Q&A: conducting litigation in Austria

Litigation

What is the structure of the civil court system?

On the first level, civil proceedings are initiated before either the district court or the regional courts.

District courts have jurisdiction in most disputes relating to tenancy and family law (subject matter jurisdiction) and in matters with an amount in dispute of up to €15,000 (monetary jurisdiction). Appeals on points of fact and law are to be made to the regional courts. If a legal question of fundamental importance is concerned, another final appeal can be submitted to the Supreme Court.

Regional courts have monetary jurisdiction in matters involving an amount in dispute exceeding €15,000 and subject matter jurisdiction in intellectual property and competition matters, as well as various specific statutes (the Public Liability Act, the Data Protection Act and the Austrian Nuclear Liability Act). Appeals are to be directed to the higher regional courts. The third and final appeal goes to the Supreme Court.

With respect to commercial matters, special commercial courts exist only in Vienna. Apart from that, the above-mentioned ordinary courts decide as commercial courts. Commercial matters are, for example, actions against business people or companies in connection with commercial transactions, unfair competition matters and the like. Other special courts are the labour courts, which have jurisdiction over all civil law disputes between employers and employees resulting from (former) employment as well as over social security and pension cases. In both commercial (insofar as commercial courts decide in panels) and labour matters, lay judges and professional judges decide together. The Court of Appeal in Vienna decides as the Cartel Court on the trial level. This is the only Cartel Court in Austria. Appeals are decided by the Supreme Court as the Appellate Cartel Court. In cartel matters, lay judges also sit on the bench with professional judges.

What is the role of the judge and the jury in civil proceedings?

Compared to common law countries, the role of Austrian judges is rather inquisitorial: to establish the relevant facts, judges can order witnesses to appear at a hearing, unless this is opposed by both parties, or otherwise appoint experts at their own discretion. In some proceedings, the tribunal will consist of a panel involving ‘expert’ lay judges, especially in antitrust cases, and ‘informed’ lay judges in labour and public interest matters.

What are the time limits for bringing civil claims?

Limitation periods are determined by substantive law.

Claims are not enforceable once they become statute-barred. The statute of limitations generally commences when a right could have been first exercised. Austrian law distinguishes between long and short limitation periods. The long limitation period is 30 years and applies whenever special provisions do not provide otherwise. The short limitation period is three years (which can be extended or waived) and applies, for example, to accounts receivable or damage claims.

The statute of limitations must be argued explicitly by one party, yet must not be taken into consideration by the initiative of the court (ex officio).

Are there any pre-action considerations the parties should take into account?

No, there is not. However, as a matter of general practice, a claimant will give notice to his or her opponent before commencing proceedings.

How are civil proceedings commenced? How and when are the parties to the proceedings notified of their commencement? Do the courts have the capacity to handle their caseload?

The proceedings are initiated by submitting a statement of claim with the court. The statement of claim is considered officially submitted upon receipt.

Service is usually effected by registered mail (or, once represented by a lawyer, via electronic court traffic, namely an electronic communication system connecting courts and law offices). The document is deemed served at the date on which the document is physically delivered to the recipient (or available for viewing).

Within the European Union, the Service Regulation (Council Regulation (EC) 1393/2007 of 13 November 2007 on the service in the member states of judicial and extrajudicial documents in civil or commercial matters) applies. Service to international organisations or foreigners enjoying immunities under public international law is effected with the assistance of the Austrian Ministry for Foreign Affairs. In all other cases, service abroad is effected in accordance with the respective treaties (particularly the Hague Service Convention).

What is the typical procedure and timetable for a civil claim?

The statement of claim is filed with the court and passed on to the defendant, along with an order to file a statement of defence. If the defendant replies in time (four weeks from receipt), a preparatory hearing will be held, which mainly serves the purpose of shaping the further proceedings by discussing the main legal and factual questions at hand as well as questions of evidence (documents, witnesses and experts). In addition, settlement options may be discussed. After an exchange of briefs, the main hearings follow.

The average duration of first instance litigation is one year. However, complex litigation may take significantly longer. At the appellate stage, a decision is handed down after approximately six months. In this regard, there are no expedited trial procedures available in Austrian civil litigation.

Can the parties control the procedure and the timetable?

The courts allocate the cases in accordance with criteria defined on a regular basis by a particular senate.

Proceedings are primarily controlled by the judge in charge of the schedule. The judge orders the parties to submit briefs and produce evidence within a certain period of time. If necessary, the experts are also nominated by the judge. However, the parties may file procedural motions (eg, for a time extension), yet may also agree on a stay of the proceedings.

Is there a duty to preserve documents and other evidence pending trial? Must parties share relevant documents (including those unhelpful to their case)?

If a party manages to show that the opposing party is in possession of a specific document, the court may issue a submission order if:

• the party in possession has expressly referred to the document in question as evidence for its own allegations;
• the party in possession is under a legal obligation to hand it over to the other party; or
• the document in question was made in the legal interest of both parties, certifies a mutual legal relationship between them, or contains written statements that were made between them during negotiations of a legal act.

The presentation of other documents may be refused if they concern family life, the opposing party would violate obligations of honour by presenting the document, the disclosure of documents would lead to the disgrace of the party or of any other person or involves the risk of criminal prosecution, or if the disclosure violates any state-approved obligation of secrecy of the party from which it is not released or infringes on a business secret (or for any other reason similar to the above).

There are no special rules concerning the disclosure of electronic documents or acceptable practices for conducting e-disclosure. Lastly, rules on pre-action disclosure do not exist.

Are any documents privileged? Would advice from an in-house lawyer (whether local or foreign) also be privileged?

Following the attorneys’ professional confidentiality rules, there is no obligation to produce documents unless the attorney advised both parties in connection with the disputed legal act. Attorneys have the right of refusal to give oral evidence if information was made available to them in their professional capacity.

Do parties exchange written evidence from witnesses and experts prior to trial?

No – evidence is taken during the course of the litigation, not before. The parties are required to produce the evidence supporting their respective allegations or where the burden of proof is on them, respectively.

How is evidence presented at trial? Do witnesses and experts give oral evidence?

The main types of evidence are documents, party and witness testimony, expert testimony and judicial inspection. Written witness statements are not admissible.

There are no depositions and no written witness statements. Therefore, witnesses are obliged to appear at the hearing and testify. Witnesses are examined by the judge followed by (additional) questions by the legal representatives of the parties.

Restrictions on this obligation exist (eg, privileges for lawyers, doctors, priests or in connection with the possible incrimination of close relatives).

While the (ordinary) witness gives testimony concerning facts, the expert witness provides the court with knowledge that the judge cannot have. Expert evidence is taken before the trial court. An expert witness may be requested by the parties yet also called on the judge’s own motion. An expert witness is required to submit his or her findings in a report. Oral comments and explanations must be given during the hearing (if requested by the parties). Private reports are not considered to be expert reports within the meaning of the Austrian Code of Civil Procedure; they have the status of a private document.

As there is no room for concurrent evidence, no such rules exist.

What interim remedies are available?

The granting of interim measures is regulated by the Austrian Enforcement Act. In general, Austrian law provides for three main types of interim measures:

• to secure a monetary claim;
• to secure a claim for specific performance; and
• to secure a right or legal relationship.

The parties may turn to the court for assistance with safeguarding evidence both before and after a statement of claim has been filed. The required legal interest is considered established if the future availability of the evidence is uncertain or if it is necessary to examine the current status of an object.

What substantive remedies are available?

Restitution in kind will be ordered by the court at the request of the creditor only if it is possible or feasible to perform. Compensation can be ordered for material damage, comprising actual loss or lost profits, or both, depending on the degree of fault of the breaching party. Compensation for non-material damage can be awarded for pain and suffering, non-material damage resulting from injury to sexual self-determination, significant violations of privacy, and others. It should be also noted that article 82 of the General Data Protection Regulation provides for possible compensation for non-material damages.

Parties may also negotiate a contractual penalty payable in the event of the debtor’s failure to (properly) fulfil contractual obligations. The judge retains the power to reduce an excessive contractual penalty.

The statutory interest rate payable on monetary judgments is set at 4 per cent per year. However, monetary claims deriving from commercial transactions are subject to a higher interest rate in addition to the statutory base interest rate. The higher interest rate for such cases is determined by the Austrian National Bank. Punitive damages are not available.

What means of enforcement are available?

The enforcement of judgments is regulated by the Austrian Enforcement Act.

Austrian enforcement law provides for various types of enforcement. A distinction is made between a title to be enforced directed at a monetary claim or at a claim for specific performance, and against which asset enforcement is to be levied.

Generally, the usual methods for enforcement are:

• seizure of property;
• attachment and transfer of receivables;
• compulsory leasing; and
• judicial action.

Enforcement will be executed by a bailiff, who is an executive of the court and must comply with the court’s orders. With respect to immovable property, three types of enforcement measures are available:

• compulsory mortgage;
• compulsory administration, with the goal of generating revenue to satisfy the claim; and
• compulsory sale of an immovable asset.

With respect to movable property, Austrian law distinguishes between:

• attachment of receivables;
• attachment of tangible and movable objects;
• attachment of claims for delivery against third-party debtors; and
• attachment of other property rights.

Austrian law does not allow for the attachment of certain specific receivables, such as nursing allowance, rent aid, family allowance and scholarships.

Are court hearings held in public? Are court documents available to the public?

In most cases, court hearings are open to the public, although a party may ask the court to exclude the public from the hearing, provided that the party can show a justifiable interest for the exclusion of the public.

In principle, file inspection is only permitted to parties involved in the proceedings. Third parties may inspect files or even join the proceedings if they can demonstrate sufficient legal interest (in the potential outcome of the proceedings).

Does the court have power to order costs?

In its final judgment, the court will order who will have to bear the procedural costs (including court fees, legal fees and certain other costs of the parties (eg, costs for the safeguarding of evidence and travel expenses)). In principle, however, the prevailing party is entitled to reimbursement by the losing party of all costs of the proceedings. The court’s decision on costs is subject to redress, along with or without an appeal on the court’s decision on the merits.

According to the Austrian Court Fees Act, the claimant (appellant) must advance the costs. The amount is determined on the basis of the amount in dispute. The decision states who should bear the costs or the proportion in which the costs of the proceedings are to be shared.

Lawyers’ fees are reimbursed pursuant to the Austrian Lawyers’ Fees Act irrespective of the agreement between the prevailing party and its attorney. Thus, the reimbursable amount may be lower than the actual payable legal fee, as any claim for reimbursement is limited to necessary costs. There are no rules on costs budgets; therefore, there are no requirements to provide a detailed breakdown for each stage of the litigation.

Upon request, a claimant residing outside the European Union may be ordered to arrange for a security deposit covering the defendant’s potential procedural costs unless bilateral or multilateral treaties provide otherwise. This also does not apply if the claimant has its residence in Austria, the court’s (cost) decision is enforceable in the claimant’s residence state or the claimant disposes of sufficient immovable assets in Austria.

Are ‘no win, no fee’ agreements, or other types of contingency or conditional fee arrangements between lawyers and their clients, available to parties? May parties bring proceedings using third-party funding? If so, may the third party take a share of any proceeds of the claim? May a party to litigation share its risk with a third party?

Unless agreed otherwise, lawyers’ fees are subject to the Austrian Lawyers’ Fees Act. Agreements on hourly fees are permissible and common. Lump sum fees are not prohibited but are less commonly used in litigious matters. Contingency fees are only permissible if they are not calculated as a percentage of the amount awarded by the court (pactum de quota litis).

Legal aid is granted to parties who cannot afford to pay costs and fees. If the respective party can prove that the financial means are insufficient, court fees are reprieved or even waived, and an attorney is provided free of charge.

Third-party financing is permitted and usually available for higher amounts in dispute (minimum approximately €50,000), yet it is more flexible regarding fee agreements. Fee agreements that give a part of the proceeds to the lawyer are prohibited.

Is insurance available to cover all or part of a party’s legal costs?

Insurance for legal costs is commonly available in Austria and may – depending on the individual insurance policy – cover a wide range of costs arising out of legal proceedings, including the party’s costs and potential liability for the counterparty’s costs.

May litigants with similar claims bring a form of collective redress? In what circumstances is this permitted?

Although the Austrian Code of Civil Procedure does not contain any provision on class actions, the Austrian Supreme Court held that a ‘class action with a specific Austrian character’ is legally permissible. The Austrian Code of Civil Procedure allows a consolidation of claims of the same plaintiff against the same defendant.

A joinder may be filed if the court has jurisdiction for all claims, the same type of procedure applies or the subject matter is of the same nature regarding facts and law. Another possibility is to organise mass claims and assign them to an institution that then proceeds as a single claimant.

On what grounds and in what circumstances can the parties appeal? Is there a right of further appeal?

There are ordinary appeals against the judgment of a trial court and appeals against the judgment of an appellate court. Procedural court orders can be challenged as well; the procedure in principle follows the same rules as appeals.

An appeal against a judgment suspends its legal validity and – with few exceptions − its enforceability. As a general rule, new allegations, claims, defences and evidence must not be introduced (they will be disregarded). Other remedies are actions for annulment or for the reopening of proceedings.

An appeal may be filed for four main reasons, including:

• procedural errors;
• unjustified exclusion of evidence;
• incorrect statement of facts; and
• incorrect application of the law.

Following an appeal, the appellate court may set aside the judgment and refer the case back to the court of first instance, or it may either alter or confirm the judgment.

Finally, a matter may only be appealed to the Supreme Court if the subject matter involves the resolution of a legal issue of general interest, namely if its clarification is important for purposes of legal consistency, predictability or development, or in the absence of coherent and previous decisions of the Supreme Court.

What procedures exist for recognition and enforcement of foreign judgments?

In addition to the numerous bilateral and multilateral instruments that Austria has concluded, the Austrian Enforcement Act, the Austrian Code of Civil Procedure and the Austrian Jurisdiction Act govern the recognition and enforcement of foreign judgments. In the case of a conflict between statutory law provisions and applicable treaty provisions, the latter will prevail. Although Austrian case law is not binding, it is given careful consideration.

Austria is a signatory to many bilateral and multilateral instruments. The most important in this regard is the Brussels Ia Regulation (Regulation (EU) No. 1215/2012 of 12 December 2012 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Recast)). The Brussels Ia Regulation lays down uniform rules to facilitate the free circulation of judgments in the European Union and applies to legal proceedings instituted on or after 10 January 2015.

The Brussels Ia Regulation replaces Council Regulation (EC) No. 44/2001 of 22 December 2000 (the Brussels I Regulation, together with the Brussels Ia Regulation and others, ‘the Brussels regime’), which remains applicable to all legal proceedings instituted prior to 10 January 2015.

The basic requirements for enforceability include the following:

• the award is enforceable in the state of issuance of the judgment;
• an international treaty or domestic regulation expressly provides for reciprocity between Austria and the state of issuance in the recognition and enforcement of judgments;
• the document instituting the proceedings was properly served on the defendant;
• the judgment to be enforced is produced with a certified translation; and
• there are no grounds on which to refuse recognition of enforceability.

A party seeking enforcement must request leave for enforcement from the respective court. The application for a declaration of enforceability must be submitted to the court of the place where the debtor is domiciled. The party may combine this request with a request for an enforcement authorisation. In such a case, the court will decide on both simultaneously.

Once a foreign judgment has been declared enforceable in Austria, its execution follows the same rules as those for a domestic judgment, meaning that the enforcement of judgments is regulated by the Austrian Enforcement Act.

Are there any procedures for obtaining oral or documentary evidence for use in civil proceedings in other jurisdictions?

In the European Union, the procedure for obtaining oral or documentary evidence from other jurisdictions is regulated by the Evidence Regulation (Council Regulation (EC) No. 1206/2001 of 28 May 2001 on cooperation between the courts of the member states in the taking of evidence in civil or commercial matters). In this regard, the regulation applies to both oral and documentary evidence and stipulates that judicial assistance requests may be communicated directly between the courts.

Bilateral treaties may apply for judicial assistance requests outside of the European Union.