Austria
In your jurisdiction, are there any formal ADR procedures available for resolving commercial disputes other than litigating (or arbitrating) to a final hearing?
Parties invariably informally negotiate, to some degree, at the outset of a dispute either as an alternative to, or at the same time as, litigation or arbitration. However, there are also a number of more formal types of ADR which are used in Austria across all types of commercial disputes. The main types of ADR in Austria are mediation, conciliation, adjudication, expert opinion and expert determination.
Mediation is a voluntary, non-binding, private process in which one or more (some procedures require at least two) trained independent persons help the parties to try to reach their own negotiated settlement. Austrian law regulates (1) a formal mediation process with qualified mediators in its civil law mediation act (Zivilrechts-Mediations-Gesetz) and (2) a less formal mediation process for international disputes in its EU mediation act (EU-Mediations-Gesetz), which transposes into Austrian Law, EU directive 2008/52/EC on certain aspects of mediation in civil and commercial matters.
Conciliation is a process in which a third person or tribunal “renders” a decision of the dispute. Where a decision is not “rendered” within certain time limits, or where all the parties are not willing to accept the decision in the conciliation process, parties may file proceedings before courts or (subject to a respective arbitration agreement) start arbitration proceedings. Generally, conciliation is voluntary, but it is mandatory in respect of a considerable number of non-commercial disputes, for example, residential and leasing law disputes, disputes within associations, some social insurance disputes, a number of professional law disputes and neighbor disputes regarding immissions (due to the extraction of light and air etc).
Adjudication is similar to conciliation and is used on a voluntary basis in construction disputes.
Another option is to get an expert opinion. This involves an expert answering a series of questions which represent the areas of dispute between the parties. This non-binding process is usually persuasive in influencing the resolution of the dispute without recourse to a hearing.
Expert determination involves the appointment of a subject-matter expert to make a decision which the parties agree beforehand to accept as binding. It is usually adopted for specific technical issues. Although generally classified as a form of ADR, this is significantly different from the other methods, most importantly, in that the outcome of the process is generally binding on the parties and non-appealable.
Does engaging in ADR have any effect on potential or existing litigation or arbitration?
Mediation under the Austrian EU mediation act avoids the expiry of limitation or prescription periods. Engaging in ADR does not itself impose an automatic stay on any proceedings or arbitration already commenced, although this can simultaneously be achieved by other means (certain agreements in such court or arbitration proceedings). The right to litigate or arbitrate is also not directly affected by engaging in ADR. Litigation or arbitration can be commenced or continued whilst ADR is pursued and will be available if no settlement is secured. If the parties have agreed that they will try an ADR process before issuing proceedings, abstaining from the ADR process may have consequences for the recovery of costs in litigation or arbitration.
Where conciliation is mandatory (principally not in commercial disputes as referenced above, but for example in certain labor, social security and labor law disputes), respective conciliation proceedings must be initiated by the person/party seeking a decision on the claims being subject to such mandatory conciliation proceedings. Court or arbitration proceedings may be only commenced after a decision in these conciliation proceedings has been “rendered” or no decision in these proceedings has been “rendered” within certain prescribed periods of time.
Is ADR compulsory and if so are there any consequences if a party fails to engage in ADR? If it is not compulsory are there any plans for this to change?
No. Mandatory ADR only applies to specific, usually non-commercial disputes. However, mediation is promoted through the civil law mediation act and quality criteria for mediation prescribed with this act. There is also strong support for mediation by the commercial courts in Austria who often advise parties to try to settle their dispute in mediation before a court judgment is ”rendered”.
Can the parties agree, in advance of any potential dispute, to engage in ADR?
For disputes where ADR is not mandatory, the parties can agree to engage in ADR, but this will usually not invalidate any court or arbitration proceedings which have been commenced before engaging in ADR. It may however have consequences on the cost recovery in such proceedings.
When does ADR generally take place?
ADR may take place both before or during/parallel to court or arbitration proceedings. In the latter case, the parties will usually also agree in the court or arbitration proceedings to halt those proceedings for agreed periods of time. Such agreements are principally binding in the court or arbitration proceedings.
Is ADR subject to without prejudice privilege and/or confidential? If not, is there any other means to protect confidential information?
Pursuant to the Austrian civil law mediation act and the Austrian EU mediation act, mediators and their assistant personnel are obliged to confidentiality and the information received by them is up to a certain degree privileged, so that mediators may refuse to testify in court and in arbitration proceedings. Beyond this, there are no specific confidentiality privileges for ADR proceedings, but parties may (and often will) enter into non-disclosure agreements (NDAs). The exception is the expert determination procedure which is not a confidential as the outcome is binding.
Does the output from ADR create precedents?
Generally not, except in the case of expert determination. A settlement achieved through ADR is usually recorded in a written agreement which will be enforceable between the parties. It is generally not binding on third parties, as is the case with any other private agreement.
Who bears the costs of ADR?
Typically, the parties share the cost of ADR, albeit it is open to the parties to agree something different as part of the settlement terms. Parties may also (and often will) agree on costs compensation and its terms in the ADR agreement at the outset of ADR proceedings.
Is your jurisdiction subject to any specific rules for cross border ADR?
Austria was required to transpose EU directive 2008/52/EC on certain aspects of mediation in civil and commercial matters into Austrian law, which was done by the EU Mediation Act. Austria has so far not signed up to the United Nations Convention on the International Settlement Agreements Resulting from Mediation (Singapore Convention).
Are there any particularly unusual features of ADR in your jurisdiction that you are aware are different to other jurisdictions?
The Austrian civil law mediation act prescribes quality criteria for mediators. Mediators pursuant to this act, require registration in a list kept by the Austrian Federal Ministry of Justice, which reviews whether qualification criteria are fulfilled and whether mediators have liability insurance. Mediators under the Austrian civil law mediation act are required to have liability insurance for damage caused by their mediation activities, with a minimum sum insured of EUR 400,000.00 (per each individual insurance claim).
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