you are being redirected to the website of our parent company, Schönherr Rechtsanwälte GmbH

13 January 2020

"Interview" with Victoria Pernt and Sara Khalil on arbitration vs litigation

What to choose…


Victoria Pernt (Vienna)


Sara Khalil (Vienna)

… if foreign law may apply?

Arbitration counsel can represent a client no matter what law applies or where the arbitration is seated. Arbitration is inherently international. We do it all.

For instance, I have represented clients in arbitrations under Kosovan, Georgian, German and English law; seated in London, Frankfurt and the Marshall Islands.

Litigation counsel represents clients in domestic courts. Domestic courts do not only rule on cases under Austrian law, but apply any any foreign law, if chosen or otherwise applicable, such as German, Spanish, Californian or Irish law. Litigators cooperate with foreign lawyers; we have vast experience with colleagues around the world.
… if the other party has its assets abroad? Arbitral awards are enforceable worldwide. Almost all (i.e. 160) states committed to enforcing foreign arbitral awards in the 1958 New York Convention. This makes it much easier and faster to enforce an arbitral award than it is to enforce a court judgment. Unlike a court judgment, an arbitral award follows the debtor around the world. The debtor cannot hide itself or its assets abroad. Judgments rendered by an Austrian court are directly enforceable in the EU. If bilateral or multilateral treaties apply (e.g. Convention of 30 June 2005 on Choice of Court Agreements), a judgment can be enforced in other countries. Even if there are no bilateral or multilateral treaties, a judgment can be enforced under certain circumstances.
… if you want confidentiality? Arbitration allows the parties to shape their own proceedings. Within the limits of the applicable law, the parties can agree to keep their dispute confidential. Thus, unlike court proceedings, arbitral proceedings can remain private. And unlike court judgments, arbitral awards can remain confidential. Litigation proceedings are open to the public. Anyone can attend a hearing. The public can only be excluded in limited circumstances, for example, if witnesses are threatened or if matters of family life are discussed. Lower instance judgments are usually not published. Supreme Court judgments are published anonymously.
… if you want a good decision? Arbitrators are chosen by the parties. Anyone can sit as an arbitrator. There is a worldwide pool of arbitrators with vastly diverse specialisations. You can choose someone with experience in your industry or that particular legal field (e.g. post M&A). In arbitration, your disputes are decided by true experts, not career judges. Austrian judges must complete more than eight years of studies and training in addition to sitting an exam before they can apply for a position at a lower court. Lay judges support them with their professional expertise in certain cases. Judges are independent and do not answer to anyone, not even the Minister for Justice.
… if you want a quick decision?

An arbitral award will generally be issued within one to one and a half years of filing a claim – or faster if the parties opt for expedited proceedings. The possibilities to challenge an arbitral award are limited and rarely used, and there is no appeal. This means that, unlike in court, you get an award that is enforceable worldwide within only one or one-and-a-half-years.

If a claim up to EUR 75,000 is filed, the court issues a payment order. Proceedings are only initiated if the defendant objects to the order within four weeks. Depending on the complexity of the case, a first instance judgment is usually issued within one to one and a half years after filing. Appellate proceedings last on average between six months and two years.
… if you want a cheap decision? Costs should not be decisive. Whether in arbitration or litigation, costs depend on the amount in dispute, and the winning party will typically be reimbursed its costs. In arbitration, the parties can influence costs when agreeing the arbitral institution and the procedure. Also, the winning party may well be reimbursed all its actual costs. In court, the winning party is reimbursed court costs and attorney's fees according to the Austrian Lawyer's Tariff Act. For a truly simple matter with a low amount in dispute, court is likely be the cheaper option.    

… if you want to make the most of your case?

Arbitration. Definitely. With specialized arbitration counsel. Arbitration is a combination of civil and common law, shaped by practitioners from all over the world, yet tailored to the case at hand. This is a game of its own. You have to know how to play it in order to win. No question litigation. In litigation it is not necessary to invent or tailor the rules. The parties know what to expect: an experienced career judge deciding the case with the opportunity to appeal – possibly even at lower costs.
In your view the biggest benefit You are in the driver seat. Parties and counsel have far more influence and power over the proceedings and their outcome in arbitration than they ever would in court. An unfavourable first (and second) instance decision can be appealed. Even if a decision is appealed the costs of the entire proceedings may be lower.
In your view the best advice Hire experienced counsel. Because arbitration is run by the parties, and because there is no appeal, make sure your counsel knows what they are doing. Your case depends on it. Same. Hire experienced counsel. A complex matter needs to be handled by an experienced litigator who knows how to present the case in court.



austria vienna