LIECHTENSTEIN Law and Practice Contributed by: Alexander Ospelt, Lukas-Florian Gilhofer, Vivianne Auer and Laura Bayer, Ospelt & Partner Attorneys at Law Ltd
or mutual agreement, and provided that the funda- mental principles of Liechtenstein law were observed during the foreign proceedings. Due to the absence of a vast network of international agreements, final judg- ments issued against a Liechtenstein domiciled party in a foreign court (other than in Austria or Switzer- land) are not automatically recognised or enforceable in Liechtenstein. By contrast, foreign arbitral awards are recognised, and enforcement in Liechtenstein is possible under the 1958 New York Convention, which entered into force in Liechtenstein on 5 October 2011. A choice of forum is permitted if expressly agreed between the parties. This agreement must be pre- sented to the court and only has legal effect if it relates to a specific dispute or disputes arising from a defined legal relationship (eg, an insurance contract). However, for insurance-related disputes, if the policy- holder resides in Liechtenstein or the insured interest is located in Liechtenstein, any reference to a foreign court is null and void. In these cases, the courts in Vaduz have exclusive jurisdiction. Compliance with this rule is observed ex officio, including in enforce- ment or insolvency proceedings. 9.5 Enforcement of Arbitration Clauses An arbitration agreement may be established either as a standalone contract or as a clause within a broader agreement. It can cover any monetary claim that falls under the jurisdiction of the ordinary courts, mean- ing that, in principle, all commercial disputes can be resolved through arbitration. The parties are free to specify the applicable legal framework and the rules of law that the arbitral tribunal should apply, as well as the procedural principles governing the arbitration. Additionally, the parties may agree to adopt specific procedural regulations, such as the Liechtenstein Arbitration Rules, for the conduct of the proceedings. 9.6 Enforcement of Awards In Liechtenstein, an arbitral award issued within the country is treated as an enforceable title, allowing the prevailing party to seek enforcement directly through the competent court without the need for prior judicial recognition. Regarding the enforcement of foreign arbitral awards, the New York Convention on Recognition and Enforce-
ment of Foreign Arbitral Awards (NYC) applies, and makes foreign arbitral awards enforceable in Liech- tenstein under the contractual regime. Foreign arbitral awards have to be recognised in principle. The requesting party must submit to the Liechtenstein court the duly authenticated signature of the award and the signature of the arbitration agreement, togeth- er with the application for recognition or enforcement (Article IV, paragraph 1 of the NYC). 9.7 Alternative Dispute Resolution Under the principle of freedom of contract, contrac- tual parties are free to agree to settle disputes out of court. Alternative dispute resolution methods, such as arbitration or mediation, are well established in Liechtenstein. 9.8 Penalties for Late Payment of Claims Liechtenstein law does not provide specific statutory penalties for late payment of claims. However, policy- holders may claim damages under general obligations law and courts may award default interest. Usually, consumer contract default remedies are interpreted in favour of the policyholder, while contractual late- payment penalties are generally enforceable, if clearly drafted. 9.9 Insurers’ Rights of Subrogation After making an insurance payment, insurers have the right of subrogation. This means that the insurer assumes the rights of the policyholder and can assert all rights or claims that the policyholder has against a third party responsible for the damage. This allows the insurer to reclaim the amount it has paid from the liable party. The scope of this right is limited to the actual amount paid under the insurance contract, so the insurer can- not claim more than the compensation it provided. The policyholder is generally required to cooperate, and must not settle with the third party in a way that prejudices the insurers subrogation rights. Contractual agreements or statutory provisions may restrict subrogation, and the insurer must assert its rights within the applicable limitation period, typically five years from the date it becomes aware of the claim.
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