1 Legal framework
1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime – for example, does it govern oral arbitration agreements?
Arbitration in Austria is governed by Sections 577 to 618 of the Austrian Code of Civil Procedure (ACCP), which apply if the seat of arbitration is in Austria. There are no specific limitations on the scope of the statutory regime (however, see question 8 on arbitrable disputes and question 10 on oral arbitration agreements). Instead, certain provisions (eg, those on interim measures) shall also apply if the seat of arbitration is not located in Austria or has not yet been determined.
1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?
Sections 577 to 618 of the ACCP govern both domestic and international arbitration.
1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?
With limited exceptions, Austrian arbitration law is based on the UNCITRAL Model Law.
1.4 Are all provisions of the legislation in your jurisdiction mandatory?
The principle of party autonomy underpins Austrian arbitration law. Exceptionally, provisions are mandatory. For example, parties may not validly waive certain (procedural) rights, such as the right to be heard and the right to fair and equal treatment.
1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction?
At present, there are no plans to amend the arbitration legislation in Austria.
1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?
Austria ratified the New York Convention in 1961. In 1988 Austria withdrew its original reciprocity reservation under Article I(3) of the New York Convention. Accordingly, Austria no longer maintains any reservations.
1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration?
Austria has ratified the Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927. In 1964 Austria also ratified the European Convention on International Commercial Arbitration. In addition, Austria has ratified a series of bilateral agreements on the recognition and enforcement of arbitral awards with Belgium, British Colombia, Croatia, Germany, Kosovo, Liechtenstein, Macedonia, Montenegro, the Russian Federation, Slovenia, Switzerland and Serbia.
Austria has been a contracting state to the International Centre for the Settlement of Investment Disputes Convention since 1971.
2 Arbitrability and restrictions on arbitration
2.1 How is it determined whether a dispute is arbitrable in your jurisdiction?
Section 582 of the ACCP governs the arbitrability of a dispute. It provides that any pecuniary claim may be made subject of an arbitration agreement. Conversely, non-pecuniary disputes are arbitrable only if they may be the subject of a settlement. Under Section 582(2) of the ACCP, matters of family law and claims regarding contracts to which the Tenancy Act, the Non-profit Housing Act and the Condominium Act apply are not arbitrable. In a similar fashion, Section 9(2) of the Labour and Social Courts Act provides that matters of social security law and disputes arising out of collective labour agreements are non-arbitrable.
2.2 Are there any restrictions on the choice of seat of arbitration for certain disputes?
No express restrictions exist on the choice of seat of arbitration for certain disputes. However, as set out in question 1, Sections 577 to 618 of the ACCP apply only if the seat of arbitration is in Austria.
3 Arbitration agreement
3.1 What are the validity requirements for an arbitration agreement in your jurisdiction?
The validity requirements in terms of content and form of an arbitration agreement can be inferred from Sections 581(1) and 583(1) of the ACCP.
Section 581(1) of the ACCP determines the elements of an arbitration agreement, defining it as an agreement by parties to submit to arbitration all or certain disputes which have arisen or which may arise between them, in respect of a defined legal relationship of a contractual or non-contractual nature. The determination of, among other things, the number of arbitrators, the seat of the arbitration, the language(s) to be used in the arbitration proceedings and the law applicable to the arbitration agreement is optional.
Section 583(1) of the ACCP provides that the arbitration agreement shall be in writing. This includes in a document signed by the parties or in letters, faxes, emails or other forms of transmission of messages exchanged between the parties which provide proof of the agreement.
Furthermore, if an agent concludes the arbitration agreement, parties must bear in mind that Section 1008 of the Austrian Civil Code requires a special power of attorney to authorise the agent to conclude an arbitration agreement on behalf of the principal.
Arbitration agreements entered into by consumers and entrepreneurs may be concluded only after the dispute has arisen and after the consumer has been given written advice on the differences between arbitration and court proceedings. The same holds true with respect to certain employment matters.
3.2 Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?
Austrian arbitration law does not explicitly provide for the doctrine of separability. However, the doctrine of separability is widely accepted by legal scholars in Austria. In contrast, according to the Austrian Supreme Court, whether the main contract and the arbitration agreement are separable is a matter of contract interpretation. Specifically, the parties' intentions at the time the agreement was signed are critical in determining whether the invalidity of the main contract also results in the invalidity of the arbitration agreement.
3.3 Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?
Section 595(1) of the ACCP provides that the parties are free to agree on the seat of arbitration. If no such agreement exists, the seat of arbitration shall be determined by the arbitral tribunal; in such determination, the circumstances of the case - including the convenience of the parties - will be considered.
Section 596 of the ACCP provides that the parties are free to agree on the language or languages to be used in the proceedings. If no such agreement exists, the tribunal shall determine the language of the proceedings.
4 Objections to jurisdiction
4.1 When must a party raise an objection to the jurisdiction of the tribunal and how can this objection be raised?
A jurisdictional objection must be raised no later than at the time of the first submissions on the subject matter of the dispute. A party shall not be precluded from raising this objection as a result of having appointed an arbitrator or having participated in the appointment of an arbitrator.
4.2 Can a tribunal rule on its own jurisdiction?
Under Section 592 para 1 of the ACCP, the tribunal shall itself decide on its jurisdiction (‘competence-competence'). This decision may be issued together with the award on the merits or in a separate arbitral award.
4.3 Can a party apply to the courts of the seat for a ruling on the jurisdiction of the tribunal? In what circumstances?
Austrian arbitration law does not provide for a specific procedure on the basis of which a party may apply to the courts of the seat for a ruling on the jurisdiction of the tribunal. Instead, as set out above, the tribunal shall itself decide on its jurisdiction. If the tribunal decides on its jurisdiction in a separate award, the parties may file an action to set aside the separate award. In such case, Section 592(43) of the ACCP provides that the tribunal may continue the proceedings and render an award while the action for setting aside of the arbitral award by which the tribunal found it had jurisdiction is still pending.
5 The parties
5.1 Are there any restrictions on who can be a party to an arbitration agreement?
Sections 617 and 618 of the ACCP provide for specific rules concerning consumer and employment-related disputes. Otherwise, Sections 577 to 618 of the ACCP do not provide for specific rules concerning the capacity to conclude an arbitration agreement. Rather, this is a matter of Austrian civil law (see question 10 concerning Section 1008 of the Austrian Civil Code).
5.2 Are the parties under any duties in relation to the arbitration?
In several instances, Sections 577 to 618 of the ACCP provide for rules that require a party to take procedural actions (eg, in the context of the arbitration appointment procedure). However, Austrian arbitration law provides for default rules in case a party fail to take certain procedural actions. For example, should a party fail to appoint an arbitrator within four weeks of receipt of a written request from the other party to do so, the appointment shall, upon the request of a party, be made by the court. Specific rules apply to the claimant's failure to file the statement of claim or the respondent's failure to respond to the statement of claim within the timeframe agreed or set (see question 30).
5.3 Are there any provisions of law which deal with multi-party disputes?
No specific provisions of law which deal with multi-party disputes exist. At the same time, though, Section 587(5) of the ACCP sets out specific rules in relation to the appointment of arbitrators in multi-party situations. In any case, multi-party arbitration requires that a valid arbitration agreement for all parties to the proceedings exist.
6 Applicable law issues
6.1 How is the law of the arbitration agreement determined in your jurisdiction?
There are no express conflict of laws rules concerning arbitration agreements. According to legal scholars and the Austrian Supreme Court, the parties' agreement as to the law applicable to the arbitration shall prevail, provided that it does not concern their capacity to enter into an arbitration agreement. If no such agreement exists, the seat of arbitration determines the law of the arbitration agreement.
6.2 Will the tribunal uphold a party agreement as to the substantive law of the dispute? Where the substantive law is unclear, how will the tribunal determine what it should be?
Section 603 of the ACCP governs the applicable substantive law. It provides that the tribunal shall decide on the dispute in accordance with the law agreed by the parties. Any agreement as to the law or the legal system of a given state shall be construed, unless the parties have expressly agreed otherwise, as a direct reference to the substantive law of that state and not to its conflict of laws rules. If no agreement as to the substantive law exists, the tribunal shall apply the law that it considers appropriate. The tribunal shall decide ex aequo et bono only if the parties have expressly authorised it to do so.
7 Consolidation and third parties
7.1 Does the law in your jurisdiction permit consolidation of separate arbitrations into a single arbitration proceeding? Are there any conditions which apply to consolidation?
Austrian arbitration law does not explicitly provide for consolidation of separate arbitrations into a single arbitration.
7.2 Does the law in your jurisdiction permit the joinder of additional parties to an arbitration which has already commenced?
The joinder of additional parties to an arbitration which has already commenced is not expressly governed by Austrian arbitration law. However, additional parties may join an arbitration which has already commenced if all parties to the arbitration consent to the joinder. According to the Austrian Supreme Court, the joinder of a third party against its will or the extension of the binding effect of an arbitration award to a third party would conflict with fundamental procedural rights, such as the right to be heard.
7.3 Does an arbitration agreement bind assignees or other third parties?
Whether an arbitration agreement binds assignees or other third parties is not expressly governed by Sections 577 to 618 of the ACCP. However, with respect to universal succession, it is well established that an arbitration agreement binds universal successors. Similarly, with respect to singular succession, it is accepted that an arbitration agreement binds a singular successor. Also, where a contract confers benefits on a third party, the latter may not accept the benefits without being bound by the arbitration agreement.
8 The tribunal
8.1 How is the tribunal appointed?
Section 587 of the ACCP provides for a detailed appointment procedure of arbitrators. However, the parties are free to agree on any other appointment procedure. Section 587(2) of the ACCP gives the parties a four-week period to agree on the appointment of a sole arbitrator. This period starts to run as soon as one party submits a written request for appointment to the other party. If the parties cannot agree on a sole arbitrator, the court, upon the request of a party, will appoint the arbitrator.
Where the tribunal will consist of three arbitrators, Austrian arbitration law provides that each party shall appoint its arbitrator and the two party-appointed arbitrators shall appoint the chairman of the tribunal.
Section 587(3) of the ACCP governs the failure of a party or the parties to comply with an agreed appointment procedure. This also includes the failure of a third party to appoint an arbitrator within three months, if the parties have so agreed. In all these circumstances, an arbitrator must be appointed by the state court.
8.2 Are there any requirements as to the number or qualification of arbitrators in your jurisdiction?
Any natural and legally competent person may serve as an arbitrator. The parties can agree that an arbitrator must have specific qualifications in order to be appointed. Such qualifications can include professional competence, language skills or other abilities. Pursuant to Section 587(8) of the ACCP, these qualifications must also be considered by the state court when appointing a replacement arbitrator.
Section 586 of the ACCP governs the composition of the tribunal and is applicable only if the parties have not agreed on a different procedure. Accordingly, the parties are free to determine the number of arbitrators.
8.3 Can an arbitrator be challenged in your jurisdiction? If so, on what basis? Are there any restrictions on the challenge of an arbitrator?
Pursuant to Section 588(2) of the ACCP, an arbitrator may be challenged only:
- due to justifiable doubts as to his or her impartiality or independence; or
- on the grounds that he or she does not have the qualifications agreed by the parties.
Section 589 of the ACCP provides a procedural framework for the challenge of an arbitrator. A party may challenge an arbitrator within four weeks of the constitution of the tribunal or of the date on which it gains knowledge of the grounds for a challenge. Unless the challenged arbitrator steps down or the other party agrees with the challenge, the tribunal - including the challenged arbitrator - will decide on the challenge.
8.4 If a challenge is successful, how is the arbitrator replaced?
In the event of early termination of an arbitrator's mandate (including a successful challenge of an arbitrator), a replacement arbitrator shall be appointed. The appointment shall be carried out in accordance with the rules that applied to the appointment of the arbitrator who is being replaced. Unless otherwise agreed by the parties, the tribunal may continue the proceedings, making use of the results of the proceedings hitherto obtained - in particular, the existing record of the hearings and all other documents.
8.5 What duties are imposed on arbitrators? Are these all imposed by legislation?
The arbitrators' duties primarily result from the contract between the parties and the arbitrator(s). It can be inferred from Sections 577 to 618 of the ACCP (in particular, Section 588 and Sections 594 and following) that the tribunal must:
- be independent and unbiased;
- conduct the proceedings fairly;
- respect the parties' right to be heard;
- take evidence as necessary; and
- render an award on that basis.
Section 594(4) of the ACCP explicitly provides that an arbitrator may become liable if:
- he or she entirely omits to fulfil the duties resulting from his or her appointment; or
- he or she fails to fulfil the duties resulting from his or her appointment in a timely fashion.
8.6 What powers does an arbitrator have in relation to: (a) procedure, including evidence; (b) interim relief; (c) parties which do not comply with its orders; (d) issuing partial final awards; (e) the remedies it can grant in a final award and (f) interest?
(a) Procedure, including evidence?
Unless the parties have agreed otherwise, the tribunal shall decide whether to hold oral hearings or whether the proceedings shall be conducted in writing. Where the parties have not excluded an oral hearing, the tribunal shall, upon the request of a party, hold an oral hearing at an appropriate stage of the proceedings.
Section 599 of the ACCP, a mandatory rule, empowers the tribunal to rule on the admissibility of evidence, to take evidence and to evaluate the results. While the tribunal has broad discretion, it must adhere to the principles of fair treatment of the parties and the right to be heard. Therefore, the parties must be granted an opportunity to submit evidence, participate in the taking of evidence and comment on the results thereof.
(b) Interim relief?
Section 593 of the ACCP authorises the tribunal to order interim or protective measures, upon the request of a party, if it considers that otherwise the enforcement of the claim would be frustrated or significantly impeded, and also where it considers that a risk of irreparable harm exists.
However, as the tribunal lacks coercive powers, its decisions must be enforced by the state courts. As a result, while the tribunal may order interim measures which are unknown under Austrian law, the enforcement courts in Austria will have to transform them into interim measures which they are authorised to enforce and that most closely resemble the type of interim relief originally granted by the tribunal.
(c) Parties which do not comply with its orders?
The tribunal may draw adverse inferences from a party's failure to comply with its orders. Likewise, the tribunal may consider non-compliance with its orders in its cost decision. In any case, the tribunal may continue the proceedings and render an award. Specific rules apply to the claimant's failure to file the statement of claim or the respondent's failure to respond to the statement of claim in accordance with within the timeframe agreed or set (see question 30).
(d) Issuing partial final awards?
The tribunal has the power to render a partial award.
(e) The remedies it can grant in a final award?
Apart from Austrian public policy, there are no restrictions concerning the type of relief that may be requested and granted. Austrian law regards this issue as a matter of substantive law.
Under Austrian law, the issue of interest is a matter of substantive law. Section 1000 of the Austrian Code provides for an interest rate of 4%. If the Austrian Commercial Code is applicable, an increased rate of 9.2% above the base lending rate (provided that the debtor acted culpably) applies. With respect to compound interest, Section 1000(2) of the Austrian Civil Code provides for an interest rate of 4%.
8.7 How may a tribunal seated in your jurisdiction proceed if a party does not participate in the arbitration?
Where the claimant fails to file its statement of claim in accordance with Section 597(1) of the ACCP, the tribunal shall terminate the proceedings. Where the respondent fails to respond to a statement of claim within the timeframe agreed or set, the tribunal shall, unless the parties have agreed otherwise, continue the proceedings, without regarding such default in itself as admission of the claimant's allegations. The same shall apply where a party is in default of another procedural action: the tribunal may continue the proceedings and may render an award on the basis of the evidence already taken. Where, in the opinion of the tribunal, the default is sufficiently justified, the defaulted procedural action may be subsequently taken.
8.8 Are arbitrators immune from liability?
Under Austrian arbitration law, arbitrators are not immune from liability. Section 594(4) of the ACCP provides that an arbitrator may become liable if:
- he or she entirely omits to fulfil the duties resulting from his or her appointment; or
- he or she fails to fulfil the duties resulting from his or her appointment in a timely fashion.
In any case, in order to be liable towards the parties, the arbitrator must have acted in a culpable manner. It is well-established case law that any liability which goes beyond the scope of Section 594(4) of the ACCP necessarily requires the successful setting aside of the arbitral award. Arbitrators' agreements and rules of arbitration of arbitral institutions frequently exclude liability to the extent possible under the applicable statutory law.
9 The role of the court during an arbitration
9.1 Will the court in your jurisdiction stay proceedings and refer parties to arbitration if there is an arbitration agreement?
Section 584(1) of the ACCP states that a court in which an action is brought in a matter which is the subject of an arbitration agreement shall dismiss the action, provided that the respondent does not make submissions on the matter in dispute or participate in a hearing before the court without raising an objection. This shall not apply if the tribunal establishes that the arbitration agreement does not exist or is incapable of being performed. If such proceedings are pending in a court, arbitration proceedings may nevertheless be commenced or continued, and an award may be rendered.
9.2 Does the court in your jurisdiction have any powers in relation to an arbitration seated in your jurisdiction and/or seated outside your jurisdiction? What are these powers? Under what conditions are these powers exercised?
Section 578 of the ACCP provides that courts may act in an arbitration only as so provided in Sections 577 to 618 of the ACCP:
- Under Section 585, a party may request, before or during arbitration proceedings, interim or protective measures and a court may grant such measures.
- Under Section 593(3), the court shall, upon application by a party, enforce interim or protective measures issued by the tribunal.
- Under Section 602, state courts may provide judicial assistance to the tribunal concerning judicial acts that go beyond the tribunal's authority.
Furthermore, state courts have powers in the context of:
- the arbitrator appointment procedure;
- the challenge of an arbitrator;
- the setting aside of an award; and
- the declaration of the existence or non-existence of an award.
Section 577(3) of the ACCP states that certain provisions of Austrian arbitration law, such as Section 585 and Section 593(3) of the ACCP, shall apply even if the seat of arbitration is not located in Austria or has not yet been determined.
9.3 Can the parties exclude the court's powers by agreement?
According to legal scholars, the powers conferred on state courts in Sections 577 and following of the ACCP are mandatory.
10.1 How will the tribunal approach the issue of costs?
Section 609 of the ACCP governs the allocation of costs. It confers on the tribunal broad discretion, but requires it to consider the circumstances of the case and the outcome of the proceedings.
10.2 Are there any restrictions on what the parties can agree in terms of costs in an arbitration seated in your jurisdiction?
There are no specific restrictions on what the parties can agree in terms of costs in arbitration seated in Austria. However, the parties' agreement may find its limits in Austrian ordre public.
11.1 Is third-party funding permitted for arbitrations seated in your jurisdiction?
Austrian arbitration law does not expressly govern third-party funding. In this sense, the Austrian Supreme Court has not yet had opportunity to rule on third-party funding in the context of arbitration proceedings. In any case, third-party funding is widely accepted and its relevance is increasing.
12.1 What procedural and substantive requirements must be met by an award?
Pursuant to Section 606(1) of the Austrian Code of Civil Procedure, an arbitral award must be in writing and must be signed by all arbitrators. Section 606(2) further provides that the award must state its date and the place where it was made. Moreover, the award must state the names of the members of the tribunal and indicate the parties. It must contain an operative part - that is, clearly determined relief. Also, and unless otherwise agreed by the parties, the award shall state the reasons for the decision.
12.2 Must the award be produced within a certain timeframe?
Austrian arbitration law does not specify a time limit for rendering an award.
13 Enforcement of awards
13.1 Are awards enforced in your jurisdiction? Under what procedure?
Pursuant to Section 614 of the ACCP, the recognition and enforcement of foreign arbitral awards is governed by the Austrian Enforcement Code to the extent that international law or legal acts of the European Union do not apply. As set out in questions 6 and 7, Austria has ratified the New York Convention, the European Convention on International Commercial Arbitration and several bilateral agreements. Also, with respect to investment arbitration, Austria has ratified the International Centre for the Settlement of Investment Disputes Convention.
14 Grounds for challenging an award
14.1 What are the grounds on which an award can be challenged, appealed or otherwise set aside in your jurisdiction?
Section 611(2) paras 1 to 8 of the Austrian Code of Civil Procedure (ACCP) provides an exhaustive list of grounds for setting aside/challenging an arbitral award; to wit:
- a valid arbitration agreement does not exist or one of the parties was under an incapacity to conclude a valid arbitration agreement under the law that governs its personal status, or the tribunal has denied its jurisdiction (Section 611(2) para 1);
- a party was not properly notified of the arbitration proceedings or of the appointment of an arbitrator, or for another reason was unable to presents its case (Section 611(2) para 2);
- the award decides a dispute or an issue which is not covered by the arbitration agreement or by the parties' requests (Section 611(2) para 3);
- the composition or constitution of the tribunal was in breach of the parties' agreement on this issue or in breach of the applicable ACCP provisions (Section 611(2) para 4);
- there has been a violation of public policy (ie, the manner in which the proceedings were conducted conflicts with the fundamental values of Austrian) (Section 611(2) para 5);
- there are grounds to file an action for revision under Section 530(1) paras 1 to 5 ACCP against a court judgment (Section 611(2) para 6);
- the subject matter of the dispute is non-arbitrable under Austrian law (Section 611(2) para 7); or
- the award itself conflicts with fundamental values of the Austrian legal system (substantive public policy) (Section 611(2) para 8).
The arbitrability of the subject matter of the dispute under Austrian law and conformity with fundamental values of the Austrian legal system (substantive public policy) must be observed ex officio at all stages of the court proceedings.
14.2 Are there are any time limits and/or other requirements to bring a challenge?
Section 611(4) of the ACCP provides that the action to set aside an award must be filed within three months. This timeframe begins to run from the date on which the party receives the award or the supplemental award. The party which files the action may simultaneously request suspension of the enforcement procedure initiated by the opposing party.
The party seeking to set aside the award must specify the grounds for the challenge in detail. Save for the set-aside/challenge grounds set out in Section 611(2) paras 7 and 8 of the ACCP (see question 41), even severe violations remain without consequences if they have not been explicitly pleaded by a party.
Pursuant to Section 615 of the ACCP, the Austrian Supreme Court is the first (and only) instance for actions to set aside an award. Section 616 of the ACCP provides that the proceedings regarding the action to set aside an award and the request for a declaration of the existence or non-existence of an award shall be governed by the provisions which apply in proceedings before the first-instance courts.
14.3 Are parties permitted to exclude any rights of challenge or appeal?
The parties cannot waive the right to challenge the award pursuant to Section 611 of the ACCP in advance. The grounds set out in Section 611(2) para 7 and 8 of the ACCP (see question 41) cannot be waived.
15.1 Is arbitration seated in your jurisdiction confidential? Is a duty of confidentiality found in the arbitration legislation?
Austrian arbitration law does not provide for confidentiality in the context of arbitration proceedings. Accordingly, the parties must specifically establish confidentiality in their agreement or agree on institutional rules which provide for confidentiality.
15.2 Are there any exceptions to confidentiality?
See question 44. Austrian arbitration law does not provide for confidentiality in the context of arbitration proceedings.
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.