AUSTRIA Trends and Developments Contributed by: Bettina Knoetzl and Dr Kirstin McGoldrick, KNOETZL
instances available, up to the Austrian Supreme Court) were EUR1.5 million. These court fees must be paid upfront when filing the lawsuit. Such burdensome costs often incentivise forum shopping, with parties seeking ways to bring the action(s) in jurisdictions offering a significantly lower cost risk. Furthermore, there are disadvantages involved in the assignment, including the loss of the possibility for consumers to bring the action at their own place of domicile. Claims joined in one legal filing A second way to pursue mass claims is to have all individual claims joined in one legal filing. For this pur- pose, certain procedural criteria must be satisfied. The Austrian Supreme Court tended to allow such joint actions through a rather generous interpretation of the legal prerequisites. The claimants need to convince the court that their claims are “basically similar” ( im Wesentlichen gleichartig ). This loose wording does not impose a significant hurdle. However, having to deal with a huge number of individual claims without aids provided by law to ease the joint litigation of these claims imposes a significant practical hurdle on the court that must deal with such a large number of par- ties. Aside from these administrative burdens, filing such a joint action triggers significant court fees and imposes a huge cost risk on the parties, owing to the way Austria calculates court and lawyer’s fees and “the loser pays system”. New regime after implementation of the EU Directive For the Austrian legislature, the implementation of the EU Directive presented a huge political challenge because, traditionally, collective redress, particular- ly class actions in the “Anglo-American” style, had been seen as contrary to Austrian legal culture and the pressure for the defendant to settle such cumber- some actions seemed disproportionately high. Also, the fear of potential defendants becoming subject to frivolous claims and consequently to unjustified pres- sure to settle has been significant. Nevertheless, having been mandated by EU legisla- tion, Austria has now implemented the EU Directive, albeit with significant delay. On 18 July 2024, the
Act on Qualified Entities for Collective Redress (the “Qualified Entities Act”) along with amendments to the Austrian Code on Civil Procedure, the Consumer Protection Act, the Court Fees’ Act and the Lawyer’s Fees Act entered into force, providing a new system of collective redress for consumers. In a nutshell, Austria used the leeway the EU Directive gave the member states as follows. • Austria has chosen the “opt-in” model. • Only certain so-called qualified entities are allowed to bring such actions. Those institutions that were already allowed to seek injunctive relief in the past are included among the entities so qualified. • A mechanism to reduce the reimbursement of legal fees significantly was introduced. • The new class action is not restricted to enable redress for specified claims contained in the cata- logue of the EU Directive but is available for claims based on any legal ground. However, with this new instrument, the existing instru- ments have not and will not vanish completely. Rath- er, an alternative option for collective redress is now available on the Austrian market. Its main advantages are the clearly reduced legal cost risk, the interruption of the time-bar, and the exclusive jurisdiction of the Commercial Court Vienna. The latter provides for a competent court that will be specialised in handling mass claims, with specially trained law clerks available to handle the practical challenges that mass claims impose on courts. This is certainly a huge advantage. On the negative side, experts criticise the vast number of vague provisions of the new procedural laws, forc- ing firstcomers to pave the way to established case law, which is currently lacking. The legislature left many politically disputed questions open to develop- ment via case law. This imposes a significant risk on potential claimants who will think twice whether they utilize this new instrument or revert to more estab- lished methods. Against this background, even after a year of its imple- mentation, it still remains to be seen if the new regime will develop into the preferred way to file collective actions. The legal community continues to watch the legal market developments with great interest. Given
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