Chambers Global Practice Guide 2021 – Litigation 2021 – Civil Law
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1.1 General characteristics of the judicial system
Austrian civil law system
The Austrian legal system is civil law. Laws are based on codes and statutes. Civil procedure provides for an adversarial procedure with inquisitorial elements: the procedure and the judge are limited to the factual allegations of the parties. The judge is not a mere “arbitrator” (for example, in the inquisitorial role of the judge, he will be the main interrogator of the parties and witnesses).
Mandatory public hearings
A public hearing is mandatory. The judge will determine all the relevant facts of the case during the hearing, hear the parties and witnesses, discuss the content of the documents and, if necessary, appoint and hear expert witnesses. Parties and lawyers have the right to question witnesses and experts. The underlying principle is that the judge (as the trier of fact) must get an immediate and personal idea of the parties, the witnesses and the case.
1.2 Judicial system
Austrian courts are organized into four levels: district courts, regional courts, higher regional courts and the Supreme Court. District courts are the courts of first instance for cases with a maximum amount in dispute of up to EUR 15,000 and, regardless of the amount in dispute, for certain matters (mainly family law and tenancy law) . The regional courts are competent to decide in the first instance on all legal cases not assigned to the district courts. They are also competent to rule on appeals against decisions of the district courts. The higher regional courts are courts of appeal for the decisions of the regional courts.
Specialized commercial courts
Commercial cases are decided by the commercial courts. In the capital, Vienna, a separate district commercial court and regional commercial court are established. In other provinces, regional (district) courts also act as commercial courts.
The Supreme Court
The Supreme Court is the highest reviewing court. No other (internal) appeal is possible against its decisions. Its function is to preserve the uniform application of the law throughout Austria. Although lower courts are not legally bound by its decisions, the Supreme Court’s case law has the character of effective precedent.
1.3 Filings and legal proceedings
Court filings are not public. The hearings are however open to the public. Public access may only be restricted if, for example, it is necessary to maintain public order, protect certain categories of information (such as bank secrecy, business or state secrets), or if the hearing involves personal family matters.
1.4 Legal representation in court
For certain disputes, the parties must be represented by a lawyer registered with the Austrian bar and cannot represent themselves. A foreign lawyer cannot represent a party in these cases
This limit applies to:
- first instance disputes before the regional courts;
- disputes before the courts of first instance if the amount in dispute exceeds 5,000 euros; and
- all appeal procedures.
In all other proceedings, the parties may (with some exceptions) be represented by any person, including a foreign lawyer.
2. Litigation Funding
2.1 Third Party Litigation Funding
The admissibility of third-party litigation funding was hotly debated in the early 2000s. Currently, third-party litigation funding is an accepted tool in Austria and is recognized without any particular restrictions . The political reason for this is the limited possibility of collective lawsuits in Austria, which is offset by third-party funding and “Austrian-style mass claims” (see 3.7 Representative or collective actions).
The state provides legal aid to parties, including legal persons unable to pay court costs.
2.2 Third Party Funding: Legal Action
There are no formal restrictions on litigation funding, but, generally, funding will only be available to plaintiffs or defendants in lawsuits involving civil cash value claims.
2.3 Third Party Funding for Plaintiff and Defendant
In most cases, funders provide financial support to the plaintiff, but this is also allowed for defendants.
2.4 Minimum and Maximum Amounts of Third-Party Funding
It is common practice for litigation funding companies to fund cases with a large financial impact, as they tend to be compensated for their services with a large share of the proceeds (around a third of them). This part must cover both the risk taken by the funder and the costs of its own lawyers. Therefore, cases with low financial impact tend to attract funders only if several similar cases are likely to emerge and collective action can be taken.
2.5 Types of Costs Considered in Third-Party Funding
Typically, litigation funding agreements cover any legal fees or costs arising from the proceeding (i.e. court costs, attorneys’ fees, expert witness and/or translator fees and witness travel expenses). Opponent’s legal fees are usually also covered to provide for the scenario in which the funded party loses the case and thus becomes liable to reimburse its opponent for its costs or costs. The funder generally reserves the right to terminate the agreement at any time to avoid covering additional costs while bearing the costs already incurred.
2.6 Contingent fees
Members of the legal profession are prohibited from entering into a pactum de quota litis with their clients, but this rule does not apply outside the legal profession. Thus, the remuneration of a third-party funder is generally based on a percentage of the amount recovered. Other fee structures may also be permitted as long as they are not excessive, indecent or contrary to consumer protection legislation. A success fee arrangement is possible, if it concerns only a certain part of the fee agreement.
2.7 Time to Obtain Third-Party Funding
Litigation funding is available at the start of litigation as well as in ongoing proceedings (eg, for appeal proceedings). Remember that the conclusion of a litigation financing agreement often takes several weeks, while the procedural deadlines and the limitation periods continue to run.
3. Initiate legal action
3.1 Rules on conduct before the action
There are no prerequisites for taking legal action. Nevertheless, it may be advisable to send a letter to the potential defendant requesting compliance regarding the litigation, because, for example, if the potential defendant immediately executes upon initiation of the lawsuit or does not contest the claim, this may lead to a cost decision. condemning the winning plaintiff to bear the costs of the procedure (unnecessary). The respondent is not required to respond to such a letter.
In a limited number of cases concerning:
- neighborhood disputes;
- rental disputes; and
- disputes between members of certain professional groups subject to a code of ethics (for example, architects, lawyers, doctors),
alternative dispute resolution mechanisms are provided as a precondition for initiating legal action. If the applicant fails to meet this prerequisite, the application may be rejected.
3.2 Limitation periods
The limitation periods applicable to civil actions are set by substantive law. Limitation periods generally begin to run when a right could have been exercised for the first time and are, as a rule, 30 years. However, due to numerous specific exceptions, most claims, including claims for damages, are subject to a shorter limitation period of three years. In the event of damages, the three-year period begins with knowledge of the damage and the identity of the party who caused the damage. For contractual claims, the limitation period generally begins on the due date of the claim.
There are a number of shorter or longer limitation periods. For example, a negligence claim against a board member can be brought within five years.
Interruption and suspension
There are different grounds for interrupting and suspending the limitation period. An admission, for example, interrupts the statute of limitations, and settlement negotiations suspend expiration; the claim must be filed within a reasonable time after the failure of negotiations.
Foreclosure of an action must be raised by the defendant. It will not be imposed by the court sua sponte.
3.3 Jurisdictional requirements for a defendant
In domestic cases, the jurisdiction of Austrian courts is determined by the Jurisdiction Act (Jurisdiktionsnorm). In most international cases, the jurisdiction of Austrian courts is determined by Regulation (EC) 1215/2012 (the recast Brussels Regulation).
These provisions establish the jurisdiction of all types of courts. The jurisdiction of a specific court to hear a case may also depend on other factors such as the type of dispute (for example, to establish the jurisdiction of commercial courts to hear a case).
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