Contributed By KNOETZL
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. The judge is not a mere "referee" (eg, in the judge’s 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 immediate and personal impression of the parties, the witnesses and the case.
Austrian courts are organised at four levels: District Courts, Regional Courts, Higher Regional Courts and the Supreme Court. The District Courts are the courts of first instance in matters involving a maximum amount in dispute of EUR15,000 and, regardless of the amount in dispute, in certain subject matters (primarily family 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 adjudicate appeals from Regional Court decisions.
Specialised Commercial Courts
Commercial matters are decided by commercial courts. In the capital city, Vienna, a separate commercial district court and commercial regional court are established. In other provinces, 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 function 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.
Court filings are not public. Hearings, however, 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 information (such as banking secrets, business secrets or state secrets), or if the hearing involves personal family matters.
In certain legal disputes, the parties must be represented 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:
In all other proceedings, the parties may (with a few exceptions) be represented by any person, including by foreign counsel.
The permissibility of third-party litigation funding 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 collective 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.
There are no formal restrictions to litigation funding. But generally, funding will only be available to plaintiffs or defendants in lawsuits regarding cash-value civil claims
In most cases, funders provide their financial support to the plaintiff, but it is also permitted for defendants.
Litigation funding companies often fund cases with significant financial impact, as they tend to be compensated for their services with a significant 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 only to attract funders only if there are multiple, similar cases that can aggregated through collective action.
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 witnesses 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.
Members of the legal profession are prohibited from entering into a pactum de quota litis (contingency 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 morals or violate consumer protection laws. A success fee arrangement is possible, if it constitutes only a certain portion of the fee agreement.
Litigation funding is available at the commencement of litigation or during ongoing proceedings (eg, for appeal procedures). It should be remembered that entering into a litigation funding agreement often takes several weeks, while procedural deadlines and limitation periods continue to run.
There is no prerequisite to filing a lawsuit. Nevertheless, it may be advisable to notify a potential 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:
Alternative dispute resolution (ADR) mechanisms are contemplated as a prerequisite to filing a lawsuit. If the claimant does not comply with applicable prerequisites prerequisite, the claim may be rejected.
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.
There are numerous shorter or longer limitations 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 acknowledgement, for example, interrupts the limitations period, and settlement negotiations suspend the expiry; the claim must be filed within a reasonable period after the negotiations giving rise to such tolling have failed.
The fact that a claim is time-barred must be raised by the defendant. It will not be imposed by the court sua sponte.
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 competent 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 Austria. In addition, there are numerous other factors that are considered to establish the jurisdiction of Austrian courts, including:
The jurisdiction of Austrian courts can also be agreed by means of a forum selection clause.
Filing the Claim
Proceedings commence with the filing of a statement of claim. Unless the amount in dispute is below EUR5,000, or concerns matters (such as family and real estate) that are allocated to the District Courts irrespective of the amount in dispute, the statement of claim must be signed and filed by a lawyer licensed to practice in Austria through the official electronic filing system (Web ERV).
Content of the Claim
Moreover, the statement of claim must clearly identify the following:
The statement of claim should state the principal facts on which the claim is based, and the relief sought. While it is not necessary for all evidence to be attached, the statement of claim should identify the evidence on which it relies.
Amendment of the Claim
The plaintiff may amend its claim at any time prior to service on the defendant. After service, an amendment affecting either the relief requested or introducing a different legal basis for the claim must be agreed upon by the defendant or permitted by the court. The decisive factors are whether the amendment affects the jurisdiction of the court and whether proceedings could be significantly prolonged by the amendment.
Additional Submissions to the Claim
Presentation of new facts and evidence, or additional submissions substantiating the claim, are not considered amendments, and are thus admissible, unless they could have been submitted earlier and their late introduction will significantly delay the proceedings. The final cut-off date for any new facts, evidence or pleading is at the end of the oral hearing. In appellate proceedings, no new facts or evidence may be presented.
Service by Court
The statement of claim is served on the defendant(s) by the court, together with an order to file an answer to the statement of claim within four weeks. The means of service must ensure proof of receipt. In most cases, the court will effect service by using registered mail.
A party that is located outside of Austria can be served either in accordance with Regulation (EC) 2020/1784 on the service of judicial and extrajudicial documents in civil or commercial matters (within the European Union) or in accordance with bilateral or multilateral treaties containing provisions on the service of documents (outside the European Union), such as the Hague Service Convention (HCCH 1965).
Austrian law also provides supplementary rules, according to which service of documents is allowed by means of postal service in a number of states. Otherwise, service is provided by diplomatic channels (ie, embassies or consulates).
If the defendant has been served with the statement of claim but fails to respond or to attend the hearing, the plaintiff can request a default judgment. Various remedies are available to the defendant to reinstate proceedings, but these must be filed within 14 days after service of the default judgment on the defendant or – if the defendant was prevented from responding for reasons beyond its control – within 14 days after the impediment ceases to exist.
Austrian Legal Tradition
Austrian law has not historically provided a vehicle for class actions. Traditionally, the class action in the Anglo-American style has even been viewed as contrary to Austrian legal culture, based on individual action and individual parties who assert their own individual claims. However, as a result of the Directive (EU) 2020/1828 on representative actions for the protection of collective interests of consumers, all that is about to change before the end of 2022.
No Class Actions but Representative Actions and Sample Lawsuits
Currently, Austrian law only provides for representative sample lawsuits in which certain organisations (eg, consumer protection organisations or the Chamber of Labour) may file a case on behalf of an individual and – irrespective of the amount in dispute – bring it before the Supreme Court. Such a claim must be assigned to the organisation and must fall within its scope of responsibility (eg, consumer claim assigned to a consumer protection organisation). While the judgment only has legal effect regarding the specific case, the lower courts will generally honour the decision of the Supreme Court as a practical precedent. The judgment does not affect the limitations periods of other claims.
The same organisations may also file for injunctions against the use of unlawful general terms and conditions and against business practices that violate unfair competition practices (so-called representative actions). With this instrument, the Austrian legislature implemented the Directive (EC) 98/27 on injunctions for the protection of consumers’ interests.
Austrian-Type Mass Claims
The Austrian law currently prohibits representative actions. Only a party with a claim in substantive law may be a plaintiff in proceedings. Consequently, in cases of mass claims, an “Austrian-type mass claims procedure” has become established by practice. This concept enables claims that may be assigned for collection to be filed, and a plaintiff may file a single lawsuit to deal with multiple claims it may have against the defendant. Thus, the party that has been assigned all claims can raise all such claims against a single defendant in the same proceeding.
Trends and Upcoming Reforms
Member States are required to implement the Directive (EU) 2020/1828 on representative actions for the protection of collective interests of consumers by the end of 2022 and to begin applying the mandated provisions from 25 June 2023. The Austrian legislature is currently at work on creating the new law, which is expected to have wide-reaching effects (see 14.1 Proposals for Dispute Resolution Reform – Implementation of the Collective Redress Directive).
There is no legal requirement to provide clients with a cost estimate of the potential litigation at the outset. Nevertheless, in practice, clients will often ask counsel to provide such a cost estimate. It is advisable to address the issue in a timely fashion because, upon filing its claim, the plaintiff must pay an advance on the court fees that are calculated on the basis of the amount in dispute.
There are only a few, specified, applications available that may be decided before a trial takes place, such as:
Otherwise, Austrian procedural law does not provide for pre-trial proceedings as are known, for example, in Anglo-American jurisdictions.
Early, Interim and Partial Judgments
Before a substantive hearing of the claim takes place, an early judgment on some of the issues in dispute or to dismiss the claim is possible, particularly with respect to procedural grounds for dismissal, such as lack of jurisdiction or improper venue.
Also, interim and partial judgments are possible but only during the main proceedings.
An important example of a pre-trial dispositive motion is one in which a party asks for an early dismissal because the claim is time-barred. If a claim is time-barred, the court may decide only this question without going into the merits of the matter.
Early Judgments on Procedural Grounds
Usually, a defence on procedural grounds must be raised before pleading on the merits of the case. A significant number of procedural grounds are disregarded by the court if raised at a later point in time. Some very severe procedural defects can also be raised at a later stage or can be observed by the court on its own without a motion. For example, directly after receiving the claim, the court must determine and verify its jurisdiction a limine, even before service of the claim on the defendant. If the court lacks jurisdiction, the claim is dismissed immediately – before trial.
The trial begins with a preparatory hearing. Most of the dispositive motions are brought beforehand and are discussed in such a hearing. They may be based on procedural grounds such as failure of jurisdiction or improper venue, or on substantive grounds such as the claim being time-barred or the “inconclusiveness” of the complaint. A claim can be dismissed by the court during this first preparatory hearing, at which point no evidence will have been taken.
A third party may join the proceedings on the side of the plaintiff or defendant if it has a legal interest in the success of that party. Legal interest is established if the decision will have a legal effect on the third party’s position (eg, an insurer may join proceedings of an insured party against the damaging party).
In practical terms, a joinder is effected by written application of the third party that must be granted by the court. Admission of the joinder may be opposed by the parties, but this opposition can be overruled by the court.
A third party may join the proceedings at any stage, even in appeal proceedings, up to the moment when the judgment becomes final.
If a foreign plaintiff is not an EU national and does not have domicile within the EU, the defendant may, in many cases, request an order compelling the plaintiff to secure the defendant’s costs (the same applies for companies that do not have a seat within the EU).
No order for security is granted in these cases if:
In general, the "loser pays principle" applies. Depending on the subject of the interim motion, this principle applies for final and binding decisions upon the interim motion. Alternatively, the decision regarding costs is made dependent upon the outcome of the final decision in the main proceedings. In general, courts decide which party is required to pay costs along with their dispositive decision regarding the main claim.
Other decisions may include an order on costs if the obligation to pay costs does not depend on the outcome of the proceedings (eg, dismissal of a third-party intervention or a challenge to a judge or expert witness on the basis of bias).
There is no fixed time limit within which a court must deal with an application. Parties are nevertheless protected against unreasonable delay by Article 6 of the European Convention on Human Rights and Article 47 on the European Charter of Human Rights, which guarantee an impartial tribunal within reasonable time. The court is thus obliged to provide prompt and effective action. If a court does not render a decision or order within reasonable time, the interested party may file a request to establish a deadline for the court.
No Pre-trial Discovery
There are no pre-trial discovery procedures in Austria. Evidence can be secured under specific circumstances, but, otherwise, production of documents and taking evidence takes place within the proceedings.
Document Production in the Proceedings
In civil proceedings, a party may be ordered by the court to produce evidence at its disposal if the court considers such evidence material, on the court’s own initiative (this rarely occurs) or upon request by the other party.
If a party does not comply with such a court order, there is no enforcement available. The court will consider the refusal in its assessment of evidence, and adverse inferences may be drawn by the court as finder-of-fact.
Prerequisites to Order a Third Party
A party may, in the proceedings, request the court to order a third party to provide a copy of a specific document if:
The requesting party must:
In contrast to the document production order addressed to one party, the production obligation of a third party is an enforceable court order. The court may impose a fine. Ultimately, contempt of court may even lead to imprisonment of up to two months. In practice, however, such orders are rarely issued against third parties.
There are no pre-trial discovery proceedings. Taking evidence is considered a sovereign task of the court and is conducted exclusively by the court at the request of the parties.
Order for Document Production
In civil proceedings, a party may be ordered by the court to produce evidence at its disposal upon request by the other party or even without such a request (this rarely occurs).
The prerequisites for an order to produce documents upon request are that:
If there is a suspicion of criminal misconduct, discovery may also be pursued by initiating a criminal investigation. Evidence, particularly in the form of documents obtained by the criminal authorities (eg, through house searches), may be obtained for use in civil proceedings. Any (potential) victim of a criminal offence as well as third parties with qualified legal interest may be granted access to the contents of a criminal file.
Austria recognises the concept of legal privilege. Members of legal professions – particularly attorneys-at-law – must refuse to testify with respect to any one of their mandates before any authority unless released by their client. Neither the party nor its counsel can be forced to produce client-attorney work product. No adverse inferences may be drawn by the court from such a refusal. Client-attorney correspondence and attorney work product are protected by legal privilege irrespective of where such documents are located.
A party ordered to produce a piece of evidence is entitled to object to the order in order to protect:
However, the requested party may not refuse to produce the requested evidence if:
This also applies to evidence in the possession of third parties if the piece of evidence is of joint use with respect to the third party and either party to the litigation.
The Austrian Enforcement Act provides for accelerated preliminary proceedings in which the court may order injunctive relief (preliminary injunctions) to prevent the frustration or significant obstruction of future enforcement. A creditor may apply for a preliminary injunction together with the claim initiating legal proceedings, prior to the actual initiation of legal proceedings, during legal proceedings and – if foreign courts have jurisdiction in the case – independently from legal proceedings in Austria.
The Enforcement Act distinguishes between preliminary injunctions:
For the purpose of securing monetary claims, injunctive relief may be granted if:
Injunctions for Securing Monetary Claims
Injunctions available for securing monetary claims include:
By an order against a debtor’s bank, bank accounts can also be frozen.
Courts are typically reluctant to assume that a party is likely to damage, destroy, hide or remove assets, and therefore require a showing of a strong and concrete likelihood in this regard.
No Anti-suit Injunctions
Austrian law does not provide for injunctions to prevent parallel proceedings in another jurisdiction. If the same case is pending in different courts, the principle of priority applies – similar to the system in the Brussels Regulation.
Injunctive relief is granted in accelerated preliminary proceedings. Depending on the concrete circumstances, injunctive relief can sometimes be obtained within 24 hours. Sometimes, the applicant has to wait for 14 days or even more.
Upon request of an applicant, injunctive relief can be awarded ex parte. The respondent will not be heard, in order to avoid frustration of the intended – interim – enforcement act. If injunctive relief is granted ex parte, the respondent’s right to be heard is satisfied only in challenge proceedings.
The applicant may be held liable for damages suffered by the respondent if the respondent later successfully discharges the injunction. In order to compensate possible damages to the respondent, the court may order that a preliminary injunction be subject to posting security by the applicant. This applies irrespective of whether the proceedings are ex parte.
Whenever Austrian courts have international jurisdiction for a claim to be secured, they also assume international jurisdiction to issue a preliminary injunction. This also applies if the asset subject to the preliminary injunction is situated in another country. It is necessary to check with each applicable jurisdiction individually whether an Austrian injunction is enforceable in foreign jurisdictions. The new regime of the recast Brussels Regulation substantially facilitates the recognition and enforcement of interim measures.
It is a general principle that a preliminary injunction must not interfere with the rights of a third party. It is, however, possible to obtain injunctive relief against a third-party debtor, affirmatively enjoining them from making payments to the debtor. In this way, it is also possible to freeze bank accounts.
In order to enforce a preliminary injunction, no further request for enforcement is required. The injunction implies the approval of enforcement. If necessary, a court can enforce the injunction with the help of an enforcement officer. Compliance with an injunction is therefore assured.
Once proceedings have been initiated with a Statement of Claim served on the defendant, the court will set a date for a preparatory hearing in which the court maps out a schedule and a plan for the course and content of the remaining proceedings. This is also an occasion on which the court is required to explore the possibility of a settlement.
Exchange of Written Submissions and the Oral Hearing
Usually, the next step involves a further exchange of written submissions prior to the oral hearing. The hearing mainly serves to take evidence, in accordance with the principle that judgments are only based on evidence taken by the court. It is mandatory for witnesses to appear before the court. Written witness statements and affidavits are used only in preliminary proceedings, where the general level of proof is intentionally lowered so that a speedy decision can be reached, or when the interrogation of a witness or party is practically impossible, for example, due to a prolonged absence or illness.
Simplified Proceedings for Smaller Claims
For monetary claims not in excess of EUR75,000, proceedings are significantly simplified. A payment order will be issued, predicated only on the claimant’s request. If the defendant objects, regular proceedings will be initiated. Otherwise, the payment order becomes enforceable.
The two main purposes of an oral hearing are:
Parties may file written submissions presenting facts, offering evidence and presenting legal issues at any time prior to one week before the main hearing.
Case Management Hearing
The case management hearing is referred to as a “preparatory court session”, which structures how evidence will be taken following this court session. It is also set to explore the possibility of an amicable settlement.
Second Part of the Hearing
The second part of the hearing focuses on witnesses and experts. The process (including the direct examination of witnesses) is led by the judge. The parties and/or their counsel are allowed to interrogate witnesses only after the court has finished its direct examination. The judge will formally close the oral hearing once the taking of evidence is completed.
Jury trials are not available in Austrian civil cases.
The Court’s Role and the Burden of Proof
The court will take evidence as requested (eg, witness testimony) and/or submitted (eg, documents) by the parties. The court may disregard evidence it considers to be immaterial, or if it is already sufficiently convinced of a certain fact. The general rule is that each party is responsible for discharging its burden of proof and providing the court with the evidence that may establish the facts favourable to its position. There are some specific rules available, such as those regarding prima facie evidence, which shift the need to establish certain facts to the other side.
Types of Evidence
Evidence may be in the form of documents, visual inspection of places or things, witness testimony, experts, and the testimony of the parties.
Evidence obtained by illegal means may be used in civil proceedings. Judges will evaluate the evidence before them and state the basis of their evaluation.
Austrian civil procedure relies on court-appointed experts who owe their duties primarily to the court and are required by statute to be neutral. If there are doubts as to neutrality or competence, court-appointed experts may be challenged. The same rules apply regarding judges. Even the mere appearance of lack of neutrality can suffice for a successful challenge.
Party-appointed experts are permitted but are regarded as other witnesses. They do not have the same special status as court-appointed experts and their testimony may be disregarded at the discretion of the court.
Hearings are open to the public, varied only upon application of a party and in specific circumstances (eg, if personal issues are discussed or trade secrets are at stake). Transcripts of the hearing (usually a summary by the judge) are not made public.
Active Role of the Judge
The judge has the predominant and most active role throughout a hearing and will not only preside in the process of the hearing but will also take the lead in examining witnesses. The judge decides when to end the trial. The court may disregard open requests for taking evidence, such as hearing one of the witnesses, if it has been satisfied by the evidence already taken.
Timing of Judgments
While an immediate oral judgment at the end of the trial is possible, in practice, judgments are generally rendered in writing at a later point in time. This process may take several months from the time the oral hearing is closed.
Proceedings before Austrian courts are generally efficient. In civil proceedings, most procedural steps are taken within two to four weeks of each other. The average duration of proceedings is one to one and a half years at the first stage and from nine months to one year at the appellate level.
Complex disputes may take longer. Especially in more complex cases, appellate court proceedings may reveal errors in the lower court proceedings and the case will then be remanded to the lower court for repetition and/or completion of the taking of evidence. The judgment rendered in such a remand is also subject to appeal according to the general procedural rules. In such cases, it can take several years before a final, binding judgment is rendered.
Austrian law distinguishes between extrajudicial and judicial settlements.
Extrajudicial settlements are concluded without a court being involved and – in order for the lawsuit to be stopped – the parties would need to agree to withdraw the claim or to an indefinite stay of proceedings. This is common in practice.
Judicial settlements are concluded before the court and are immediately enforceable. The parties are not limited by the pending dispute and may also agree on matters that have yet to be a part of the dispute. This, however, could trigger additional court fees. The court will only review if the subject matter in dispute is capable of being settled (eg, something that is fundamentally within the authority of the parties). Some courts also check whether the terms of the settlement are specific enough to be enforced. In practice, courts are open to recording a settlement in the form reached by the parties.
The conclusion of a settlement agreement triggers a specific settlement tax duty, a concept unknown in many other jurisdictions. Parties should consult with their local lawyer before concluding a settlement under Austrian law.
If the legal dispute is settled at the first hearing, the court fees are halved.
Parties can agree to keep their settlements confidential.
The confidentiality of settlements concluded during a trial is somewhat limited by the principle of public court hearings. In practice, however, there are suitable ways to maintain confidentiality. For example:
The parties and their counsel sign the court agreement and the judge makes it part of the court records. Third parties can access the court records only if they can establish a legal interest.
Judicial settlements (concluded before the court) are enforceable in the same manner as judgments. An extrajudicial settlement is simply treated as a contract and cannot be directly enforced. Claims arising from a disputed extrajudicial settlement agreement must be pursued before a competent court.
It is general practice to conclude a judicial settlement subject a revocation clause. Such clauses enable legal representatives to conclude a settlement and create the possibility of consulting their client, and it provides the parties with a period for reflection to take care of the necessary internal approvals, for instance by the supervisory board or by the insurer of that claim.
Limitations to Challenges
The substantive reasons to challenge settlement agreements are significantly fewer than those available to challenge other agreements, as they are limited to severe mistakes or deceit.
A successful litigant may obtain a judgment:
A performance judgment may order, for example:
An enjoining judgment orders a party to stop or desist from a certain act. A divorce is an example of a judgment that alters legal status. Declaratory judgments may be obtained regarding the existence of a certain legal relationship or a certain claim.
Civil courts limit their decisions to the relief requested by the plaintiff.
Monetary and Declaratory Judgments
There are no special rules regarding awards in damage proceedings. The most important forms of awards for damages are monetary judgments (ordering the payment of money) and declaratory judgments regarding foreseeable future damages. For such damages, declaratory judgments may be necessary to avoid the expiration of a limitations period.
No Punitive Damages
Austrian tort law is based on the principle of compensation and provides for damage claims only insofar as the plaintiff actually suffers damages. Punitive damages are not available. Contractual penalties are nevertheless allowed and intellectual property law provides for lump sum damages, which are deemed to be partly punitive in nature.
There are no general rules that limit the amount of maximum damages. However, some provisions of substantive law establish maximum amounts for particular types of damages, particularly in cases of strict liability.
Amount of Interest
Under Austrian civil law, the debtor is required to compensate the creditor for the damage caused by any delay of payment, together with legal interest. If not otherwise agreed by the parties, legal interest amounts to 4% per annum. Between entrepreneurs it amounts to 9.2 basis points above the base interest rate if the default is attributable to the debtor’s negligence. As a rule, the base rate applicable is the base rate that was in effect on the first day of the relevant half year (1 January for the first half and 1 July for the second half) and is available on the Austrian National Bank's website. The creditor can also claim, in addition to the legal interest, compensation for other damage caused by late payment.
The starting date for interest accrual is the date when the payment obligation is due. It is owed from the day after the payment obligation becomes due until the day of actual payment. This applies both to pre-judgment and post-judgment interest.
Types of Enforcement
Different enforcement rules apply:
For monetary claims, the following types of enforcement are available: enforcement on movables, real estate, receivables, claims for delivery and other pecuniary rights (eg, patents or company shares).
In claims for specific performance, the following methods can be considered:
Assets Subject to Enforcement
Creditors can choose to enforce against real property or other specific assets (eg, a specific bank account, a specific share); or, alternatively, to request enforcement in the form of:
As to recognition and enforcement of foreign titles in Austria, a distinction must be drawn between titles under the Brussels Regulation and titles which do not fall under this regime.
Enforcement Under the Brussels Regulation
Under the Brussels Regulation, a judgment of an EU member state shall be recognised in other member states without any special procedure being required. A judgment rendered in a member state and enforceable in that state shall be enforced in another member state without any declaration of enforceability being required and under the same conditions as apply to a domestic judgment.
Enforcement Outside the Scope of the Brussels Regulation
For titles which do not fall under the regime of the Brussels Regulation, it is necessary to initiate exequatur proceedings and to obtain a “declaration of enforceability”. The application for the declaration of enforceability may be joined with the application for the authorisation of enforcement itself. If the applications are joined, there is only one proceeding, and the relevant decisions are rendered at the same time.
A declaration of enforceability is only granted if the foreign judgment is enforceable according to the law of the state where it was issued and if reciprocity is guaranteed by international conventions, treaties or by regulations. This means that there must be a legal basis confirming that Austria and the other state mutually recognise each other’s court decisions. If a court is uncertain in this regard, it will turn to the Austrian Ministry of Justice for determination and guidance.
There are two appeal levels, one to the court of appeal and one to the Supreme Court. An appeal to the Supreme Court is limited to matters of significance for the judicial system (see 10.5 Court-Imposed Conditions on Granting an Appeal).
Admissibility of an Appeal to the Supreme Court
Parties may appeal first instance decisions, to Regional Courts which hear appeals from decisions of District Courts, and to Regional Appellate Courts in cases of appeals from Regional Court decisions. The decision of the court of appeal will include a statement on whether its judgment is open to an appeal to the Supreme Court.
If it does not allow for an appeal to the Supreme Court, the party seeking further appeal may challenge the court of appeal’s decision and request permission to seek further appeal to the Supreme Court. In such cases, the challenge must contain the challenge of the decision of the court of appeal denying further appeal to the Supreme Court but also set forth the actual appeal.
No Factual Findings by the Supreme Court
If the Supreme Court accepts its competence, it will only review questions of (material and/or procedural) law. Factual findings are never subject to revision by the Supreme Court. Factual findings and the assessment of the evidence can only be challenged before the courts of appeal.
The service of the judgment triggers a four-week period during which the partly or entirely unsuccessful party may file an appeal. The opponent may respond thereto within four weeks of service of the appeal. These time periods cannot be extended.
Grounds of Appeal
The appellant may claim errors of procedural and/or material law, errors of fact and/or nullity (which rarely occurs).
Procedure Before the Court of Appeal
The court of appeal may retake evidence (mostly rehearing witnesses) if it decides to independently assess certain evidence. But it will not rehear the entire case. In practice, the court of appeal rarely conducts an oral hearing or takes evidence itself, but rather upholds or changes the decision, or remands the case to the court of first instance to rehear parts of the case.
The appeal proceedings serve to review the correctness of the judgment at first instance, but not to raise any new facts or bring new claims. The court of appeal must disregard new allegations and new evidence.
The possibility of seeking a review of second instance decisions by the Supreme Court is highly restricted.
Appeals on the points of (material and/or procedural) law may only be brought if the decision upon such points of law is of significant importance to ensure uniformity or certainty of legislation or to its development. Also, there may be further restrictions with regard to the amount still in dispute. In the second instance court, a (contestable) decision is issued on the admissibility of an appeal on the point of law to the Supreme Court, to which the Supreme Court is not bound. Consequently, the Supreme Court may still dismiss an appeal considered admissible by the court of second instance or allow one considered inadmissible by the court of second instance as long as that appeal is not in any case inadmissible by law (eg, because the amount still in dispute does not exceed EUR5,000).
In practice, the court of appeal rarely conducts an oral hearing (see 10.4 Issues Considered by the Appeal Court at an Appeal).
The court of appeal may, on the grounds of a procedural deficiency:
In the event of an incorrect legal assessment, the court of appeal may confirm or amend the first instance judgment.
If the procedure/judgment is rendered null and void, the court of appeal will nullify the procedure/judgment and refer the case back to the first instance.
As a rule, the Supreme Court decides on the merits by confirming or amending the appellate judgment. On the grounds of procedural deficiency and if factual findings are missing, the Supreme Court will set aside the judgment and refer the case back to the court of appeal or the court of first instance.
Austrian law operates under the “loser pays” principle. Accordingly, every party is required to pay its own costs during the proceedings. At the end of proceedings, the court will render a decision on costs, ordering the unsuccessful party to reimburse the cost expenditures of the other party.
Legal costs and fees consist of:
The reimbursable fees for lawyers are fixed according to a tariff, depending on the amount in dispute and the procedural steps taken by the lawyer. The actual fees a lawyer charges a client may, and often do, exceed the tariff. The winning party may still end up having to pay the excess amount.
The court’s decision on costs depends on which party prevails and in what proportion.
No interest is awarded on costs
ADR and, particularly, mediation, is viewed positively in Austria. Yet, mediation is still rarely used to settle commercial disputes. Parties to complex commercial and corporate disputes prefer to sue in court or to initiate arbitration proceedings, thereby delegating the resolution of the dispute to judges or arbitrators. However, nowadays a good number of judges are aware of and appreciate the power of mediation and actively refer parties to mediation.
The Law on Mediation Regarding Civil Claims (Zivilrechts-Mediations-Gesetz), enacted in 2004, aims to promote and facilitate access to mediation by setting out basic mediation procedures. It establishes required qualifications of certified mediators, provides that mediation conducted by a certified mediator prevents the limitation period from expiring, and sets out that certified mediators shall not be required to testify in court proceedings. In many areas, the Austrian Law on Mediation Regarding Civil Claims pre-empted most of the provisions foreseen by the (EC) Directive 2008/52 of 21 May 2008 regarding certain aspects of mediation in civil and commercial matters.
The prevailing opinion is that parties should engage in ADR proceedings voluntarily. There are only a few situations in which mediation is compulsory. These cases mainly relate to:
Judges increasingly encourage parties to consider ADR, generally in the form of mediation. Some Austrian courts have engaged in a pilot project in which, at the beginning of the proceedings, parties are informed about the option to engage in mediation. In the event that one or both parties fail to cooperate, no adverse consequences arise with respect to either party.
Several organisations offer and promote ADR in Austria, including the Bar Association. For commercial cases, the Vienna International Arbitral Centre of the Federal Economic Chamber (VIAC) is the leading institution.
VIAC offers ADR rules that provide a flexible procedural framework that cater to the need of its clients. To promote understanding and use of ADR, VIAC also published a handbook, which gives guidance on ADR proceedings under the auspices of VIAC.
If the seat of the arbitration is in Austria, the arbitration proceedings will be governed by the Austrian arbitration law, which is contained in the Fourth Chapter of the Austrian Code of Civil Procedure (Sections 577-618).
Since 2006, the legislation governing arbitration in Austria has been strongly based on the UNCITRAL Model Law, with a few minor deviations. Significantly, Austrian arbitration law does not differentiate between domestic and international arbitration.
Under Austrian arbitration law, the definition of arbitrability is broad. The general rule is that pecuniary claims are usually considered arbitrable. Non-pecuniary claims are considered arbitrable if the parties have the capacity to enter into a settlement agreement addressing the specific claim.
As a specific exception, family law matters, and all claims based on contracts that are – even partially – subject to the Tenancy Act (Mietrechtsgesetz) or to the Non-Profit Housing Act (Wohnungsgemeinnützigkeitsgesetz), as well as all claims concerning condominium property are precluded from being subject to an arbitration agreement.
Moreover, certain collective labour and social security matters are not arbitrable.
Although they are generally arbitrable, disputes involving consumers or employees may only be made subject to an arbitration agreement (with additional formal requirements) after the dispute has arisen. The additional formal requirements are extensive and lead to a very high threshold to validly conclude an arbitration agreement with consumers or employees, rendering arbitration agreements in these areas impracticable.
Within three months of receiving an arbitral award, a party is entitled to file an action to set the award aside based on one or more of the following grounds.
Additional grounds are available if a consumer or an employee is involved. Otherwise, the grounds are exhaustive. It is firmly established in the case law of the Austrian Supreme Court that there is no révision au fond of the merits of the case.
An action to set aside an award is filed with the Austrian Supreme Court, which decides as first and last instance (ie, without possibility of a further appeal). Practice has shown that a well-reasoned decision will be rendered within a comparatively short period of six to eight months on average.
Jurisdiction on Enforcement
Under Austrian law, arbitral awards are deemed equivalent to judgments of state courts and will be enforced the same way by means of application to the District Court where:
An authenticated original or a duly certified copy of the arbitral award must be submitted together with the application for enforcement. The original or a certified copy of the arbitration agreement must only be presented upon a request by the court.
If the arbitration was seated outside Austria, the award will first have to be formally recognised and declared enforceable by the District Court that is competent for enforcement. The application for recognition can be made together with the request for enforcement, and the courts will decide simultaneously on both requests. After being declared enforceable, the foreign award is treated as a domestic arbitral award –ie, equivalent to the judgment of an Austrian Court.
Recognition and enforcement of foreign arbitral awards (ie, where the seat of arbitration was outside Austria) is governed by international treaties to which Austria is a party, including:
Implementation of the Collective Redress Directive
The EU Directive 2020/1828 on representative actions for the protection of the collective interests of consumers is about to be implemented in Austria. The Member States are obliged to adopt and publish, by 25 December 2022, the laws, regulations, and administrative arrangements necessary to comply with the directive and to implement them from 25 June 2023. It implies major changes in the Austrian legal system, which has not, to date, provided for true class actions.
It is the intention of Austrian lawmakers to provide an expansive tool for consumers to seek redress as provided by EU Directive 2020/1828, leading to a significantly changed landscape in the civil procedural law, as well as substantive tort law provisions; most notably, a revised interruption of the statute of limitations.
Even though the details of the new regulations are not yet clear, it is fair to assume that the benefits to, and the leverage of, parties eligible to seek redress for damages in such a collective redress action, will be substantial. Affected parties seeking to pursue such an action now, may wish to consider waiting for the implementation of this new law – unless a time bar forces earlier action. Conversely, defendants, who wish to avoid being sued under the claimant-friendly new regime, might consider ways to create lis pendens in advance of the effectiveness of the new law.
The main effect of COVID-19 has been to accelerate the modernisation and digitalisation of the judicial system, particularly in respect of “distance hearings”.
Videoconferencing in the Past
The use of videoconferencing in oral hearings is not new under Austrian procedural law. Before the pandemic, civil procedural rules permitted witness or party examination via videoconference only in certain, specific, circumstances, eg, if they were unable to travel. Neither the technology nor the civil procedural rules were in place that would have enabled the entire oral hearing to be conducted via videoconference.
Videoconferencing since COVID-19
In the wake of the pandemic, this situation has changed. The new rules that were introduced during the pandemic permit the whole hearing to be conducted via videoconference. These apply until the end of 2022. The court has the possibility to conduct a full trial – ie, all oral hearings, including taking evidence – via videoconference, provided that all parties agree in advance. There are exceptions to the principle of consent, such as enforcement and insolvency proceedings, where consent is not required, provided that the parties have the necessary technical means to participate. Parties, witnesses and other participants (eg, experts or interpreters) may request a videoconference if they belong to a risk group or are in necessary (professional or private) contact with someone in a risk group.
+43 1 3434 000 212
+43 1 3434 000 firstname.lastname@example.org www.knoetzl.com