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Austrian Supreme Court as competent body in setting aside proceedings

On 1 January 2014, the renewed Austrian Arbitration Law has come into force (SchiedsRÄG 2013) introducing major changes. The most significant and important amendment is the long anticipated shortening of the procedural levels for setting aside an arbitral award.

On 1 January 2014, the renewed Austrian Arbitration Law has come into force (SchiedsRÄG 2013) introducing major changes. The most significant and important amendment is the long anticipated shortening of the procedural levels for setting aside an arbitral award. As of the beginning of this year, the Austrian Supreme Court is the first and – at the same time – the last judicial instance to decide on claims challenging an arbitral award.  

History and Background:

Prior to SchiedsRÄG 2013, Sec. 615 and 616 of the Austrian Code for Civil Procedure (ACCP) provided for three judicial instances for setting aside procedures: the Court of First Instance, the Court of Appeal and the Supreme Court. Practitioners have always considered this as a major disadvantage for promoting Austria as a place for arbitration as one of the most common reasons for choosing arbitration is the parties´ wish or need for a swift and final resolution of the dispute. The prospect of having to pass through three further instances should one of the parties to the proceedings challenge the award was frequently deterring parties from choosing Austria as the venue for their arbitration; all the more as a lot of other jurisdictions –  above all the other German-speaking countries as major competitors – provide for significantly shorter setting-aside procedures. Switzerland, for example, which is highly popular with parties opting for arbitration and very active in this field, has for the longest time vested the exclusive competence to decide on claims challenging an arbitral award with the Swiss Supreme Court.
Following extensive discussions among Austrian arbitration experts and practitioners which have lasted for years, and based on the work of several renowned practitioners and academics, the shortening of the procedural stages for setting-aside procedures has finally been implemented.

The New Regulation:

Abolishing the three procedural stages previously established, Sec 615 ACCP now confers the competence to decide on the setting aside of an arbitral award on the Supreme Court as first and at the same time last instance. Additionally, the provision assigns exclusive jurisdiction to declare the existence or nonexistence of an arbitral award on the Supreme Court, as well as the authority to decide on a dispute regarding the formation of an arbitral tribunal. Sec. 616 Para 1 ACCP provides that the rules for proceedings before the Courts of First Instance shall apply to the proceedings before the Supreme Court, which means that the Supreme Court – if invoked in any of the arbitration-related matters enlisted above – has the same options and obligations as a court of first instance, for example in the context of taking evidence. This is positive since the reform of the Austrian Arbitration Law was not intended to cut back or reduce the parties´ legal protection but rather to grant full protection in the speediest and most efficient way. This aim has now been achieved.
The new regulation provides for a concentration of all arbitration-related matters in the experienced hands of the Austrian Supreme Court and at the same time devotes due attention to the parties´ interest in full legal protection. This solution can be considered ideal.
Meanwhile, a special panel to deal with those matters outlined in Sec. 615 ACCP has been constituted at the Austrian Supreme Court. This panel consists of a president, four rapporteurs and one additional member, designated for one year. The establishment of a special panel means that the decision-making in all arbitration-related matters in Austria lies with selected members of the Supreme Court, who will certainly build up further expertise. Thus, not only does the new regulation give rise to the expectation of speedy and efficient proceedings, the implementation of a special panel exclusively authorized to decide on arbitration-related matters will also further enhance the quality of the respective decisions.

Conclusion:

The new provisions regulating setting aside procedures for arbitral awards in Austria are a major success and contribution to Austria´s competitiveness as a venue for international arbitration proceedings. Parties now no longer have to fear lengthy and costly setting-aside procedures, but are granted an efficient, speedy one-stop shop procedure, which at the same time grants full legal protection.