Date of the last update: 27th May 2024.

Types of class action mechanisms. General characteristics

Austrian law contains mechanisms for pursuing claims in group proceedings which, however, do not constitute a typical class action mechanism. They are:

  1. a representative action initiated by a social organisation representing a given group of interests (so-called Verbandsklage), also known as a collective action “of the Austrian type” (Sammelklage österreichischer Prägung), regulated by the Act Against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb, UWG) and the Act on Consumer Protection (Konsumentschutzgesetz, KSchG), relies on the fact that individual claimants by the way of cession (Inkassozession, according to Section 29 KSchG; Section 14 UWG) transfer their claims to an association, which then pursues the claim in court, acting on its own behalf; individuals who have not decided to transfer their claims to the organization do not lose them, and the ruling issued in the case has no effect on their legal situation (in this aspect the described solution is closest to the opt-in model); it is pointed out that “Austrian-type” collective actions are most often brought by the Austrian Association for Consumer Protection Consumers (der Verein für Konsumenteninformation, VKI) and the Austrian Chamber of Labor.
  2. a ‘model’ case system (the so-called Verbandsmusterklage, a test-case mechanism) where cases are heard to the motion of a given organisation, however, unlike in German Law, there is no special procedure in this regard; this type of case resolution follows from the general rules of civil procedure – a single individual action is initiated, the outcome of which is not binding for the settlement of the remaining cases, however, it is of significance for the judiciary practice and may consequently affect the manner of conclusion in other similar cases.
  3. a mechanism of the joint examination – what is more, in order to pursue claims in group proceedings the mechanism of the joint examination of several cases based on § 227 of the Austrian Code of Civil Procedure (Zivilprozessordnung, ZPO) may be used, as allowed by Oberster Geritshof (Austrian Supreme Court) in a landmark judgment rendered in the case with file reference no. 4 Ob 116/05.

The premises of admissibility and the procedure

[Joint examination of cases] Under § 227 ZPO, cases may be heard jointly, when:

  1. a given court has jurisdiction and competence to hear all the cases that are to be joined;
  2. all cases may be heard in the same mode of proceedings;
  3. both the factual and legal bases are of the same type in all of the cases that are to be joined (§ 11 ZPO in conj. with § 187 ZPO in conj. with § 227 ZPO).

Combining cases for joint examination is an institution applicable to all cases falling within the competence of a civil court, except for family law cases (where other rules apply).

The cases where the Austrian Supreme Court allowed for the “collective action” for the first time were connected to damages related to the use of financial services and more specifically – the failure to provide consumers with required mandatory information.

The ZPO does not provide for any particular certification procedure. The court decides whether to combine cases for joint examination either to a motion of a party or to its own motion (ex officio). Claimants’ claims should be substantially similar (im Wesentlichen gleichartig). In principle, the court’s judgement in this scope is final and unappealable.

Austrian law does not prescribe any minimum number of cases to be examined jointly within individual proceedings in the model laid down in § 227 ZPO.

[Representative actions] The representing entity files a lawsuit in favour of the interested parties. From that moment onwards the representing entity is the only claimant in the case.

Organizations entitled to initiate the proceedings are not obligated to notify all the potentially interested parties of the intention to bring an action and they simply announce the initiation of the proceedings in the usually adopted manner. E.g. the Consumer Association identifies members of a group to be represented in the future by collecting (via its website) reports about detected infringements of law. Next to initiating the proceedings to their own initiative, the Consumer Association brings representative actions also to the recommendations of the Minister of Labour, Social Affairs and Consumer Protection.

The type of relief (legal protection) that can be obtained (court decision)

In the event of joint examination of cases under § 227 ZPO, any and all types of relief available under civil law cases are possible. Austrian law provides for redress both in cases of material and non-material damage, however, so-called punitive damages are not allowed. A resolution made by the court in one of the joined cases does not determine the manner of resolution of the remaining cases, although in practice they will frequently overlap due to identical factual and legal bases.

In the case of a representative action, an adjudication action (e.g. for awarding damages) is not allowed. The aim of such an action is for the court to order the cessation of specific actions by the defendant (e.g. infringing on consumer rights or fair competition principles).

Costs and manner of financing the proceedings

In accordance with the general rules, the costs of proceedings are charged to the losing party. In relation therewith, a more frequently practiced solution entails bringing an action to the initiative of an organisation (acting on its own behalf) which is obligated to pay trial costs only once, regardless of the number of entities it represents. The reimbursement of the costs by the losing party may also be obtained only by the representative being a claimant.

The so-called contingency fees are forbidden under Austrian law (so the rule that an attorney is entitled to remuneration only in the case of winning is not applicable), notwithstanding, contracts providing for so-called performance fees are allowed and used in practice. According to this mechanism the remuneration is paid unconditionally, however, in the case of winning the attorney is entitled to an additional “bonus” (premium “for success”).

In Austria the practice of financing the abovementioned proceedings by third persons has functioned for several years. The possibility of obtaining such funding from an external institution professionally performing such operations in practice is, as a general rule, dependent on value of the subject of the dispute (it has to exceed EUR 50,000 in total). These rules are not subject to any statutory regulations, so obtaining such support actually depends only on an agreement between the interested parties (party) and the supporting entity. It is indicated that the fee for an  entity that finances proceedings is usually about 30% of the claimed amount.

Practice and significance of the institution. Development trends

The year 2007 saw the first draft concerning the introduction of a typical class action into the Austrian legal system. So far, however, despite numerous signals that a class action mechanism needs to be introduced indeed, no provisions that would constitute a separate regulation in this area have been implemented. A heated public debate in this regard is ongoing in connection with the wave of proceedings in the wake of the so-called “Volkswagen affair”. The upcoming expected changes will be related to obligation to implement the mechanisms provided for by European Union law, which will be discussed below.

According to the Consumer Association report for 2015, 240 “group” proceedings were conducted in Austria, including 113 “model” cases and 118 representative actions.

In early September 2018 the Consumer Association initiated a number of proceedings based on § 227 ZPO, where approximately 10,000 individual cases of persons injured in the fuel affair were accumulated. For this purpose 16 lawsuits in 16 different countries had to be filed. On the same principle also another organisation, Cobinclaims brings forth actions acting on behalf of entrepreneurs injured by Volkswagen S.A. The organisation indicates that until September 2018 more than 12,000 persons interested in group proceedings have come forward. In both cases proceedings are financed by a third entity in exchange for a percentage of the win. This was the largest wave of group cases in Austria so far.

The most of the recent cases in which the collective redress mechanism has been applied, claims are  related to the outbreak of the COVID-19 pandemic. The most high-profile is considered to be the lawsuit brought in 2021 by a group of tourists over the failure to  ensure adequate safety in the Austrian ski town of Ischgl, which led to infection of more than 6,000 tourists from 45 countries in March 2020.

Implementation of Directive of the European Parliament and of the Council (EU) 2020/1828

As Austria has so far failed to implement the Directive, in the case Verbraucherschutzverein v. Energie Klagenfurt GmbH, the Klagenfurt District Court – the first among all the courts of the member states – opted for direct application of its provisions, citing CJEU case law according to which the directive may be directly applicable if: 1) the deadline for transposition has passed, 2) the provisions of the directive are clear, precise and unconditional, and 3) they create rights for individuals – and on the basis of the Directive, adopted that a class action brought by a consumer protection association is permissible.

On the 2nd May 2024, after more than a year of work on implementing legislation – the Austrian Ministry of Justice published a draft law transposing the Directive. According to it –  the minimum class size for an action for damages / compensation is 50 consumers; consumers will be able to join the proceedings within three months of the publication of the decision to bring the action. Joining the proceedings will have the effect of suspending the statute of limitations for individual claims – retroactively from the date of filing a representative action. Claims that are already barred by the statute of limitations will thus also be able to be successfully asserted in this way, which would be a novelty under Austrian law. The draft does not provide for an extension to non-consumers: in this regard, it remains within the framework of the Directive and does not follow the example of the German implementation, which envisages extending representative actions to the claims of small entrepreneurs as well. The procedure would be based on an opt-in model.