AUSTRIA Law and Practice Contributed by: Anna Zeitlinger, Gabriel Lansky, Philip Goeth and Konstantin Oppolzer, Lansky Ganzger Goeth + Partner Rechtsanwälte GmbH
7. Designation, Compliance and Circumvention 7.1 Executive Body
applicable EU law ex officio and rule in favour of the EU operator if the no-claims clause applies. 6.2 Enforcement Following the successive amendments to the EU sanctions framework, culminating in the 18th EU sanctions package, Austrian courts are expected to refuse the recognition or enforcement of judgments and arbitral awards that would require an EU operator to act in breach of EU sanctions. Likewise, where the seat of arbitration is in Austria, arbitral awards may be set aside or refused enforcement if they are incom - patible with EU public policy as reflected in the EU sanctions regime. The 18th EU sanctions package, adopted on 18 July 2025, significantly reinforced the interaction between sanctions law and dispute resolution by elevating the “no-claims clause” under Regulation 833/2014 to a matter of EU public policy. As a result, member states may refuse to recognise or enforce foreign judgments or arbitral awards where doing so would effectively compensate a party for losses arising from another party’s compliance with EU sanctions. The pack - age also introduces specific measures in the field of investor-state arbitration, requiring member states to oppose the recognition and enforcement of awards that conflict with EU sanctions. In addition, designat - ed claimants and, in certain circumstances, entities within their corporate group may become liable for damages suffered by EU parties as a result of sanc - tions-related proceedings. Recent case law from neighbouring jurisdictions illus - trates a broader European trend. On 13 May 2025, the Higher Regional Court of Stuttgart held that the enforcement of an arbitral award that would result in a breach of EU sanctions must be suspended. On 13 March 2026 the Swiss Federal Supreme Court ruled that, in debt enforcement proceedings initiated by a company controlled by a sanctioned person, sanc - tions create a statutory deferral that prevents enforce - ment for as long as the relevant sanctions remain in force, while the claim itself continues to exist. The practical application of these principles in Austria remains to be seen.
Although the Austrian Sanctions Act 2024 general - ly provides for the possibility of imposing unilateral national sanctions – an approach which, in our view, raises concerns under EU law – Austria has not to date imposed such national sanctions. Thus, persons des - ignated by the EU are deemed as ‘sanctioned’ in Aus - tria; EU sanctions regulations apply directly in Austria. However, the Ministry of Finance or the Ministry of Interior, after consultation with the Ministry of Euro - pean and International Affairs, may propose to the United Nations or the European Union the designation of a person, provided that such person fulfils a listing ground as set forth by the UN or the EU under a spe - cific sanctions regime, a direct territorial or personal nexus to Austria exists and the designation promotes Austrian security interests and does not contradict Austria’s obligations under EU and international law. 7.2 Scope of Designation Entities that are owned or controlled by a designated person are strictly speaking not deemed “sanctioned” or “designated” under a sanctions regime for these entities do not fall under any of the applicable list - ing grounds. However, their assets may be subject to financial restrictive measures if a designated person owns or controls such non-listed legal entity (knock on effect of sanctions). In practical terms, such entity is indirectly sanctioned. Guidance on Ownership and Control To determine whether or not a non-listed entity is owned or controlled, Austrian operators, courts and authorities follow the Frequently Asked Questions of the EU Commission on the implementation of Regula - tion 833/2014 and Regulation 269/2014 and the Best Practices of the Council of the European Union for the effective implementation of financial restrictive measures. Though, these guidance documents are not binding, the factors to determine ownership or control are accepted throughout the European Union. Recently, in relation to the sanctions against Russia, the European Union has introduced into Regulation 269/2014 the definition of the terms “ownership” and “control” (these definitions were originally introduced
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