Worldwide: Dispute Resolution Insider - Thirteenth Edition

TO OUR READERS

Welcome to the Spring Edition of the DRInsider, the quarterly Newsletter of the Wolf Theiss Disputes team, in which we provide an overview of recent developments in CEE/SEE.

On 26 March 2019, the EU Parliament approved the controversial Directive on the Harmonization of the EU Copyright Law; in spite of considerable reservations and despite Europe-wide protests. We provide you with an overview of the most discussed provisions.

There have also been some interesting developments in the national jurisdictions in recent months:

Following the general aim for clearer and faster proceedings, we present the essential changes of the latest amendments in Romanian civil procedure law. In addition, we look at issues connected to the invalidity of an arbitration clause with the latest statements of the Austrian Supreme Court and a recent decision of the Russian Supreme Court on the use of model clauses to avoid any uncertainties.

We also introduce the latest changes in the Croatian legislation. A new Act on Whistelblowers has been implemented. Furthermore, a new Act on Nullity of Loan Agreements with Foreign Creditors had to be adopted, due to the CJEU's declaration of the former act's incompatibibility with EU law.

There have also been crucial decisions of the Austrian Supreme Court which will be addressed.

Read inside to find out more.

CIVIL PROCEDURE

Recent And Important Amendments To The Romanian Civil Procedure Code

By Andreea Zvac and Cristian Gorgoi

On 18 November 2018, Law no. 310/2018 for amending and supplementing the Romanian Civil Procedure Code ("RCPC") was published in the Official Gazette.

Most of the amendments made to the RCPC are aimed at simplifying court procedures and compliance with the latest decisions taken by the Romanian Constitutional Court in relation to court jurisdiction.

One important amendment consists in fully removing the filtering procedure for cassation appeals which was previously conducted by the High Court of Cassation and Justice in non-contentious procedures aimed at ruling on the admissibility of the cassation appeal. This will certainly lead to a faster resolution of cassation appeals which were very much delayed by this filtering procedure.

Significant amendments have also been made in relation to the jurisdiction of Romanian courts to resolve cassation appeals. Due to the wording of the previous version of the RCPC there have been extensive debates on whether or not the High Court of Cassation and Justice should resolve all cassation appeals, irrespective of the case value and the court which delivered the appealed judgement.

With the latest amendments to the RCPC it has been established that: (i) the tribunals have jurisdiction to rule on cassation appeals filed against judgments issued by the first instance courts (in Romanian "Judecatorii"); (ii) the courts of appeals shall have jurisdiction to rule on cassation appeals against judgements issued by the tribunals; and (iii) the High Court of Cassation and Justice shall only resolve cassation appeals filed against judgements issued by the courts of appeals. This has actually confirmed the general rules of jurisdiction and court hierarchy which were in place before 2013 (i.e. before the new RCPC was enacted).

Moreover, by the newly enacted amendments, the legislator excluded the value limitations (Article 482 RCPC) in relation to the possibility to file a cassation appeal. At the moment any judgement (issued in an appeal or in a case where it is not possible to file an appeal) can be challenged by a cassation appeal irrespective of the case value.

The RCPC amendments also refer to the provisions (Article 183 para. (1) and (3)) regulating the moment when a procedural document is deemed to be filed with the court, in case of communication via fax or email. It was now established that documents sent via fax or email shall be considered submitted at the court at the date of their receipt as recorded by the court fax or email.

As regards the drafting of the judgment, an important amendment refers to the drafting and communication deadlines. Thus, the new wording of Article 426 para. (5) of the RCPC establishes that the decision has to be drafted and signed by the judge (or the panel of judges) no later than thirty (30) days from the date of the ruling, and only in justified cases may this time limit be extended by a further thirty (30) days, but not more than twice. Hence, by this amendment the judges shall have the possibility to extend the time-limit for drafting the judgement for a maximum of ninety (90) days. Such an amended provision may motivate the judges to draft their judgements more rapidly.

One last amendment to mention refers to the situation when a judge (or a panel of judges) has/have wrongfully mentioned in the judgement the legal deadline for challenging the judgement. The amended provisions of the RCPC explicitly provide that if the party follows the wrong indication in the judgement and challenged it outside the legal deadline, this will not be considered as a reason for dismissing the appeal.

We trust that these amendments are able to create a clearer and faster procedure for resolving cases pending in front of Romanian courts.

Use Of Unlawfully Obtained Evidence In Austrian Civil Proceedings?

By Patrick Mittlböck

Can unlawfully obtained video recordings be presented as evidence in civil proceedings?

Austrian Supreme Court decision dated 24 May 2018 (6 Ob 16/18y)

The background of the case is the following:

The properties of the plaintiffs and the defendants are situated directly next to each other. The plaintiffs' property can only be reached via a path leading through the defendants' property. In this respect there is an easement (Dienstbarkeit) in favour of the plaintiffs (walking and driving). The defendants accused the plaintiffs of illegally parking their vehicles on the access road and other areas of the defendants' property. Therefore, the defendants obtained a cease-and-desist order (Unterlassungsurteil).

For the purpose of obtaining evidence (to be able to prove offences of the plaintiffs in the future), the defendants installed video cameras on their house that were directed not only at their own property but also covered parts of the path leading to the property of the plaintiffs. The plaintiffs sought the removal of the video surveillance system. The courts of first and second instance dismissed the plaintiffs' complaint. The Supreme Court reversed the decisions of the lower courts and – in addition to referring the case back to the court of first instance – stated inter alia the following:

1. The reasons listed in § 50a Para 4 Data Protection Law ("DSG 2000"; now: § 12 Para 2 No 4 and § 12 Para 3 DSG 2000), which justify private video surveillance, do not cover obtaining evidence in civil proceedings.
2. Due to this lack of legal justification, the video surveillance of the property therefore violates the plaintiffs' right of personality (§ 16 Austrian Civil Code, "ABGB") as well as their fundamental right to data protection.
3. As to using private video surveillance recordings as evidence in civil proceedings, which was not assessed, nothing can be derived from this.

The legislator had implemented in § 12 and 13 of the former data protection act (DSG 2000) a system of balancing of interests as well as a proportionality test in order to assess the admissibility of private video surveillance. Presumably, the legal assessment of the Supreme Court in the decision at issue would have been the same under the new regulations of the new DSG.

Can these unlawfully obtained video recordings be used in future civil proceedings nevertheless?

The Austrian Civil Procedure Code ("ZPO") does not contain any provision regarding the usability of unlawfully obtained evidence.  Thus, in general even evidence obtained unlawfully must be taken into account by the court.

• According to some doctrines, exceptions exist for evidence that was obtained as a result of a violation of provisions of criminal law that concern the core area of constitutionally protected fundamental rights and freedoms (e.g. torture).
• Pursuant to other doctrines, it must be strictly distinguished between the admissibility of producing evidence according to material law provisions (e.g. data protection law, criminal law) and the question of procedural usability as evidence (described as the "separation principle").

In the decision at issue the Supreme Court hints at the "separation principle" by stating that "For the usability [...] as evidence in civil proceedings [...] nothing can be derived from this."

Thus, the substantive inadmissibility of video recordings under data protection law must be assessed independently of whether such video recordings can be used as evidence in civil proceedings.

Highlights From The Austrian Supreme Court

By Patrick Winter

"One stumble over the cuckoo's nest"

In one of its recent decisions, the Austrian Supreme Court dealt with the so-called "false father regress", and the question whether it is legally compliant to claim back maintenance payments made in the erroneous belief that a child is one's own child.

Unlike the title suggests, the case at hand has less to do with the movie classic by Miloa Forman, but rather with the notorious habits of the bird itself.

The essential fact was that an alleged "father", after the divorce, fulfilled his maintenance obligation for the child born by his then wife. At no time, however, was the "father" aware that the child was not in fact his own child but had been conceived in the course of the woman's extramarital

The Supreme Court ruled in favour of the "father"; arguing that the spouses' financial interests are also protected by the marital duty of loyalty pursuant to Sec. 90 Austrian Civil Code, so that claims for damages can be derived from their violation. Consequently, the protective purpose of this duty covers not only ideal interests but also the financial loss of the alleged father.

Further, as stated by the court, neither the abolition of the judicial punishment of adultery in 1997; nor the concept of marriage, which is currently undergoing social change, is relevant in this context. In addition, the objection of the mother of the child that the coitus took place under the influence of alcohol was dismissed by the Supreme Court as inadmissible.

Interesting fact: In contrast to Austrian case law, the German Federal Court of Justice rejects claims for damages by "false fathers", basically stating that the wife cannot be required to inform her husband immediately that another man might possibly be the biological father.

(4 Ob 82/18i)

An Invalid Arbitration Clause And The Fight Against The Recognition And Enforcement Of The Arbitral Award In Austria

By Valerie Hohenberg and Florian Pechhacker

The authors are currently representing a client in proceedings regarding the enforcement and recognition of a SCC Award under the New York Convention in Austria.

While the proceedings are still pending, the Austrian Supreme Court already had to specify previous case law (see Austrian Supreme Court decision of 19 December 2018, 3 Ob 153/18y).

The arbitral proceedings

Starting point of the dispute was a loan agreement between the disputing parties which contained a clause providing that

and a clause with the headline "Governing Law" inter alia providing that

The opponent of our client ("opponent") initiated arbitral proceedings before the Arbitration Institute of the Stockholm Chamber of Commerce ("SCC") (Case V 2015/12). Our client contested the validity of the arbitration clause. By decision of 5 November 2015, however, the Arbitral Tribunal affirmed its jurisdiction and subsequently issued an arbitral award on 13 June 2017 in favour of the opponent.

The enforcement proceedings

Subsequently, the opponent applied to the Vienna District Court Innere Stadt for enforcement and recognition of the arbitral award, against which our client filed an objection on various grounds under the respective Articles of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention").

The Supreme Court lifted the decision (i) of the Vienna District Court Innere Stadt and (ii) of the Regional Court on Civil Matters of Vienna (which had ruled in favour of our client and dismissed the opponent's application) and referred the proceedings back to the Vienna District Court Innere Stadt for the further decision on the client's objections in view of the arbitration clause in dispute.

The Supreme Court's Ruling

The Austrian Supreme Court specified its previous case law in many respects:

• Even if the arbitral tribunal, within the scope of its competence, has decided that a valid arbitration agreement exists, the state court is not bound by this decision. It can reassess both the question of law and the underlying facts. Insofar as the award contains statements on the affirmation of an arbitration agreement, this only has evidentiary effect in the recognition proceedings.
• The question of validity of an arbitration clause is subject to the (apparently) chosen law.
• The improvement of formal defects in documents which need to be provided in accordance with Article IV New York Convention can be omitted, if none of the parties denies the existence of the arbitral award or the authenticity of the signatures of the arbitrators thereon.
• The exemption under Article 1 para 2 lit d Brussels I Regulation covers the arbitral proceedings themselves, including the decisions of the arbitral tribunal on its jurisdiction, but also proceedings for the declaration of enforceability of arbitral awards in Austria.
• As regards Article V para 1 lit d of the New York Convention, the party with the "burden of proof" (Behauptungslast) must at least provide prima facie evidence that the alleged procedural violation could also have affected the content of the award.

We will keep you updated in case this very interesting and challenging dispute results in further new Austrian case law.

VIAC's Recommendation For A Model Arbitration Clause Involving Russian Parties

By Alexander Zollner

As every arbitration institution, the Vienna International Arbitral Centre ("VIAC"), too, recommends a certain model arbitration clause to be agreed upon by parties intending to submit their disputes to VIAC. While it is indeed not obligatory to use such model arbitration clause, it is highly advisable to do so. Apparently in the wake of a decision of the Supreme Court of the Russian Federation ("Russian Supreme Court") of 26 September 2018 (Case no. 305-ЭС18-11934), VIAC is recommending certain additions to its model arbitration clause in case Russian parties are involved.

It is reported that in the mentioned decision, a judge of the Russian Supreme Court upheld decisions of lower courts refusing to enforce an ICC award on the ground that, inter alia, the underlying ICC arbitration clause (which was apparently almost identical to the current standard ICC clause recommended on the ICC's website, see https://iccwbo.org/dispute-resolution-services/arbitration/arbitration-clause/) did not constitute an enforceable agreement to submit a dispute to arbitration under the ICC Rules. Reportedly, in the court's view a mere reference to the "Rules of Arbitration of the International Chamber of Commerce" in the arbitration clause without reference to the "ICC International Court of Arbitration" was obviously considered ambiguous as it would not evidence the parties' consent to a specific institution resolving their dispute (cf Fremuth-Wolf/Grill in VIAC Handbook 2019 Annex 1 mn 5; Khvalei, Supreme Court on Validity of the ICC Model Clause: Keep Calm and Carry On, ICC Dispute Resolution Bulletin 2018, Issue 4, p. 24 et seqq).

Furthermore, it is reported that at the end of December 2018, the Russian Supreme Court published a review of jurisprudence (apparently summarizing Russian courts' practice on various issues and serving as guidance to lower courts), also relating to state court practice concerning arbitration related issues (e.g. globalarbitrationreview.com [accessed on 21 March 2019]; cf. also Fremuth-Wolf/Grill in VIAC Handbook 2019 Annex 1 mn 5 fn 10 with further references). In this review, the Russian Supreme Court has reportedly confirmed the validity and enforceability of an ICC model arbitration clause and noted that a reference to the ICC Rules of Arbitration is sufficient for an arbitration clause to be deemed valid and enforceable, since the parties' intent as to the formation of the arbitral tribunal can be easily drawn from the reference to the ICC Rules of Arbitration (cf Khvalei, Supreme Court on Validity of the ICC Model Clause: Keep Calm and Carry On, ICC Dispute Resolution Bulletin 2018, Issue 4, p. 26).

In any case, it seems advisable to follow VIAC's recommendation for an amended model arbitration clause in case Russian parties are involved (additions to the usual model arbitration clause are in italics and underlined):

"All disputes or claims arising out of or in connection with this contract, including disputes relating to its validity, breach, termination or nullity, shall be submitted to the Vienna International Arbitral Centre (VIAC) of the Austrian Federal Economic Chamber and shall be finally settled under the Rules of Arbitration (Vienna Rules) of VIAC by one or three arbitrators appointed in accordance with the said Rules." (cf https://www.viac.eu/en/arbitration/arbitration-clause-vienna-rules-2018).

To read this Newsletter in full, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.