Arbitration in Vienna: The Vienna Rules 2013 – Most Notable Changes

Effective 1 July 2013, the new Vienna Rules of Arbitration, presented by the Vienna International Arbitral Centre, have introduced amendments and additional provisions to the previous rules established in 2006. Adopted by the Extended Presiding Committee of the Austrian Federal Economic Chamber in May 2013, the new rules aim to incite further flexibility, clarity, and efficiency into the arbitral process. The changes and additions will continue to allow arbitrators and parties to effectively navigate the complex process of arbitration in a streamlined and understandable manner.

Although Arbitration in Vienna has a long history due to its neutral setting and central location, prior to 2006, Austria’s statutory provisions on arbitration were included in the Austrian Code of Civil Procedure (Zivilprozessordnung) which, in large part, had not been amended since 1895. On 1 July 2006, the new Austrian Arbitration Act entered into force, adapting the statutory framework for arbitration in Austria to current practical needs and the newest international standards. At the same time, the Vienna International Arbitral Centre, the permanent arbitral institution of the Austrian Federal Economic Chamber, recognized the need for a serious overhaul of its arbitration rules in order to adapt them not only to the most recent developments in international practice, but also to the new arbitration act.

This new set of rules has now been in force for more than seven years and has been received very well by parties as well as attorneys. International arbitration cases have more than doubled since 2006. However, an increase in the amount of arbitral proceedings as well as the emergence of new trends have induced the Vienna International Arbitral Centre to again revise the Vienna Arbitration Rules in order to maintain a reliable, convenient, straightforward and competitive arbitral framework. The most notable changes are outlined below.

The comprehensive reformation of the Vienna Rules of Arbitration resulted in the addition of several articles which will streamline the arbitral process, yet add to the flexibility needed to adapt to new and emerging trends within arbitration.

Arbitration in Vienna - the most notable changes

Article 14: Joinder of Third Parties

The possibilities for the involvement of third parties in arbitration proceedings have been increasingly discussed over the last years. While the 2006 version of the Vienna Rules did not contain any provision regarding the joinder of third parties, the 2013 version now explicitly regulates this issue in a way leaving sufficient flexibility for arbitrators to consider the particularities of any given case. The joinder of third parties is decided by the arbitral tribunal after consideration of all the relevant circumstances, including hearing all parties. However, what is considered a ‘relevant circumstance’ and how such circumstances shall be relevant, is left for the arbitral tribunal to decide, thus giving discretion to the arbitrators in determining whether a third party shall be joined or not. Notably, the exact role of the joined party as well as the legal implications of such joinder are not regulated in the Vienna rules, thus making it possible for the arbitral tribunal to take into account particularities of the place of arbitration and the applicable law in deciding on the admissibility and appropriateness of the joinder.

Article 15: Consolidation

The new rules also allow two or more proceedings to be consolidated if either, (1) the parties agree to the consolidation or (2) if the seat of arbitration and nominated arbitrators are the same in the proceedings to be joined. Considering the two possibilities for consolidation, consolidation should be expected to be rare in practice. The question of whether or not proceedings are joined rests with the Board of the VIAC. Notably, the consolidation of proceedings is possible only upon request of a party. Therefore, while the arbitral tribunal may suggest a joinder to the parties, it cannot itself request that the Board consolidate separate proceedings.

Article 18: Constitution of the Arbitral Tribunal in Multi-Party Proceedings

In multiparty proceedings, all parties on one side have to agree on the arbitrator they wish to nominate. Where an agreement is not reached amongst the parties on one side, the arbitrator is appointed by the Board of the VIAC. In line with the previous rule of Article 15 Vienna Rules 2006, substitute appointment for one side does not automatically lead to the other side losing its right to appoint an arbitrator. However, the new provision now grants the Board of the VIAC the opportunity to appoint all arbitrators of the panel, including the possibility of revoking previous appointments, in exceptional cases. This new provision is aimed at avoiding concerns regarding equal treatment of all parties in exceptional cases, in particular giving consideration to the renowned Dutco-decision.

Notably, the new Vienna Rules do not contain a provision regulating the general admissibility of multi-party proceedings. This question must be solved by resorting to the general provisions of the Vienna Rules. Most importantly, the omission of the old Article 15, which regulated the admissibility of third party proceedings under the 2006 version of the rules, eliminates a complicated rule which was catered towards the particularities of Austrian law and had the potential of causing irritation in an international context.

Article 19: Confirmation of Nomination

A further novelty in the 2013 rules can be found in the appointment process of arbitrators. While the 2006 rules provided for a single step nomination process for party-appointed arbitrators, the new rules stipulate a two-step process. Therefore, an arbitrator is not simply appointed by way of a party’s nomination and the arbitrator’s declaration of acceptance, but needs to be confirmed by the Secretary General of the VIAC. This two-step process enables the Secretary General to refuse the appointment of an arbitrator in cases where there are doubts as to the arbitrator’s impartiality, independence or capability to conduct an arbitration, thus reducing the risk of a challenge of arbitrators after their appointment.

Article 40: Remission to the Arbitral Tribunal

While Austrian arbitration law does not provide for the possibility of remission of an award by the state courts to an arbitral tribunal, the Vienna Rules 2013 take into account that such remission might be admissible in other jurisdictions. The new rules therefore incorporate a provision enabling the Board and the Secretariat of the VIAC to take all necessary steps to comply with the remission by analogously applying the Vienna Rules to such supplementary proceedings, including the possibility for additional cost advances intended to cover the costs of these supplementary proceedings.

Article 42: Costs

While the principles regarding the question of who had to bear the advance on costs at the outset of the proceedings have remained unchanged, the 2013 version of the rules introduces a much-appreciated clarification. The new version of Article 42 now makes it clear that, by agreeing to arbitration under the Vienna Rules, the parties undertake a mutual obligation to bear their share of the cost advance. Further, it is now expressly clarified that, where a party refuses to bear its share of the costs and another party substitutes payment of that share, the arbitral tribunal may order the defaulting party to reimburse the paying party for the respective share. The possibility of rendering such decision by means of an arbitral award is expressly mentioned. However, in order to leave sufficient flexibility for the arbitral tribunal to take into account the circumstances of a specific case, the arbitral tribunal may issue such a decision in any form it considers appropriate.

Article 45: Expedited Procedure

For the first time in the history of the Vienna Rules, the 2013 version now includes provisions regarding expedited proceedings aimed at accelerating the arbitral procedure in appropriate cases. These rules differ from other institutional rules on expedited procedure insofar as the applicability of the expedited procedure does not depend on the amount in dispute. Rather, the expedited rules apply only in cases where the Parties have agreed on their application, whether in advance or in the early stages of the proceedings. These expedited rules provide, in particular, for shortened time limits, a decision by a sole arbitrator, a limitation regarding the number of written submissions, and a time limit for the rendering of the arbitral award.

On an overall level, the 2013 amendments to the Vienna Rules, while regulating important issues, do not substantially alter the character of the rules. The Vienna Rules remain an efficient and flexible framework without attempting to overregulate the arbitral process.