AUSTRIA Trends and Developments Contributed by: Bettina Knoetzl and Dr Kirstin McGoldrick, KNOETZL
KNOETZL Herrengasse 1 1010 Vienna Austria
Tel: +43 1 34 34 000 Fax: +43 1 34 34 999 Email: office@knoetzl.com Web: www.knoetzl.com
New Representative Actions Until July 2024, Austrian law did not provide an offi- cial platform for class actions. There were only lim- ited possibilities of collective redress and Austrian law only allowed certain, specified organisations, such as consumer protection associations, to file actions for declaratory judgment and/or for injunctive relief in the interest of a group of individual claimants. Many changes to General Terms and Conditions, for exam- ple in financial or online service products, were forced into effect through this makeshift means of collective redress. However, the available instruments provided for strict limits: even if the organisations were suc- cessful, injured parties still had to bring a follow-on damage claim on their own account and were forced to start legal proceedings, unless the defendant pre- ferred to settle the claims out of court. As this historical avenue of collective redress had been restricted to injunctive relief and did not allow for the filing of damages in the past, legal practice has, over time, devised ways to collect similar damage claims and file those jointly under one single lawsuit. Typi- cally, such actions would be financed by third-party funders, a practice approved by the Austrian Supreme Court. With the implementation of the Directive (EU) 2020/1828 in July 2024, the legal landscape in Austria has changed significantly. However, given the many procedural uncertainties in the new regime, there is still caution amongst practitioners. Nevertheless, giv- en the significant reduction in costs, new class actions are finding their way before the Austrian courts.
Ways to Pursue Mass Claims Prior to the Implementation of Directive (EU) 2020/1828 Previous ways to pursue mass claims In July 2024, Austria implemented Directive (EU) 2020/1828 on representative actions for the protec- tion of the collective interests of consumers (the “EU Directive”). Nevertheless, the previously developed ways to pursue mass claims under a single lawsuit will continue to play their role. The assignment of indi- vidual claims to one single organisation which then files an action, will have its advantages over the new regime. Assignment of individual claims Through the assignment of individual claims to one party, as the named claimant, many damaged parties can collectively file one lawsuit. In practice, it is often a consumer protection organisation that files the lawsuit and assumes the role of the claimant. This system provides certain advantages for the indi- vidual holders of the claims in terms of expenditure. Under Austrian law, the loser of a dispute pays the final costs for both parties, and the costs (court fees and lawyers’ fees) decrease proportionally as the amount in dispute increases. Therefore, the bundling of many claims in one lawsuit means a lower cost risk for the individual holders of the claim than many individual lawsuits. Moreover, litigation funders are more likely to be found in large-amount disputes. Nevertheless, costs of pursuing claims remain high. For example, in a joint action of 3,200 claimants against an Austrian bank, the amount in dispute was EUR127 million in the aggregate. The court fees alone for the proceedings in the first instance (there are three
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