In Liechtenstein law and especially in the social system, arbitration has achieved a position of considerable significance. One of the reasons for this is the discretion which is associated with arbitration proceedings since these are not proceedings which are open to the public like an action before a civil court. It is precisely in the area of beneficiaries and benefits that arbitration has proved to be of great value. Among other things, even the law provides for the optional inclusion in all statutes or articles of association of an impartial arbitration board for all disputes among the parties and in relation to the company or for one or the other (§ 45 TrUG). The law states that legally valid decisions of an arbitration board are enforceable in the same way as judgments of a national court.


    The great advantage of arbitration proceedings is certainly also the rapid handling of the dispute. Proceedings before ordinary courts usually provide for three legal instances whereas decisions of arbitration boards are final unless there are provisions for contesting such decisions before the State courts. In actual practice, it is only very seldom that superior courts of arbitration are agreed.

    The holding of the proceedings is largely informal, which means that the matter can be dealt with even more speedily. Complex business and technical questions can be facilitated by the appointment of specialists in the subject as arbitrators. In may happen that it is not even necessary to call in experts.

    Not least, arbitration proceedings can be held in any language desired and avoid the necessity for time-consuming and expensive translations into the official language of the ordinary courts.

    It is precisely with references to foundations and trusts that the exclusion of the public in arbitration proceedings is of special significance.


    The arbitration agreement is what is known as a procedural contract (Supreme Court decision, OGH 11.9.1970, OGH 28.5.1971, J 625/272; ELG 1967-1972, p 145ff). Consequently, for the interpretation of the arbitration agreement, reference must always be made to the provisions of the law of procedure, especially in respect of the question of the admissibility, preconditions, content and effect of procedural law rulings.

    Ordinary jurisdiction is excluded by the arbitration agreement and the parties agree to be bound by the arbitration award. If, despite the conclusion of an arbitration agreement, an action is brought before the ordinary court, the objection that an arbitration agreement was concluded can be made. The existence of an arbitration agreement is then considered as an impediment to the action. However, the court must then examine the validity of the arbitration agreement.

    The general competence of the arbitration board is specified by the arbitration agreement in question. The arbitration board is authorised to decide on its own competence and therefore also verifies the effects of the arbitration agreement. It would be inadmissible to interrupt the arbitration proceedings and request the ordinary courts to decide on the validity of the arbitration agreement. The District Court only becomes competent again when an action is brought for the cancellation of an arbitration award and is lodged within 3 months otherwise it is excluded (§ 613 ZPO).


    The law requires that in principle the parties are also able to conclude a compromise on a subject of dispute (§ 594 Para. 1 ZPO). This means that legal capacity must exist which is to be judged according to the Code of Civil Procedure (ZPO). Minors can therefore conclude arbitration agreements only to a limited extent.

    With testamentary arbitration clauses (§ 616 ZPO), testamentary capacity is required and the corresponding requirements of form for testamentary dispositions must also be observed.

    The Code of Civil Procedure prescribes that an arbitration agreement must be made in writing (§ 577 Para. 3 ZPO). The legal requirement of the written form is absolute (see Austrian Supreme Court, OGH, JBl 1957, 623; OGH SZ 12/48; Georg Backhäusen, Schiedsgerichtsbarkeit unter besonderer Berücksichtigung des Schiedsvertragrechtes, Manz Verlag Wien, 1990). Unlike most other States, Liechtenstein has not yet relaxed the requirement of form. However, also in Liechtenstein, the rigid requirement for the written form should be relaxed and even arbitration agreements concluded by telegram, telex or telefax should be recognised.

    The requirement of form is intended to provide protection from undue haste and offer the guarantee that the parties are aware of the significance of the arbitration agreement. With the conclusion of an arbitration agreement, the parties exclude ordinary jurisdiction.

    According to §53a JN (Jurisdiktionsnorm) an agreement of exclusive foreign jurisdiction has to be in writing and officially certified by the Liechtenstein Court. In 1977 the Liechtenstein Supreme Court decided that the Court of Arbitration of the ICC, Paris, is not a foreign court according to §53a JN (OGH, 14.12.1977, 4 C 76/76-28, LES 1980/81, page 19ff).

    It is to be assumed that the personal signature of general terms of business satisfies the requirement of form. If the agreement of arbitration or individual arbitration provisions are unusual, they do not become part of the transaction and an arbitration agreement would not be concluded in a legally valid manner.

    Although it is required, pursuant to the provisions of law, that the arbitration agreement must be drawn up in a written form, it suffices if the statutes of a trust company or the articles of association of an establishment specify that in the event of disputes between the parties, such as between the holders of founder's rights and beneficiaries or between the holders of founder's rights and beneficiaries on the one hand and the establishment or trust company on the other, provision is made for the competence of an arbitration board. Only such cases, the law does not specify that a separate declaration in writing must be made (§ 45 Para. 2 TrUG).


    For the interpretation of an arbitration agreement, case law takes the intention of the parties as the point of departure. The question asked is what purpose is pursued by the parties. In addition, reference is to be made to the general canons as aids to interpretation (§ 914 ABGB).


    As regards the subject of the dispute, the law does not say anything about the subject for which an arbitration agreement can be concluded (§ 594 ZPO).

    It is not contested that the subject of the dispute must be specified and must result from one or more individually defined or definable legal relationships. If the subject was not defined, the arbitration board itself cannot fix the limits of its competence either.

    Such a provision may certainly not be narrowly interpreted. A subject would be specified, for example, when the arbitration agreement is part of a contract and it follows from the close connection that it should apply for all disputes arising from this contract.


    The arbitration agreement usually specifies the composition of the arbitration board. If, however, neither the arbitrators nor a provision on the number and appointment of the arbitrators are mentioned in the arbitration agreement, an arbitrator is appointed by each party. These are then required to agree on a chairman (§ 597 ZPO).


    If an arbitration agreement states that an arbitrator is to be appointed, this appointment, when demanded by the opposing party or possibly a third party, must be made within 14 days (§ 598 ZPO).

    If the appointment of an arbitrator is not made within the time specified or if the arbitrators cannot agree on the person of the chairman, the appointment is to be made by the District Court following an application to this effect (§ 599 ZPO).

    If the parties have to jointly appoint an arbitrator and cannot agree, the District Court must pronounce that the arbitration agreement is suspended following an application to this effect (§ 600 ZPO).

    With reference to the rejection of the arbitrator, the same grounds apply as for the rejection of a judge (§ 603 ZPO).


    In principle, the procedure can be determined on a discretionary basis. In most cases, however, a certain procedure is specified in the arbitration agreement or possibly also by subsequent agreements in writing between the parties. Despite the allowance of unqualified discretion, there are some procedural regulations which have to be observed.


    Before an arbitration award is made, the arbitrators must hear the parties (§ 604 ZPO). The canon of due process of law also applies in arbitration proceedings. The disregard of this canon leads to the invalidity of the arbitration award (§ 612 Para. 1 litera 2 ZPO).


    Before pronouncing the arbitration award, the arbitrators have to establish the facts of the dispute. The non-determination of the facts does not, however, cause the arbitration award to be invalid. At most, the parties can claim invalidity on account of the violation of the due process of law. If the arbitration award also infringes mandatory legal regulations, it would then be invalid.


    Even when a party does not take part in the proceedings before the arbitrator, the proceedings are to be carried on with the other party alone. A default judgement may not be pronounced (§ 604 Para. 2 ZPO).


    The arbitrators may not use enforcement measures or impose penalties against or on the parties, witnesses and experts or against or on other persons (§ 605 ZPO).

    However, the infringement of this regulation does not lead to the invalidity of the arbitration award.


    An arbitration award infringes mandatory legal regulations if the legal rule infringed is inalienable and agreements and dispositions to the contrary are declared invalid by law. This is therefore the case when the parties are bound to these in a mandatory manner and a free agreement otherwise between the parties is not possible.

    Special mention in this connection may be made of the following: nonobservance of exclusion grounds by the arbitrators, non-observance of the canon by which no decision may be made without an application, nonobservance of the written form of the arbitration award.

    These grounds would lead to the invalidity of the arbitration award.

    An arbitration award which does not meet the minimum requirements of arbitration competence would be ipso ire invalid.


    In principle, it is considered that arbitrators may not use enforcement measures against the parties or against other persons (§ 605 ZPO; Supreme Court decision, 18.10.1980, 3 C 214/79-15, LES 1982 page 16-19).

    Should the arbitrators consider any juridical actions to be necessary for which they have no authority, these are to be imposed by the District Court at their request (§ 606 ZPO). Within this scope, the District Court has to provide juridical assistance.

    The parties can, of course, voluntarily submit to the precautionary measures suggested by the arbitration board. But even in this case such a voluntary submission would not be enforceable since only the arbitration award and not other dispositions has the effect of legally valid court judgment (§ 611 ZPO).

    Within the framework of juridical assistance, the District Court has to issue the corresponding provisional injunctions. These are admissible before or during arbitration proceedings when a valid arbitration agreement has been concluded.

    In principle, the execution order applies for the procedure for provisional injunctions.

    The applicant for security has to apply to the Liechtenstein District Court for a provisional injunction (interlocutory injunction), stating the reasons (Art. 274 Para. 3 EO).

    When all the conditions are met, the interlocutory injunction is issued and served on the respondent. If need be, it may also be served on possible third-party debtors (banks, insurance companies, trustees, etc.). In particular, the interlocutory injunction also has to contain the security measures, it is to be justified and must include an explanation on rights of appeal (Art. 275, 277 EO).

    The time is to be stated for which the provisional injunction is to be issued. This is especially important for third-party debtors, such as banks, etc. This term may also be prolonged on application (Art. 284 Para. 5 EO).

    If an application is made for a provisional injunction before arbitration proceedings are opened, the interlocutory injunction must state within which period of time the right is to be asserted in the arbitration proceedings. This period of time is usually 14 days (Art. 284 EO).

    Whether any security payments have to be made in the arbitration proceedings depends largely on the agreement between the parties. In any event, the District Court is free to make the issue of the provisional injunction dependent on the payment of such security. The applicant then has to pay this (Art. 283 EO).

    The respondent is free to contest the provisional injunction as a whole or in partareas in the stages of appeal before the ordinary courts.

    For the case that the petition of the applicant proves to be unjustified, the respondent can demand damages.

    However, these damages are fixed not by the arbitration board but by the District Court on a discretionary basis in the form of an order (Art. 287 EO).


    In the arbitration agreement, provision can be made for the manner in which the arbitration award is to be made, whether it must be unanimous or whether an absolute majority suffices. Should the arbitration agreement contain no ruling at all about this and if there are more than two arbitrators, the arbitration award must be made with an absolute majority of votes (§ 607 ZPO).

    If the necessary majority is not achieved or if agreement cannot be reached in the case of two arbitrators, the arbitrators must inform the parties of this. If the arbitration agreement or a subsequent agreement in writing between the parties does not include a ruling for such a case, either party can submit a petition to the District Court for the arbitration agreement to be suspended or for it to be invalid for the individual case (§ 608 ZPO).


    The arbitration award is to be signed by all the arbitrators otherwise it is invalid. The document and also the copy of the arbitration award is to be marked with the date of the formulation of the arbitration award.

    Copies of the arbitration award are to be delivered to the parties by post or handed to them personally.

    The original of the arbitration award is to be kept. If is not clear who has to keep the arbitration award, the documents are to be deposited with the District Court (§ 610 ZPO).


    If the parties have not agreed in the arbitration agreement the contestation of the judgement before a higher court of arbitration, the arbitration award between the parties has the effect of a legally valid court judgement (§ 611 Par. 1 ZPO).

    The arbitrators must confirm in writing the occurrence of the legal force and enforceability of the arbitration award when this is requested by one of the parties. This is to be written on a copy of the arbitration award.


    The law lists in a categorical manner the cases in which an arbitration award is ineffective. These are (§ 612 ZPO):

    • When there is no arbitration agreement at all or the arbitration agreement was invalid, was suspended before the pronouncing of the arbitration award or is ineffective for the individual case;

    • When the party which asserts the invalidity of the arbitration award was not granted due process of law by the arbitrators in the proceedings or when the same, if a legal representative was required, was not represented by such in these proceedings if in the latter case the conduct of the case was not subsequently approved in due manner;

    • If in respect of the arbitrators appointed for the arbitration proceedings a legal or contractual provision was violated or when the original document and the copy of the arbitration award were not signed by all the arbitrators.

    • When the rejection of an arbitrator was refused by the arbitration board as unjustified;

    • When the arbitration board has exceeded the limits of its task;

    • When the arbitration award violates mandatory legal regulations;

    • When the arbitration award has ordered one party to perform a legally inadmissible or forbidden action;

    • When the conditions obtain under which a court judgement can be contested by a motion for a new trial (for example, when the judgement is based on a forged deed, when a false oath has been sworn, when an arbitration award has already been made concerning the same matter and this has become enforceable) (§ 498 ZPO).

    The contestation of arbitration awards can be filed in the form of an action for the cancellation of the arbitration award. Except in cases covered by § 498 ZPO, the action must be filed within a period of 3 months from the notification of the arbitration award or, when the grounds for contestation only become known at a later date, as from the day on which the party learnt of the grounds for contestation.


    The costs of the arbitration proceedings are primarily determined by the agreement between the parties.

    In doubt, each party shall bear its costs itself. Arbitration agreements often state that the arbitration board shall also decide on the reimbursement of the costs between the parties. For costs towards third parties, such as expenses for witnesses and experts, both parties are jointly and severally liable.

    In respect of the costs for arbitrators, the law does not provide exhaustive information.

    Pursuant to the Code of Civil Procedure, attorneys in arbitration proceedings can claim remuneration according to the decree on tariff rates for the payment of attorneys-at-law and legal agents (LGBl 1988 No. 10, current version). This tariff is based on the time expended and the value of the matter in dispute.

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.