1. USE OF COMMERCIAL ARBITRATION
1.1 Describe the prevalence of commercial arbitrations as a method of settling disputes, both domestic and international.
Austria has a relatively long tradition of arbitration, with this form of dispute resolution being first formally included as part of the body of law in 1895 when specific provisions relating to arbitration were included within the Austrian Code of Civil Procedure (Zivilprozessordnung, ZPO) which came into effect on 1 January 1898. The last major reform with regard to arbitration, before the present redrafting, occurred in 1983, following the realisation that Austria had increasingly been named as the venue for the settlement of international disputes through arbitration, as a result of its growing reputation as a neutral, yet attractive and geographically convenient, location in Central Europe. The separate body established as the International Arbitral Centre of the Austrian Federal Economic Chamber, known as the Vienna International Arbitral Centre (VIAC), has just celebrated 30 years of its existence. Undoubtedly the success of the arbitral centre, with its own arbitration rules (the Vienna Rules), was due to the fact that Vienna provided a convenient middle ground at the time of the thaw in East-West relations in the 1970s and 1980s. Austria has experienced a significant increase in international arbitration with the seat of the proceedings in Vienna, without an Austrian party necessarily being a party to the arbitration proceedings. After a number of years of debate, a new arbitration law is about to come into effect, updating the original law to bring it in line with the UNCITRAL Model Law on International Commercial Arbitration (the Model Law) (see below).
Generally speaking, contracts involving parties of different nationalities with an international slant will contain arbitration agreements, whereas in domestic contracts the predisposition to inclusion of an arbitration agreement is somewhat limited, with Austrian parties preferring the national courts. The provisions of the ZPO, however, apply equally to international or domestic arbitration.
2.1 What are the principal sources of law and regulation relating to domestic and international arbitration? (Describe the role of federal or state laws and relevance of court decisions.)
Although Austria is a federal state, substantive and procedural law is the same throughout the country. It does not, therefore, make a difference, from a legal point of view, where the place of arbitration is situated within the country. As stated above, Austrian arbitration law in effect dates back to 1895 when the ZPO came into force. Before the present redrafting, minor amendments to the provisions relating to arbitration in the Code had over the years taken place, with a major reform in 1983 (carried out before the UNCITRAL Model Law). The present legal basis for the procedures for arbitration within Austria, included as the Fourth Section of the ZPO, is contained in arts 577–599 of the present ZPO. However, a new Austrian Arbitration Act, now Schiedsrechts-Änderungsgesetz 2006, SchiedsRÄG 2006, revising the Fourth Section of the ZPO, and to be included as Chapters One to Ten of the Fourth Section, is about to come into force. As provided by the third official draft of 18 October 2005, this new law on arbitration will be contained within the redrafted arts 577–618, the scheduled date of the Act coming into force having now been delayed from 1 January 2006 to 1 July 2006. The draft has now passed through Parliament, with its last reading in December 2005, and the new law was published on 13 January 2006 (BGBl. I 13 January 2006 Nr 7 – GP XXII RV 1158 AB 1236 S 129), confirming its coming into effect on 1 July 2006. The new provisions basically follow the provisions of the UNCITRAL Model Law, although there still remain minor divergences and the Austrian law endeavours to go into more detail.
The law as it stands at the moment (in force until 30 June 2006) is not based on the UNCITRAL Model Law and the style of drafting is noticeably different. At present, in contrast to the Model Law, the provisions do not contain explicit rules which govern the jurisdiction of the courts and the jurisdiction of the arbitral tribunal. Further under the ZPO there is no power for arbitrators to grant enforceable interim measures, the ZPO does not contain rules regarding the taking of evidence by arbitrators and there are no statutory provisions for the correction, interpretation and amendment of the award. Additionally a challenge of an arbitrator may not be taken to a national court whilst the arbitration proceedings are pending. All these issues are dealt with in the new law (‘Section 4 – Arbitration’; amendments to ZPO in sections dealing with arbitration – Jurisdiction: art 592; Interim measures: art 593; Taking evidence: art 599; Correction of Award: art 610; Challenge procedure: art 589).
In the new law the First Chapter, defining the scope of application, provides that the provisions are applicable if the place of arbitration is within Austria, but this is extended with regard to a number of provisions of the Act so that the Act applies even if the place of arbitration is not within Austria or has not been determined. As long as the place of arbitration has not yet been determined, the domestic jurisdiction shall apply for those court assignments as stipulated in the Third Chapter of the new law, if one of the parties has its seat, domicile or ordinary residence within Austria.
Further changes to be made by the new arbitration law are with regard to defining what an arbitration agreement is (the definition now follows that of the Model Law), and arbitrability, which now no longer primarily looks to see whether a ‘matter is capable of settlement’ (as is the case under the present law) but considers all pecuniary rights (jeder vermögensrechtliche Anspruch), as matters that may be the subject of an arbitration agreement, allowing for the earlier concept as a fallback when deciding on the arbitrability of disputes that do not concern pecuniary rights. The new law goes further than the Model Law in defining the requirements of in writing to include electronic communications that do not require a signature, in so far as an agreement can be evidenced to exist. There is still discussion on the Austrian anomaly which requires a special power of attorney for a person validly to enter into an arbitration agreement. This requirement is still within the present law but it is removed by the new Act.
2.2 List and briefly describe relevant arbitration statutes, international treaties and conventions.
As mentioned above, the principle statute is the Austrian Code of Civil Procedure (ZPO) which in its Fourth Section covers arbitration procedure. The new amended law in general reflects the language of the Model Law, although some changes and additions to the Model Law have been made.
Austria is a signatory state to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), having ratified the same in 1961 (BGBL 200/1961). Originally a reservation of reciprocity was made pursuant to art 1, para 3 of the New York Convention but this was withdrawn in 1988 (BGBL 1988/191).
Austria is also a signatory state to the 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States with the Convention entering into force in Austria in 1971 (ratified 25 May 1971).
Further Austria is a party to a number of bilateral and multilateral treaties that provide for international arbitration.
3.1 What are/describe the principal institutions and/or government agencies that assist in the administration or oversight of international and domestic arbitrations?
The principle institution in Austria dealing with international arbitration is the International Arbitral Centre of the Austrian Federal Economic Chamber, referred to as the Vienna International Arbitral Centre (VIAC), at:
Wiedner Hauptstrasse 63
A-1045 Vienna
Austria
Tel: +43 590 900 43 97
Fax: +43 590 900 216
Email: arb@wko.at
Website: http://wko.at/arbitration The VIAC administers international arbitration proceedings and its most recent version of its rules of arbitration and conciliation (the Vienna Rules) was adopted on 30 November 2000 with effect from 1 January 2001. Further amendment of these Rules may be necessary to take into account amendments about to be made to the arbitration law section of the ZPO (see above), although it has been commented recently that the Rules are drafted in such a way that they give the impression that Austria is already a Model Law country.
The Vienna Commodity Exchange, at the Vienna Stock Exchange, Wipplingerstrasse 34, A-1011 has its own Court of Arbitration, with its own recommended arbitration clause.
Certain bodies and chambers, including the chambers regulating professional bodies, provide for their own arbitration rules and/or administer arbitration proceedings.
The International Chamber of Commerce (ICC) maintains a direct presence through the Austrian National Committee.
4.1 What is the relationship between agreements to arbitrate and access to the courts? Is there a presumption of arbitrability/policy support for arbitration? Will the courts stay court actions in favour of agreements to arbitrate?
Austrian courts have consistently stayed court proceedings where an arbitration agreement is deemed to exist, and generally operate with an arbitration-friendly approach so that one may definitely say that there is a presumption of arbitrability and a policy of support for arbitration.
4.2 May an arbitral tribunal rule on a party’s challenge to its own jurisdiction (‘competence-competence’)? Need a tribunal suspend its proceedings if a party seeks to test jurisdiction in the courts?
The principle of ‘competence-competence’ (Kompetenz-Kompetenz) is recognised in Austria and an arbitral tribunal is competent to decide on its own jurisdiction and on the validity of the arbitration agreement. However, this decision of the arbitral tribunal is subject to review by the national courts (presently under art 595 of the ZPO). At present this review is limited and there is no right of challenge in the national courts where the tribunal has declined jurisdiction in an award; further, an award where the tribunal accepts jurisdiction can only be challenged at the end of the arbitration proceedings with the rendering of the final award, and not during the arbitral proceedings. Article 595, setting forth the grounds for challenge of an award, is only applicable to an award on the substance of the dispute, therefore at present an interim award on jurisdiction is not open to challenge until the proceedings on the merits are at an end. This position changes with the new law (art 592).
The provisions of art 16 of the Model Law, concerning the competence of the arbitral tribunal to rule on its jurisdiction, are in general followed. Article 592(1) of the new law maintains the basic principle of competence-competence for arbitral tribunals. A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the bringing of the first pleading in the matter (art 592(2)). The award by the arbitral tribunal on its jurisdiction may be challenged before a national court under the provisions of art 611 of the new law. Where the arbitral tribunal has accepted its jurisdiction, but a request for the setting aside of the arbitral award on jurisdiction has been made, while the request is still pending the arbitral tribunal may continue the arbitral proceedings and make an award (art 592(3)). This follows art 16, para 3 of the Model Law. The claimant has the right under art 611 of the new Act to make an application for the setting aside of the decision of a tribunal where the arbitral tribunal has denied its competence, this right expires with the bringing of an action before a state court (art 584).
5.1 Provide a selected bibliography of the most influential publications in or relied upon in the jurisdiction – books, journals, newsletters and pamphlets.
Books
G Backhausen Schiedsgerichtsbarkeit unter besonderer Berücksichtigung des Schiedsvertragsrechts (Wien, Manz, 1990) T Chiwitt-Oberhammer Der fehlerhafte Schiedsspruch (Wien, Verlag Österreich, 2000) Hans W Fasching Kommentar zu den Zivilprozessgesetzen (Wien, Manz, 2000–2006) Hans W Fasching Schiedsgericht und Schiedsverfahren im österreichischen und im
internationalen Recht (Wien, Manz,1973) B Garger Das Schiedsgutachtenrecht (Wien, Manz, 1996) C Hausmaninger Die einstweilige Verfügung im schiedsgerichtlichen Verfahren
(Wien, Springer Verlag, 1989)
K Heller Der verfassungsrechtliche Rahmen der privaten internationalen
Schiedsgerichtsbarkeit (Wien, Manz, 1996)
W Melis A Guide to Commercial Arbitration in Austria (Wien,
Wirtschaftskammer Österreich, 1983)
C Liebscher The Healthy Award, Challenge in International Commercial
Arbitration (The Hague: Kluwer Law International, 2003)
K Neuteufel Schiedsrechtliche Entscheidungen 1898–1998 (Wien, Verlag
Österreich, 2000)
P Oberhammer Entwurf eines neuen Schiedsverfahrensrechts (Wien, Manz,
2002) W Rechberger Zivilprozessordnung-Kommentar (Wien, Springer Verlag, 2000) R Stohanzl Jurisdiktionsnorm und Zivilprozessordnung-Kommentar (Wien,
Manzsche Verlags-und Universitätsbuchhandlung, Wien, 2002)
Journals, newsletters
Ecolex; Österreichisches Anwaltsblatt; ÖJZ; RdW; SchiedsVZ; Wbl; ZfRV Newsletter of the Austrian Arbitration Association, ArbAut
6.1 Are there form and/or content requirements for an enforceable agreement to arbitrate? How may they be satisfied?
Presently the provisions concerning the form of the arbitration agreement are contained in art 577 of the ZPO, whereby the agreement must be in writing, by exchange of letters or contained in telegrams, faxes, emails or other forms of written communication exchanged between the parties which act as evidence of the agreement.
Article 583 of the new law repeats these requirements. It is, therefore, to be noted that the requirement of signature is not included and email communication is acceptable to evidence a valid arbitration agreement.
A special peculiarity in Austria for the validity of an arbitration agreement has been the requirement of a special power of attorney for a party to enter into an arbitration agreement. This requirement is still in existence under the present law (in force until 30 June 2006) but is removed under the amendments of the new law. Until the new law takes effect, however, anyone entering into an arbitration agreement must have an additional capacity to enter into such agreement validated through a special power of attorney (written special authorisation in accordance with Section 1008 of the ZPO).
Arbitration is not mandated for any type of normal commercial dispute in Austria.
7.2 Is arbitration prohibited for certain types of dispute (restraints of fundamental public policy)?
Certain types of dispute are considered non-arbitrable at Austrian law. Under the present provisions, agreements which refer all disputes which may arise between two parties to arbitration without establishing reliance on a specific legal relationship are void. Further, a fundamental principle of Austrian law (art 577(1) in the present law), which continues in the new law (art 582(1)), is that only a matter capable of settlement by the parties may be the subject of an arbitration agreement. Thus claims in matters of family law, as well as claims based on contracts that are subject, even if only in part, to the Austrian Landlord and Tenant Law or to the Austrian Residential Public Benefit Law, including all disputes relating to contracts covered by the Act and all claims resulting from or in connection with co-operative apartment ownership, may not be made subject to arbitral proceedings (art 582(2)).
8.1 May an arbitral clause be considered valid even if the rest of the contract in which it is embedded is invalid?
Legal doctrine in Austria generally considers that an arbitration clause constitutes an independent agreement which does not necessarily share the fate of the main contract. Article 581(1) of the new Act includes the provision that an arbitration agreement may be concluded in the form of a separate agreement or as a clause within a contract. The specific provisions in art 16(1) of the Model Law in respect of separability of the arbitration agreement are not included in the new Act.
9. QUALIFICATION/APPOINTMENT/LIABILITY OF ARBITRATORS
9.1 Are there specific provisions regulating the qualifications of arbitrators? Are there requirements (including disclosure) for ‘impartiality’ and ‘independence’, and do such requirements differ as between domestic and international arbitrations?
There are no specific requirements as to qualifications for arbitrators. Any person over the age of 18 with legal capacity may sit as an arbitrator. However, to date in Austria a judge was not able to sit as an arbitrator as long as he or she still held his or her position in the judiciary (present art 578 of the ZPO).
Article 587(1) of the new Act provides that the parties are free to agree on a procedure of appointing the arbitrator or arbitrators; failing such agreement detailed steps are set out in art 587(2), along the lines of art 11(3) of the Model Law, concerning the number of arbitrators and the time for appointment. The arbitration agreement may set out specific qualifications required of the arbitrator and the court in appointing an arbitrator in these circumstances must take regard of these requirements (art 587(8)).
Any person appointed as an arbitrator by a party must disclose information which might affect his or her impartiality or independence. The requirement of disclosure of circumstances which are likely to give rise to doubts as to impartiality and independence continues throughout the arbitral proceedings, and requires disclosure without delay. An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his or her impartiality or independence, or if he or she does not possess qualifications agreed on by the parties (art 588 of the new Act).
In accordance with art 577 of the new Act these provisions apply to all arbitrations where the place of arbitration is within Austria (domestic and international).
With regard to the International Arbitral Centre of the Austrian Federal Economic Chamber, the Vienna Rules provide that the parties are free to appoint any person having legal capacity irrespective of nationality as an arbitrator; however, a member of the Board of the Centre may act only as chairman of an arbitral tribunal or sole arbitrator.
9.2 Are there provisions governing the challenge or removal of arbitrators? Do the courts or other jurisdictions play/have a role in any such challenge?
The provisions for challenge are included in the present art 586 of the ZPO, but have now been amended by new arts 588 and 589 (Third Chapter of the new Act), which follow the wording of arts 12(1) and (2) and 13(1), (2) and (3) of the Model Law exactly. The grounds for challenge for both domestic and international arbitrations are now therefore those set out in the Model Law, namely if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence, or if he or she does not possess qualifications agreed to by the parties.
Early termination of the arbitrators mandate is governed by art 590 of the new Act, and the appointment of a substitute arbitrator is governed by art 591. An application may be made to a state court to decide on the termination of the mandate when an arbitrator either becomes unable to perform his or her function or fails to act without undue delay and the arbitrator does not withdraw from his or her office, the parties cannot agree on his or her termination or no decision upon the termination of an arbitrators mandate is made in the procedure agreed between the parties (art 590 of the new Act). This decision of the Court is not subject to appeal (art 590(2)). These provisions apply if the place of arbitration is Austria. The Austrian courts will also have jurisdiction, so long as the place of arbitration has not been determined, if one of the parties has its seat, domicile or ordinary residence within Austria (art 577(3) of the new Act).
9.3 Does legislation govern, or have the courts developed rules regarding the liability of arbitrators for acts related to their decision-making function?
The present law contains provisions on the liability of arbitrators at art 584(2) ZPO. An arbitrator can be held liable for failure to comply with his or her duties. The duties of an arbitrator include the duty to conduct the proceedings in an appropriate manner, the duty to render an award and the duty to give leave for enforcement of the award. Judicial precedent exists in Austria which established that an arbitrator was liable for damages incurred as a result of, having already accepted the position of arbitrator, at a later date declining to act further without grounds.
The Vienna Rules contain a provision at art 5(5) that: ‘liability of the arbitrators … for any act or omission related to the arbitration proceedings, insofar as such liability may be admissible by law, shall be excluded.’
Under the new Act liability of an arbitrator is covered by art 594(4) which provides: ‘An arbitrator who does not or does not timely fulfil his obligation resulting from the acceptance of his appointment, shall be liable against the parties for all damages caused by his culpable refusal or delay.’
10. PARTY REPRESENTATION
10.1 Are there particular qualification requirements for representatives (‘counsel’) appearing in the jurisdictions?
So far a party has been able to nominate any person of its choice to represent it in arbitration proceedings. The person representing a party was, however, required to produce a power of attorney authorising him or her to act to the arbitrators. No limitations are imposed under the new Act, and no specific qualification requirements appear necessary for a party representative. It is not clear, however, whether a non-Austrian lawyer who is not registered with the Austrian Bar would be able to set up practice in the country to act as party representative in arbitrations generally. In all probability a lawyer based in Austria intending to act as counsel would need to be registered with the local Bar, as the rules of the Austrian Bar strictly regulate who is allowed to practise law in Austria. In domestic arbitrations applying Austrian law, counsel who are not entitled to practise law in Austria would run into difficulties with the Bar rules. In international arbitrations, applying the law of another state, so far no objections have been raised to party representatives not registered with the Austrian Bar.
11. PLACE OF ARBITRATION/PROCEDURES
11.1 Are there provisions governing the place (seat) of arbitration, or any requirement for arbitral proceedings to be held at the seat?
Austrian law leaves the choice of the location of the place of arbitration in the first place to the parties, and failing their agreement to the arbitral tribunal. In an arbitration under the Vienna Rules usually the place of arbitration will be Vienna, but even this is subject to the wishes of the parties and the arbitral tribunal in question. The position is regulated in the new Act at art 595, which follows art 20 of the Model Law almost exactly.
11.2 Are specific procedures mandated in particular cases, or in general?
Article 587(1) of the present ZPO gave the arbitrators the discretion to determine the procedure, unless the parties had agreed otherwise; there was, therefore, a great degree of flexibility available.
The Fifth Chapter of the new Act regulates the conduct of the proceedings. Article 594 follows the principles of arts 18 and 19 of the Model Law but with different wording. Article 595 follows the wording of art 20 of the Model Law adding that the place of arbitration may be determined by an arbitral institution (art 595(1)). Article 596 provides that the parties are free to agree the language of the arbitration, failing which it shall be determined by the arbitral tribunal (in line with the first part of art 22(1) of the Model Law, but the article does not go into further detail). As far as the statements of claim and defence the new Act includes at art 597 provisions almost identical to those in art 23(1) and (2) of the Model Law. With regard to the hearing and written proceedings, art 598 states:
‘Subject to any contrary agreement by the parties, the arbitral 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 arbitral tribunal shall, upon the motion of a party, hold an oral hearing at an appropriate stage of the proceedings.’
12. EVIDENCE GATHERING
12.1 What is the general approach to the gathering and tendering of evidence at the pleading stage and at the hearing stage (production, discovery, privilege, use of witness statements etc)? Are there differences between domestic and international arbitrations?
As the amendments in the new Act apply equally to domestic and international arbitrations the changes made to reflect the Model Law introduce a new element to domestic law procedures, where under the present law no statutory provisions existed for the production of written evidence and disclosure of documents. The position is now covered by the new Act at art 599. Article 599(1) and (2) speaks in general terms of the taking of evidence, without specifying further, whilst art 599(3) refers to ‘all written statements, written documents and other communications which are produced to the arbitral tribunal by a party’ which are required to be brought to the notice of the other party. Following the Model Law (art 24(3)) expert opinions and other evidence to which the arbitral tribunal may refer in its decision are to be brought to the notice of both parties.
To date domestic arbitration has tended to follow the domestic rules of practice in civil litigation with respect to discovery, the different stages of hearings, and the conduct of hearings in arbitration. In international arbitrations, however, procedures follow international norms, with hearings being more streamlined, allowing for pre-filed written witness statements and oral evidence and length of testimony within agreed time limits. The IBA Rules of Evidence are becoming increasingly referred to in case of disagreement as an accepted guideline.
12.2 What powers of compulsion or court assistance are there for arbitrators to require attendance of witnesses or production of documents, either prior to or at the substantive hearing? Is there a difference between domestic and international tribunals or as between parties and non-parties? Do special provisions exist for arbitrators appointed pursuant to international treaties (ie bilateral or multilateral investment treaties)?
Although arbitrators have the power to use all means of evidence in order to establish the facts of the case, this only runs to hearing parties, witnesses or experts who appear before them voluntarily. Arbitrators in Austria do not have any power to apply coercive measures either upon the parties themselves or third parties, nor may an arbitrator put a person appearing before him or her on oath (present art 588 of the ZPO). The new Act provides for court assistance with the taking of evidence in line with the principles outlined in art 27 of the Model Law, but with special reference to the situation in Austria. Article 602 of the new Act provides that:
‘The arbitral tribunal, arbitrators authorised by the arbitral tribunal or a party with the approval of the arbitral tribunal, may request from a court the conduct of judicial acts for which the arbitral tribunal has no authorisation. The judicial assistance may also consist of the court requesting a foreign court or authority to conduct such acts. Article 37 paragraphs (2) to (5) and Articles 38, 39 and 40 of the Austrian Judicature Act [Judiktionsnorm] shall apply accordingly, provided that the arbitral tribunal and the parties to the arbitral proceedings shall have the right to appeal in accordance with Article 40 of the Austrian Judicature Act [Judiktionsnorm]. The arbitral tribunal or an arbitrator mandated by the arbitral tribunal and the parties may participate in the taking of evidence at court and may put questions.’
These provisions apply equally to international and domestic arbitrations. No special provisions exist for arbitrators appointed pursuant to international treaties.
13. INTERIM MEASURES/ROLE OF THE TRIBUNAL
13.1 Are there special provisions relating to the granting of interim and preliminary relief? Have the courts recognised and/or limited any such authority? Do the courts themselves play a role in interim relief in arbitration proceedings?
Under the present law arbitrators have no power to make a provisional order which can be enforced against a party. If such an order is necessary a request must be made to the appropriate national court (art 589(1) of the ZPO). The existence of an arbitration agreement does not mean that the application to the national court for an interim measure will be rejected, but it should be noted that the practice of Austrian courts to grant interim measures is restrictive, courts being unlikely to grant such applications generally, not only in arbitration proceedings.
The new Act provides at art 593 for the power for arbitrators to order interim measures of protection in line with the provisions of art 17 of the Model law. Article 593 follows the wording of art 17 exactly but then goes on to amplify the manner in which orders for such interim measures shall be issued by arbitral tribunals (art 593(2)) and the manner of application for enforcement before Austrian courts (art 593(3) and (5)) and stipulates procedures where the measure is unknown to Austrian law and an appropriate alternative is available (art 593(3)). As well as setting out the grounds where a court shall refuse to enforce a measure ordered by an arbitral tribunal (art 593(4)) the new Act also sets out the grounds when a court shall set aside the enforcement of the measure (art 593(6)) in some detail.
14. TAXATION OF ARBITRATORS’ FEES
14.1 Does the state, or any of its sub-divisions, purport to tax domestically the fees of foreign arbitrators conducting hearings in the state? Is there a difference if the arbitration is ‘seated’ in the state or elsewhere?
Foreign arbitrators are treated in the same manner as other foreigners with an income arising from activities in Austria. The usual residence and threshold provisions will apply and any tax liability will depend on whether any reciprocal tax agreements exist between Austria and the arbitrator’s country of residence.
15. DEFAULT PROCEEDINGS
15.1 Are there provisions governing a tribunal’s ability to determine the controversy in the absence of a party who, on appropriate notice, fails to appear at or seek adjournment of the arbitral proceedings?
Presently art 587(2) of the ZPO provides that if after being duly notified a party does not participate in the arbitration, the arbitrators have the power to continue the arbitration in the presence of the other party only, and the ensuing award is binding on both parties. Article 600(1) of the new Act follows art 25(a) of the Model Law exactly concerning default of a party, the article in the new Austrian Act being headed, however, ‘Default of an act in proceedings’. Article 600(2) follows the wording of art 25(b), allowing for the continuing of proceedings in the absence of a response by the respondent, but adds: ‘The arbitral tribunal may continue the proceedings and may make an award on the basis of the evidence taken. Where the default is to the conclusion of the arbitral tribunal sufficiently excused, the default can be recovered and the missed act in proceedings made up for.’
16. THE ARBITRAL AWARD
16.1 Must an award take any particular form, eg in writing, signed, dated, place, the need for reasons, delivery etc?
Awards in both domestic and international arbitrations must be made in writing (present arts 592 and 593 of the ZPO) and signed by the arbitrators. The award should state the date it is made (art 592(2) of the ZPO), but the lack of a date is not a ground for challenge of the award. The signatures of the majority of the arbitral tribunal have been sufficient since the amendment to the ZPO in 1983; previously the signatures of all arbitrators were necessary. In Austria it was not mandatory for an award to contain reasons; however, the giving of reasons is customary.
Under the new Act, art 606 follows art 31 of the Model Law, providing that the signatures of the majority of all members of the arbitral tribunal shall suffice, provided the reason for any omitted signature is stated on the award by the presiding or another arbitrator. In accordance with art 606(2), following art 31(2) of the Model Law, unless the parties have agreed otherwise, the award shall state the reasons upon which it is based. The award shall state the date on which it was made and the place of arbitration (art 606(3)), and a copy signed by the arbitrators shall be delivered to each party (art 606(4)). Going further than art 31 of the Model Law, art 606 further contains provisions concerning safekeeping of the award, the arbitrators’ endorsement of enforceability on a copy of the award and confirms at art 606(7) that by the making of the award the underlying arbitration agreement does not become ineffective.
16.2 Are there limits on arbitrators’ powers to fashion appropriate remedies, eg punitive or exemplary damages, rectification, injunctions, interest and costs?
The arbitrators must reach their decision in accordance with the rules of law agreed upon by the parties. The parties must specifically authorise the arbitrators in writing to decide on matters in equity (ex aequo et bono, Billigkeit). Arbitrators have a wide discretion to grant remedies which are fair and reasonable but are primarily guided by the law applicable to the dispute. It is, therefore, for the arbitrators to grant remedies which fall within the substantive law applicable to the merits of the dispute. Austrian law does not recognise the concept of punitive damages and in the absence of any agreement to the contrary damages are either pecuniary damages compensating for loss or restitution in fact. In an international arbitration interest is awarded in accordance with the principles of the law applicable to the merits of the dispute. At Austrian law statutory interest may be awarded and in line with the EU Directive on combating late payment in commercial transactions (Directive 2000/35/EC) interest at the rate of 8 per cent above the base rate may be awarded if there is no special agreement. Compound interest is only available if the relevant law provides for it or by agreement of the parties.
Under the present provisions of the ZPO a claim for costs must be made within the arbitration proceedings as the allocation of costs in arbitration proceedings is not regulated by law in Austria. The arbitrators’ power to award a claim for costs against an unsuccessful party will depend on the terms of the arbitration agreement between the parties. Arbitrators may apportion costs between the parties as they deem justified.
Under the new law the making by the arbitral tribunal of a decision on costs is covered by the new art 609. The arbitral tribunal shall make a decision on the costs exercising its discretion, and looking at the particular circumstances of each case. The decision on costs shall be made either as part of the arbitral award or as a separate arbitral award (art 609(4) and (5)).
17. RECOURSE FROM AN AWARD
17.1 Are there provisions governing modification, clarification or correction of an award?
Under the present law the arbitrators are allowed to correct clerical mistakes, typing errors and errors in calculation, on their own initiative or at the request of any party. An interpretation of the award after it has been served on the parties is, however, not permitted.
Under the new Act, art 610 covers correction and interpretation of the award and the giving of an additional award. The provisions generally follow art 33 of the Model Law, but differ slightly, eg the arbitral has only four weeks to correct an error, either on the request of a party (from the date of receipt) or on its own initiative (from the date of the award), and no provision is made for allowing for an extension of this time.
17.2 May an award be appealed to or set aside by the courts? If so, on what grounds and by what procedures?
No appeal from an arbitral award to a court in Austria is permissible under Austrian law. The grounds for setting aside on the basis that the award is invalid are at present included in art 595 of the ZPO, which sets out an exhaustive list, dealing largely with issues of jurisdiction and process, but also if the arbitral agreement is invalid for lack of form or content or a party had lack of capacity to conclude the arbitration agreement. Further, an award can be challenged if the award is incompatible with basic principles of Austrian law and deemed to be a violation of public policy or infringes mandatory provisions of applicable law. An award may also be challenged if the arbitral tribunal deals with matters beyond those referred to it.
Recourse against an award under the new Act is covered in the Seventh Chapter, starting with art 611, on application for setting aside an award, which follows art 34 of the Model Law, setting out the similar grounds listed in art 611(2) nos 1–8, but including the fact that ‘the requirements have been met according to which a judgment of a court of law can be appealed by an action for revision under Article 530 paragraph 1, numbers 1 to 5; … ’ (art 611(2) no 6), in which case ‘the grace period for the action for setting aside shall be judged by the provisions on the action for revision’ (art 611(4)).
The action for setting aside must be made within three months, following receipt of the award or additional award by the claimant (art 611(4)).
The procedures for setting aside an award are now contained in the Ninth Chapter of the new Act (arts 615 and 616). Application is now to be made to the Landesgericht in whose district the arbitral tribunal has its place of arbitration. If the place of arbitration has not yet been determined, or outside Austria the Commercial Court of Vienna (Handelsgericht Wien) has jurisdiction. In labour and social law matters either the applicable Landesgericht or in Vienna the Labour and Social Court Vienna (Arbeits-und Sozialgericht) shall have jurisdiction. It remains unclear whether the decision following a challenge at a national court may then be appealed to a higher instance in the national court system, in Austria comprising three tiers, ultimately reaching the Austrian Supreme Court-OGH. In theory this could be possible if the legal issue was of a unique character or because there was no applicable case law or the relevant case law was ambivalent on the point at issue, and the question of law, therefore, merits a ruling of the higher court. This procedure of appeal would be in line with general civil procedural steps on appeal.
18. ENFORCEMENT OF AWARD
18.1 What are the procedures and standards for enforcing an award? Is there a difference between ‘domestic’ and ‘non-domestic’ awards?
There is a slight distinction between domestic and foreign awards with regard to the enforcement of an arbitration award in Austria. An award is considered domestic if the place of arbitration is within Austria. National enforcement legislation on domestic awards does not require a leave for enforcement where the seat of arbitration was within Austria; a party simply makes a request to the court for an order, which grants enforcement. However, confirmation that the award has not been challenged and is of a final and binding nature is required (Rechtskraft), confirming its enforceability (Vollstreckbarkeit). For a foreign award leave for enforcement is required, before enforcement is granted. Section 79ff of the Enforcement Act provides rules for the enforcement of foreign arbitral awards. Austria has ratified the New York Convention and, generally speaking, the enforcement of a foreign arbitration award follows quickly and efficiently.
In the new Act specific provisions cover the enforcement of foreign awards (art 614). The enforcement continues to be brought under the Enforcement Act (Executionsordnung). To date enforcement of foreign arbitral awards in Austria has not presented a problem.
19. CONFIDENTIALITY OF PROCEEDINGS
19.1 What are the confidentiality requirements of the arbitral process, ie existence of the arbitration, pleadings, documents produced, hearing, award?
In Austria, state court proceedings are generally open to the public whereas arbitration proceedings are traditionally not open to the public. There is, however, no clear ruling as to whether there is an obligation to maintain confidentiality in arbitral proceedings in the absence of an agreement in this respect by the parties.
20.1 Is there any particular aspect of the approach to arbitration in the jurisdiction which bears special mention?
The one unique attribute in Austria was the requirement of a special power of attorney to enter into an arbitration agreement which will now be no longer necessary following the introduction of the new provisions on arbitration law due to come into effect on 1 July 2006.
