Arbitration in Austria

19 March 2008

Austria has traditionally been a preferred venue for international arbitral tribunals particular for disputes with some connection to Central and Eastern Europe. In July last year it adopted new legislation for arbitrational proceedings on the basis of the “model law on international commercial arbitration” of the United Nations Commission on International Trade (UNCITRAL).

Austria's legal regulations on national arbitration proceedings have remained largely unchanged since 1895. As a result Austria has often been criticised for failing to adhere to international standards and for lacking legal clarity and certainty. It therefore came as no surprise when in 2006 a wide range of legal reforms were announced to harmonise Austria with Uncitral.

2006 Launch

The new Austrian arbitral procedure entered into force on July 1, 2006 under Sections 577 to 618 of the Code of Civil Procedure. The new regulations have increased the number of legal provisions and provide a more concise legal structure. In addition, the scope of arbitration was extended to include all proprietary claims. Claims under family law and tenancy law are still exempt.

One of the most significant changes introduced by the new arbitration regulations is the obligation to act immediately on any violation of procedural requirements. Failure to point out a breach after it has been recognised results in a corresponding loss of the right to assertion. In other words, any breach will be of no consequence for the remainder of the arbitration proceedings. This regulation is crucial for any abrogation proceedings that may be initiated.

There are significant differences between the new regulations and the UNCITRAL model when it comes to serving documents. Under the new Austrian rules if the location of a party is unknown (despite adequate enquiries), serving documents to the address stated in the arbitral agreement or to the last known address is only allowed if the party is already aware of the arbitral proceedings.

One of the most significant changes is in regard to corporate law and the power to act. Under the new rules it is no longer necessary to issue a special power of authorisation, such as a proxy, in order for the empowered person to be able to conclude arbitral agreements on behalf of a company. Thus, when a businessman issues a power of authority within the framework of his business, such an authorisation now automatically includes the power to enter into arbitral agreements with third parties.

Up till now parties to an arbitral agreement were able to obtain an injunction in front of an ordinary civil court by filing a corresponding application. However, it is now also possible for the arbitral court to issue provisional measures such as injunctions as long as the parties have not agreed to exclude such actions in their arbitral agreement.

Construction Disputes

In 2001 the Austrian Standards Institute established a special mechanism for joint dispute resolution in form of the ON-Arbitrational Court. It was recognised that friction between the participants was likely in this sector and so the industry required its own forum to reconcile any differences.

Among other things, the ON-Arbitrational Court is actively engaged in disputes relating to building contracts, tunnel construction, civil and underground engineering, building construction, real property, building services, bridge construction and geotechnics.

The process of the ON-Arbitrational Court is regulated by separate rules and primarily employs experts from the field of construction. These rules are applied as supplementary regulations to Code of Civil Procedure. The purpose of this act is to assure a straightforward, unbureaucratic and efficient approach where the fundamental principles of the arbitral procedure are kept solely in place.

In addition, the ON-Arbitrational Court provides for a separate conciliation procedure. This is less formal than the standard tribunal process and is conducted by mediators instead of arbitrators. Following the examples of foreign model proceedings, the ON-Arbitrational Court also has a summary conciliation procedure for disputes relating to working sites. The summary procedure was established to provide quick settlements and to reduce the potential for further conflicts at an early stage.

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