Austria updates

Arbitration & ADR

Contributed by Graf & Pitkowitz Rechtsanwalte GmbH
Supreme Court scrutinises admissibility of videoconference hearings
  • Austria
  • 29 October 2020

The Supreme Court recently determined the admissibility of conducting an arbitral hearing by means of a videoconference in the context of challenge proceedings. The court held that even where one party opposes, ordering a remote hearing in arbitration is admissible and does not constitute a reason to challenge the arbitral tribunal. This decision must be regarded as a precedential landmark decision as it appears to be the first decision of any supreme court worldwide to tackle this issue.

Supreme Court specifies reasoning standards for awards
  • Austria
  • 08 October 2020

Under longstanding Supreme Court case law, defective reasoning did not previously constitute a severe enough violation of procedural public policy to set aside an award. However, in recent years, the court has reversed this trend and repeatedly held that non-adherence to certain reasoning standards in arbitral awards can be a ground to set aside an award. In a recent decision, the Supreme Court has provided further guidance on the required reasoning standards for awards.

Supreme Court scrutinises decision awarding costs to losing party
  • Austria
  • 16 July 2020

The Supreme Court recently considered whether a final arbitral award on the reimbursement of costs violated Austrian public policy. The claimant had ultimately succeeded in the arbitration conducted under the rules of the International Court of Arbitration of the International Chamber of Commerce. Nevertheless, the cost decision ordered it to reimburse the respondent's costs. The Supreme Court dismissed the claimant's request to set aside the cost decision.

Supreme Court takes strict stance on conflict of interest
  • Austria
  • 16 January 2020

The Supreme Court recently considered whether the fact that an arbitrator and a party counsel in one arbitration acted as co-counsel in another unrelated arbitration cast doubt on the arbitrator's independence and impartiality and thus disqualified him from acting as arbitrator in the arbitration under review. In its decision, the court correctly acknowledged the reality of the Austrian arbitration scene, which results in frequent contact between practitioners.

Supreme Court evaluates hybrid arbitration agreement
  • Austria
  • 18 July 2019

The Supreme Court recently considered the validity of a hybrid arbitration agreement which provided for the formation of a tribunal under the International Chamber of Commerce Rules of Arbitration to arbitrate at the Vienna International Arbitral Centre. In this context, the court also considered the consequences of violating procedural rules agreed by the parties and the tribunal's failure to issue a reasoned award.


Banking & Financial Services

Contributed by Schima Mayer Starlinger
Oops, I did it again: Austrian banks' terms and conditions and PSD II
  • Austria
  • 24 November 2020

The European Court of Justice (ECJ) recently responded to the Supreme Court's request for a preliminary ruling and issued a decision with respect to a dispute concerning the standard terms and conditions of Deniz Bank. The ECJ also addressed an additional issue relating to the relationship between Article 52(6)(a) of the EU Payment Services Directive on tacit consent and the EU Unfair Consumer Contract Terms Directive.

Legislative moratoria on loan repayments – are certain SMEs more equal than others?
  • Austria
  • 06 October 2020

The outbreak of COVID-19 triggered various response measures across the globe. Among other measures, the Austrian legislature, similar to other European countries, has implemented a moratorium on payments of credit obligations to support operational and liquidity challenges faced by borrowers due to the pandemic. Contrary to, for example, Germany, the Austrian legislature has included, in addition to consumers, micro-enterprises in the scope of the moratorium.

COVID-19 pandemic and banking in Austria – lessons learned?
  • Austria
  • 14 July 2020

A significant part of Austria's COVID-19 subsidy programme was structured as government guarantees for bridging loans to be granted by banks to provide the economy with liquidity. Now, less than three months after the start of the programme, small and medium-sized enterprises regard this approach as disastrous, with many complaining that the granting of loans has been slow and cumbersome, despite the state guarantee, if a loan has been granted at all.

Failing banks – first application of new deposit guarantee scheme
  • Austria
  • 13 March 2020

An insolvency proceeding was recently opened for the assets of Anglo Austrian AAB AG. This was the last step in a long-lasting dispute between the bank and Austrian and EU regulators, leading to the revocation of the bank's licence. This case is notable because it is the first application of the newly enacted deposit guarantee scheme and was expected to be the first application of the insolvency provisions under the Federal Act on the Recovery and Resolution of Banks.

No worms for early birds? Lexitor and Austrian implementation of EU Consumer Credit Directive
  • Austria
  • 24 January 2020

Considering the obvious conflict with European Court of Justice case law, the Austrian legislature's aim to fully implement the EU Consumer Credit Directive and the Austrian Consumer Credit Act's intended (but directive-breaching) effects consumers, legal advisers and the courts are now confronted with the delicate question of how consumer requests for repayment should be dealt with.


Competition & Antitrust

COVID-19 crisis: shutdown mergers expected
  • Austria
  • 03 September 2020

In the wake of the global economic crises triggered by the ongoing COVID-19 crisis, the Austrian Federal Competition Authority (AFCA) expects an increased number of company takeovers in the coming months; however, the number of mergers in 2020 to date has been lower than in previous years. The AFCA holds that it would not be appropriate to relax merger control for such 'shutdown mergers', as merger control is necessary to protect the Austrian market and the country's long-term economic development.

Family business and group privilege
  • Austria
  • 27 February 2020

The cartel prohibition applies to activities between independent undertakings; however, it does not apply to activities between a controlling and a controlled undertaking, as such a subsidiary would not enjoy economic independence. This concept is referred to as 'single economic entity', which such a 'family' of undertakings may enjoy. In a recent case, the Supreme Court reviewed the question of whether such a concept would also apply in relation to a jointly controlled undertaking.

Amazon slightly changes course
  • Austria
  • 15 August 2019

Amazon has offered to change its terms and conditions following a series of Federal Competition Authority (FCA) investigations regarding business practices on the 'Amazon.de' marketplace. The FCA conducted an extensive market survey in which approximately 400 of the top-selling Austrian marketplace traders on 'Amazon.de' were interviewed in writing and via telephone. The survey results showed that Amazon had market power for a representative selection of larger Austrian marketplace traders.

Fig leaf for 'naked' cartel
  • Austria
  • 24 January 2019

A recent Cartel Court decision demonstrates how a long-term relationship between Semperit and a group of Thai companies turned into an equally lengthy disagreement, which came to a decisive turning point in the courts. The final blow landed with a decision by the Federal Cartel Authority, which imposed a fine of €1.6 million on Semperit for violating the Austrian Cartel Act and Article 101 of the Treaty on the Functioning of the European Union.


Corporate & Commercial

Judicial authorisation of transfer of shares with restricted transferability
Schoenherr
  • Austria
  • 17 February 2020

The Supreme Court recently dealt, for the first time, with the judicial authorisation of a transfer of shares with restricted transferability in joint stock companies. The court's legal reasoning will be of great interest, especially for parties undertaking transactions where only a block of shares is sold and a transfer restriction is included in the articles of association, as is often the case in Austria.

Say on pay and related party transactions: implementation of EU Shareholder Rights Directive II
  • Austria
  • 03 June 2019

With the deadline for implementing the EU Shareholder Rights Directive II (SRD II) fast approaching, the government recently published a ministerial draft of the Stock Corporation Amendment Act 2019, which addresses the rules on say on pay and related party transactions. The draft seeks to minimise the administrative burden on listed companies by avoiding any 'gold plating'. Further, it closely follows SRD II and takes advantage of business-friendly options.


Corporate Finance/M&A

Contributed by Schoenherr
New FDI screening act
  • Austria
  • 30 September 2020

In July 2020 a new foreign direct investment (FDI) screening act, the Investment Control Act (ICA), entered into force. The ICA, which largely transposes the requirements of the EU Foreign Investment Screening Regula­tion, is in line with the general EU trend of tightening or enacting FDI screening instruments, which has been fuelled by concerns of buy-outs of critical European infrastructure by foreign investors due to the COVID-19 pandemic.

Transaction price mechanisms in times of COVID-19
  • Austria
  • 12 August 2020

In times like these, parties should consider the key parameters of a contemplated transaction even more carefully. In addition to factors such as pricing, process timelines and contractual undertakings, parties must properly consider the COVID-19 pandemic's potential economic effects on targets when structuring a deal. This article outlines the differences between the two main purchase price mechanisms that can help to alleviate such economic effects and the pros and cons of each.

Supreme Court facilitates financing companies with cross-border business
  • Austria
  • 15 May 2019

For the first time, the Supreme Court has upheld a security right granted under German law, even though the asset had been transferred to Austria. Previously, such rights were terminated once the asset was moved from Germany to Austria. The decision will substantially facilitate the financing of companies with cross-border business.

Constitutional Court rules on Squeeze-Out Act's compatibility with Constitution
  • Austria
  • 31 October 2018

The Constitutional Court recently ruled on whether the Squeeze-Out Act is compatible with the Constitution. The plaintiff argued that certain provisions of the Squeeze-Out Act violate the Constitution because they restrict shareholders' property rights and the principle of equality (rights enshrined in both the Constitution and the European Convention on Human Rights). However, the Constitutional Court held that this was not the case.

Privacy-related representations in M&A agreements
  • Austria
  • 09 May 2018

Companies regularly store information about their customers, clients, employees, investors, partners and vendors. Privacy and data security are therefore important aspects of most M&A transactions. Although the risk of non-compliance with privacy laws may result in severe negative consequences, many M&A agreements still lack adequate privacy-related representations and warranties.