In a decision of 23 June 2015, the Austrian Supreme Court (“OGH“) decided on an action to set aside an arbitral award on jurisdiction. The OGH’s decision contains clarifying remarks on the question of the applicable law to an arbitration clause and the form requirements which an arbitration clause must fulfill in order to be validly concluded pursuant to Section 583 para 1 Austrian Code of Civil Procedure (“ACCP“).
1. The underlying arbitration
Claimant (who was Respondent in the underlying arbitration), an Italian company and Respondent (who was Claimant in the underlying arbitration), a German company enjoyed a longstanding business relationship. In 2007, the Parties wanted to conclude a new consultancy agreement. The first offer has been rejected by Claimant due to the intended duration of the contract. In order to resolve this issue and to come to a mutually agreeable solution, the Parties held a meeting on 20 November 2007 at Claimant’s headquarters. In this meeting, the Parties orally agreed on the text of the contract, which also contained a clause providing for arbitration with the seat of the arbitral tribunal in Vienna. On 30 November 2007, Respondent transmitted a cover letter accompanied by the agreed text of the contract via telefax to Claimant, but only signed the cover letter and not the text of contract. On 18 December 2007, Claimant only returned the signed text of the contract via telefax to Respondent.
On 11 April 2013, Respondent (who was Claimant in the underlying arbitration) initiated arbitration proceedings at the Vienna International Arbitral Centre and requested disclosure of certain business documents and payment of outstanding commission fees. Claimant objected to the jurisdiction of the arbitral tribunal. On 31 October 2014, the arbitral tribunal rendered an award on jurisdiction holding that the arbitration clause was validly concluded and that it had jurisdiction to decide on the dispute arising out of the consultancy agreement.
2. The OGH’s decision
a) Preliminary remarks
At the outset the OGH noted that an arbitral tribunal according to Section 592 para 1 first sentence ACCP rules on its own jurisdiction and that since the revision of the provisions governing arbitral proceedings in Austria (Sections 577et seqq. ACCP) in 2006 such decision may be taken by a separate arbitral award. Such arbitral award on jurisdiction can be independently challenged within three months after its rendering (Section 611 para 1 second sentence and para 4 ACCP).
b) Decision on the applicable law
Before the OGH could decide whether the arbitral tribunal had correctly accepted jurisdiction it had to engage in a conflict of laws analysis in order to clarify which law to apply to the respective questions. The OGH followed the prevailing legal literature and stated that the law applicable to the arbitration clause needs to be determined independently as the law applicable to the arbitration clause does not automatically follow the law applicable to the main contract. In addition, the OGH – in line with legal literature – stated that the law applicable to the various elements of an arbitration clause must be determined separately. Presently, the OGH had to determine which law applies to the question whether parties have validly concluded an arbitration clause on a substantive law level (as part of the Schiedsvereinbarungsstatut) and which law governs the form requirements (Formstatut).
As to the Schiedsvereinbarungsstatut the OGH followed its previous case law and held that in the absence of a choice of law by the parties the law of the state in which the arbitral award shall be rendered is applicable. Presently, the Parties neither chose the law applicable to the main contract nor to the arbitration clause; thus, the OGH concluded that as the award shall be rendered in Austria, Austrian law applies. As to the Formstatut the OGH briefly referred to the different opinions in legal literature and older case law on this topic, but concluded that the disputed questions in this respect (which mainly concern the relationship between the form requirements of an arbitration clause under Austrian law and Article II New York Convention) do not need to be solved in the present case. It rather held that Section 583 para 1 ACCP applies to the present case (whereby Article II New York Convention merely serves as some kind of control factor when presently applying Section 583 para 1 ACCP).
c) Interpretation of Section 583 para 1 ACCP
Section 583 para 1 ACCP provides that “[T]he arbitration agreement must be contained either in a written document signed by the parties or in letters, telefax, e-mails or other means of transmitting messages exchanged between the parties, which provide a record of the agreement.” After outlining the legislative history of Section 583 para 1 ACCP and discussing the different views in legal literature with regard to the form requirements mentioned in this provision, the OGH concluded that Section 583 para 1 ACCP provides for two equal alternatives to fulfill the form requirements of an arbitration clause (arg. “The arbitration agreement must be contained either in … or in …“). Only the first alternative requires the parties to sign the document (arg. “… written document signed by the parties …“). The parties do not have to sign the exchanged documents to fulfill the form requirements of the second alternative. Yet, it is required that the letters can be clearly associated to the respective sender.
In the present case the OGH held that the Parties in the meeting of 20 November 2007 agreed on the contract and that this agreement also comprised the arbitration clause. The further events, namely the exchange of telefaxes, did not concern the main contract, but only the arbitration clause, as by that the form requirements of Section 583 para 1 second alternative ACCP were met and the arbitration clause was validly concluded. Under the second alternative of Section 583 para 1 ACCP it was – contrary to what Claimant was arguing – not required that both Parties indeed sign the text of the contract. It sufficed that the text of the contract (without being signed) was exchanged by telefax. Claimant’s action to set aside the arbitral award was therefore dismissed.