III. The Arbitration Tribunal

3.1    Constitution of the Arbitral Tribunal

3.1.1    Number of Arbitrators

The parties to an arbitration agreement are in general free to determine the number of arbitrators. However, Austrian law does not allow for an even number of arbitrators. Where the parties have agreed on an even number of arbitrators, the arbitrators appointed by the parties have to appoint another arbitrator to act as the presiding arbitrator of the tribunal. This provision was enacted to ensure that the effectiveness of the arbitration is not hampered in cases where the arbitrators cannot reach an unanimous decision. Absent an agreement of the parties as to the number of arbitrators, Austrian law stipulates that the tribunal shall consist of three arbitrators.

3.1.2    Method for Selection

Further, the parties are free to designate the method for the selection of the arbitrators. Therefore, it is possible to provide for a particular appointment by reference to arbitration rules or by stipulating a procedure in the arbitration agreement. Such an agreement as to the appointment procedure is only limited by the mandatory requirements for minimum qualifications (see 3.1.4 below) of the arbitrators, and procedural fairness.

3.1.3    Default Procedure under Austrian Law

Where the parties have not agreed on such a procedure, or the chosen method for selecting an arbitrator(s) fails, Austrian law provides for a default procedure for the appointment of an arbitrator(s):

  • Where the parties have agreed on a sole arbitrator but not on the appointment procedure, the parties must jointly appoint such an arbitrator. If the parties cannot reach such an agreement within four weeks upon receipt of a written request to do so, the sole arbitrator will be appointed by the state court upon request of one of the parties; and
  • In case the parties have agreed on an uneven number of arbitrators, each party shall appoint an equal number of arbitrators and the party-appointed arbitrators shall appoint the presiding arbitrator. If a party does not nominate its arbitrator(s) or the party-appointed arbitrators cannot agree on a presiding arbitrator within four weeks upon receipt of a written request to do so, the arbitrator(s) shall be appointed by the state court.

The Austrian Code of Civil Procedure contains a special provision for a default appointment procedure in multiparty proceedings. Where several parties (on either the claimant’s or respondent’s side) jointly appoint an arbitrator, they have to do so within a period of four weeks. If no appointment is made within this time, any party (i.e. any of the defaulting parties as well as any of the opposing parties) may request the state court to render a substitute appointment. It should be noted that this provision provides only for the substitute appointment of the defaulting side’s arbitrator. The other side does not lose its right to appoint an arbitrator.
In most cases, the state court competent for the substitute appointment is the Austrian Supreme Court.

If the parties commence arbitatration under the auspices of an institution, the respective rules (such as the Vienna Rules) provide for a specific appointment procedure that does not involve state courts. Generally, the board of the institution will act as the appointing authority in case of default.

3.1.4    Personal Qualifications to Act as an Arbitrator

Austrian law does not contain any special pre-requisites on the qualification of arbitrators. Therefore, any natural person who has full legal capacity may be appointed as an arbitrator. There are no further requirements to act as an arbitrator. Specifically, Austrian law does not require any particular education or accreditation. However, active Austrian judges are prohibited from accepting appointments as arbitrators.
The parties may, however, require the arbitrator to have certain skills or qualifications, for example particular experience in a given field or command of a certain language.

3.1.5    Independence and Impartiality of Arbitrators

Austrian law enshrines the principle that an arbitrator has not only to be impartial and independent, but must also be seen to act impartially and independently from an objective point of view. Hence, any potential arbitrator must disclose any circumstances likely to give rise to doubts as to his or her impartiality or independence, or if he or she does not possess the qualifications agreed upon by the parties. The duty to disclose is a continued obligation. Therefore, the arbitrator has a duty to inform the parties without undue delay of any relevant circumstances he or she becomes aware of during the entire arbitration proceedings.

3.2    Challenge of an Arbitrator

3.2.1    Grounds for Challenge

In line with international standards, arbitrators may be challenged if there are justifiable doubts as to the arbitrator’s impartiality and/or independence. A challenge of an arbitrator can only be successful if, on the basis of an objective analysis, i.e. from the perspective of a reasonable third person, circumstances exist that can be perceived to give justifiable doubts as to the arbitrator’s impartiality and/or independence. Moreover, an arbitrator may be challenged if he or she lacks the skills and qualifications agreed upon by the parties.

3.2.2    Challenge Procedure

Under Austrian law, the challenge procedure consists of two tiers. In the first tier, the parties are free to agree on the challenge procedure. In the absence of such an agreement between the parties, the default rule is that the arbitral tribunal itself shall decide on a challenge (such decision is made by all members of the tribunal, including the challenged arbitrator). Institutional rules might provide for a different procedure, such as the Vienna Rules, where the board of the institution is competent to decide upon such a challenge. If the challenging party were not successful in the first tier, it may proceed to the second tier and request the courts of law (usually, again, the Austrian Supreme Court) to decide on the challenge. The second tier is binding. Hence, the parties cannot ignore the court’s decision to reject a challenge.

3.3    Replacement of an Arbitrator

In case of a successful challenge or an early termination of the mandate by the arbitrator, a substitute arbitrator is to be appointed. If the parties have not agreed otherwise, the appointment of the substitute arbitrator follows the same procedure as that followed for the original arbitrator. The arbitral tribunal can – but is not obliged to – continue with the proceedings without repetition of any procedural steps that have already been taken.

3.4    Relationship between the Parties and the Arbitrator

Austrian law does not contain any specific provisions as to the relationship between the arbitrators and the parties. The contract between an arbitrator and the parties is a separate agreement distinct from the parties’ arbitration agreement. The conclusion of this agreement usually coincides with the acceptance of the mandate by the arbitrator. The foremost duty of the arbitrator under this contract is to resolve the parties’ dispute by rendering an award. This is in line with the Austrian Supreme Court’s qualification of the agreement as a contract for works and services containing elements of an agency contract.

In return for the performance of the mandate, the arbitrator is entitled to financial remuneration. The amount of the remuneration is usually stipulated in the arbitrator’s contract, or by reference to the cost scales of an institution. In the absence of such an agreement, arbitrators are entitled to “reasonable remuneration” under Austrian law.

3.5    Jurisdiction

3.5.1    Competence-Competence

An arbitral tribunal with the seat in Austria has the power to rule on its own jurisdiction. However, the arbitral tribunal’s award on its jurisdiction is subject to review by the courts of law (again, in most cases the Austrian Supreme Court is court of first and final instance). Hence, the tribunal only has preliminary competence-competence. Court review cannot be excluded by the parties’ agreement.
If an award granting jurisdiction is challenged before the state courts, the tribunal may nevertheless continue the proceedings and can even issue the final award, despite the fact that its jurisdiction is not finally determined.

3.5.2    Timely Objection against Jurisdiction

Under Austrian law, the parties to arbitration proceedings are under a duty to raise any objection against the arbitral tribunal’s jurisdiction and against an excess of the scope of its authority without undue delay. The objection against the jurisdiction must be made no later than at the time of the first submission on the subject matter of the dispute. Participating in the constitution of the arbitral tribunal does, however, not have preclusive effects. A plea that the matter exceeds the tribunal’s authority must be raised as soon as such matter is made the subject of a substantive motion or petition. In case a party does not raise an objection, or does so belatedly, the lack of jurisdiction is cured and that party is deemed to have waived its right to raise any such objection.