AUSTRIA Trends and Developments Contributed by: Bettina Knoetzl and Katrin Hanschitz, KNOETZL
Outside of the EU, large Austrian insolvencies with cross-border implications – be it in litigation or arbi- tration – pose interesting challenges, among them the suspension of arbitration proceedings against insol- vent entities; the recognition of insolvency adminis- trators’ authority; the permissibility of performance awards against foreign insolvent entities; and the effect of the liquidation of foreign entities during ongo- Sanctions continue to affect not only the general Aus- trian economy but also the Austrian litigation land- scape in multiple ways. From a practice perspective, Austrian and EU sanc- tions require careful review before legal services are provided to Russian entities. Any engagement with sanctioned parties often requires special authorisa- tion; the delineation between (permitted) representa- tion of sanctioned parties in litigation and arbitration and (impermissible) support in other areas can be dif- ficult to navigate. ing arbitration or litigation. Sanctions Against Russia The consequences of breaching sanctions can be dire, with heavy administrative and criminal penalties ranging from fines up to EUR1 million to imprison- ment for responsible individuals. Cases have been reported where Austrian firms were heavily fined for circumventing sanctions, such as rerouting restricted exports through third countries. From January 2026, measures to improve monitoring will come into effect, with multiple competencies concentrated within the Austrian Financial Market Authority. Sanctions intersect with procedural issues such as arbitrability, public policy (“ordre public”), and service- of-process, leading to frequent litigation over whether Russian arbitral awards or judgments can be enforced in Austria. More generally, Austrian companies have suffered significant financial losses as they adjust to the sanc- tions regime, including reduction in exports/trade to Russia. Litigation related to contract frustration, force majeure, and disputes over contract fulfilment has grown as companies wind down Russian opera- tions or challenge claims from sanctioned parties. The
banking sector has been particularly affected, with Austrian financial institutions – most significantly the Raiffeisen Bank International – embroiled in signifi- cant litigation arising from Russian court decisions, asset freezes, and sanction-related penalties, forcing them to set aside provisions of hundreds of millions for potential losses and to defend actions in both Aus- tria and abroad. In addition, there has been an increase in cross-border disputes involving efforts to recover or protect assets that are subject to EU sanctions and have been frozen in Austria, such as shares or bank accounts. Austrian authorities strictly enforce these freezes, and Austrian courts are careful to avoid outcomes that would con- flict with EU sanctions policy. Construction Litigation The Austrian Federal Competition Authority has imposed fines of over EUR193 million on dozens of companies for price-fixing, market division and bid-rigging impacting thousands of public and pri- vate tenders throughout Austria, with new fines and proceedings expected through 2025. Follow-on civil claims are anticipated – in order to encourage private enforcement of anti-cartel rules, Austrian law allows direct and indirect customers who suffered damages from cartel-related overcharges to bring civil claims against the cartel participants. Litigation funders have announced that they are supporting actions against the largest companies. The aftermath of the cartel scandal will be keeping courts and practitioners busy in the coming years. Class Actions After its delayed implementation of the Representa- tive Action Directive, the new class actions are slow to arrive in the Austrian courts. This may be a result of litigation funders being reluctant to invest significant funds into an untried system, given the many proce- dural uncertainties. However, Austrian consumer protection organisations have made a start, often combining the old consumer class actions with new collective redress injunction actions to benefit from the broader scope of the new rules and the specialised jurisdiction of the Commer- cial Court of Vienna. A wave of injunction claims was
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