In its recent decision dated 28 September 2016, the Austrian Supreme Court (OGH) ruled on a party’s request to have an arbitral award set aside alleging that it lacked sufficient reasoning. The OGH’s decision contains welcoming clarifications as to whether such deficiency constitutes grounds for setting-aside proceedings and as to parties’ obligations to make use of remedies available prior to filing such request under Austrian law.
B. The Underlying Arbitral Proceedings
In essence, the dispute arose out of a consultancy agreement concluded between the parties to the dispute at hand. In its claim, the claimant alleged that the defendant was obliged to render an account with respect to all business transactions, which were concluded within a specific time period. The arbitral tribunal rendered an interim ruling and dismissed such claim. Subsequently, the claimant filed a request to have the ruling set aside, alleging that it lacked sufficient reasoning.
C. The OGH’s Decision
1. Lack of Reasoning Constituting Grounds for Set-Aside Proceedings?
The relevant provision is found in Section 611 para 2 item 5 of the Austrian Code of Civil Procedure (ZPO). According to this provision, it constitutes grounds to have an arbitral award set aside if a breach of procedural ordre public occurs. This is the case – only – if the proceedings are conducted in a way conflicting with fundamental values of the Austrian legal system and such breach is comparable to grounds to have a decision by a state court declared invalid. Whether this applies to a lack of sufficient reasoning of an arbitral award was answered in the affirmative by the OGH in its decision.
The OGH firstly states that Austrian legal literature does not consider a lack of reasoning of an arbitral award to constitute grounds for it to be set aside. However, the OGH concludes differently referring to Section 1059 para 1 lit d and para 2 lit d of the German Code of Civil Procedure and to related literature, as under German procedural law, arbitral awards not containing sufficient reasoning can be challenged by a request to have them set aside. The OGH further notes, with reference to German case-law, that the strict criteria applicable to state court judgments are not applicable to arbitral awards. However, arbitral awards must not be illogical and their reasoning must not be contrary to the decision, contain empty phrases only and must take a stand on the substantial pleas brought forward by the parties.
As to the level of detail of such reasoning, the OGH differentiates whether (i) the arbitral tribunal follows a legal or factual position already brought forward by a party or discussed in the course of the arbitral proceedings, or (ii) the arbitral tribunal bases its reasoning on arguments that have not been discussed in the proceedings. In scenario (i), a reference to the respective party’s position might suffice. However, in scenario (ii), the arbitral tribunal needs to provide a comprehensive explanation of its reasoning.
In the case at hand, sufficient reasoning was not provided by the arbitral tribunal. It dismissed the claimant’s request as not being sufficiently specified. However, the reasons for the dismissal could not be derived from the interim ruling. Thus, grounds for having the arbitral award set aside were given.
2. Remedies to be Pursued
Care is required if parties want to challenge an arbitral award based on the above grounds. A request to have an arbitral award set aside is one of the potential remedies, but not the only one: Section 610 para 1 item 2 ZPO provides for the right to have parts of the arbitral award clarified, if the parties have agreed on such a remedy; whereas item 3 thereof provides for the right to have an amended arbitral award rendered if the arbitral tribunal has not conclusively dealt with the requests brought forward in the course of the arbitral proceedings. The applicable remedy has to be filed within 4 weeks from the date of having received the arbitral award.
The OGH requires that such a remedy is filed prior to requesting the arbitral award to be set aside. Only then, and provided that the arbitral tribunal has not amended or clarified its reasoning, can the set-aside request be filed, otherwise such right is forfeited and the claim must be dismissed.
In the case at hand, the party having requested the arbitral award to be set aside did not file a request for clarification pursuant to Section 610 para 1 item 2 ZPO. Accordingly, the set-aside request would have to be dismissed.
D. Closing Remarks
The OGH’s decision is to be welcomed. In an unequivocal manner, it obligates arbitrators to carefully deal with the facts of each case and the legal assessment thereof, and to make their reasoning comprehensible for the parties in the arbitral award. Sloppiness can be challenged and arbitrators risk for their arbitral award to be set aside. Such considerations by the OGH constitute a further step to ensure that parties can rely on a thoroughly rendered decision.
written by Oliver Loksa
 OGH 28.09.2016, 18 OCg 3/16i.
 OGH 18.02.2015, 2 Ob 22/14w.
 OGH 23.02.2016, 18 OCg 3/15p = Zak 2016/235 S 119 – Zak 2016,119 = ecolex 2016/218 S 486 (Hausmaninger) – ecolex 2016,486 (Hausmaninger) = JBl 2016,462.
 As a side note, under Section 606 para 2 ZPO, parties can waive their right to be provided with a reasoning. However, there was no such waiver in the case at hand. In this regard, the OGH clarified that the existence of such a right cannot be interpreted in a way that no reasoning has to be provided by the arbitral tribunal.
 In the case at hand, the proceedings were conducted under the Vienna Rules 2006 and, contrary to the Vienna Rules 2013, under these rules, a request for clarification could have been filed only in the case of an explicit agreement between the parties. The existence of such an agreement had not been argued by the defendant, thus it was not possible for the claimant to file such a request. Accordingly, the request to have parts of the arbitral award clarified was granted.