VII. Setting Aside an Award

Judicial control is confined to a minimum when it comes to challenging an arbitral award before the Austrian courts. These narrow grounds are set out in Section 611 Austrian Code of Civil Procedure (ACCP) and only apply to awards rendered in proceedings having their seat of arbitration in Austria. The Austrian Supreme Court is the court of first and final instance – except in consumer and labour law arbitrations – in which to challenge an arbitral award (see infra 7.3).

7.1 Structure of Section 611 ACCP

Section 611 ACCP comprises an exhaustive list of grounds for setting aside an arbitral award. An important distinction is made between those grounds which are only considered upon application by a party – Section 611 para 2, nos 1 to 6 ACCP – and those to be considered ex officio by the state court – Section 611 para 2 nos 7 and 8 ACCP. The parties cannot waive in advance their right to challenge the arbitral award or waive any grounds enumerated in Section 611 ACCP.

7.2 Specific Grounds

Due to the following grounds, each party may challenge an award rendered in Austria:

  • A valid arbitration agreement does not exist, or the arbitral tribunal denies its jurisdiction despite the existence of a valid arbitration agreement, or a party was not capable of concluding a valid arbitration agreement under the law which was personally relevant to that party;
  • A party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or for another reason was unable to adequately defend itself or challenge the claims of the opposing party;
  • The award deals with a dispute not falling within the terms of the arbitration agreement, or contains decisions on matters beyond the scope of the arbitration agreement or beyond the claims of the parties; however, if the defect concerns only a separable part of the award, then only that part of the award shall be set aside;
  • The formation or composition of the arbitral tribunal is not in accordance with a provision of Section 611 ACCP or with an admissible agreement of the parties;
  • The arbitral procedure was not carried out in accordance with the basic elements of the Austrian legal system (procedural ordre public);
  • The requirements have been met according to which a judgment of a court can be appealed under Section 530 para 1 nos 1 to 5 ACCP via an application for the proceedings to be reopened;
  • The subject matter of the dispute is not arbitrable under Austrian law; and
  • The award is in conflict with basic elements of the Austrian legal system (material ordre public).

An award may not be challenged before the Austrian courts on any other grounds (see infra 7.3). The setting aside of an award has no impact on the effectiveness of the underlying arbitration agreement. If, however, an award on the same subject matter has already been set aside twice in a final and binding manner, and if a further, third award on the same subject matter is to be set aside for a third time, then the court, upon the application of a party, shall declare the arbitration agreement invalid with respect to that subject matter.

Where an award has been set aside, its legal existence no longer subsists – it no longer has the effect of a final and binding court judgment between the parties and is no longer enforceable.

7.3 The Austrian Supreme Court as Competent Authority

On 1 January 2014, a government bill introducing changes to the Austrian Arbitration law has came into force. In particular, the Austrian Supreme Court is now both the first and last instance to decide on the challenge of an arbitral award for setting aside claims brought before the state courts on or after 1 January 2014. Instead of thre previous regime of three procedural levels (court of first instance, court of appeal, Supreme Court), the decision about a challenge to an arbitral award is now made by just one judicial instance: the Austrian Supreme Court. The former provisions had been considered as a major disadvantage for promoting Austria as place of arbitration. However, the system of three procedural levels remain in force for awards in consumer and labour law disputes.

Within the Austrian Supreme Court, a separate arbitration senate (known as the “Senate 18”) has been constituted. It deals solely with setting aside proceedings.