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The 2018 Vienna Rules: Tailored for Efficiency

It is an auspicious time in Vienna and Austria. While local residents are no doubt pleased that the nation's capital has been ranked as the world's most livable city for the ninth consecutive year,1 arbitration advocates in particular have reason to be optimistic. Relying on its stability, modern infrastructure, and central location, Vienna has made a competitive push to become a world-class arbitral hub.

User data reflects this popular trend. Over the last two years, the Vienna International Arbitration Centre ('VIAC') has received approximately 60 pending cases annually, with aggregate amounts in dispute ranging from EUR 622 million to EUR 1,4 billion. Future growth is expected to rise even further. Under new changes to the Austrian Chamber of Commerce Act, VIAC may now administer both domestic and international disputes, thus expanding its caseload. Moreover, local practitioners have observed an increasing number of ICC arbitrations seated in Vienna.

Austria's legal framework and rules adopt a modern pro-arbitration approach. After enacting the UNCITRAL Model Law in 2006, the Austrian Parliament made further revisions to the nation's Arbitration Act in 2013. Since then, nearly all arbitration-related matters are reviewed directly and exclusively by the Supreme Court,2 making Austria one of the few countries in which annulment decisions are non-appealable. In addition, the Supreme Court has held that the setting aside of an award is a precondition for arbitrator liability, thereby relieving tribunals of fearful litigation from disgruntled parties.3

Determined to keep pace with these advancements, VIAC has amended its Arbitration Rules (the 'Vienna Rules') twice within the last five years.4 The latest amendment, which became effective on 1 January 2018, will be the focus of the remainder of this article.

The 2018 Vienna Rules

The latest series of revisions to the Vienna Rules is geared towards promoting enhanced efficiency measures from the three main actors in proceedings: the tribunal, the parties, and the institution. Whereas its predecessor, the 2013 amendments, introduced new provisions on case consolidation, joinder, and advances on costs, the new Rules implement cost-effective mechanisms that have already been observed in practice. This is enshrined in Article 28(1), which charges the tribunal to conduct the proceedings in an "efficient and cost-effective manner".

However, the new Rules are not without teeth. Article 16(6) permits the Secretary General to review arbitrator conduct in assessing fees. Previously, the Secretary General could only increase fees up to 30 percent from the cost schedule in "particularly complex cases". Now, fees may be raised by a maximum of 40 percent for "especially complex cases or for especially efficient conduct of proceedings", or decreased by 40 percent for inefficient proceedings. Arbitrators therefore face the risk of partial loss of fees as well as (more importantly) reputational damage caused by institutional sanction.

Parties are also held accountable. Similar to the way in which it promotes efficient arbitrator conduct, the new Vienna Rules authorize tribunals to assess the parties' (and their representatives') contribution to procedural efficiency in decisions on costs.5 Tribunals may also issue interim measures on security for costs based on a certain set of criteria. According to Article 33(6), such an order against a claimant is appropriate "if the respondent shows cause that the recoverability of a potential claim for costs is, with a sufficient degree of probability, at risk". This black-letter standard will certainly benefit tribunals and might be eventually adopted by other institutions.

Moreover, frivolous claims will now face higher administrative costs. In contrast with smaller domestic cases, administrative fee ceilings for large disputes have increased from EUR 60,000 to EUR 75,000. Respondents wishing to bring counterclaims will also be subject to advances on costs, although it remains open whether requests for security for costs are applicable in such instances.6 If a party fails to comply with an order, the opposing side may request the tribunal to suspend or terminate the proceedings in whole or in part.7 Considering that the parties and their representatives are generally responsible for the majority of delays8 and costs,9 these added measures are welcomed.

In another step to enhance party efficiency, the Vienna Rules have integrated its Rules of Mediation into the Rules of Arbitration. Its impetus stems from the trend to encourage potential reconciliation between adversaries through a negotiated solution. If the parties reach an amicable agreement, the tribunal will typically memorialize it in a 'consent' award for enforcement purposes. To avoid potential issues regarding enforceability, however, parties are advised to adopt the so-called 'Arb-Med-Arb' process. Under this arrangement, a dispute is first referred to arbitration before mediation is attempted. This allows for the possibility of a consent award while leaving open the opportunity to continue with the arbitration should discussions fail.

Finally, the 2018 Rules ensure greater efficiency from VIAC. In particular, all cases will be administered through an electronic database system. For example, a statement of claim can now be submitted in electronic form along with hard copy, thus accelerating the initiation of proceedings. After the hardcopy file is transmitted to the tribunal, however, all communications between it and the parties must be submitted to the Secretariat in e-format.

VIAC is also planning to equip users with digital access to a case management system. In this way, documents would simply be uploaded and become instantly accessible to all relevant parties. Hardcopy submissions may therefore eventually become altogether unnecessary.

Conclusion

By modernizing its laws and streamlining cases to an arbitration-savvy Supreme Court, Austria's efforts to ensure the quality and efficiency of arbitrations seated in Vienna has entrenched its status as an arbitration-friendly jurisdiction. Coupled with VIAC's latest cutting-edge developments, Vienna is positioned to become a premier location for arbitration.


  1. O. Smith, Revealed: 2018's best and worst cities to live in, The Telegraph, p. 1 (20 March 2018).
  2. I.e., Issues concerning arbitrator appointments and challenges, the existence or non-existence of an arbitral award, as well as award annulment or set-aside proceedings.
  3. OGH, 22 March 2016, 5 Ob 30/16x.
  4. 2013 and 2018.
  5. Article 38(2).
  6. Article 9(2).
  7. Article 33(7).
  8. Implementation of dilatory tactics by counsel (e.g., arbitrator challenges) fuels so-called 'due process paranoia', which leads arbitrators to take cautious management decisions to the detriment of economic proceedings.
  9. According to the 2011 CIArb Costs of International Arbitration Survey, arbitrator fees and administrative expenses generally represent only 20% of the total cost of international arbitration, whereas 80% of overall costs were attributable to party costs, including expert, witness, and legal fees.