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Dispute resolution before courts during the crisis

Dispute resolution before courts during the crisis

Covid-19 has left barely any field of legal work untouched, and the settlement of private law disputes is no exception. However, the various types of proceedings are affected in different ways.

Oral proceedings before Austrian state courts were largely off the table from mid-March to the end of April 2020. During this period, only sessions which were ‘absolutely necessary to maintain the proper administration of justice’ were held. In the courts’ opinion, most private law disputes did not fall under this category. As Austrian civil procedure law places a strong emphasis on oral proceedings, this meant that hardly any procedural steps were taken in civil proceedings between mid-March and the end of April 2020, in practice. Due to the moratorium on time limits, no written submissions had to be made and the statute of limitations was also suspended under certain circumstances. Negotiations were resumed from May 2020 onwards. However, as the courts are now faced with the challenge of conducting the dismissed cases while simultaneously dealing with new cases, it will probably take some time before normal operations are restored. People were still permitted to file lawsuits, after all. 

In order to continue proceedings despite the crisis, while avoiding personal contact (and by extension, the risk of spreading the virus) and still satisfying the requirement of orality, discussions have focussed on the possibility of holding meetings via video conference. Although the courts have the necessary technical equipment for this purpose, by and large, these online negotiations were, and are, rather rare. The reason for this is that the courts required, and still require, all the parties to give consent for the hearing to be conducted via video. Due to various concerns (some genuine, some alleged), the parties and their representatives rarely give this consent. In many cases, the crisis brought the state courts to a temporary standstill as a result.

The situation in arbitration proceedings was (and is) more nuanced. There are no uniform rules regarding Covid-19, as arbitration proceedings are subject to different legal systems and different sets of rules. Moreover, they regularly deal with cross-border issues: the parties and the arbitrators alike often come from different countries, and the place of arbitration, the applicable law and any arbitral institution may also introduce further elements from around the globe. Both the arbitral institutions and the arbitral tribunals must, therefore, ensure that different states’ regulations are included in their decisions on dealing with Covid-19.

Even before Covid-19, it was common practice in international arbitration proceedings to minimise the number of in-person meetings involving all the parties to an oral hearing. Due to the (sometimes considerable) distances between the various parties involved, holding in-person meetings to draw up the programme for proceedings, for example, would have been inefficient in itself. This is why ‘case management conferences’, say, or other discussions between parties and the arbitral tribunal on purely procedural issues are held by telephone conference as standard. Online hearings have also been part and parcel of international arbitration practice for some time now. 

However, arbitral tribunals (as well as state courts) have so far been reluctant to order online hearings without the consent of all the parties involved. However, if the travel restrictions continue for a longer period of time, this attitude will probably change in the medium term. In contrast to state courts, arbitral tribunals are largely free to organise their proceedings however they like as long as the principles of a fair trial are observed. In the future, arbitral tribunals may use this broad discretion to arbitrate matters without any in-person negotiations taking place. Finally, a party is not to be allowed to unnecessarily delay the proceedings by refusing to consent to online hearings without grounds. Conversely, it is often difficult to replace in-person questioning carried out by the arbitral tribunal, especially when determining the credibility of witnesses. As a result, not every refusal to hold an online hearing can be viewed as a guerrilla tactic. In some situations, even just one in-person meeting with all the parties involved will ensure that the proceedings are fair.

The handling of time limits before arbitral tribunals in light of Covid-19 is similar: the broad discretion allows the arbitral tribunals to decide in each individual case whether and how time limits are to be interrupted or extended. However, since the restrictions triggered by Covid-19 also delay the work of the parties’ representatives in the arbitral proceedings, at least (such as access to libraries or clients’ opportunities to submit original documents) the arbitral tribunal needs to extend the deadline correspondingly in most cases. However, this only applies with regard to deadlines set before the outbreak of the coronavirus crisis. It is up to the parties to take account of the delays caused by Covid-19 for any deadlines set thereafter.

While the Covid-19 measures were in force, LGP was involved in procedural discussions in arbitration proceedings via telephone conference, as well as in negotiations before state courts via video conference. We also discussed the individual advantages and disadvantages of arbitration negotiations via video conference in various cases. In our view, this form of negotiation has potential for any case, even if it is not a perfect fit for every single case. While we have had good experience with undertaking witness interviews via video, there are cases where in-person interaction between the (arbitration) court and the witnesses is irreplaceable. However, as has long been the case in arbitration, remote communication could come into play as an option even after the crisis has passed, particularly in the case of preparatory meetings. 


Mag. Michael Komuczky, Attorney at Law at LANSKY, GANZGER + partner

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