Arbitration has become an indispensable alternative to often expensive, extended, and inefficient proceedings before state courts. The reasons for the success of (mainly international but also domestic) arbitration include the ability to have the dispute settled by a panel of experts who can be nominated by the parties based on their specific qualifications, and, most significantly, the almost universal enforceability of arbitral awards under the umbrella of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Additional benefits include confidentiality, (cost) efficiency, and the generally shorter duration of arbitral proceedings.
Against this background, competition for international arbitral proceedings has become fierce in recent years, especially from the arbitration institutions’ perspective. Austria’s history as a strategically well-located and neutral country has made it a popular place for international arbitral proceedings – which it remains today. Beyond that – or perhaps because of that – Austria is an arbitration-friendly jurisdiction. Austrian courts in general have a positive approach towards arbitration agreements and show a strong preference for upholding arbitration agreements as valid, provided that formal and minimum content requirements have been met. With the Austrian Arbitration Act of 2006, Austria has adopted (with only minor changes) the UNCITRAL Model Law as its law of arbitration, thereby ensuring that the internationally acknowledged standards for arbitration are incorporated into Austrian law. Furthermore, under Austrian arbitration law there are only a limited number of grounds on which arbitral awards may be challenged.
However, most recently, international arbitration has been scrutinized, and questions have been raised about whether arbitral proceedings actually are as flexible and time-and-cost efficient as arbitration practitioners have claimed. As a result, Austria took up the challenge of modernizing its procedural rules in order to meet the expectations of parties interested in arbitration. Additionally, the Vienna International Arbitral Centre (VIAC) amended its rules to adapt to recent trends (such as an increase in multi-party proceedings), and to address concerns about a lack of flexibility or efficiency (e.g. by introducing fast track proceedings).
Single Instance to Challenge Awards
By virtue of the Austrian Arbitration Law Reform Act of 2013 (which entered into force on January 1, 2014), the number of court instances empowered to review arbitration matters has been narrowed from three to one. Parties now have direct access to the Austrian Supreme Court, which acts as first and last instance for all appeals to have arbitral awards set aside and for decisions on the validity and existence of awards and procedures regarding constitution of the arbitral tribunals. Arbitration proceedings involving consumers and labor law matters are still regulated under the former regime and thus may pass three court instances.
VIAC Rules 2013
As of July 1, 2013, the new Vienna Rules of the VIAC apply to all proceedings initiated on or after that date. Particularly by introducing the possibility of a fast track procedure, VIAC has reacted to critical voices saying that arbitral proceedings are not as efficient as they should be. The new VIAC Rules also introduced new regulations regarding the joinder of parties and the consolidation of proceedings, which is now allowed if: (i) the parties agree; or (ii) the same arbitrators were nominated or appointed and the place of arbitration in all of the arbitration agreements on which the claims are based is the same. The responsibility for approving consolidation lies with the VIAC Board after having heard the parties and the arbitrators. Furthermore, the parties can now agree to fast track proceedings, in which the final award will be rendered within six months from the transmission of the file to the arbitral tribunal, unless this time frame is extended. Additionally, the arbitral tribunal now has wider discretion in ordering third parties to join proceedings upon the request of a party or a third party.
The amendments to Austrian arbitration law and the adoption of the new VIAC Rules are important steps to maintaining and increasing the attractiveness of Austria as a player in the field of international arbitration. From the perspective of Austrian lawyers nowadays it is in any case state of the art to inform and advise clients about the possibility or – depending on the circumstances of the contractual relationship in question and on the parties to the contract – even the necessity of including arbitration clauses in international contracts. With the modernization measures taken over the last two years, Austria is perfectly prepared for new arbitral proceedings to come in the future.
Arbitration is rapidly paving its way into the Polish market as a fast, efficient, and cost-effective dispute resolution alternative to Polish state courts. In recent years, economic growth in Poland has gone hand-in-hand with the development of arbitration as a dispute resolution method. Meanwhile, the growth of arbitration has also been accompanied by an arbitration-friendly approach of Polish state courts, which have consistently accepted the limited scope of review of arbitral awards.
Wojciech Kozlowski, Partner and Michal Jochemczak, Counsel, Dentons
This Article was originally published in Issue 5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.