AUSTRIA Law and Practice Contributed by: Markus Fellner, Stefan Sallat and Florian Henöckl, Fellner Wratzfeld & Partner Rechtsanwälte GmbH
Arbitral Awards Austria has ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Arbitral proceedings and the enforcement of arbitral awards are common in Austria, which main- tains a leading international arbitral institution (the Vienna International Arbitral Centre or VIAC). 6.4 A Foreign Lender’s Ability to Enforce Its Rights Impediments to a foreign lender enforcing security in Austria are largely technical and administrative. In civil law court proceedings, competent courts may request cost advances (unless the relevant claimant is domiciled in the EU or in a state that is a party to the Hague Convention on Civil Procedure of 1 March 1954); in addition, translation requirements will apply for non-German language transaction documentation. As a general rule, any and all claims against a debtor will immediately become due upon the opening of insolvency proceedings. Therefore, there is no require- ment for separately terminating, for instance, a loan agreement. Also, under Austrian insolvency law, any agreement on rescission or termination rights, which would apply in the case of the opening of insolvency proceedings, are generally null and void. In relation to assets that are within the possession of the obligor in an insolvency but subject to in rem rights of third parties (such as pledged assets), Aus- trian insolvency law provides for specific rights of segregation which will permit that, following enforce- ment of security, the relevant proceeds will be passed on to secured creditors. If this segregation right is asserted, but disputed by the insolvency administra- tor (on behalf of the estate), the administrator has the option of redeeming the outstanding debt or initiating separate enforcement proceedings. In cases where turning over an asset to a secured creditor would put the continuation of the debtor’s business at risk, the claim for the returning of the asset is suspended for period of six months from the opening of the insolven- cy proceedings unless such moratorium would cause 7. Bankruptcy and Insolvency 7.1 Impact of Insolvency Processes
law-governed receivables, the creation of pledges/ mortgages over Austrian real properties, etc. Therefore, it is common market practice that security rights over assets located in Austria and/or provided by Austrian domiciled transferors/pledgors are docu- mented in Austrian law-governed security documen- tation. A waiver of immunity would basically be upheld in Austria. 6.3 Foreign Court Judgments As regards the enforcement of non-Austrian judg- ments or awards, there are three basic categories. Court Judgments From EU Member States Due to the Brussels I Regulation (EU) No 1215/2012, which applies in Austria, judgments from other mem- ber states of the European Union are generally recog- nised and enforced in Austria without any additional procedures or retrial of the merits of the case. Limited exceptions may apply in the case of substantial devia- tions from Austrian law (ie, those that contravene the Austrian ordre public (public order)). Court Judgments From Non-EU Member States Outside the scope of applicability of the Brussels I Regulation, enforceability of a foreign court judgment depends on whether there is a bilateral treaty between the home state of a lender/security holder and Aus- tria. As a substantive criterion, Austrian law (on the enforcement of court judgments) requires reciprocity to be ensured under bilateral treaties or regulations. In addition, it is required that the defendant in the enforcement proceedings had the opportunity to par- ticipate in the original proceedings before the foreign court and that the relevant judgment may no longer be challenged before the courts and/or authorities of the foreign state. Enforcement of a foreign (non-EU) court judgment may nevertheless be denied if and to the extent that the enforcement is aimed at an action which may not be enforced or is not permissible under the laws of Austria or if the ordre public would be violated.
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