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17 May 2007
As a result of the entry into force of the new Austrian arbitration legislation on July 1 2006 (Sections 577 to 618 of the Civil Procedure Code), the Rules of Arbitration of the Vienna International Arbitral Centre (VIAC) of the Austrian Federal Economic Chamber needed to be updated in order to bring them into line with the new law.
The amended Vienna Rules 2006 apply to all arbitration proceedings in which the claim was filed after June 30 2006. For arbitrations begun before July 1 2006, the Vienna Rules 2001 still apply. This update considers the main amendments made by the Vienna Rules 2006.
The new Section 588(2) of the code allows for the challenge of an arbitrator who does not meet the qualifications for this function as agreed by the parties. Such qualifications may include professional experience, language skills or a specific nationality. Article 11(1) of the Vienna Rules 2001 listed "sufficient reasons to doubt the independence and impartiality of an arbitrator" as grounds for challenge. In contrast, Article 16(1) of the Vienna Rules 2006 is in line with the new legislation and now includes a lack of agreed qualifications as grounds for challenging an arbitrator.
According to Article 21 of the Vienna Rules 2006, tribunal-appointed experts may be challenged for the same reasons. A challenge to an expert is ruled on by the tribunal, unlike a challenge to an arbitrator, which is decided by the VIAC board.
Article 19(1) of the Vienna Rules 2006 includes a mechanism for the introduction of jurisdictional objections, which the Vienna Rules 2001 did not provide. The new provision states that such a plea is to be raised with the first pleading or as soon as the matter that allegedly lies outside the tribunal's jurisdiction is raised. A later jurisdiction plea will be accepted only if the tribunal considers the delay to be justified. Article 19(1) is identical to the new Section 592(2) of the code (which, in turn, corresponds to Article 16 of the United Nations Commission on International Trade Law Model Law and Section 1040 of the German Code of Civil Procedure).
According to Article 19(2) of the Vienna Rules 2006, the tribunal enjoys Kompetenz-Kompetenz and is expressly entitled to decide on jurisdiction, either along with the merits in the final award or in a preliminary award. This provision is identical to Section 592(1) of the code.
In this context, reference should be made to Section 592(3) of the code, which authorizes the tribunal to continue the arbitral proceedings and render an award even if a challenge of the tribunal's award on jurisdiction is pending.
Article 11 of the Vienna Rules 2006 establishes jurisdiction over counterclaims based on an arbitration agreement providing for the jurisdiction of the VIAC. Article 7a of the Vienna Rules 2001 required that counterclaims be based on the same arbitration agreement in order for the VIAC to have jurisdiction. This restrictive prerequisite has now been dropped. Thus, under the Vienna Rules 2006, counterclaims deriving from contracts other than that of the principal claim can be arbitrated in the proceedings dealing with the principal claim, provided that they are based on a VIAC arbitration agreement which is compatible with the arbitration agreement on which the principal claim is based.
According to the prevailing - and rather questionable - scholarly opinion, the former Austrian arbitration law did not grant tribunals the power to render interim measures. Section 593 of the code now expressly enables tribunals to do so. Sections 593(1) and (2) correspond to the nearly identical Articles 22(1) and (2) of the Vienna Rules 2006. According to the Vienna Rules 2006, a party may apply for interim measures if the enforcement of the claim would otherwise be frustrated or considerably impeded, or if there is danger of irreparable harm. The party against which the measures is sought must be heard before such measures are issued. The party applying for the measures may be requested to provide collateral. The code also provides for the enforcement of interim protection measures issued by arbitral tribunals. On the basis of Section 593(3) of the code, the competent district court will enforce the measures at the request of a party. The competent district court does not have discretion to decide whether to enforce the measures (unlike under the corresponding German legislation). The court may, however, refuse enforcement on the limited grounds listed in Section 593(4) of the code.
Article 22(6) of the Vienna Rules 2006 expressly states that the competence of the tribunal to impose interim measures does not prevent the parties from applying for interim measures before the courts.
Article 24 of the Vienna Rules 2006 likewise resulted from the harmonization of the rules with the new arbitration legislation. Pursuant to Section 603(2) of the code, in the absence of a choice of law by the parties the arbitral tribunal shall apply the rules of law that it deems appropriate. Article 16 of the Vienna Rules 2001 required an arbitrator to establish the applicable substantive law by virtue of the conflict of laws rules that he or she deemed relevant. New Article 24 (identical to Section 603 of the code) permits arbitrators to choose the rules of law that they deem appropriate, thus increasing the arbitrators' freedom to select the applicable substantive law by diverse methods and standards, which may well be different from the conflict of laws rules.
Article 29(1) of the Vienna Rules 2006 marks another step towards the modernization of the Vienna Rules. According to Articles 29(1) and (2), any party can apply to the tribunal within 30 days of receipt of the award for the correction of numerical or clerical errors or, if the parties have so agreed, for the interpretation of certain parts of the award. Setting out the parties' agreement as a prerequisite for interpretation may help to confine the practice of underlying parties applying for the interpretation of an award when their actual intention is revision of the award. Furthermore, Article 29(1)(c) of the Vienna Rules 2006 provides for the tribunal to pass an additional award on points submitted to the tribunal but not yet decided. This regulation corresponds to Section 610 of the code, which imposes a time limit of four weeks after the award for such requests.
Unlike the Vienna Rules 2001, the Vienna Rules 2006 provide in Article 36(3) that, if a party wishes to offset the principal claim against its own claims that do not bear any legal or factual connection to the principal claim, it must pay the same fees to the VIAC for the set-off as if it had submitted a counterclaim.
The Vienna Rules 2006 include an explicit regulation dealing with the collection and payment of value added tax (VAT) on arbitrators' fees in order to increase legal certainty. When taking up office, arbitrators whose fees are subject to VAT must inform the VIAC secretary general of the prospective amount of VAT (Article 36(10) of the Vienna Rules 2006). Consequently, the VAT payable on arbitrators' fees becomes a component part of the costs of arbitration requested and collected by the VIAC under Article 32(a) of the Vienna Rules 2006.
For further information on this topic please contact Gerold Zeiler or Barbara Steindl at Schönherr Rechtsanwälte by telephone (+43 1 53 43 70) or by fax (+43 1 53 43 76100) or by email (email@example.com or firstname.lastname@example.org).
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