AUSTRIA Trends and Developments Contributed by: Florian Haugeneder, Patrizia Netal, Jurgita Petkutė and Natascha Tunkel, KNOETZL
Impartiality When deciding on challenges to arbitrators, the Aus - trian Supreme Court will frequently also consider the IBA Guidelines on Conflicts of Interest in International Arbitration, which were updated in 2024. The Austrian Supreme Court has already stated several times that a subsequently discovered reason for rejection can, in “blatant cases”, also be asserted by means of an action for annulment. However, asserting the ground for challenge in the action for annulment requires that the challenge of the arbitrator was no longer possible before the arbitral award was made. In its decision 18 OCg 3/24a of 2025, the Austrian Supreme Court granted a set-aside application based on the lack of impartiality of the arbitrator. The underlying case gives rise to the appearance of bias because the arbitra - tor acted for the claimant’s opposing party not only in the past, but throughout the entire arbitration pro - ceedings. His duties were not limited to legal advice, but he participated in a hearing lasting several weeks. There, he was listed as “counsel” for the opposing party. The appearance of bias arises from the arbi - trator’s dual role: in the ICC arbitration, he was sup - posed to challenge the claimant’s legal position, but in the VIAC arbitration, he was supposed to objectively assess the claimant’s legal position. The arbitrator merely disclosed to the claimant that he had previ - ously acted as an adviser to the claimant’s opponent. The written statement was drafted in the past tense in the decisive/essential points. Based on these circum - stances, the claimant had no reason to believe that the arbitrator would continue this advisory activity for its opponent during his activity as an arbitrator and would even participate in hearings and appear against the claimant there. In granting the setting aside of the award in this case, the Austrian Supreme Court con - tinued its arbitration-friendly approach by protecting the process in cases where the conduct of the arbitra - tor grossly violated the integrity of arbitration proceed - ings. In fact, the Austrian Supreme Court specifically emphasised that the reputation of arbitration must be equal to that of state courts, because the acceptance of arbitration requires not only professional compe - tence, but also the trust of those seeking legal redress in independent, impartial arbitrators who act free from conflicts of interest.
Declaration of the existence or non-existence of an arbitral award In 2024, the Austrian Supreme Court rendered two decisions (cf. OGH 10 Ob 11/24a and OGH 4 Ob 46/24d) that relate to Section 612 of the Austrian Civil Procedure Code, which provides declaratory relief to clarify whether a document is to be considered an award. Applications under this provision are exceed - ingly rare. For example, such applications are made is when it is necessary to clarify whether the “award” is, in fact, an expert determination. The relief offered by Section 612 of the Austrian Civil Procedure Code is also available if the seat of the arbitration is not in Austria. However, a legal interest in the declara - tory judgment is required; a mere economic interest is insufficient. This relief is not subject to a time limit. In its recent decisions, the Austrian Supreme Court clarified, inter alia, that it alone is the competent court for such applications and that the application can only relate to the determination of the existence or non- existence of an arbitral award, whereas the determina - tion of the existence or non-existence of an arbitration agreement is not permitted. Constitutionality of arbitration It is rare that the Austrian Constitutional Court deals with matters related to arbitration. It recently (cf. VfGH G 49/2024-7) had the opportunity when an action was filed requesting to declare as unconstitutional and void Section 607 of the Austrian Civil Procedure Code which grants an arbitral award the same effect as a court judgment. The Austrian Constitutional Court declined to accept the action and specifically held that there are no constitutional objections to the funda - mental admissibility of private arbitration established on a private autonomous basis (in conjunction with the relevant statutory provisions). Firstly, the relevant pro - visions provide (sufficient) possibilities for the parties to bring an action to set aside the award; secondly, the grounds to set aside awards also provide suffi - cient guarantees that an award that contradicts the fundamental values of the Austrian legal system (ordre public) can be challenged, and, thirdly, that courts and administrative authorities may ex officio not take an award into account that contradicts the fundamen - tal values of the Austrian legal system. In view of the legal framework and the safeguards it provides, the application has no reasonable prospect of success.
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