Outline the organisation of your court system as it relates to collective or representative actions (class actions). In which courts may class actions be brought?
Austrian law does not provide for collective or representative actions (class actions), in the strict sense. Therefore, the Austrian court system does not relate to collective actions in any specific manner.
As in most other jurisdictions, Austrian law on civil procedure, as set out in the Code of Civil Procedure (ZPO), provides for the following possibilities:
- that more than just one plaintiff files a complaint or more than just one defendant receives a complaint (joinder of parties under section 11 of the ZPO); and
- that actions that have been brought individually are subsequently being joined (joinder of proceedings under section 187 of the ZPO).
Other than that, the only mechanisms to provide for collective redress in a larger sense are the following:Actions under section 28 et seq of the Act on Consumer Protection (KSchG) and under section 14 of the Act Against Unfair Trade Practices (UWG)
These actions are called ‘actions brought by (specific) organisations’. In essence, these actions can only be brought by certain types of legal entities acting as plaintiffs, in particular by consumer organisations, and are aimed exclusively at injunctive relief; that is, they are aimed at obtaining judgments ordering the defendant to cease and desist, or, in other words, to abstain from a behaviour violating provisions under consumer protection law, or under the law against unfair trade practices. Therefore, these actions cannot be used to claim damages (ie, no compensatory relief).
The aforementioned actions can be brought in ordinary civil courts.Actions under section 502, paragraph 5, No. 3 of the ZPO
These actions are called ‘model actions’. Such actions can only be brought by certain types of legal entities acting as plaintiffs, in particular by consumer organisations. By contrast with the actions described directly above, an action under section 502, paragraph, 5 No. 3 of the ZPO can aim for a judgment awarding damages or other compensation. The original owner of the claim will, typically, be a consumer. For the consumer organisation to act as plaintiff, it is necessary that the consumer assigns his or her claim to the consumer organisation, albeit for the purpose of the litigation only. In economic terms, therefore, the original owner of the claims remains entitled to eventually collect the proceeds of the litigation. The difference between this ‘model action’ where, technically, the consumer organisation acts as plaintiff, and an ‘ordinary’ litigation where the original owner of the claim acts as plaintiff himself or herself, is the easier access to revision of the first instance judgment by the Court of Appeals, and, subsequently, by the Supreme Court of Austria (OGH). The underlying assumption is that when the Supreme Court of Austria (OGH) renders a final and unappealable decision in a case, typically affecting more than just one consumer, the one judgment being rendered in an individual case will help resolve, or settle, all the other cases as well - not in a legally binding fashion but by example, or based on the foreseeability of how other similar cases would be decided if they were also adjudicated.
The aforementioned actions can be brought in ordinary civil courts.Class action Austrian style
Owing to the lack of a genuine collective action, or class action in the strict sense, over the past 20 years Austrian legal practice has developed an improvised mechanism to cope with mass claims, such as claims resulting from accidents with a large number of victims, or from illegal behaviour of businesses committed on a large scale, and thus affecting a multitude of individuals, typically consumers. This mechanism has been (unofficially) addressed as ‘class action Austrian style’.
The mechanism is as follows: an interested party (a legal entity or, theoretically, a natural person) that is willing to act as plaintiff (typically a consumer organisation), will accept assignments of claims not just from one single owner of a claim (usually a consumer), or from just a few owners of claims (usually consumers), but rather will accept assignments of claims from any and all consumers who consider themselves entitled to raise identical, or, at least, very similar claims against the same defendant and who are willing to assign their claims to this entity (usually a consumer organisation). As in the case of a ‘model action’ (actions under section 502, paragraph 5, No. 3 of the ZPO, see directly above) this assignment is of a purely formal nature only. In economic terms, the owners of the claim remain entitled to collect the eventual proceeds of the litigation. Subsequently, this entity (the plaintiff) will bring a single action against the defendant that combines all claims that have previously been assigned to the entity. Thus, the monetary value of the aggregated claims is usually rather high, which, in turn, makes it possible for the plaintiff to obtain third-party litigation funding. In Austrian legal practice, a number of mass claims have been brought in Austrian courts in this manner over the past 20 years and have subsequently been settled.
The aforementioned actions can be brought in ordinary civil courts.Frequency of class actions
How common are class actions in your jurisdiction? What has been the recent attitude of lawmakers and the judiciary to class actions?
See question 1. Actions under section 28 et seq of the KSchG and section 14 of the Act UWG (ie, ‘actions brought by [specific] organisations’) and actions under section 502, paragraph 5, No. 3 of the ZPO (ie, ‘model actions’) are quite common and long-standing practice under Austrian law, in particular under Austrian consumer protection law.
However, ‘class actions Austrian style’ have also been used for approximately the past 20 years, typically by consumer organisations, and in some cases also by other entities that have been interested or willing to act as plaintiffs in mass claims cases. The initial reaction of the judiciary to such ‘class actions Austrian style’ was in many instances rather hostile. Eventually, decisions handed down by the OGH confirmed that such actions are - although not expressly mentioned in the ZPO - in accordance with the law under certain conditions (see question 3). The OGH has admitted more than once that there is an obvious need for an effective mechanism to resolve mass claims. In 2007, the Austrian Ministry of Justice, with the assistance of various public interest groups, even drafted and published a draft statute on class or group actions. However, until now, political differences between the partners of the various Austrian coalition governments that have been in power ever since have prevented this draft from ever being enacted. In 2016, the Austrian Ministry of Justice once again formed a working group on collective redress and considered suggestions to introduce reforms, but, as in previous years, this did not result in any legislation being passed. In September 2017, the President of the EU Commission announced the New Deal for Consumers, which aimed at strengthening enforcement of EU consumer law amid a growing risk of infringements. In April 2018, the EU Commission adopted the New Deal for Consumers, a package composed of two proposals for Directives, one of them being the proposal on representative actions for the protection of the collective interests of consumers and repealing the Injunctions Directive 2009/22/EC (Representative Actions Proposal), aiming at introducing and harmonising a collective redress mechanism on an EU-wide scale. Under the Austrian EU Presidency (during the second half of 2018), this initiative has been carried forward. As of April 2019 the European Parliament and the Council have reached a provisional agreement on stronger and better enforced consumer protection rules. Work on the aforementioned Directive continues in the European Parliament and the Council. In May 2018, the EU General Data Protection Regulation (GDPR) entered into force. Article 80 of the GDPR provided for - albeit optional - collective redress mechanisms in the field of data protection. However, as a result of heavy opposition from the Austrian Chamber of Commerce and other pro-business interest groups, Austrian lawmakers chose not to make use of these options. As a consequence, Austria presently remains one of the last EU member states that does not have any effective collective redress mechanisms, at least not in the field of compensatory relief.Legal basis
What is the legal basis for class actions? Is it derived from statute or case law?
The ‘class action Austrian style’ (see question 1) is based on a combination of the model action (see question 1) and a particular provision of the ZPO, namely section 227. Section 227 of the ZPO allows a plaintiff that raises more than just one claim against the same defendant to bring all claims in one single action. The only requirements are:
- the court before which the action is brought must be competent to hear and decide all claims that have been combined in the action; and
- the same type of proceeding must be available for all claims that have been combined in the action.
In addition to the aforementioned requirements, case law handed down by the OGH has added two additional requirements:
- all claims must be based on a highly similar (albeit not necessarily identical) cause of action; and
- all claims must raise highly similar (albeit not necessarily identical) questions of fact or law.
What types of claims may be filed as class actions?
‘Actions brought by (specific) organisations’ are available only where the defendant has allegedly violated certain provisions of the KSchG or of the UWG.
Model actions are, in principle, available for all types of causes of action. However, because, in practice, only consumer organisations make use of this type of action, such actions are mostly aimed at obtaining damages on behalf of an individual consumer. The respective cause of action can be any appropriate provision under Austrian law.
The same is true for ‘class actions Austrian style’.Relief
What relief may be sought in class proceedings?
‘Actions brought by (specific) organisations’ can be aimed exclusively at injunctive relief; that is, at judgments ordering the defendant to cease and desist, or, in other words, to abstain from a behaviour violating provisions under the KSchG or under the UWG. These actions, therefore, cannot be used to claim damages (ie, no compensatory relief).
Model actions under section 502, paragraph 5, No. 3 of the ZPO, by contrast, can be aimed at all types of relief available under Austrian law, including compensatory relief, as long as such claims can be assigned from the original holder of the claim (typically a consumer) to a third person (typically to a consumer organisation).
The same is true for ‘class actions Austrian style’ (see question 1).Initiating a class action and timing
How is a class action initiated? What is the limitation period for bringing a class action? Can the time limit for bringing a class action be paused? How long do class actions typically take from filing to a final decision?
As no specific statutory provisions exist for class actions under Austrian law, there are no specific provisions for how a class action is initiated and no specific limitation periods, nor are there any specific provisions for the tolling of limitation periods. In practice, a ‘class action Austrian style’ is usually initiated by a consumer organisation when there is a large number of complaints by similarly affected consumers. In such a case, Austrian consumer organisations often initiate their redress mechanism strategy by collecting data from consumers, usually via a questionnaire that they make available on the internet.
A notice with opportunity to cure prior to filing a complaint is generally not required, but it is advisable to do so in order to avoid adverse cost consequences. Section 45 of the ZPO provides that the costs of the proceedings must be borne by the plaintiff if the defendant has not given cause for action and accepted the claim at the first opportunity. Typically, class actions take three to five years.