In May and June 2022 I interviewed 30 Austrian arbitration practitioners, located in Graz, Innsbruck, and Vienna. The text below is a series of observations drawn from those interviews.
Note: It should be remembered that these are merely subjective notes drawn from my own recollections of the interviews and an initial review of interview transcripts. As a result, these notes may not ultimately match the observations reached after a serious analysis of those transcripts, and while I have obviously made every effort to avoid errors, there may indeed be observations made below that turn out to be incorrect once the transcripts are analysed in depth.
Austria’s arbitration market
-Historically Austria has had a very particular role in the international arbitration marketplace, being one of the two (alongside Sweden) centres of what was traditionally called “East-West” arbitration, namely between countries from the Eastern Bloc and those from Western Europe and North America.
-Austrian interviewees were consistent in the view that while Austrian arbitration has developed somewhat beyond this initial market, it nonetheless remains fundamentally tied into this role and East-West arbitrations remain the core of Austrian arbitration.
-Notably, though, this is not solely due to Austria’s traditional reputation for neutrality and diplomacy in that context, or because of Vienna’s recognition as an arbitral centre, but also because of the significant connections between Austrian businesses and Austrian banks with Eastern European businesses, the former reportedly often insisting upon arbitration in Vienna as part of doing business with an Eastern European partner.
-In the longer term it is not clear that maintaining such a strong focus on the East-West market is sustainable, as the growth of arbitration in Eastern Europe and the growth of Eastern European economies is likely to result in the increasing development of acceptable alternatives in that region, thereby cutting into Austria’s arbitration market.
-However, while occasional concerns in this respect were mentioned, there was no consistent view that it is yet a significant issue.
International v. Domestic Arbitration
-The emphasis in the preceding section on international arbitration does not just reflect the prominence of international arbitration in Austria, but rather a lack of domestic arbitration in Austria.
-To be clear, it is not that there is no domestic arbitration at all, and interviewees consistently mentioned the use of arbitration in corporate disputes, particularly involving small or family-owned companies in which all parties valued the confidentiality that arbitration can give.
-However, outside this one area, interviewees expressed the view that while domestic arbitration occurs in Austria, it is relatively rare, and Austria’s arbitration practitioners are fundamentally international arbitration practitioners.
-One reason for this lack of development of domestic arbitration in Austria is historical, and tied to Vienna’s role in East-West arbitrations.
-That is, Austrian arbitration is fundamentally Viennese arbitration, and while there are some arbitration practitioners located outside Vienna, they maintain a strong contact with Vienna and routinely travel to Vienna for arbitrations.
-The development of arbitration in Vienna, however, has long been tied to its arbitral institution, the Vienna International Arbitration Centre (VIAC).
-Until recently, though, the VIAC was not permitted to administer domestic arbitrations, and so had no role in attempting to develop domestic arbitration.
-Domestic arbitrations were instead handled by local chambers of commerce, which usually had little real interest in the development of arbitration.
-As a result, while Austria’s role in international arbitration was regularly developed and promoted, domestic arbitration was left to lay idle.
-This underlying situation changed recently, with VIAC now having permission to administer domestic arbitrations as well as international.
-However, while there have been some efforts made to develop interest in domestic arbitration, including roadshows in cities outside Vienna, those efforts have reportedly received little interest (at the extreme end, one interview reported being present at a roadshow event that generated a single audience member).
-The explanation repeatedly offered by interviewees for the apparent lack of interest in arbitration domestically was not only a lack of knowledge of arbitration outside the circle of international arbitration practitioners, due to the history described above, but primarily that Austrian courts are ultimately seen as good.
-In short, since parties can take their disputes to a court system that they view positively, and that will be cheaper and is more familiar than arbitration, and since in a domestic dispute they do not need to benefit from arbitration’s traditional benefit of international enforceability, then they see no reason to try something new when the status quo works well enough.
Arbitral Institutions
-As already mentioned, the most prominent arbitral institution in Austria is the VIAC, and interviewees acknowledged the important role the VIAC has in maintaining Austria’s presence in the international arbitration “consciousness”, praising its successes in this respect.
-The VIAC is not, however, the only institutional presence in Austrian arbitration, and interviewees consistently referenced the International Chamber of Commerce (ICC) as being at least as important an institution for Austrian arbitration.
-Indeed, while interviewees valued the VIAC and generally regarded it positively, a consistent feature of the interviews was a comparison of the VIAC with the ICC and an expressed regret that the former does not meet the latter’s higher standards.
-That is, the VIAC was regarded as a good institution, but the ICC was consistently discussed as a better one with more rigorous standards, regularly being described as the preferred institution for larger or more significant arbitrations.
-Fundamentally, the concerns expressed by interviewees about the VIAC are perhaps best seen as tied to its intimate connection with the Viennese arbitration market and arbitration community, this arguably manifesting in a lower level of rigour than is expected by the ICC.
-Interviewees consistently, for example, spoke highly of the ICC’s scrutiny of awards, a practice often complained about as excessive by interviewees in other jurisdictions. Austrian interviewees, however, repeatedly praised it as a means of ensuring quality in awards, which by implication are less reliably high quality in VIAC arbitrations (i.e. the quality of an award is dependent to a greater extent on the specific arbitrator(s), given the institution’s lower level of involvement).
-Concern was also expressed by more than one interviewee that the VIAC was more tolerant than the ICC on questions of arbitrator impartiality, a flexibility that arguably reflects the VIAC’s strong rooting in what is ultimately a relatively small Viennese arbitration community. To be clear, the view expressed was not that bias was ignored, but only that it was tolerated more flexibly than would be expected from the ICC, particularly with respect to a party-appointed arbitrator’s pushing of their appointing party’s interests.
-However, as already noted, the VIAC was seen as central to Austrian arbitration’s continued success, and these concerns were expressed in the context of a desire for further improvement of the VIAC in these respects, rather than as a rejection of the institution.
-It is also important to mention in this context the Austrian Arbitration Association (ArbAut), which does not administer arbitrations, but was described by interviewees as forming a trio with the VIAC and the ICC as the leading bodies in Austrian arbitration, all three often cooperating on organising events and on promoting Austrian arbitration.
-This situation of split power was described as preventing any of the three institutions achieving a dominant position, with the membership and leadership of all three also overlapping.
Language
-As in other jurisdictions, and as might be expected given the near-exclusivity of international arbitration in Austria’s arbitration market, strong English was repeatedly emphasised by interviewees as essential for anyone wishing to succeed in Austrian arbitration.
-There was some discussion of connections between arbitration practitioners in German-speaking countries, but not to a degree that a “German language community” could reasonably be said to exist.
-Reference was made by interviewees to cross-community events, particularly involving Austria and Switzerland as “Alpine” countries.
-However, there was no indication of an Alpine or cross-community German-language arbitration market.
-In that respect comments regarding the insularity of Switzerland were particularly prominent, with more than one Austrian interviewee expressing the view that “Austrians looking for an arbitrator consider Austrians and Swiss; Swiss looking for an arbitrator consider Swiss”.
Arbitration Hubs and the Arbitration Community
-As already noted above, fundamentally Austrian arbitration is Viennese arbitration.
-This does not mean that there are no arbitration practitioners located outside Vienna, but there are few.
-Moreover, non-Vienna interviewees emphasised that despite their location outside Vienna, ultimately their arbitration work was Vienna-connected (with Vienna at least the seat) and travelling to Vienna for hearings was standard.
-Similarly, non-Vienna interviewees emphasised the centrality of travelling to Vienna for networking. Events are occasionally held outside Vienna, but ultimately there is nothing that could plausibly be described as an “arbitration community” in any city other than Vienna.
-In turn, Viennese interviewees also discussed their arbitration networks as being fundamentally either Viennese or international, with no real engagement with practitioners outside Vienna. They were aware that there are non-Viennese arbitration practitioners, but discussions in interviews of non-Viennese practitioners were based on speculation, rather than actual knowledge, indicating a lack of significant experience of non-Viennese practitioners in Viennese arbitrations.
-Vienna’s arbitration community itself, based on the interviews, is perhaps best described as balancing openness and insularity.
-Given Vienna’s focus on international arbitration, as well as the annual influx of foreign arbitration practitioners that come for the Vis Moot (excluding the years impacted by COVID-19), it is perhaps unsurprising that there were no indications of Vienna’s community being “closed” to outsiders.
-Indeed, there was a clear conception of it being central to Vienna’s ongoing success that it engage with the rest of the arbitration world and present an arbitration “product” that can be seen as genuinely “international”, rather than distinctly Austrian.
-That said, interviewees repeatedly described what might be called a relatively “self-aware” community, which was not closed to new entrants, but where hierarchies were acknowledged and career development could be impacted by having the “right” relationships with the “right” people.
-That said, this effect was also mitigated by the fragmentation caused by the lack of a single focus for the community (as discussed above, with respect to the VIAC, the ICC, and ArbAut), and this diffusion of focus kept the community relatively open.
-In short, while in some jurisdictions the primary arbitral institution can take on a role as the “core” of the arbitration community, with connecting to that institution being central to career development, none of the three Austrian institutions was described as having such a role. Connecting with each of them was beneficial, but interviewees also expressed a consistent view that it was possible to have an active arbitration career in Austria without doing so – more difficult, but doable.
Gender
-While there were fewer concerns expressed about gender than in some other jurisdictions, there was discussion of the impact on participation in arbitration by women of broader Austrian social values and what was presented as a more conservative Austrian view on the roles of women.
-Specifically highlighted was that, in one interviewee’s estimate, only around 20% of Austrian lawyers are female, and almost unavoidably that imbalance carries over into the arbitration community.
-Ultimately, while experiences of sexism were certainly discussed, female interviewees did not report the same level of experiences as have been reported in some other jurisdictions or that they felt excluded from prominent roles in the Viennese arbitration community.
-Allowing, as always, that these interviews reflect only comments made by a proportion of Austrian practitioners, the general impression given was of an arbitration community that is itself open to female practitioners, but that is nonetheless unavoidably impacted by broader conservative social standards.
Arbitral Procedure
-Perhaps the most notable aspect of the comments by interviewees on Austrian arbitration practice is the consistent denial that there is, as such, a distinctively “Austrian” approach to arbitration.
-That is, while in many jurisdictions arbitration practice, even at the level of international arbitration, is strongly impacted by domestic litigation practice, and that impact is not entirely absent in Austria, reports by interviewees indicate that the longstanding separation of Austrian arbitration from domestic concerns has also shaped Austrian arbitration practice.
-Arguably in reflection not only of the traditional focus of arbitration in Austria on resolving East-West disputes (rather than Austria-Elsewhere disputes), but also of the lack of domestic arbitration of any significant level in Austria, and even of the strong concentration of arbitration practitioners in a single city, Austrian interviewees described Austrian arbitration practice as effectively being an attempt to mirror accepted “international” standards.
-In short, Austrian practitioners recognised that parties come to Austria for “international” arbitration, not for “Austrian” arbitration, and the need to deliver that “international” process has become one of the social norms of the community, conformity to which is important for career success.
-That said, one element of an “Austrian” approach to arbitration was consistently highlighted by interviewees, that also arguably reflects Austrian arbitration’s background in East-West arbitrations.
-That is, interviewees repeatedly emphasised that Austrian arbitrators will often feel an obligation to ensure “equality” between parties, taking particular efforts to ensure that a party less sophisticated in arbitration understands the process and is not disadvantaged by that lack of understanding.
-To be clear, there were no suggestions that this extended to affecting the substantive outcome of the dispute, but only to ensuring a balanced process.
-While it is obviously impossible to identify the origin of such a practice based on the limited information in these interviews, it is not difficult to see such a practice as arising naturally in a jurisdiction in which arbitration was focused on resolving disputes between parties from one area in which little arbitration existed and where international commerce was less common (the Eastern bloc) and parties from another area in which both international commerce and arbitration will have been more familiar. Ensuring that the latter’s greater sophistication in arbitration did not result in unfair outcomes would be an essential component of maintaining such a market.
The Social and Psychological Underpinnings of Commercial Arbitration in Europe 