The Austrian Constitution establishes Austria as a representative, or indirect, democracy with a two chamber parliamentary system, in which the separation of powers principle is recognized. Most legislative power lies with the Nationalrat (National Assembly), which is elected by general federal elections every fourth year. On the other hand the members of the second chamber, the Bundesrat (Federal Assembly), are nominated by the diets of the nine autonomous Provinces (Länder). The Federal Assembly represents the interests of the Federal Provinces.
Austria's formal head of state is the "Bundespraesident" (Federal President), who is directly elected by the populace. The country's government is headed by the "Bundeskanzler" (Federal Chancellor), in whom most political power is vested. Federal legislation is first signed by the Federal President and then countersigned by the Federal Chancellor.
Constitutional law is given a higher status by virtue of the fact that it is harder to amend. An amendment to a national constitutional provision requires a two thirds majority in parliament, with at least half of the members present and voting. The provision thereby adopted is then known as a "Constitutional Law" or "Constitutional Regulation". By contrast, to pass a valid motion in parliament relating to a law that is not constitutional in nature, a simple majority of votes is required, with one third of parliamentary members present and voting.
The highest ranking laws in the Austrian legal hierarchy are outlined in the "Fundamental Principles" of the Austrian national constitution. The Fundamental Principles are the following: the democratic principle; the principle of the separation of powers; the principle of the rule of law; the republican principle; and the liberal principle. As a whole, these leading principles form the basic constitutional legal system. Particular constitutional weight is thus accorded to these principles, so that any "complete alteration" to the national constitution can only take place if first agreed by the Austrian people in a referendum. A "complete alteration" to the constitution takes place when the constitution is so radically amended that either one of the leading principles needs to be removed, or the relationship of the principles to each other becomes essentially altered.
Austria's entry into the EU on January 1 1995 required a "complete alteration" to the national constitution. Austrian constitutional law was thus joined with EU law as the most fundamental source of law (Dual-constitution). The general view is that EU law now takes precedence over domestic Austrian law and the national constitution, but is subordinate to the fundamental principles of the constitution.
Corresponding to national constitutional law and national law is regional constitutional law and regional laws relating to each of the nine Austrian federal regions. Regional constitutional law is subordinate to national constitutional law and must not conflict with national constitutional law. However, as a matter of convention, national laws that are not constitutional in nature take no priority over regional laws.
Private law is divided in to general private law applicable to all persons, and specialised forms of civil law, which is applicable only to certain categories, such as commercial law for businessmen or employment law for employers and employees. The major part of what is considered general private law is regulated in a comprehensive private law code called the Allgemeine Buergerliche Gesetzbuch / Austrian General Civil Code (ABGB). Although case law is not legally binding it does have decisive persuasive authority.
A number of fundamental principles, all of which originate from Roman law, form the basis of Austrian Private law. The principle of Privatautonomie (individual freedom) is the freedom to pursue legal relations in the form and manner determined by the parties. Said principle is expressed more precisely in the principle of contractual and testamentary freedom (Vertragsfreiheit) which includes the freedom (i) over the form of the contract, (ii) the content of the contract, and (iii) to dissolve a contract. A further fundamental principle is the principle of consensus (Konsensprinzip), which provides that any change in the legal position can only be achieved by consent. Any contract infringing good mores will be deemed void according to Section 879 ABGB. Good faith is protected by Section 367 allowing those in good faith to acquire from bad faith or non-entitled possessors.
Legal Capacity - Any natural or legal person is able to bear legal rights and obligations. Different forms of legal persons are recognized, such as a corporation or a trust or certain legal persons, under public law. As far as natural persons are concerned, contractual capacity is limited according to age and certain other individual circumstances.
Contracts - To establish a valid and binding contract between parties, the following prerequisites must be satisfied: contractual capacity, consensus of the parties, intention, possible and acceptable content, and if required the observation of formal requirements. A defect in any one of these elements will either render the contract void or give rise to a right to rescind the contract. In case of a party's insufficient performance the non-breaching party's remedies vary from price reduction to - e.g. if the defect cannot be corrected and essential to the contract - collection of the goods and rescission.
Property Law – In Article 285 the ABGB (Austrian General Civil Code) gives a very broad definition of property: “everything which differs from the person and serves for the use of men is called property in the legal sense”. This definition includes not only corporal things. The ABGB subdivides the law of property into rights in rem which include possession, ownership, pledge servitudes and inheritance and rights in personam i.e. obligatory rights, such a contracts, torts, and unjust enrichment. Property law in the narrow sense refers to rights in rem.
Ownership – Is the most comprehensive right in rem. It is defined as the right to dispose arbitrarily of the substance and fruits of property and to exclude everyone else from it (art. 354 ABGB), subject to limitation imposed by statute or rights of third parties (art. 364 (1) ABGB). All other rights in rem are viewed as limitations on ownership. When they fall away, ownership expands to its previous scope. The law distinguishes original and derivative modes of acquisition of ownership.
Torts - The ABGB provides a uniform system applying to both contractual and tortious damages. According to Sections 1293 et seq. ABGB that person that caused damages to another person or property shall be liable to compensate this damage to the extent of restoring the previous position of the other party if: (i) the damages would not have occurred but for the party's conduct or omission; (ii) that conduct or omission was unlawful and fault on the part of the person causing the damages is established.
Business Associations - A general division between the types of business associations that can be drawn are partnerships and corporations. The main distinction between the two types is that the latter confers only limited liability on its members. Austrian law knows two types of corporations: (i) Aktiengesellschaft" (joint stock corporation) and (ii) Gesellschaft mit beschränkter Haftung (limited liability company). An Aktiengesellschaft can be a private or a public company. It is managed by a management board which is appointed and supervised by a supervisory board. The corporate form of a limited liability company is simpler and more widely used. Only large limited liability companies require a supervisory board. All corporations must be registered in the Commercial Register, which provides publicly available information about every corporation. Foreign corporations may establish branch offices in Austria, which must also be registered in the Commercial Register.
- Principle of Party Control – in civil procedure, the parties are largely in control of the lawsuit.
- Principle of Limited Investigate Power – it is up to the parties to prove their respective claims and defenses, and they are under a duty to make truthful and complete statements
- Principle of ex-officio Proceedings – once civil proceedings have been initiated by the plaintiff, the court will ex-officio take the steps necessary to move the case along
Principles Governing the Trial
- Principle of Orality – only what has been brought forward in an oral hearing may provide the foundation of adjudication in a civil trial
- Principle of Immediacy – the case may be decided only by judges who have participated in the entire trial, and all evidence must be produced in the oral trial
- Principle of Publicity – justice is a principle to be dispensed in open court
- Principle of Procedural Concentration or Efficiency – Article 6 (1) ECHR guarantees a speedy trial.
- Principle of the Right to be Heard – auditor et altera parts, include service of all documents, access to the file, and to be present and participate in oral hearing.
Also exist in the Austrian law the non-contentious Procedures, this will be applies when the legislator specifically assigned a matter to this historically grown rather than systematically defined area.
The Civil Procedure Code provides for an ordinary appeal against a judgment of a trial court, and for a second appeal against the decision of an appellate court. A complaint or second complaint may lie against a court order. Other requests for relief from court decision are referred to as extraordinary remedies.
A timely appeal suspends the legal validity – "res judicata effect" - and in most instances the enforceability of the judgment. In review proceedings, no new claims and defenses or new allegations of facts and evidence may be introduced.
The ordinary recourse is the Appeal, Second Appeal and the Complaint.
The extraordinary Recourse is the Action in Annulment and action for reopening of proceedings
The company with limited liability (GmbH) is a corporation and the most popular legal form for business enterprises in Austria. A GmbH is a legal entity. The shareholders are not personally responsible for the liabilities of the company (exception: obligation to pay up their capital contributions, whereby a shareholder will be liable for the other shareholders, in case of refunding of capital contributions and in case of serious undercapitalization and insolvency).
The GmbH is governed by the Act on Companies with Limited Liability (GmbHG) of 1906 (with numerous amendments since then). It is permissible to establish GmbHs for almost all business purposes.
The GmbH is an incorporated enterprise; the shareholders' liability is restricted to the value of the corporation's assets. One or more shareholders set up a GmbH. Individuals, corporations and partnerships,
Austrian or foreign citizens and foreign corporations can be founders and shareholders. The minimum share capital of a GmbH amounts to EUR 35.000, -. At least half of the minimum share capital has to be contributed in cash.
As a legal entity, the company comes into existence upon its registration in the commercial register of the competent regional court.
The application for registration must bear the notarized signatures of all managing directors. The following information must be provided:
- company name
- legal form
- registered office
- business address
- optional: abbreviation of the line of business (not more than 40 characters)
- amount of share capital
- balance sheet date for financial statements
- signing power of managing directors
- date of signing of articles of association (declaration on the establishment of a company)
- names, dates of birth and addresses of the managing directors and form of signing power (sole or collective) ;
- names, dates of birth and registry numbers and addresses of shareholders and amount of capital contributions subscribed and paid up
- if applicable: names, dates of birth and addresses of holders of commercial power of representation and form of signing power (sole or collective)
- if applicable: names, dates of birth and addresses of the members of the supervisory board and indication of chairman and vice-chairman
- if applicable: limited term of the company
- if applicable: branch offices in Austria, indicating their business address
- if applicable: any trade licenses granted previously.
Also a lot of other documents must be attached to the application for registration, like: articles of association (in case of a one-man company: declaration on the establishment of the company; notarized shareholders’ resolution on the appointment of the managing directors (unless included in the articles of association, a shareholders’ resolution is required; it may be included in the same document as the articles of association to save costs or – if requested – must be included in notarized minutes or a written resolution by circulation bearing the notarized signatures of all shareholders) etc.
At least two founding shareholders must sign the articles of association, the form of which must be a notarial deed. In case of formation by only a single shareholder the declaration on the formation of the company replaces the articles of association.
This declaration also requires the form of a notarial deed. The provisions on the articles of association apply per analogy to the declaration on the formation of the company; the following explanations as to the articles of association are, therefore, also applicable to the declaration on the formation of the company.
If a shareholder does not sign personally, his representative must submit a duly notarized (and in most cases, superlegalized by affixing the Apostille pursuant to the Hague Convention) special power of attorney (pertaining to this single business transaction), which will be attached to the notarial deed. The articles must state at a minimum:
- company name and registered company seat;
- objects of the enterprise;
- amount of share capital and capital contributions to be made by each share-holder;
- if the company has a supervisory board, thresholds for loans and capital expenditure requiring supervisory board approval.
The name of the company may either be derived from its objects of the enterprise or contain the name of at least one shareholder.
A GmbH may conduct any type of business except insurance, mortgage banking, equity funds, or political activities. In order to register for banking, the GmbH must obtain a banking license from the Minister of Finance.
Share Capital and Shares
The minimum share capital is € 35,000 with each share at a minimum of € 70. At least one half of the share capital must be raised in cash, whereas the remaining part may be raised in assets other than money (contribution in kind). Each shareholder has only one share and must pay up in cash at least one quarter of his share, at least € 70. The total of all cash contributions must be at least € 17,500. There are exceptions to these rules: Under certain conditions (audit of the contribution in kind or continued operation of an enterprise having existed for at least five years and having been run by the shareholders), the share capital may be raised solely in contributions other than cash.
The shareholders' liability is limited to the (total) share capital. Shares of a GmbH can only be transferred by means of a notarial deed. Shares cannot be traded on the stock exchange.
Since the transfer of the participation in a GmbH is more complicated than that of
shares in a stock company (AG), the GmbH is less suitable for widespread ownership or frequent transfer of shares. On the other hand, the articles of association of a GmbH offer more flexibility than those of a stock company.
The GmbH offers the possibility to customize the articles of association to the needs of the owner and provides the opportunity for shareholders to formulate general guidelines for management and to stipulate specific instructions for particular areas of business.
The articles of association may provide for additional contributions (“calls”) to be paid by the shareholders based on a resolution of the shareholders’ meeting.
Shares may be transferred inter vivos or mortis causa. An inter vivos transfer requires the form of a notarial deed. Since October 1, 2000 this transfer is no longer subject to transfer taxes.
Shareholders
Any physical or legal entity may be a shareholder. There is no citizenship or residence requirement. The company may also be formed by one person only.
They may be individuals or legal entities, resident or non-resident, Austrian or foreign citizens.
The formation of a GmbH starts with the drafting of a deed, in which the founders
(single founder) issue(s) a declaration of formation undertake the obligation to pay in the share capitaland lay down the articles of association of the GmbH. The articles need to stipulate the company's business name, the place of business, the type of business activity, amount of the nominal capital etc.
The articles of incorporation (together with the by-laws) must be established by notarial deed. The articles also frequently contain provisions as to the number of managing directors. They must be individuals but need not be citizens or residents of Austria.
A GmbH comes into legal existence when it is registered with the Commercial Register. Between the date of signing of the articles and the registration of the
GmbH, the company is referred to as a company prior to registration.
Such company takes the legal form of a Civil Law Association or a General Partnership, which is entitled to act via its representatives. Any person acting in the name of the company at this stage therefore becomes personally liable.
The managing directors manage and represent the GmbH.
Representation includes responsibility in- and outside of court. In case the articles of incorporation do not stipulate specific rules, the principle of collective management and representation applies. Therefore, all managing directors must act jointly. Furthermore, the power of representation is not restrict able vis-à-vis third parties. The management authority can be restricted only internally and the shareholders can exercise their right to fix guidelines and instructions regarding any particular business etc.
A supervisory boardis mandatory i.e. if the amount of the share capital exceeds EUR 70.000, -- and the GmbH has more than 50 shareholders, or if the GmbH
has more than 300 employees (on average per year). The board's purpose is to control and supervise the board of management.
A general meeting of shareholders must be held at least once a year (ordinary meeting) and, in addition to the cases expressly referred to in the law or the articles, it shall be called (by the managing directors) whenever required in the interest of the company. Furthermore, a minority of 10 % of the share capital is entitled to call a general meeting. In particular, a general meeting is compulsory, if one half of the share capital has been lost.
The meeting shall be held at the registered domicile of the company unless the articles determine otherwise. Decisions shall be made at the shareholders' meeting, unless all shareholders have given their written consent in the articles of association that decisions can also be made in writing. In this case, circular resolutions are possible.
The shareholders decide on e.g. appointment of managing directors, the auditor,
approval of the annual financial statements, the distribution of net profits and the
release of the managing directors and members of the supervisory board (if any). The resolutions with respect to the annual financial statements shall be adopted within the first eight months of each financial year.
A GmbH is considered insolvent if and when it cannot pay its debts at maturity, or as soon as the liabilities exceed the fair market value of the assets. In both cases, the managers are required, immediately (within 60 days at a maximum), to apply to the court for liquidation proceedings or for a settlement with creditors. Failure to initiate the appropriate proceedings can involve the managers in personal liability.
Any creditor of the company may also file a petition of bankruptcy.
Liquidation procedures are initiated by a 75 % majority of the voting stock. The general meeting has to appoint a liquidator, usually one of the (former) managers who must file a relevant notification with the Commercial Register. The registration has to be announced in the official gazette Wiener Zeitung; it must be accompanied by a request to all creditors to submit their claims. After settlement of all the creditors' claims, the Stock corporation remaining assets are distributed to the shareholders, but not earlier than three months after the public notification to the creditors. After the company has been finally wound up, the Commercial Court has to be notified about the termination. Finally, the GmbH is erased from the Commercial Register.
The stock corporation (AG) is governed by the Stock Corporation Act of 1965 (AktG).The AG is a legal entity and is like the GmbH a corporation.
The most important advantage of the AG is the flexibility in transferring the shares, thereby enabling the AG to raise funds on capital markets. However, in contrast to the GmbH, a supervisory board is compulsory for the AG and shareholders' assemblies are subject to stricter formal requirements.
Shareholders are not personally liable for the debts of the company. The minimum stock capital is € 70,000.
A company may issue par-value sharesor non-par-value shares. Normally, bearer certificates are issued; registered shares are required as long as the shares are not fully paid in. In principle, one common share entitles its holder to one vote in the general meeting.
Preferred shares without voting rights may be issued up to one third of the common stock. Shares with multiple voting rights are not permitted.
Legislation governing AGs is designed to ensure that the share capital is paid in and maintained (even more than for GmbHs). In particular, it is not permitted for a company to repay share capital to the shareholders, irrespective of whether such payment would reduce the AG's net assets to a level below its stated share capital.
An AG is composed of a board of management a supervisory board and the shareholders’ meeting. The board of management is solely responsible for the management of the company (no binding instructions by other corporate bodies) and represents the company in all legal matters. Its members are appointed by the supervisory board. The managing directors are appointed for a maximum of five years. It is possible to appoint members of the board of management also for a shorter period of time. Reappointments are permitted.
The financial statements and the report of the managing board need to be audited by an independent auditor and need to be submitted to the commercial register within nine months after the end of the financial year; in case of a large AG the financial statements have to be published in the official Wiener Zeitung.
The board of managers, the supervisory board, the auditor and the general meeting are mandatory in Austria. Additional boards may be appointed. The members of the board of managementare the representatives of the corporation and are responsible for its management. They have legal power for representation, which cannot be limited towards third parties. Unless otherwise
specified in the articles, all members of the board of management must act jointly in both managing the corporation and representing the corporation vis-à-vis third parties.
The management's power of representation may only be restricted internally (e.g. for specific transactions, which require approval of the supervisory board). The board of managers periodically reports to the supervisory board and submits the annual financial statements for the supervisory board's approval. The board members are appointed by the supervisory board for a maximum term of five years and can only be dismissed during this time for good reason.
The statutory supervisory boardconsists of at least three members who are elected by the shareholders' meeting. According to a specific Labour Act, member(s) of the labour council are delegated to the supervisory board as Stock corporation representatives of the employees. The main functions of the supervisory board are to appoint and remove the members of the management board, to give pre-approval (for specific transactions of major interest to the company), to supervise and, as appropriate, give advice to the management board, to safeguard the shareholders' interest and to give the corporation's employees some participation in management matters.
The supervisory board must approve the audited annual financial statements unless the supervisory board and the board of managers decide to submit the statements to the shareholders' meeting. The supervisory board checks the management report and the distribution of profits and must give a report to the shareholders' meeting.
A general meeting of the shareholders is to be held annually within eight months after the balance sheet date of the previous year. In the ordinary annual meeting the shareholders decide on the distribution of profits, the formal discharge of the supervisory board and board of management from legal responsibility and the appointment of the auditors. For fundamental decisions, e.g. increases or
reductions of capital or amendments of the articles of incorporation, mergers, profit and loss pooling agreements, liquidation, etc., the approval of 75 % of the votes is required.
As a rule, the board of management calls the shareholders' meeting. In addition, the supervisory board or shareholders, holding at least 5 % of the voting common stock, are entitled to call an extraordinary shareholders' meeting. The decisions of a general meeting must be certified by a notary public, in order to become legally binding.
Liquidation proceedings for an AG are, in principle, the same as for a GmbH, except that the request to all creditors to submit their claims must be published three times and that the liquidation proceeds must not be distributed earlier than twelve months after the latest publication of such request.
This form, however, can only be established through the reincorporation of an existing company (merger, conversion of a national corporation, establishment of a holding and subsidiary SE), not by natural persons. Accordingly, this form of incorporation is not suited for a startup.
The advantage of an SE over other forms of incorporation lies in its international status. An SE can relocate its principal place of business or place of incorporation without having to liquidate and free of any other restriction. As such, management can react quickly to relevant changes in business conditions (for example, taxation) of a location within the EU.
Substantive criminal law (i.e. those provisions concerned with the crimes themselves rather than the criminal process) is the branch of public law that defines criminal acts and sets out the respective criminal penalties. Criminal law is a wide concept, and it includes as a separate sub-category, the so-called "non-criminal" penal law (concerned with administrative crimes and disciplinary penalties). Thus, within the concept of criminal law, one differentiates between judicial criminal law and administrative criminal law depending on whether the criminal law is to be enforced by the courts or by the administrative authorities. The law is, thus, determined by the relevant body. The law must, however, comply with the provisions of the constitutional laws which allocate the criminal justice to the courts.
The requirements of culpability correspond to an arbitrary (a reflex movement would for example not be seen as arbitrary), factual (it must be a standard fact), unlawful and culpable (the act must be linked to the offender; he must have some responsibility for it) behavior which can be threatened by legal sanctions. An act can only fulfill the requirements of culpability if it satisfies all the characteristics of a type of crime as provided for by the law ("no punishment without a lawful justification"). The elements of a crime (offences: tort and crime) are regulated either by the Austrian Criminal Law (StGB) or in one of the instruments of secondary legislation.
The criminal procedural provisions regulate the procedure for determining whether a suspect has committed a crime and whether, as a result, a sanction should be imposed on him. These provisions are contained in the Austrian Criminal Procedure Law (StPO) and in secondary legislation. The provisions regarding the preliminary criminal proceedings on the imposition of a remand in custody or on the carrying out of an asset seizure, house search or telephone surveillance is also regulated there.
- Principle of Accusation
- Principle of Public ex officio Prosecution
- Principles of Compulsory Prosecution
- The charge principle: every criminal procedure will be triggered and defined by the claims of a prosecutor. The prosecutors can be the public prosecutor (State Prosecutor), the subsidiary prosecutor or the private prosecutor.
- The legality principle: it is the duty of the State Prosecutor (subject to exceptions) to prosecute the offences of which he becomes aware whilst in office.
- The speech principle (the reading of statements from the preliminary proceedings by the examining magistrate or the police is only possible in limited circumstances.)
- The public principle (the public should only be excluded from a hearing on important grounds)
- The procedure must be carried out in front of a legally appointed judge.
- Participation of the public in the criminal justice (jury and juror).
- Establishment of the truth principle (the court must do everything in its power to clarify the state of affairs and should not limit itself to the examination of the claims from the state prosecutor and the defense).
- Independent Judgment Principle (the judge forms his opinion independently without outside interference)
- Principle of Independent Investigation
- Principles of Orality and Immediacy
- Principle of Free Evaluation of Evidence
- Principle of Reasonable Doubt “in dubio pro reo” and Presumption of Innocence
- Principle of Publicity
- Right to an Independent Judge
- Right to the Lawful Judge
- Principle of Lay Participation
The Fair trial principle and the principle of the presumption of innocence (the accused remains innocent until his guilt is proven) are guarantied; the accused must be acquitted if some doubts persist due to some arguments indicating that he is guilty and others indicating the opposite (Principle in dubio pro reo).
All jurisdictions in Austria proceed from the Federal Republic. Verdicts and findings are proclaimed and published in the name of the Republic. Austrian Law draws a basic distinction between two principal jurisdictions: (i) tribunals and courts concerned with public law matters, and (ii) the courts of ordinary jurisdiction.
Constitutional Court (Verfassungsgerichtshof (VfGH) - Its task is to protect the civil rights of the citizens and to ensure that legislation is in conformity with the Austrian Constitution. Citizens may apply to the Constitutional Courts if acts of a public authority directly violated any of their personal rights granted by the Constitution. The Constitutional Court also adjudicates conflicts: (i) in the legislative competences between the federation and the federal provinces; (ii) between courts of ordinary jurisdiction and administrative authorities and/or courts of public jurisdiction; (iii) between itself and the Admistrative Court (Verwaltungsgerihtshof (VwGH)).
Administrative Courts - A variety of administrative tribunal and appeals court exists to review the decisions and actions of the administrative authorities. The administrative tribunals are not strictly courts; however, proceedings before such tribunals fulfill the fair trial requirement of Article 6 of the European Convention of Human Rights (ECHR). The most important of these tribunals is the Independent Administrative Tribunal (Unabhaengiger Verwaltungssenat (UVS)). The only administrative court in Austria is the Verwaltungsgerichtshof. It reviews the decisions and the exercise of power of the entire public administration. The administrative tribunals can be subject to judicial determination.
The courts of ordinary jurisdiction deal with all matters outside the competence of the public law courts, i.e. matters of private law, criminal law, as well as aspects of competition law.
Courts of first instance - Depending on the facts of the case, such as the amount claimed in civil cases or the type of offense in criminal cases, the case falls within the jurisdiction of either a District Court (Bezirksgericht) or a Regional Court in the first instance. If the first instance court is a District Court, decisions are taken by a single judge. In civil cases also before Regional Courts, decisions are for the most part taken by a single judge. On the other hand, the composition of the Regional Court in criminal matters differs according to the nature of the proceedings and the possible penalty. It may also be constituted as a Schoeffengericht with two professional and two lay judges, or a Schwurgericht with three professional judges and a jury of eight people.
Courts of second instance - In civil matters where the case was initially brought before a District Court, an appeal must be made to a Regional Court. Where a Regional Court already decided in the first instance, decisions must be appealed before a Province Court (Oberlandesgericht). On the other hand, in criminal matters, the Province Courts are always the second instance courts.
Supreme Court - The Supreme Court (Oberster Gerichtshof (OGH)) is the highest court in civil and criminal cases. It has 6 Senates for criminal cases, 10 for civil cases and 2 additional for labour cases and social cases. The Supreme Court hears cases at last instance only. The composition of respective Senates depends on the importance of the matter brought before the Supreme Court. In criminal cases the Supreme Court will only hear appeals for nullity against a guilty verdict of a Schoeffengericht or a Schwurgericht or an appeal against the penalty.
The new austrian arbitration law (into force since 01 July 2006) is not codified in a separate act; rather, it continues to be part of the Code on Civil Procedure. Sections 577 onwards will deal with issues related to arbitration proceedings.
Regarding arbitration agreements, the law will apply if the arbitration clause is agreed on or after that date.
The new law does not mirror every single aspect of the United Nations Commission on International Trade Law (UNCITRAL) Model Law. However, the main features of the UNCITRAL Model Law are introduced by the new law, henceforth Austria will rightly call itself a model law country.
Unlike the UNCITRAL Model Law, the new Austrian law will not distinguish between domestic and international arbitrations. The same provisions will apply to both cases. The new law also makes no distinction between commercial and non-commercial arbitration proceedings. As a result, specific rules apply to consumers and employment-related matters. Rules on these issues are not very common in Austria, and the new law contains a number of provisions which make it unlikely that this situation will change in the future (see Sections 617 and following).
The structure of the new law closely follows the UNCITRAL Model Law. The first chapter deals with general issues such as the scope of application of the law and the service of written communications in arbitral proceedings, and the second chapter with the arbitration agreement (definition, arbitrability and form). The third chapter deals with the installation of the arbitral tribunal and the challenging of arbitrators, and the fourth with the tribunal's jurisdiction (including the power to issue interim measures). The conduct of the arbitration proceedings and the making of the award are governed by the fifth and sixth chapters. The seventh chapter deals with the possibility of setting aside an award under Austrian law, and the eighth chapter discusses the recognition and enforcement of foreign awards. The ninth chapter is about state court proceedings relating to arbitration. The tenth chapter contains special provisions dealing with consumers and employment law matters.
Regarding the applicability of the Austrian arbitration law, Section 577 distinguishes between three groups of provisions.
Most provisions of the new law apply only if the seat of the arbitral tribunal is in Austria (Section 577(1)). The term 'seat of the arbitral tribunal' does not, however, mean the place where the oral hearing is being conducted. As with the UNCITRAL Model Law's 'place of arbitration', the seat of the arbitral tribunal refers to the legal rather than the physical venue of the arbitration (Section 595).
Some provisions, all of them relating to the intervention of the courts at a time when the arbitral tribunal has to be installed and when arbitrators are challenged, also apply if the seat of the arbitration has not yet been established, provided that at least one of the parties has its domicile or ordinary residence in Austria. Under such circumstances, the Austrian courts have jurisdiction to assist with the establishment of the arbitral tribunal and may play a role where arbitrators are challenged (see Chapter 3, Sections 586 to 591).
A final group of provisions applies regardless of where the seat of the arbitral tribunal is located and regardless of whether such place has been established at all (Section 577(2)). These provisions include:
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Section 578 - extent of court intervention;
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Section 580 - receipt of written communication;
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Section 583 - formal requirements of arbitration agreement;
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Section 584 - arbitration agreement and legal action before the court;
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Section 585 - arbitration agreement and interim measures by the court;
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Sections 593(3) to (6) relating to the enforcement of interim measures issued by arbitral tribunals;
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Section 602 - court assistance;
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Section 612 - determination of the existence or non-existence of an arbitral award; and
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Section 614 - recognition and declaration of enforcement of foreign arbitral awards.
As in the UNCITRAL Model Law, under the new arbitration law the role of the courts in arbitration proceedings is very restricted. Except where specifically provided, the courts shall refrain from intervening in arbitration matters at all (Section 578). As a result, matters such as anti-suit injunctions against arbitrators or against the parties of arbitration proceedings are inadmissible under Austrian law.
The definition of an 'arbitration agreement' is modelled after Article 7(1) of the UNCITRAL Model Law. Section 581(1) of the new law states that it is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. Like the model law, the new Austrian law explicitly states that an arbitration agreement may be made in the form of an arbitration clause as well as in the form of a separate agreement.
In principle, any proprietary claim is arbitrable. In addition, non-proprietary claims are still arbitrable if the law allows the dispute to be settled by the parties, and arbitrability is one way of doing so (Section 582(1)).
There are, however, several exceptions. Claims in family law, as well as disputes relating to the lease of property and to cooperative apartment ownership as specified in Section 582(2), are not arbitrable. Most employment law and consumer disputes are arbitrable only if the parties enter into an arbitration agreement once the dispute has arisen (Section 9(2) of the Labour and Social Courts Act; Section 619(1) of the Code on Civil Procedure). Other employment law disputes regarding social security issues or claims in relation to works council representation and workplace security are not arbitrable at all.
Section 583, which governs the formal requirements of arbitration clauses, is in line with the relevant provision of the UNCITRAL Model Law (Article 7(2)).
Accordingly, the arbitration agreement should be in writing, either as part of a document signed by the parties or as an exchange of letters, telex, email or any other means of communication which constitutes a record of the agreement (Section 583(1)).
If a separate document of a contract refers to an arbitration clause, that arbitration clause is valid if this reference incorporates the separate document as part of the contract (Section 583(2)).
Section 583(3) ensures that any objections as to the validity of an arbitration clause are raised at an early stage. Therefore, a formal defect in an arbitration agreement is deemed to be cured if a party pleads to the merits of the case in an arbitration without simultaneously raising the issue of the invalidity of the arbitration agreement (Section 583(6)). In addition, if a party has relied on the validity of an arbitration agreement at an earlier point in time, it may not plead at a later point that such an arbitration agreement does not exist unless the relevant circumstances have since changed (Section 584(5)).
The general principle of kompetenz-kompetenz applies. Thus, the tribunal can rule on its own jurisdiction (Section 592(1)).
This decision of the arbitral tribunal, even if it denies its jurisdiction, has to be made in the form of an award.In addition, once arbitration proceedings have been initiated, an action relating to the matter in dispute brought before a state court shall be dismissed. However, this does not apply if a party to the pending arbitration has challenged the jurisdiction of the arbitral tribunal and if the tribunal cannot be expected to reach a decision within a reasonable period of time (Section 584(3)).
On the other hand, if an action is pending before a court, arbitration proceedings may nevertheless be commenced or continued and an award may be made (Section 584(1)).
Article 16(1) of the UNCITRAL Model Law stipulates that for the purpose of the arbitral tribunal deciding on its jurisdiction, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision of the arbitral tribunal that the contract is null and void shall not automatically entail the invalidity of the arbitration clause. These provisions of the UNCITRAL Model Law which enshrine the widespread international doctrine of separability of the arbitration clause have not been implemented into Austrian law. However, the longstanding notion under Austrian law is that arbitration agreements (including arbitration clauses which form part of a contract) are governed by public law (procedural law) rather than the general provisions of Austrian civil law. As such, arbitration clauses have to be considered as separate contracts which are not necessarily invalid just because the main contract in which they are included is invalid. In addition, numerous court decisions have applied the principle that it can follow from the intention of the parties to the arbitration clause that the clause shall survive the main contract's termination. Taking all this into consideration, it appears that under Austrian law, arbitration clauses are largely separable from the main contract. In practice, there seems to be no substantial difference from the concept of separability under the UNCITRAL Model Law.
Following Article 17 of the UNCITRAL Model Law, Section 593(1) allows the arbitral tribunal, after having heard both parties, to order such preliminary or protective measures as it may consider necessary in respect of the subject matter of the dispute. However, unlike Article 17 of the Model Law, Section 593(1) creates a precondition for the issuance of any interim or protective measure: the measure should be issued only if without it either the enforcement of a claim would be frustrated or materially hampered, or one of the parties would risk incurring irrecoverable damage.
Unlike the UNCITRAL Model Law, the new Austrian law explicitly states that the issuance of ex parte measures is not allowed. Thus, the other party should, in any case, be heard by the arbitral tribunal before the interim or protective measure is issued (Section 593(1)).
The arbitral tribunal may require any party to provide appropriate security in connection with any interim or protective measure.
Sections 593(3) to (6) ensure that interim measures, albeit no awards, are enforceable in Austria, and establish the rules for the enforcement of such measures as well as for the denial of enforcement. The provision covers measures by both domestic and foreign arbitral tribunals. As a result, the new regime not only makes domestic measures enforceable, but also serves as the legal basis for the enforcement of foreign interim measures in Austria.
Even if an arbitration agreement exists, the courts are still competent to issue interim measures. In that respect, Section 585 implements Article 9 of the UNCITRAL Model Law into Austrian law without any significant changes. It establishes the general principle that the Austrian courts retain jurisdiction to grant interim protection measures, regardless of the fact that the parties have entered into an arbitration agreement.
As regards the formation of the arbitral tribunal, the provisions of the new Austrian law follow the UNCITRAL Model Law.
The tribunal may thus consist of one or more arbitrators, depending on the agreement between the parties. In the absence of such an agreement, there will be three arbitrators. However, a tribunal must not consist of an even number of arbitrators. If the parties agree on an even number of arbitrators, the appointed arbitrators must agree on an additional arbitrator who will act as chairman of the tribunal (Section 586).
In further derogation from the UNCITRAL Model Law, Section 587 contains special provisions for multi-party arbitrations. In this respect, Section 587(6) stipulates that all arbitrators shall be appointed by the court if co-claimants or co-respondents on one side fail to agree on the appointment of the arbitrator and the parties are not bound by agreement (eg, in the arbitration clause) to agree on an arbitrator to be appointed by their side. On the other hand, if an agreement on the appointment of a joint arbitrator of the co-claimants or co-respondents exists, only the arbitrator of those parties would be appointed by the court if they fail to agree on a joint arbitrator (Section 587(5)).
When a person wishes to act as an arbitrator, he or she must disclose any circumstances which could give rise to doubt as to his or her impartiality or independence, or which contradict the agreement between the parties (Section 588(1)).
An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubt as to the arbitrator's impartiality or independence, or if the arbitrator does not possess the qualifications the parties have agreed upon (Section 588(2)).
Although the wording of Section 588 differs slightly from Article 12 of the UNCITRAL Model Law, its meaning is still the same and an objective standard applies to both the obligation to disclose and the grounds for challenge.
As stipulated in the UNCITRAL Model Law, the conduct of the proceedings is primarily governed by the mandatory provisions of domestic law - in this case the new Austrian legislation. Failing mandatory legal provisions, the parties may agree on the conduct of the proceedings (eg, by referring to the rules of an arbitration institution). In the absence of such an agreement, non-mandatory law applies. If a matter is not covered by non-mandatory law, the arbitral tribunal decides at its own discretion.
Most of the remaining provisions are generally in line with the model law. However, according to Section 594(2) the parties shall be treated fairly - 'fair' having the meaning defined in Article 6 of the European Convention on Human Rights. The equal treatment requirement of Article 18 of the model law is one aspect of the requested fair treatment. In this respect, there appears not to be much difference from the model law. The same is true of Section 594(2), which derives from Article 18 of the UNCITRAL Model Law. Instead of stipulating that each party shall be given a full opportunity to present its case, it simply states that the parties have to be heard. By so doing, the new law is in line with past and present Supreme Court rulings which hold that the parties must be given an opportunity to present their facts and to comment on any facts presented by the other party, as well as on any evidence introduced into the proceedings by either of the parties or the arbitral tribunal.
Unless otherwise agreed by the parties, Austrian law requires arbitrators to make a reasoned award (Section 606(2)). It does not, however, stipulate any time limit for the delivery of the arbitral award.The award must be issued in writing and signed by at least a majority of the arbitrators (Section 606(1)). It must contain the date on which it was issued as well as the seat of the arbitral tribunal (Section 606(3)). Upon the request of any party to the arbitration proceedings, the award has to contain confirmation that it is final and enforceable (Section 606(6)).
The arbitral tribunal has jurisdiction over costs awards. The new law also stipulates that such jurisdiction exists even if the arbitral tribunal finds that it has no jurisdiction over the subject matter (Section 609(2)).
Section 611 stipulates the grounds for challenging an arbitral award, which in principle echo those set out by Article 34 of the UNCITRAL Model Law. However, there are some differences. In particular, unlike the model law, not every deviation of the arbitral tribunal's conduct of the proceedings from the agreement of the parties or the applicable law constitutes grounds for setting aside an award (Article 34(2)(iv) of the model law). If, however, the deviation violates public policy, the award can be set aside (Section 611(2)(5)).
In addition, Section 611(2)(6) has no basis in the model law. It states that an award can be set aside should the preconditions occur under which the judgment of a court of law can be appealed by filing a complaint for revision pursuant to Section 530(1).
Arbitral awards are enforced by the Austrian courts in the same way as judgments of state courts (eg, seizure of movables or immovables, financial claims of the defendant against third parties). Since Austria is a party to the New York Convention, the Washington Convention and the Geneva Convention, the enforcement of foreign awards is also subject to these state treaties.
The Legal Information System of the Republic of Austria (RIS) is a computer-assisted information system on Austrian law, which is coordinated and operated by the Austrian Federal Chancellery. Its beginnings date back to 1983 when the essential features of the system were designed. After federal legislation had been incorporated into the system, decisions of the supreme courts started to be included. A section of the Legal Information System offers a selection of important Austrian laws in English translation.
The Legal Information System contains the following databases: Federal Law Gazette (Bundesgesetzblatt), Draft bill, Government bill, Federal law, State Law Gazette, Municipal law, European Community Law, Case-law documentations, Instruction edicts, Instruction edicts of the Federal Ministry of Justice, and Austrian laws in English.
The federal law database covers 99% of Austrian federal law. Amendments are incorporated as soon as they are promulgated so that the database always contains the applicable version of a document (one document: 1 section or 1 article or 1 annex). In addition to the applicable version, many norms also offer the opportunity to access previous versions, making it possible for the user to reconstruct the development of the regulation.
As a result of the cooperation with the office of the State (regional) government, the State Law Gazette contains all issues of the State Law Gazette in their original versions of the Austrian Provinces. The Municipal law database contains the laws of some Austrian municipalities. The database also contains selected municipal laws of Austrian Provinces.
The European Community Law Database (CELEX) contains the European Community law. The Austrian Federal Chancellery receives the data from The Office for Official Publications of the European Communities. The CELEX database is made up of the following sections: treaties, external relations, secondary legislation, complementary legislation, preparatory works, case law, national measures, parliamentary questions, consolidated texts (at present time there are no documents available), official journals (C-series), and EFTA documents.
Case-law is now a third key component of the Legal Information System. The databases contain both the legal principles and the full text of the rulings. The database contains the case-law of the Constitutional Court (nearly all rulings since 1980), the Administrative Court (comprises nearly all its decisions since 1990; substantial rulings are also available from previous years), of the Supreme Court (decisions of civil and criminal law), the Independent Administrative Tribunals (selected rulings since 1991), the Independent Federal Asylum Board (selected rulings since 1998), the Environmental Senate, the Procurement Review Authorities (rulings of the Federal Public Procurement Review Authority, the Federal Public Procurement Arbitration Body since 1997 and the Procurement Review Authorities of Salzburg and Vienna since 2004), the Data Protection Commission, the Federal Communications Board, the Appeals Tribunal and Supreme Disciplinary Commission (case-law on disciplinary matters and matters pertaining to employee transfers in the Federal Government since 1999) and the Supervisory Tribunal for Employees' Representation (case law on matters of employees' representation).
- Austrian Parliament - official drafts and information ("Materialien") from the legislative process
- Austrian Constitutional Court
- Austrian Administrative Court
- Telekom-Control Commission, KommAustria and RTR-GmbH
Austrian Regulatory Authority for Broadcasting and Telecommunications
- Federal Ministry of Transport, Innovation and Technology
- Data Protection Commission
- Federal Chancellery
- www.help.gv.at - Guide for Austrian authorities, offices and institutions, parts in English
- Rechtsfreund.at - This website provides information on all parts of Austrian law, more than 20 notes on legal issues and a selection of model contracts. It offers various calculation programs such as the calculation of attorney and notary fees and the calculation of the sizeable exempt amounts and introduces the most important recent law books. In addition, the website http://www.rechtsfreund.at/law-austria.htm provides extensive information on Austrian Law in English (the latest books on Austrian law in English are listed on http://www.rechtsfreund.at/books-austrian-law.htm).
- SWK Online - SWK Online is the electronic edition of the leading professional magazine for Austrian Tax Law and Business Law. This magazine is published three times monthly and informs entrepreneurs, consultants, employees of tax authorities and other civil services, as well as employees in financial accounting, about current legal questions, changes in legislation and higher-court jurisdiction in the aforementioned legal field. It is independent and only indebted to its readership. SWK online includes professional articles that can be easily put into practice in business affairs. The authors are economic trustees, experts from federal ministries and universities, tax authorities as well as managers in private industry.
- Rechtsdatenbank - With the creation of the Legal Database in 1986, the first milestone for electronic legal information in Austria was laid. The RDB, working together with every Austrian legal publisher, offers the largest selection of legal information currently available in database form. As an independent organisation, the RDB is able to bring together in one single platform professional journals from 27 different publishers together with all information currently contained in the RIS database. RDB subscribers are able to search in Austria's most comprehensive on-line database of court practice, proceedings and literature. Every user of the RDB portal not only has access to the more than 1.9 million documents that comprise the central RBD database, but also access to 14 additional partner databases. The documents on the RDB database sometimes extend as far back as 1946.
- Arge Daten - Austrian Society for Data Protection - Information about data protection and data security in Austria
- www.asok.at - ASoKonline is the internet version of the "Arbeits- und Sozialrechtskartei", one of Austria's leading journals regarding Labour and Social Security Law issues. The online database offers all articles and court decisions published in the aforementioned journal, beginning with the January 1998 issue until present, a collection of Austrian labour laws, as well as regular news on the subject to subscribers.
- internet4jurists.at- Legal problems of the internet, many decisions (IT-law)
- Austrian Bar Association
- Information Technology-law - Publications on internet and telecommunication law
- Federal Competition Authority - Includes information on Austrian Merger Notification and Procedure
- www.jurbooks.at - Legal bookshop online
- www.jusline.at - Portal for comprehensive legal information and e-law services (e.g.: cadastral register, commercial register, electronic access records, trade register, data of the registry office); further information found here.
- www.amtskalender.com - Database with information about all Austrian authorities
- www.lexisnexis.at - The database "Recht Online" (Law Online) provides access to legal information (civil law, labour law, business law, criminal law and tax law)
by Adrian Ivanovici
This presentation of the Austrian Law system was made with the support of the following sources:
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