AUSTRIA Trends and Developments Contributed by: Florian Haugeneder, Patrizia Netal, Jurgita Petkutė and Natascha Tunkel, KNOETZL
Commercial disputes regarding ESG are also project - ed to increase in the wake of the Corporate Sustain - ability Due Diligence Directive formally adopted by the European Council in May 2024. The implementation of this Directive will have an impact on existing and future contracts, as the new responsibilities and obli - gations that companies will have to comply with will lead to reassessment of international supply chains. It seems likely that the adjustment process will give rise to disputes. Arbitration, offering a bespoke and confidential procedural framework with great flexibility to accommodate the needs of businesses acting in a globalised environment, is ideally suited for resolving often sensitive ESG-related disputes. Consequently, the expectation is that ESG-related arbitration will soon emerge as a dominant trend. Procedural Trends I: Impact of Sanctions against Russia on Arbitration Proceedings Arbitration proceedings involving sanctioned parties have been confirmed to constitute an exception to the prohibition to directly or indirectly engage in any trans - action with Russian organisations listed in Annex XIX to Article 5aa of Regulation (EU) 833/2014, concerning restrictive measures in respect of actions undermin - ing or threatening the territorial integrity, sovereignty and independence of Ukraine. The European Court of Justice is increasingly being approached to decide on questions related to Regulation (EU) 833/2014, includ - ing on questions of arbitrability, whether Regulation (EU) 833/2014 is part of the EU’s public policy and how to interpret Regulation (EU) 833/2014 (see, for example, C 802/24). On 20 June 2024, the sanctions regime regarding the prohibition of services to legal entities established in Russia introduced an authorisation requirement pur - suant to Article 5n paragraph 10 lit. h. In Austria, the Ministry of Justice’s Public Procurement Law Unit is responsible for granting such authorisations, which include authorisation for the provision of legal advi - sory services by lawyers. A separate mailbox has been set up for the submission of applications for the granting of an authorisation. However, there remains a certain grey zone as to the definition of “legal ser - vices” in this context. It has not yet been clarified at EU level which services related to an arbitration qualify as legal services. This is particularly relevant regarding
legal advice rendered before a dispute has arisen or become pending. Overall, these exceptions and the authorisation pro - cedure will allow arbitral proceedings and the enforce - ment of awards to continue in disputes involving par - ties from Russia. Also, the introduction of several amendments to the Russian Arbitrazh Procedural Code (commonly referred to as the “Lugovoy Law”) in 2020 has affect - ed the conduct of arbitration proceedings involving Russian parties. The Lugovoy Law grants Russian commercial courts exclusive jurisdiction over dis - putes involving sanctioned entities, if the sanctioned entity would face obstacles to a fair trial abroad. In its decision on the VTB (Europe) SE challenge to consti - tutionality of Article 248 Lugovoy Law, the Russian Constitutional Court declared the law to be consti - tutional on 3 June 2025. This exclusive jurisdiction is protected by the competence of the Russian courts to, upon request of a party, issue anti-suit injunctions directed against arbitration proceedings. These anti- arbitration injunctions have already been frequently requested by Russian parties and have been granted by Russian courts. The response thereto is twofold. On the one hand, arbitral proceedings with Russian parties are now increasingly involving interim measures and coun - ter measures. The location of assets and the interim securing of assets has also become more prevalent. On the other hand, the EU has, in its 15th sanction package, adopted countermeasures and introduced a prohibition on the recognition or enforcement in the EU of injunctions, orders, judgments or other court decisions pursuant to or in relation to the Lugovoy Law or equivalent Russian legislation. Procedural Trends II: Increase of Insolvency- Related Arbitration The development of the field of insolvency-related arbitration builds upon a 2018 decision of the Aus - trian Supreme Court which confirmed that claim veri - fication proceedings do not fall within the exclusive competence of the (insolvency) courts but can be conducted before arbitral tribunals provided the arbi -
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