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.
What are the standing requirements for a class action?
‘Actions brought by (specific) organisations’ that are aimed at injunctive relief only, can only be brought by organisations enumerated in the relevant statutory provisions; namely, section 28 et seq of the KSchG and section 14 of the UWG. In essence, this means consumer organisations only.
The same is true for model actions under section 502, paragraph 5, No. 3 of the ZPO (see question 1).
‘Class actions Austrian style’ (see question 1) can, theoretically, be brought by any entity that is willing to accept assignments of claims from a multitude of owners of claims, and that is subsequently willing to act as plaintiff. In practice, however, it is mostly consumer organisations that serve as plaintiffs in ‘class actions Austrian style’.Participation
Do members of a class have to opt in or opt out of the action? Are class members notified that an action has been commenced on their behalf and, if so, how?
As no genuine class action exists in Austria, there is no opt-out mechanism either. The ‘class action Austrian style’ functions in a similar manner as an opt-in mechanism, as in order for an owner of a claim to participate in such an action it is necessary to expressly assign one’s claim to the plaintiff. This assignment, however, is of a purely formal nature only. In economic terms, the owner of the claim remains entitled to eventually collect the proceeds of the litigation.Certification requirements
What are the requirements for a case to be filed as a class action?
For ‘class actions Austrian style’, there is no minimum number of persons required. As to the other requirements provided under Austrian statutory and case law, see question 3.
How does a court determine whether the case qualifies for a class action?
The fulfilment of the requirements for a ‘class action Austrian style’, in particular the fulfilment of the requirements set out by case law (see question 3), is often disputed by the respective defendant. In such cases the court will hold a hearing and render a decision of the admissibility of the ‘class action Austrian style’. This can be quite time-consuming, taking one year or even two years, in particular where the decision of the court of first instance is being appealed against. As regards evidentiary requirements, the fulfilment of the requirements for a ‘class action Austrian style’ will be assessed mostly on the basis of the plaintiff’s pleadings and the documentary evidence provided by the plaintiff.Consolidation
Is there a process for consolidating multiple class action filings?
As no specific statutory provisions exist for class actions under Austrian law, no specific statutory provisions exist for consolidating multiple class action filings. However, the statute provides for the possibility of consolidating (ordinary) civil proceedings that are pending before one and the same court, and that are: pending between the same parties, in other words, the plaintiff and defendant are the same persons; where the defendant is the same person; or where the plaintiff is the same person. In such a situation, section 187 of the ZPO allows for the possibility of consolidation of proceedings.
There are no official databases that allow plaintiffs to find out about competing actions in other fora. The courts, however, have access to an electronic administration system.
How does discovery work in class actions?
It is important to understand that Austrian civil procedure does not provide for ‘discovery’ in the strict sense (ie, for discovery in the form of, eg, a US-American style litigation). Under Austrian law, defendants are, in principle, not obliged to disclose information or documents to the plaintiff, even if the information or documents were relevant to the case. There are some limited exceptions to this rule (see section 304 et seq of the ZPO). All this is also true for the types of proceedings described here.
Rarely has a ‘class action Austrian style’ ever been adjudicated. Most ‘class actions Austrian style’ have eventually been settled. If, however, the proceeding goes into the stage of taking evidence, for example, the testimony of witnesses or the examination of documents, or having an expert witness render his or her opinion on specific questions of fact (all of which, in Austria, is not done pretrial but, rather, as a part of the court proceeding), one has to distinguish between:
- questions of fact that are common to all claims that have been combined in the ‘class action Austrian style’; and
- questions of fact that pertain to the individual claims only.
The taking of evidence relevant to questions of fact that are common to all claims that have been combined in the ‘class action Austrian style’ would, typically, be conducted at a first stage of the litigation over a ‘class action Austrian style’. Subsequently, the taking of evidence relevant to questions of fact that pertain to the individual claims only, would be conducted.Privilege and confidentiality
What rules and standards govern non-disclosure of documents on the grounds of professional privilege, litigation privilege or other confidentiality considerations?
Under Austrian law, defendants are, in principle, not obliged to disclose information or documents to the plaintiff, even if the information or documents are relevant to the case. However, section 303 paragraph 1 of the ZPO provides that, if a party claims that a document substantial for the party’s reasoning is in the possession of the opponent, the court may, at the request of the party, order the opponent to present the document. Section 305 No. 4 of the ZPO provides that the presenting of documents can be refused, if, by disclosing the document, the party would breach a state-recognised duty of confidentiality from which he or she was not released, or a trade or business secret. Section 304 paragraph 1 of the ZPO, however, provides that the party cannot refuse the disclosure of documents if the party itself has referred to the document for the purpose of proof, if the party is obliged by civil law to hand over or present the document, or, if the document is - according to its content - mutual to both parties.
There are no specific statutory provisions on non-disclosure for class actions.Testimony
What rules apply to submission of factual and expert witness testimony? In what circumstances will the court order witness-examination?
In general the plaintiff or the defendant must request the hearing of a witness or an expert opinion. Usually the court approves the request. The court may dismiss the request, if the evidence offered by the parties appears irrelevant, if the court deems the claim considered and ripe for decision, if the request was delayed, or, if it was grossly culpably not brought forward earlier and its approval would significantly delay the proceedings.
There are no specific statutory provisions for the submission of factual and expert witness testimony for class actions.
What mechanisms and strategies are available to class-action defendants?
Defendants tend to dispute the procedural requirements for ‘class actions Austrian style’, (ie, the defendants typically contest the similarity of claims). Regarding the similarity of claims, see questions 1 and 3.Joint defence agreements
What rules and standards govern joint defence agreements? Are they discoverable? What are the advantages and disadvantages of these agreements?
SettlementApproval of settlements
Describe the process and requirements for approval of a class-action settlement.
As ‘class action Austrian style’ will only affect those owners of claims who have assigned their claims to the plaintiff (usually a consumer organisation), and there is, therefore, no legal effect of a settlement upon owners of claims outside this group, there is no need for approval of a class action settlement by a court or similar institution. It is, at least in principle, however, conceivable that the agreement by which the original owners of the claims assign their claims to the entity that then, formally, serves as plaintiff, provides for some mechanism by which a certain majority of the assignors would have to agree to a settlement negotiated by plaintiff and defendant.Objections to settlement
May class members object to a settlement? How?
In a ‘class action Austrian style’ this will depend on what the assignee (usually a consumer organisation) has agreed upon with the original owners of the claims (see question 17). In principle, to make a ‘class action Austrian style’ operable, the assignee will rather not allow for any objections to an eventual settlement.Separate settlements
How are separate class action settlements handled?
Plaintiffs and defendants are free to settle either all or only parts of the claims.
Judgment and appealPreclusive effect
What is the preclusive effect of a final judgment in a class action?
The ‘class action Austrian style’ has legal effect only upon those owners of claims who had previously assigned their claims to the plaintiff (usually a consumer organisation).Appeals
What type of appellate review is available with respect to class-action decisions?
As the ‘class action Austrian style’ is not regulated expressly in the ZPO, there are no specific provisions relating to appellate review of such proceedings. However, if the plaintiff is an organisation enumerated under section 29 of the KSchG; that is, in practice, the Austrian Association of Consumer Information or the Austrian Chamber of Labour, appeals against a first instance judgment can be launched irrespective of the amount of the value at dispute.
What role do regulators play in connection with class actions?
Not applicable.Private enforcement
Describe any incentives the civil or criminal systems provide to facilitate follow-on actions.
There are several incentives to facilitate follow-on actions. For example, Section 37h, paragraph 2, No. 1 of the Antitrust Law (KartellG) provides that the limitation period of the right to claim compensation for damages caused by a breach of competition law, is tolled for the duration of proceedings aimed at the decision of a competition authority about the infringement of competition law.
Furthermore, Section 37i, paragraph 2 of the KartellG provides that a court that has to decide on the compensation for damages caused by a breach of competition law, is bound by the legally binding decision of a competition authority that a breach of competition law has been committed.
Alternative dispute resolutionArbitration and ADR
What role do arbitration and other forms of alternative dispute resolution play in class actions? Can arbitration clauses lawfully contain class-action waivers?
Arbitration has, as far as has been published, not been used in class actions. However, after having been brought in court, several class actions were eventually resolved by mediation.Court-ordered mediation
Do courts order pretrial mediation in class actions? Does the appointment of a mediator make it more likely that the court will approve a settlement?
The ZPO does not provide for court-ordered mediation. However, after having been brought in court, several class actions were eventually resolved by mediation. As ‘class actions Austrian style’ will only affect those owners of claims who have assigned their claims to the plaintiff (usually a consumer organisation), and there is, therefore, no legal effect of a settlement upon owners of claims outside this group, there is no need for approval of a class action settlement by a court or similar institution.
Fees, costs and fundingContingency fees
What are the rules regarding contingency fee agreements for plaintiffs’ lawyers in a class action?
Contingency fees for lawyers are prohibited under Austrian law (section 879 of the Austrian Civil Code). However, most ‘class actions Austrian style’ have been financed by third-party litigation funding companies (see question 29).Cost burden
What are the rules regarding a losing party’s obligation to pay the prevailing party’s attorneys’ fees and litigation costs in a class action?
Under Austrian law on civil procedure, the losing party is obliged to pay the prevailing party’s attorney’s fees and other litigation costs, such as court fees (which are high in Austria) in the amount stipulated by statutory law.Calculation
How are costs calculated? What costs are typically recovered? Does cost calculation differ in the litigation and settlement contexts?
Under Austrian law on civil procedure, the losing party is obliged to pay the prevailing party’s attorney’s fees and other litigation costs, such as court fees (which are high in Austria) in the amount stipulated by statutory law. The lawyers’ fees are stipulated in the Lawyers’ Fees Act (RATG). In case of a settlement, the parties are free to decide whether, how and to which extent costs will be reimbursed.Third-party funding
Is third-party funding of class actions permitted?
Third-party litigation funding has been used in Austrian litigation for the past 20 years. As contingency fees for plaintiffs’ attorneys are prohibited in Austria (see question 26), this practice has often been disputed as being in conflict with Austrian law as well. Case law on the admissibility of third-party funding is still very rare in Austria. However, the OGH has ruled that a defendant cannot avail itself of this argument as a defence. In other words, the admissibility of third-party litigation funding is a question exclusively between the owners of the claims and the litigation funding company.Public funding
Is legal aid or other public funding available for class actions?
Most ‘class actions Austrian style’ are financed by third-party litigation funding companies; public funding is possible too.
Section 63 paragraph 1 of the Code of Civil Procedure provides for legal aid; it shall be granted if a party is unable to pay the costs of conducting proceedings without endangering the party’s necessary livelihood and the intended claim or defence does not appear to be evidently wanton or to have no prospect of success. Typically, the financial requirements are not met when it comes to ‘class actions Austrian style’.Insurance
Are adverse costs, adverse litigation judgment or after-the-event insurance available?
Third-party litigation financing is available.Transfer of claims
Can plaintiffs sell their claim to another party?
Yes, to the extent that no contractual obligation exists to the contrary.Distributing compensation
If distribution of compensation to class members is problematic, what happens to the award?
In Austrian practice, distribution of compensation awarded by an eventual judgment, or by means of a settlement, has not been problematic. This is owing to the fact that in a ‘class action Austrian style’ claim owners have previously assigned their claims to the plaintiff (usually a consumer organisation), and the mechanism of distribution is, therefore, usually precisely agreed upon beforehand.
Update and trendsLegal and regulatory developments
What legislative, regulatory or judicial developments related to class actions are on the horizon?Legal and regulatory developments34 What legislative, regulatory or judicial developments related to class actions are on the horizon?
The implementation of the ‘New Deal for Consumers’ may be on the horizon, as soon as the directives have been enacted (see question 2).