By Maria Theresa Trofaier and Daniela Karollus Bruner CMS Reich Rohrwig Hainz Rechtsanwälte GmbH - Vienna.

Austria has a relatively long tradition of arbitration – the first provisions relating to arbitration were included in the Austrian Code of Civil Procedure since 1898. Austria has benefited and continues to benefit from its reputation as a neutral place conveniently located in the centre of Europe. There is still a significant increase in international commercial arbitration with the seat of proceedings in Vienna, in many cases without any involvement of an Austrian party. The International Arbitral Centre of the Austrian Federal Economic Chamber (better known as the Vienna International Arbitral Centre – VIAC) has equally benefited from Vienna as an attractive, yet less expensive venue (compared to Zurich, Paris or Stockholm) and recently celebrated its 30th anniversary.

In 2006, a new arbitration law came into effect, bringing Austrian law in line with the UNCITRAL Model Law on International Commercial Arbitration.

The law of arbitration in Austria is contained in the Austrian Code of Civil Procedure (“CCP”) (“Zivilprozessordnung – ZPO”), originally enacted in 1895, which sets out in its Fourth Section the provisions relating to arbitration.

After several partial amendments of the old provisions relating to arbitration, with the last major amendment in 1983, the new Austrian Arbitration Act (“Schiedsrechts-Änderungsgesetz 2006”, Federal Law Gazette I 2006/7) came into force on 1 July 2006, comprehensively amending the old law on arbitration. The main purpose of the new Austrian Arbitration Act 2006 is to create a modern arbitration law which incorporates the principal features of the UNCITRAL Model Law. The new law was not codified in a separate act but continues to be part of the CCP, with the former provisions of Articles 577–599 CCP now replaced by the new provisions of Articles 577–618 CCP. It should be noted that the old provisions still apply to arbitration proceedings commenced prior to 1 July 2006 and the effectiveness of arbitration agreements that were concluded prior to 1 July 2006 is still governed by the former provisions of Articles 577–599 CCP. Originally Austrian arbitration law was intended for domestic arbitrations, but over the years it has proved flexible enough for international proceedings as well.

In 1975 the Austrian Federal Economic Chamber established the Vienna International Arbitral Centre (VIAC). The success of the arbitral centre, with its own arbitration rules (the Vienna Rules), was undoubtedly 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.

VIAC administers the settlement of disputes by arbitration in matters where the jurisdiction of the Centre has been agreed by the parties, in situations where either not all contracting parties that concluded the arbitration agreement have their place of business or normal residence in Austria at the time of the conclusion of that agreement, i.e. there is a cross-border element, or the subject matter of the dispute between the parties whose place of business or normal residence is in Austria has an international character.

If the parties have agreed to the jurisdiction of VIAC, the Rules of Arbitration and Conciliation of the Centre – the Vienna Rules (“Schieds- und Schlichtungs­ordnung - Wiener Regeln”) apply in the version valid at the time of commencement of the proceedings. The Vienna Rules were recently updated taking into account the amendments to the law made by the new Arbitration Act, and the present version of the Vienna Rules was adopted on 3 May 2006 with effect from 1 July 2006.

Scope of application
Unlike the UNCITRAL Model law, the provisions of Austrian arbitration law do not distinguish between domestic and international arbitration or between commercial and non-commercial arbitration proceedings. The provisions of Articles 577 et seq. CCP apply to all arbitrable disputes. In defining arbitrability the new law considers any pecuniary claim that lies within the jurisdiction of the courts as being capable of being subject to an arbitration agreement. This definition, however, is expanded with regard to non-pecuniary claims, allowing for the fallback to “a matter capable of settlement” as had been included in the old law (see further below). In connection with consumer-related or employment-related matters, special provisions, set out in Articles 617 and 618 CCP, apply.

The structure of the law
The structure of the law closely follows the UNCITRAL Model Law. The First Chapter contains general provisions about the scope of application and service of written proceedings. The Second Chapter deals with the arbitration agreement itself, the Third Chapter deals with the formation of the arbitral tribunal and the challenging of arbitrators, and the Fourth Chapter with jurisdiction. The Fifth and Sixth Chapters set out the provisions relating to the conduct of proceedings and the rendering of the award. The Seventh Chapter deals with setting aside an award. The Eighth Chapter deals with recognition and enforcement of foreign awards, and the Ninth Chapter with State Court proceedings relating to arbitration. The Tenth Chapter contains special provisions concerning consumer-related and employment-related issues. The role of the courts

Austrian law removes arbitration matters almost completely from the supervision of the national courts, and affords the parties and arbitrators wide autonomy to conduct the arbitration as they consider best. Except where the provisions of Articles 577–618 CCP so provide, courts shall refrain from intervening in arbitration matters altogether (Article 578 CCP). As a consequence, matters such as anti-suit injunctions against arbitrators or parties to arbitration are not admissible. Austrian courts have consistently stayed court proceedings where an arbitration agreement is deemed to exist. It is generally acknowledged that arbitration enjoys a privileged position within the Austrian legal system, with an “arbitration-friendly” regime prevailing.

General principles
The underlying general principles of Austrian arbitration law are:

• equality and objectivity: all parties must be treated fairly and shall have the right to be heard (Article 594 (2) CCP);
• autonomy: the parties enjoy great autonomy. There are only a few legal provisions which cannot be waived by agreement and which are mandatory; and
• due process: all parties must have the opportunity to present their case.

Definition (Article 581 CCP)
The definition of an arbitration agreement is set out in Article 581 CCP which corresponds to the definition in Article 7 (1) of the UNCITRAL Model Law. An arbitration agreement may be concluded by a separate agreement or included as an arbitration clause within a contract. It shall be set out in writing and must clearly express the intention of both parties to submit the dispute in question to arbitration.

The arbitration agreement must specify the legal relationship on which it is based. Thus, without a defined legal relationship, general arbitration agreements which refer all future disputes between the parties to arbitration regardless of the origin or nature of the dispute are null and void.

It is an accepted principle that the arbitration agreement binds only the parties to the agreement. Austrian courts are very reluctant to bind third parties to arbitration agreements.

Arbitrability (Article 582 CCP)
Generally, all pecuniary claims are arbitrable, but disputes relating to non-pecuniary claims can be arbitrable as well if the parties could also conclude a settlement regarding the dispute.

However, a number of matters are excluded from arbitrability even though they may include pecuniary claims. As specified in Article 582 (2) CCP, claims in family law and claims relating to lease of property and to cooperative apartment ownership cannot be conducted as arbitral proceedings.

Furthermore, it is highly controversial as to whether a number of specific (Austrian) company law issues are arbitrable. For example, a claim for compensation against the managing director of a limited liability company or a claim for payment of the capital invested according to Article 10 Austrian Limited Liability Company Law (“GmbH-Gesetz”) cannot be subject to arbitration proceedings.

The formal requirements of the agreement (Article 583 CCP)
Article 583 CCP governs all arbitration agreements concluded on or after 1 July 2006. The formal requirements of a written arbitration agreement in ­accordance with Article 583 CCP correspond to those set out in Article 7 (2) of the UNCITRAL Model Law. The document must either be signed by the parties to the ­agreement or it can be contained in correspondence between the parties which provides a record of the agreement (letters, facsimiles, e-mails or other means of communication). In Austrian law the agreement may also be validly concluded by a party representative other than the managing director or the company officer (“Prokurist”) if the person holds a special power of attorney which states his empowerment to conclude an arbitration agreement.

A reference in a contract to another document containing the arbitration clause amounts to a valid arbitration agreement if the clause is then part of the contract, but it must satisfy the general requirements of a contractual reference to a separate document. It should be noted that a formal defect in the arbitration agreement is cured if the parties do not contest it before entering into the merits of the case in arbitration proceedings.

Claims before court and interim measures (Articles 584 and 585 CCP)
With regard to substantive claims brought before national courts in a matter which is the subject of an arbitration agreement, Article 584 (1) CCP corresponds to Article 8 of the UNCITRAL Model Law, providing for the referral to arbitration if an arbitration agreement exists. Articles 584 (2)–(5) CCP, however, provide additional provisions to those set out in the Model Law, allowing for specific situations where a national court may deal with the merits of a claim even if an arbitration agreement was originally concluded.

Articles 584 and 592 set up one of the most important principles of arbitration: the power of the tribunal to rule on its own jurisdiction (“Kompetenz-Kompetenz”). Unless the arbitration clause is null and void, inoperative or incapable of being performed, a national court must dismiss a claim brought before the court which is subject to an arbitration agreement between the parties. Once arbitration proceedings are commenced, no claim concerning the same subject matter in dispute may be brought before a national court. The general consequence is that a court must dismiss any claim related to those in the arbitral proceedings. If, however, the jurisdiction of the tribunal has been challenged before going into the merits of the case and the tribunal cannot be expected to reach a decision within a reasonable time (Article 584 (3) CCP) then the national court may proceed to deal with the matter.

The arbitral tribunal shall decide on its own jurisdiction in the form of an arbitral award (Article 592 (1) CCP). It should be noted, however, that the issue of juris­dic­tion may not have been finally resolved as it may be challenged again by an ap­pli­cation to set aside the award made on the issue of jurisdiction (Article 611 CCP).

In accordance with Article 585 CCP, Austrian courts are still competent to grant interim or protective measures even if a valid arbitration agreement exists. The Vienna Rules contain a similar provision in Article 22 (6) that a request for interim measures of protection to a national court does not constitute an infringement or waiver of the arbitration agreement. Arbitral tribunals may order interim or protective measures at the request of a party (Article 593 CCP).

The constitution of the arbitral tribunal (Articles 586, 587 CCP)
Only a natural person who has full contractual capacity may be appointed as an arbitrator. There is no requirement that an arbitrator be qualified as a lawyer or a registered member of the bar. Active Austrian judges are prohibited from accepting appointment as arbitrators during their tenure of judicial office. An arbitrator may be appointed either as a result of being specifically named in the arbitration agreement (contractually appointed arbitrator) or by an appointment being made in compliance with the form of appointment provided for in the arbitration agreement, taking into account the numbers of arbitrators agreed (this last method of nomination is in line with the general practice).

The parties are free to agree on the number of arbitrators (Article 586 (1) CCP). If the parties agree on an even number, the arbitrators shall appoint an additional arbitrator as chairman. Unless the parties agree on the number of arbitrators, the number shall be three (Article 586 (2) CCP). In accordance with Article 587 CCP, the parties are also free to agree on the procedure for appointing the arbitrator(s). If the parties fail to do so, the mandatory provisions of Article 587 (2) et seq. are applicable:

• in arbitrations with a sole arbitrator, the arbitrator is appointed by the national court if the parties fail to agree within four weeks after receipt of a written request by the other party to appoint the arbitrator (Article 587 (1)1 CCP);
• if there are three arbitrators, each party appoints one arbitrator and the appointed arbitrators shall choose a third arbitrator to act as chairman (Article 587 (1)2 CCP);
• in arbitrations with more than three arbitrators, each party shall appoint an equal number of arbitrators and the appointed arbitrators shall appoint another arbitrator to act as chairman (Article 587 (1)3 CCP);
• if the party or the equal number of appointed arbitrators fail to nominate an arbitrator (or chairman) within four weeks of receipt of a written request to do so, the missing arbitrator shall be appointed by the national court (Article 587 (1)4 CCP); and
• parties are bound to their appointment as soon as written communication has been received by the other party (Article 587 (1)5 CCP).

In further derogation from the UNCITRAL MODEL Law, Austrian arbitration law contains special provisions in case of multi-party arbitrations (Articles 587 (5) and (6) CCP). The provisions distinguish between proceedings where co-claimants or correspondents are bound to appoint a common arbitrator and proceedings in which they are not bound to do so. In the first case, the appointment shall be made by the court if the co-parties fail to appoint a common arbitrator, whereas in the second case all appointments shall be made by the court, unless the parties have agreed upon another appointment procedure. Court decisions on the substitute appointment of arbitrators are made in accordance with the provisions of Articles 587 (8) and (9) CCP, and are not subject to appeal. Worth mentioning in connection with court appointment is the issue that courts must refrain from making a substitute appointment if the party in delay appoints the missing arbitrator in the meantime (Article 587 (7) CCP).

Grounds for challenge of arbitrators (Article 588 CCP)
Article 588 CCP setting out the grounds for challenge is, like the respective provision in the UNCITRAL Model Law – Article 12, a mandatory provision. Accordingly, arbitrators may be challenged if they are not independent from the parties or biased. No actual lack or proof of impartiality or lack of independence is required: an objectively justified doubt as to the arbitrator’s impartiality is sufficient to provide grounds to challenge the arbitrator. An arbitrator may also be challenged if he does not possess the qualifications agreed by the parties (e.g. professional qualifications, experience or language skills).

Challenge procedure, early termination of mandate and ­appointment of a substitute arbitrator (Articles 589–591 CCP)
In accordance with Article 589 (1) CCP, the parties are free to decide on the procedural rules for challenging arbitrators. If the parties fail to do so, the statutory provisions of 589 (2) CCP apply. The provisions follow Article 13 (2) of the UNCITRAL Model Law. Apart from the parties’ right to decide on the procedural rules in connection with the challenge of arbitrators, the right to go to court to obtain a decision on a previously unsuccessful challenge cannot be waived (Article 589 (3) CCP). For arbitrations under the Vienna Rules, the VIAC Board has the authority to decide on any challenge of an arbitrator, nevertheless an unsuccessful challenge may be subsequently brought to court.

Early termination of an arbitrator’s mandate is possible if the parties so agree or if the arbitrator himself withdraws from office (Article 590 (1) CCP). Furthermore, the court may terminate the arbitrator’s mandate in several cases as listed in Subsection (2).

If the mandate of an arbitrator is terminated for any reason whatsoever, a substitute arbitrator must be appointed in accordance with the rules applicable to the former appointment (Article 591 (1) CCP). The arbitral tribunal may continue with the proceedings at its own discretion without repetition of procedural steps already taken.

Competence to rule on jurisdiction (Article 592 CCP)
In accordance with Article 592 (1) CCP, the arbitral tribunal shall decide on the issue of jurisdiction itself (“Kompetenz-Kompetenz”). The decision shall be made in an arbitral award either together with the ruling on the merits or in a separate arbitral award. This provision follows the wording of Article 16 of the UNCITRAL Model Law.

Important to note in connection with this provision, however, is the omission of the second and third sentences of Article 16 (1) of the UNCITRAL Model Law concerning the doctrine of separability. Nevertheless, this does not mean that arbitration agreements in Austria are invalid just because the main contract in which they are included is invalid. Numerous court decisions in Austria have stated that in many cases an arbitration clause survives the termination of the contract. Therefore, in Austria the concept of separability between the contract and the arbitration clause seems to be in line with the provisions of the UNCITRAL Model Law.

Power to order interim measures (Article 593 CCP)
After having heard both parties, an arbitral tribunal is entitled to order interim or protective measures against a party, as the arbitral tribunal may consider necessary in respect of the subject matter of the proceedings. Ex parte measures are not allowed as the other party must be heard before measures may be ordered.

Interim or protective measures may be ordered if the enforcement of the subject matter claim would be frustrated otherwise or if there is danger of irreparable damage to one of the parties to the arbitration.

Articles 593 (3)–(6) CCP ensure that the interim or protective measures are enforceable in Austria.

General provisions
Aside from the mandatory provisions of the Austrian Arbitration Act (e.g. Articles 594 (2) and (3), 597 (1), 599 (1), 602, 617 et seq.), the parties are free to agree on the procedure to be followed in conducting the proceedings (Article 594 (1) CCP). Therefore, the parties are free to refer to the rules of an arbitration institution. In the absence of such an agreement, non-mandatory law applies, while in the absence of non-mandatory law the arbitrators are free to decide at their own discretion.

The parties shall be treated “fairly” (Article 594 (2) CCP). This requirement derives from Article 6 of the European Convention on Human Rights and also contains the requirement of “equal treatment” of the parties. Furthermore, each party has the right to be heard, which does not mean that oral hearings are mandatory, but only that the parties must have an opportunity to present their case.

The parties also have the right to be represented by persons of their choice in the proceedings (Article 594 (3) CCP). If an arbitrator does not fulfil the duty assumed by acceptance of his appointment or does not fulfil this duty in a timely manner, he is liable towards the parties for all damages caused by his refusal or delay (Article 594 (4) CCP).

Seat of the tribunal and language of arbitration
(Articles 595, 596 CCP)
The parties are free to agree on the seat of the arbitral tribunal (Article 595 (1) CCP). This provision does not refer to the actual place of oral hearings but to the legal seat or place of arbitration. This is obviously important in deciding the question of whether Austrian law applies (Article 577 CCP), since the procedural law follows that of the seat of the arbitration, and Austrian law will only be applicable if the seat is within Austria. The actual oral hearings may be conducted at any place the tribunal considers to be appropriate.

Corresponding to Article 22 of the UNCITRAL Model Law, the parties are free to choose the language of the arbitral proceedings. Failing such agreement, the language is determined by the arbitrators (Article 596 CCP).

Statements of Claim and Defence (Article 597 CCP)
The claimant has the duty to submit his claim and state the facts on which the claim is based. Notwithstanding Article 23 (1) of the UNCITRAL Model Law, Austrian law does not stipulate that the claimant shall present the points at issue in his claim, because it is understood that it should not be his duty to anticipate possible objections of the respondent. Both parties may amend or supplement their claim or positions during the proceedings, unless the tribunal rejects this due to delay.

Oral and written proceedings, conduct, taking evidence (Articles 598 and 599 CCP)
The parties are free to agree on the issue of whether proceedings shall be conducted orally or in writing. In the absence of an agreement concerning the oral hearing of the parties, the tribunal may order such oral hearing at an appropriate stage if a party so requests. Even though Austrian arbitration law does not expressly stipulate that the proceedings are always private, this prevailing principle in arbitration applies in Austria as well. Therefore, unless agreed otherwise, the general public is excluded from the proceedings. In Article 616 (2) CCP, this principle is stipulated in connection with court proceedings concerning arbitration matters as well: members of the public may be excluded at the request of a party if a justified interest in their exclusion is shown.

In accordance with Article 599 CCP, the arbitral tribunal has the power to decide on the admissibility of evidence, to take such evidence and to determine its relevance. The parties are entitled to receive sufficient notice concerning hearings and meetings of the arbitral tribunal for the taking of evidence. Furthermore, the parties have the right to receive submissions, documents or communications supplied to the arbitral tribunal by the other party, and expert reports or other evidence upon which the arbitral tribunal may rely (Article 599 (3) CCP).

Both provisions (Articles 598 and 599) are in line with Articles 19 (2), 24 (2) and (3) of the UNCITRAL Model Law, even though slightly different wording is used in the CCP.

Default of a party to observe the course of proceedings (Article 600 CCP)
Article 600 deals with the issues that may arise if there is a default of a party in the proceedings. If the claimant fails to communicate his Statement of Claim, the proceedings shall be terminated by the arbitral tribunal. If the respondent fails to respond within the agreed or ordered term, this does not automatically mean that the failure itself shall be treated as an admission by respondent. The arbitral tribunal may continue with the proceedings and decide on the evidence taken. Furthermore, the default may be cured at a later stage by procedural actions if the arbitral tribunal finds the default to be sufficiently excused.

Appointment of experts and court assistance (Articles 601 and 602 CCP)
The arbitral tribunal has the authority to appoint experts to supply it with a report on specific issues, unless otherwise agreed by the parties (Article 601 (1)1 CCP). Furthermore, the arbitral tribunal may require the parties to give the expert any relevant information or to produce and provide documents relevant to the proceedings (Article 601 (1) 2 CCP).

Parties also have the right to present expert reports from their own expert witnesses (Article 601 (4) CCP).

In accordance with Article 602 CCP, the arbitral tribunal may request court assistance for the performance of judicial acts over which the arbitral tribunal does not have authority (e.g. legal assistance by a foreign court or by another authority). If the taking of evidence before court is the subject of the request for court assistance, the arbitrators and the parties are entitled to participate in this taking of evidence before the court and to ask questions.

Choice of law
Arbitrators shall make their decisions based on the applicable law as agreed by the parties. The parties are free to decide on the applicable law. Failing any designation by the parties, the arbitral tribunal has full discretion to determine the law(s) it considers appropriate (Article 603 (2) CCP). According to Article 603 (3) CCP, the parties may also authorise the arbitrators in writing to make the decision based on principles of equity (ex aequo et bono).

Decisionmaking by the panel of arbitrators
The arbitrators may make final awards regarding all claims in the case, as well as partial or interim awards. There is no statutory time limit within which an award must be made. However, arbitrators have a duty not to delay the proceedings unduly.

If the arbitral tribunal consists of more than one arbitrator, the decision must be made by a majority of all of its members, unless the arbitration agreement determines otherwise (Article 604 (1) CCP). Abstention by one or more arbitrators is possible under Austrian law (Article 604 (2) CCP). Even though the parties are free to agree on the decisionmaking provisions, it appears that it is not acceptable under Austrian law to decrease the necessary quorum to a minority or to give a certain arbitrator’s vote a special weight.

Settlement
The parties may conclude a settlement during the proceedings and can then choose between two options: they may request the arbitral tribunal to record the settlement (Article 605 (1) CCP) and to sign the record afterwards, or the parties may request the arbitral tribunal to render an award on agreed terms (which has the same effect as an award on the merits of the case). With regard to enforcement in Austria this difference is not of great importance, but if enforcement is sought in another signatory state of the New York Convention then the parties will require an award by consent rather than a mere settlement agreement. A settlement agreement/record of this agreement does not have the same status as an arbitral award and is not enforceable under the provisions of the New York Convention.

The arbitral award and its effect (Articles 606 and 607 CCP)
The award shall be made in writing and shall be signed by all the arbitrators. If there is more than one arbitrator and one fails to sign then the majority of arbitrators (including the chairman) shall sign the award, and note the obstacle which prevented the missing signatures on the award (Article 606 (1) CCP). The award shall state the reasons on which it is based (Article 606 (2) CCP), the date of issue and the seat of the arbitral tribunal (Article 606 (3) CCP). Each party has the right to receive a copy signed by the arbitrators (Article 606 (4) CCP) and to request the arbitral tribunal to ­confirm that the award is final and enforceable (Article 606 (6) CCP).

Between the parties, the award has the effect of a legally binding and final judgment (Article 607 CCP). In general, the finality and enforceability of an award does not differ from that of a binding judgment of an Austrian court.

Termination of proceedings (Article 608 CCP)
Under Austrian law, arbitration proceedings may terminate either as a result of settlement, a final award on the merits, or by an order of the arbitral tribunal in case:

• the claimant fails to file a Statement of Claims in accordance with the provisions in the Austrian Arbitration Act;
• the claimant withdraws his claim, unless the respondent objects thereto and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final award;
• the parties agree on the termination; or
• the proceedings’ continuation is impossible (e.g. the parties fail to pursue the proceedings any further).

The termination of the proceedings terminates the mandate of the arbitral tribunal as well (Article 608 (3) CCP).

Costs (Article 609 CCP)
It is at the discretion of the arbitrators to decide on the obligation to pay the costs of the arbitration and the amount of the costs to be reimbursed between the parties. It is, however, common practice for the losing party to pay the total amount of the arbitrators’ fees and of the costs of the ­proceedings, including the other party’s reasonable costs of legal representation (i.e. costs follow the event). The decision on the obligation for reimbursement of costs and the determination of the amount of costs shall form part of the arbitral award (Article 609 (4) CCP) or be the subject of a separate award (Article 609 (5) CCP).

Correction and interpretation of the award (Article 610 CCP)
The arbitrators may correct clerical mistakes, typing errors and mathematical errors, either on their own initiative or at the request of any of the parties, within four weeks of receipt of the award. Furthermore, parties can request interpretation of the award by the arbitrators within four weeks of receipt of the award or they can request the issue of an additional award concerning asserted claims not yet decided by the award (Article 610 (1) CCP). The interpretation or corrections are considered to be part of the arbitral award itself (Article 610 (5) CCP). The provisions of the Austrian Arbitration Act generally follow those of Article 33 of the UNCITRAL Model law; exceptions include the fact that the arbitral tribunal 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 that no provision is made for allowing an extension of this time.

The recourse against an arbitral award (including recourse against awards concerning the jurisdiction of the tribunal) may only be made in an application to set aside the award. This procedure is set out in the Seventh Chapter of the new law (Articles 611–613) following Article 34 of the UNCITRAL Model Law.

An award shall be set aside:

• if a valid arbitration agreement does not exist; if the agreement has become invalid before making the award; if the agreement has ceased to have effect for the particular case; if the tribunal denied its jurisdiction despite the existence of a valid arbitration agreement; or if a party was unable to conclude the arbitration agreement because of its status/lack of capacity;
• if a party was not given proper notice of the appointment of arbitrators or of the proceedings or if it was otherwise unable to present its case;
• if the tribunal dealt with a dispute not covered by the arbitration agreement or if it contained decisions concerning matters beyond the subject covered by the agreement; if severance is possible, only the part of the award going beyond the issue shall be set aside;
• if the tribunal was not constituted or composed in accordance with contractual or statutory provisions;
• if the proceedings were conducted in a way that violates Austrian public policy or if the award itself violates public policy;
• if the matter in dispute is not arbitrable under domestic law; or
• if the conditions are present whereby a request may be made for a court judgment to be set aside and the case reopened by means of a claim of revision in accordance with Article 530 Para. 1 lit 1 to 5 CCP.

The application to set aside the award shall be filed within three months of receipt of the arbitral or additional award (Article 611 (4) CCP). However, the setting aside of the award does not automatically invalidate the underlying arbitration agreement. If an arbitral award concerning the same subject matter has been set aside twice and is likely to be set aside again, the court may declare the arbitration agreement invalid in relation to this subject matter upon the request of one of the parties.

A request to determine the existence or non-existence of an award is possible if the applicant shows that he has a legitimate legal interest in such a declaration (Article 612 CCP).

Arbitral awards which violate public policy or concern matters that are not arbitrable under Austrian law do not have any effect in other proceedings. Therefore, Courts or other authorities are not bound by such awards even if they have not been vacated (Article 613 CCP).

It should be noted that, in general, the Austrian courts are very restrictive in setting aside arbitral awards.

Austria is a signatory State to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Recognition and enforcement of foreign arbitral awards are governed by the provisions of the Austrian Enforcement Act (EA), “Exekutionsordnung – EO”, to the extent not determined by international law or legal acts of the European Union. The formal requirements of the arbitration agreement are also met, if the (foreign) agreement complies with the formalities of Article 583 CCP as well as with the formalities of the law applicable to the arbitration agreement.

Article 614 (2) CCP goes a step further than Article 35 (2) of the UNCITRAL Model Law and Article IV (1) (b) of the New York Convention: it provides that the original agreement or a certified copy of the agreement shall only be necessary if requested by the court.

The grounds for refusing the enforcement of an award, as laid down in Article 36 of the UNCITRAL Model Law, have not been specifically included in the provisions of the new Austrian Arbitration Act.

To date, enforcement of foreign arbitral awards in Austria has not presented a problem.

Jurisdiction (Article 615 CCP)
Article 615 CCP establishes regional courts (“Landesgericht”) as the general competent courts for judicial tasks in relation to arbitration matters. If the seat of the arbitral tribunal has not been determined, if the seat is outside Austria or in case of jurisdiction in accordance with Article 612, the competent court is Vienna Commercial Court (“Handelsgericht Wien”).

Court proceedings (Article 616 CCP)
Generally, only court proceedings concerning the Third Chapter of the Austrian Arbitration Act (Articles 586–591 CCP) – relating to the formation of the arbitral tribunal – are governed by the general provisions of the Act on non-litigious matters (“Außerstreitgesetz”). Other court proceedings in connection with arbitration, such as proceedings regarding an application to set aside an award and regarding the application for determination of the existence or non-existence of an arbitral award, are governed by the CCP (Article 616 (1) CCP).

On the request of any party, the public shall be excluded from court proceedings regarding arbitration matters (Article 616 (2) CCP).

Consumers (Article 617 CCP)
Article 617 CCP stipulates special provisions for arbitration matters between an entrepreneur (“Unternehmer”) and a consumer. A consumer is a person for whom the transaction is not part of his business. Unlike the UNCITRAL Model Law, Austrian law offers protection for consumers who are involved in arbitration. Therefore, an arbitration agreement between an entrepreneur and a consumer can only be effectively concluded after the dispute has arisen.

The agreement must be included in a document directly signed by the consumer (Article 617 (2) CCP). Furthermore, a written legal instruction pointing out the differences between arbitration and State Court litigation shall be issued to the consumer before the conclusion of the arbitration agreement (Article 617 (3) CCP). Geographical proximity between the seat of arbitration and the consumer is another requirement according to Article 617 CCP. In addition to the general grounds for setting aside awards, the provision in connection with consumers stipulates further grounds such as violation of international mandatory provisions and grounds for reopening the proceedings (Article 617 (6) CCP).

Matters related to employment law (Article 618 CCP)
Article 618 CCP is not based on the UNCITRAL Model Law. The protection concerning consumers granted under Articles 617 (2)–(7) is extended to certain employment matters pursuant to Section 50 (1) Act on the Procedure before the Labour and Social Court (Arbeits- und Sozialgerichtsgesetz – ASGG).

By substantially amending and modernising the law on arbitration, Austria will be able to remain a significant arbitration centre benefiting from its privileged situation in the very heart of Europe and its long tradition as an arbitration-friendly venue.

CMS Reich-Rohrwig Hainz Rechtsanwälte GmbH
Ebendorferstrasse 3
1010 Vienna, Austria


Daniela Karollus-Bruner
T +43 1 404 43-255
F +43 1 404 43-9255
E daniela.karollus-bruner@cms-rrh.com


Maria Theresa Trofaier
T +43 1 404 43-255
F +43 1 404 43-9255
E maria-theresa.trofaier@cms-rrh.com