AUSTRIA Trends and Developments Contributed by: Florian Haugeneder, Patrizia Netal, Jurgita Petkutė and Natascha Tunkel, KNOETZL
European Space Agency Policy Institute. Perhaps due to this sector-specific knowledge, there appears to be a rise in arbitrations in this field. Further, the choice of Austria as a seat of arbitration for outer space dis - putes may also be driven by the fact that Austria is a neutral country, a factor that is of relevance for the increasing public-private partnerships and related dis - putes in the sector. Evolving Sectors III: Environmental, Social and Corporate Governance Cases Environmental, social and governance (ESG) consid - erations have gained significant importance in recent years, with stakeholders and even the general public demanding sustainable and socially responsible prac - tices. This has also increased the pressure on states. In many cases, this creates a tension between exist - ing contracts, the law, and politically or policy driven decisions. This has led to an international increase in investment disputes – with Vattenfall AB and oth- ers v Federal Republic of Germany (ICSID Case No. ARB/12/12) being one of the most prominent in the DACH region. Further investment arbitration cases are to be expected as a result of this development. Beyond investment arbitration, ESG-related com - mercial disputes are also expected to increase in the mid to long term. Recent regulatory retrenchment and simplification measures in the United States and the European Union may affect the timing, scope and legal basis of some claims, but they are unlikely to eliminate the underlying commercial drivers of ESG disputes. Companies will continue to face contractual obligations concerning supply-chain due diligence, human rights, emissions, green claims, audit rights, termination rights and allocation of compliance risk. Arbitration, offering a bespoke and confidential pro - cedural framework with great flexibility to accommo - date the needs of businesses acting in a globalised environment, is ideally suited for resolving often sensi - tive ESG-related disputes. Accordingly, ESG-related arbitrations are likely to feature more prominently in the future. 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 upon directly or indirectly engaging in any transaction with Russian organisations listed in Annex XIX to Art. 5aa of Regulation (EU) 833/2014, concerning restrictive measures in respect of actions undermining or threatening the territorial integrity, sov - ereignty and independence of Ukraine. The European Court of Justice is increasingly being approached to decide on questions related to Regulation (EU) 833/2014, including on questions on arbitrability, whether Regulation (EU) 833/2014 is part of EU’s public policy and how to interpret Regulation (EU) 833/2014 (see, eg, C 802/24). On 20 June 2024, the sanctions regime regarding pro - hibition of services to legal entities established in Rus - sia introduced an authorisation requirement pursuant to Art. 5n para. 10 lit. h. In Austria, the Ministry of Jus - tice’s Public Procurement Law Unit is responsible for granting such authorisations, which include authori - sation for the provision of legal advisory services by lawyers. However, there remains a certain grey zone as to the definition of “legal services” in this context. This is particularly relevant regarding legal advice ren - dered before a dispute has arisen or become pend - ing, but not strictly necessary for access to arbitral proceedings. Overall, these exceptions and the authorisation pro - cedure allow arbitral proceedings and the enforce - ment of awards to continue in disputes involving par - ties from Russia. However, each case still requires a sanctions analysis, including under applicable asset- freeze rules, the no-claims rule and any authorisation requirements. 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
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