Case law Developments in PIL

More Post-Brexit Troubles – Proceedings in UK Unreasonable for Austrian Claimants

This post was written by Paul Lorenz Eichmüller, University of Vienna.

Austrian law provides for an international forum necessitatis in Austria if this is necessary to avoid a denial of justice, i.e. if legal action abroad is (objectively) impossible or (subjectively) unreasonable, see § 28(1)2 Jurisdiktionsnorm (Civil Jurisdiction Act). The Austrian Supreme Court has recently issued four decisions (2 Nc 11/22y, 2 Nc 17/22f, 9 Nc 8/22h and 10 Nc 6/22x) in which it stated that bringing a claim for flight compensation in the UK is indeed unreasonable for Austrian claimants. This – admittedly, quite harsh – verdict shows once again Brexit’s negative impact on matters of civil jurisdiction.

The Austrian forum necessitatis

Compared to other European countries, the institution of a forum necessitatis takes a rather prominent role in the Austrian provisions on international jurisdiction in civil and commercial matters. If there is no other forum reasonably available to claimants with Austrian (or EU-) nationality or habitual residence/domicile in Austria, they can file an application to the Austrian Supreme Court to establish the jurisdiction of the Austrian courts. This procedure is called the “ordination” of jurisdiction. The cases covered by this provision range from instances where there are in fact no other countries whose courts would hear the claim, to cases where the other available fora are regarded as unreasonable – as determined on a case-by-case basis.

Even though the Supreme Court constantly reiterates that the notion of unreasonableness needs to be interpreted restrictively in order to avoid a general forum actoris in Austria (see RIS-Justiz RS0046322), its interpretation in practice is surprisingly broad. Rather obvious instances of unreasonableness include the non-enforcement of the foreign judgment in Austria; urgent proceedings abroad taking too long; a factual standstill of judicature in the respective country; severe doubts regarding the independence of the courts; or one of the parties being subject to political persecution abroad.

However, also significant additional costs of the foreign proceedings compared to litigation in Austria can constitute a ground for (subjective) unreasonableness; this includes the lack of legal aid; the lack of reimbursement of legal costs by the winner of the proceedings; or unusually high deposits as security for costs. In contrast, a less favourable position in the substantive law that is applied abroad is normally insufficient to justify an ordination of an Austrian forum necessitatis (RIS-Justiz RS0117751).

In relation to member states of the Brussels Ibis Regulation or the 2007 Lugano Convention, the ordination of a forum necessitatis will generally be impossible, as bringing a claim in these countries is not considered impossible or unreasonable (RIS-Justiz RS0112108). Since the end of the transitional period, the UK is no longer part of either of these instruments and thus subject to the general reasonableness test of the Austrian Supreme Court.

Flight Compensation as a Contentious Point

Unlike the Brussels Ibis Regulation, the domestic Austrian rules on international jurisdiction do not include a general jurisdictional head at the place of performance. The corresponding provision in § 88 JN is limited only to cases in which the place of performance was explicitly agreed upon in the contract and can be proven by a document signed by the respondent. The practical relevance of this head of jurisdiction is therefore negligible.

When it comes to flights operated by an airline based in a third country, there is thus neither a place of general jurisdiction nor any court with specific jurisdiction in Austria. If – like in one of the Supreme Court decisions (2 Nc 17/22f) – the airline has assets in Austria, the claimant can at least base the (exorbitant) jurisdiction of Austrian courts on the location of the airline’s assets (§ 99 JN). In all other cases of flight cancellation or delays (without assets of the airline in Austria), travellers living in Austria – even if they departed from an airport in Austria – would thus have to bring a claim at the airline’s seat in a third country. However, the decision of the third country will not necessarily be enforced in Austria. This is where the ordination of an Austrian forum necessitatis comes into play: No enforcement means that the judgment would be worthless, so the proceedings abroad are considered unreasonable for the claimant.

In all four of the recent decisions, Austrian claimants sought flight compensation from an airline based in the UK. However, after the UK left the EU, the reasonableness of an action against the airline at its seat in England also depends on the chances of the English judgment being recognised in Austria. While there is in fact an Austro-British treaty on the mutual recognition and enforcement of judicial decisions in civil and commercial matters from 1961, this treaty only guarantees the recognition of the decisions by “superior courts” (Art II(1)). In England, that would only be decisions by the High Court, the Court of Appeal or the Supreme Court (Art I(2)(a)). Due to the low amount of money usually in dispute in a flight compensation case, it will regularly be impossible to reach one of these courts. Thus, the recognition of a potential English judgment would fail, and this is the reason why an Austrian forum necessitatis was provided by the Supreme Court. Brexit has led to a step back into the 1980’s – when these issues were last discussed (RIS-Justiz RS0002320).

An Outlook

Due to an increasing number of ordination cases regarding flight compensation, the Austrian legislator has reacted and recently § 101a JN , providing for jurisdiction of the courts at the place of departure or arrival in all matters relating to the EU Flight Compensation Regulation. It is thus unlikely that situations like the ones decided will occur again.

Yet, these decisions continue to be of interest, for they show one thing very clearly: while Austria is in the fortunate situation to have a bilateral treaty with the UK that provides for the recognition of some (high-profile and high-value) decisions, it is far from covering everything. Particularly claims of lower value that will not reach the superior courts will not be enforced in Austria. With its forum necessitatis, Austria has found a way to minimise the negative jurisdictional side effects of Brexit for its citizens and residents, but Brexit still continues to pose us with problems we had considered solved a long time ago.