In the Monday edition of the daily newspaper "Die Presse", Vienna Bar Vice-President Bettina Knoetzl applauds the winning team from the University of Vienna after they took home first place in the global Vis Moot Competition for the first time ever. She also takes this opportunity to discuss the status of international law capabilities in Austria and proposes effective measures to increase them.
Public Service Announcements of the Vienna Bar:
For the first time in the 30-year history of the world's largest law student competition in the field of arbitration, the Willem C. Vis International Commercial Arbitration Moot, the team representing the University of Vienna prevailed and claimed First Prize after their hard-fought victory in the oral final of the competition.
Hearty congratulations are due to the University of Vienna team and the organizers, after the organizers brought 378 teams from 89 countries to Vienna this year. We are proud that such a top-class event is based in Vienna and that a team from Austria – for the first time – brought home the victory.
Elsewhere, away from providing world-class training for these students, how does Austria stack up as a venue for international litigation?
Frankfurt, London, Paris, Stockholm, Zurich and other world cities compete vigorously for lucrative business disputes. The reason for this is simple: international disputes are an economic engine for the jurisdiction hosting them. A functioning, international judiciary also promotes the country's reputation as a business location.
Where does that leave Austria? Austria could easily take a top spot: Our jurisdiction is admired worldwide for its independence and efficiency. The local environment also fits; Vienna is popular as a tourist destination. Only the framework conditions for high-value disputes are a deterrent: With no English-speaking divisions, excessively high court fees, a settlement fee, and consumer protection for capital investors, Austria is not and will not remain attractive. This is a missed opportunity! It is time that the changes proposed by the legal profession to promote domestic commercial and arbitration jurisdiction are implemented; so that Austria stays on the ball and continues to win in the future.
To sum up the demands of the Vienna Bar, we want to expand on the framework conditions, which make Austria unattractive for international disputes:
Global developments on the world markets and within the intra-EU area have long established English as the language of commerce. English is the globally preferred language for both contract negotiations and contracting. With Brexit, however, the attractiveness of the – linguistically obvious – place of jurisdiction for the settlement of legal disputes London, England, is being called into question. This offers an opportunity for EU member states to step up and fill the gap. The Austrian Commercial Courts, the Courts of Appeal in Austria and the Austrian Supreme Court should establish chambers where litigation proceedings can be held in English, allowing foreign parties to follow the proceedings, particularly the oral hearings.
It is above all the high costs that deter those seeking justice here. Austria is at a massive competitive disadvantage for disputes with high amounts at stake: our high, uncapped court fee and the – in other jurisdictions strangely foreign concept of a – settlement tax steer people seeking justice to look for alternatives. This applies in particular to disputes with large amounts in dispute, where the current Austrian court fee is universally viewed as unreasonably high in comparison to the service provided by the state courts and also to comparative costs in other countries. The court fee should be capped for amounts in dispute exceeding € 10 Million.
Similarly, Austria's unique settlement tax acts as a deterrent and encourages "creative solutions" to avoid this tax for the price of having to live with reduced legal certainty. This, too, weakens the attractiveness of Austria as the best international forum. Parties willing to settle their dispute choose other places, like Liechtenstein or Slovakia, in order merely to conclude their settlement agreement, there. This practice should come to an Austrian-advantageous end by simply abolishing the settlement tax completely.
Arbitration for Capital Investors
Access to arbitration proceedings should be opened to individuals who hold interests in or acquire shares in partnerships or corporations as private persons and not as part of a company's business. For this purpose, they should not be subject to restrictions for entering into arbitration agreements as consumers are. Arbitration is an ideal mechanism for international investors' disputes. Austria should, in fact, attract this type of disputes.
More Information (in German):
- Dispute-Resolution-Center im Herzen Europas" – Bettina Knötzl im Österreichischen Anwält:innenblatt (12/2022)
- Aufwertung des Rechtsstandorts Österreich: Für eine internationale Handelsgerichtsbarkeit" – Bettina Knötzl in anwalt aktuell (3/2022)
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