to be applied. This agreement may be part of the arbitration clause or, more commonly, may be entered into in the form of a separate document which is often prepared by the arbitration panel. In the absence of an agreement between the parties, the arbitrators may decide on the applicable procedural rules at their own discretion. If the parties agree on the rules of a specific arbitration body such as ICC International Court of Arbitration or the International Arbitral Center of the Austrian Federal Economic Chamber, the procedural rules of this arbitration body apply.

The possibility of recovering the costs of the proceedings is subject to an agreement between the parties, which must be incorporated either in the arbitration agreement or in a separate document (eg Term of reference). In the absence of such an agreement, the arbitration panel may decide on the recovery of costs and will usually do so in the same way as the respective provisions of the Austrian Civil Procedure stipulate for court litigation.

5. Interim Relief

Arbitration courts are not entitled to grant interim or conservatory measures. Such a relief may be issued and executed by state courts even while arbitration proceedings are pending before the arbitrators. However, this situation will most probably be changed by the enactment of the new law on arbitration which is to be expected soon.

6. Award and Enforcement

If the case is decided by more than two arbitrators, they decide by absolute majority, unless the arbitration agreement contains anything to the contrary (Section 590 ZPO). Austrian law stipulates no time limit for the delivery of the arbitral award. The award must be issued in writing. It must be signed at least by a majority of the arbitrators and contain the date of the decision (Section 592 ZPO).

Arbitral awards are binding and enforceable. If no appellate proceedings are foreseen by the parties they are also final. Upon request of a party, this has to be confirmed by the arbitrator or the chairman of the arbitral tribunal (Section 994 ZPO).

Arbitration awards constitute effective titles of execution and are enforced by Austrian courts in the same way as judgements of state courts (Section 1 (16) Enforcement Code). Foreign awards are enforceable according to the provisions of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Geneva Convention, of which Austria is a party.

7. Annulment of Awards

Arbitration awards can be set aside by state courts under specific circumstances set out in Article 595 of the Code of Civil Procedure:

- the absence of a valid arbitration agreement;

- denial of a party's fair chance to present its case;

- violation of statutory or contractual stipulations as to either the composition of the arbitral tribunal or the decision-making of such tribunal;

- the failure of the arbitrators to sign the original copy of the arbitration award;

- dismissal of the challenge of an arbitrator although sufficient reason for the challenge existed;

- excessive exercise of the arbitral tribunal's jurisdiction (ultra petita);

- violation of Austrian public order or statutory provisions of Austrian law which cannot be avoided, even if the parties agree on the application of foreign law;

- circumstances as enumerated in Section 530 ZPO for the reopening of civil procedures (including eg false testimony of witnesses); however, this ground may be waived in the arbitration agreement if such agreement is entered into by businessmen.

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.