1. General

1.1 General Characteristics of the Legal System

Austrian Civil Law System

The Austrian legal system is steeped in civil law. Laws are based on codes and statutes. Civil procedure contemplates an adversarial process with inquisitorial elements: The proceedings and the judge are limited to the factual allegations of the parties, however, the judge is not a mere "referee" (eg, in the judges' inquisitorial role, they will be the primary interrogator of parties and witnesses).

Obligatory Public Hearings

A public hearing is obligatory. The judge will determine all relevant facts of the case in the hearing, hear parties and witnesses, discuss the content of documents and – if needed – appoint and consider expert witnesses. Parties and lawyers are entitled to interrogate witnesses and experts. The underlying principle is that the judge (as the finder of fact) should get an imme diate and personal impression of the parties, the witnesses and the case.

1.2 Court System

Court Hierarchy

Austrian courts are organised at four levels: Dis trict Courts, Regional Courts, Higher Regional Courts and the Supreme Court. The District Courts are the courts of first instance in mat ters involving a maximum amount in dispute of EUR15,000 and, regardless of the amount in dis pute, in certain subject matters (primarily fam ily law and tenancy law). Regional Courts have jurisdiction over first instance rulings on all legal matters not assigned to District Courts. They are also competent to rule on appeals from District Court decisions. Higher Regional Courts adju dicate appeals from Regional Court decisions.

Specialised Commercial Courts

Commercial matters are decided by commer cial courts. In the capital city, Vienna, a sepa rate commercial district court and commercial regional court are established. In other provinc es, the regional (district) courts also function as commercial courts.

The Supreme Court

The Supreme Court is the highest court of appeal. There is no further (domestic) remedy available with respect to its decisions. Its func tion is to ensure uniform application of the law throughout Austria. Although lower courts are not legally bound by its decisions, the Supreme Court's law has an effective precedential value.

1.3 Court Filings and Proceedings

Court filings are not public. Hearings, how ever, are open to the public. It is only possible to restrict public access if, for instance, such restrictions are necessary for maintaining public order, protecting certain categories of informa tion (such as banking secrets, business secrets or state secrets), or if the hearing involves per sonal family matters.

1.4 Legal Representation in Court

In certain legal disputes, the parties must be rep resented by a lawyer admitted to the Austrian Bar and they may not represent themselves. A foreign lawyer may not represent a party in these cases.

This limitation applies to:

disputes of first instance before Regional Courts;

disputes before District Courts if the amount in dispute exceeds EUR5,000; and

all appeal proceedings.

In all other proceedings, the parties may (with a few exceptions) be represented by any person, including by foreign counsel.

2. Litigation Funding

2.1 Third-Party Litigation Funding

The permissibility of third-party litigation fund ing was the subject of fierce debate in the early 2000s. At present, third-party litigation funding is an accepted tool in Austria and is recognised without any particular restrictions. The political reason for this is the limited possibility of a col lective suit in Austria, which is compensated by third-party financing and "Austrian-type mass claims" (see 3.7 Representative or Collective Actions).

The state provides legal aid for parties, including legal entities unable to afford litigation.

2.2 Third-Party Funding: Lawsuits

There are no formal restrictions to litigation fund ing. But generally, funding will only be available to plaintiffs or defendants in lawsuits regarding cash-value civil claims.

2.3 Third-Party Funding for Plaintiff and Defendant

In most cases, funders provide their financial support to the plaintiff, but it is also permitted for defendants.

2.4 Minimum and Maximum Amounts of Third-Party Funding

Litigation funding companies often fund cases with significant financial impact, as they tend to be compensated for their services with a signifi cant proportion of the proceeds (approximately one third). This proportion must cover the risk undertaken by the funder, the costs of their own lawyers, overhead, and investor profit. Therefore, cases with low financial impact tend to attract funders only if there are multiple, similar cases that can aggregated through collective action.

2.5 Types of Costs Considered Under Third-Party Funding

Litigation funding agreements generally cover all legal fees and court costs incurred by the party being funded that arise in the proceedings (ie, court fees, lawyer's fees, fees for expert wit nesses and/or translators, and travel expenses for witnesses). The opponent's legal fees are usually also covered to provide for a scenario in which the funded party loses the case and must reimburse the opponent for its legal fees or costs. The litigation funder will usually reserve the right to terminate the agreement at any time in order to avoid having to cover further costs while bearing the existing costs.

2.6 Contingency Fees

Members of the legal profession are prohibited from entering into a pactum de quota litis (con tingency fee arrangement) with their clients, but this rule does not apply to those outside of the legal profession. Accordingly, a third-party funder's compensation is generally determined by a percentage of the amount recovered. Other fee structures may also be permissible as long as they are not excessive, contrary to good mor als or violate consumer protection laws. A suc cess fee arrangement is possible, if it constitutes only a certain portion of the fee agreement.

2.7 Time Limit for Obtaining Third-Party Funding

Litigation funding is available at the commence ment of litigation or during ongoing proceed ings (eg, for appeal procedures). It should be remembered that entering into a litigation fund ing agreement often takes several weeks, while procedural deadlines and limitation periods con tinue to run.

3. Initiating a Lawsuit

3.1 Rules on Pre-action Conduct

General Rule

There is no prerequisite to filing a lawsuit. Nev ertheless, it may be advisable to notify a poten tial defendant, demanding satisfaction of the dispute, because, for example, if the potential defendant immediately performs upon initiation of the lawsuit or does not dispute the claim, this can lead to a cost decision, requiring the "successful" plaintiff to bear the costs for the (unnecessary) proceedings. The defendant is not obliged to respond to such a letter.


In a limited number of cases relating to:

  • neighbourly disputes;
  • tenancy disputes; and
  • disputes between members of certain profes sional groups subject to a code of conduct (eg, architects, lawyers, medical doctors),

alternative dispute resolution (ADR) mecha nisms are contemplated as a prerequisite to filing a lawsuit. If the plaintiff does not comply with applicable prerequisites, the claim may be rejected.

3.2 Statutes of Limitations

Limitation Periods

Statutes of limitations applied to civil suits are fixed by substantive law. The limitations periods generally commence when a right could have been first exercised and, as a general rule, are 30 years. However, due to numerous, specified exceptions, most claims, including for damages, are subject to a shorter limitations period of three years. In the case of damage claims, the three year period starts with knowledge of the damage and the identity of the party causing the damage. For contractual claims, the statute of limitations generally begins when the claim is due.

Specific Rules

There are numerous shorter or longer limita tions periods. For example, a negligence claim against a managing board member may only be brought within five years.

Interruption and Suspension

There are different reasons for interruption and suspension of the limitations period. An acknowl edgement, for example, interrupts the limitations period, and settlement negotiations suspend the expiry; the claim must be filed within a reason able period after the negotiations giving rise to such tolling have failed.

Procedural Aspects

The fact that a claim is time-barred must be raised by the defendant. It will not be imposed by the court sua sponte.

3.3 Jurisdictional Requirements for a Defendant

Relevant Rules

In domestic cases, the jurisdiction of Austrian courts is determined by the Law on Jurisdiction (Jurisdiktionsnorm). In most international cases, the jurisdiction of Austrian courts is guided by Regulation (EC) 1215/2012 (the recast Brussels Regulation).

These provisions establish jurisdiction of all types of courts. Whether a specific court is com petent to hear a case may also depend on other factors, such as the nature of the dispute (eg, to establish the competence of the commercial courts to hear a case).

Jurisdiction at the Seat of the Defendant

The general rule is that Austrian courts will have jurisdiction if the defendant has its seat in Aus tria. In addition, there are numerous other factors that are considered to establish the jurisdiction of Austrian courts, including

  • whether Austria is the place of performance of a contract;
  • the place where the damage occurred; and
  • when the dispute relates to real estate located in Austria.

Jurisdiction Clause

The jurisdiction of Austrian courts can also be agreed by means of a forum selection clause.

Originally published by Chambers and Partners.

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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.