Austrian law, specifically the Austrian Civil Mediation Act (Zivilrechts-Mediations-Gesetz), provides a definition for mediation as “a voluntary process in which a professionally trained, neutral mediator uses recognised methods to systematically promote communication between the parties with the aim of enabling them to find their own solution to their conflict”.

While this definition formally only applies to mediation in civil matters, i.e., conflicts which fall within the competence of the ordinary civil courts, the definition is generally applicable. Other laws (including administrative law) merely use the term mediation without further definition.

As Austria is a European Union (EU) Member state, it has also transferred into national legislation Directive 52/2008/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters (“EU Mediation Directive”), which regulates cross-border disputes. The EU Mediation Directive defines mediation as “a structured process, however named or referred to, whereby two or more parties to a dispute attempt by themselves, on a voluntary basis, to reach an agreement on the settlement of their dispute with the assistance of a mediator”.

The role of mediator under Austrian law is indirectly outlined by the definition of mediation. Specifically, the mediator shall employ recognised methods to systematically promote communication between the parties thereby enabling them to resolve their own conflict. This is generally understood to mean a facilitative mediation process.

In addition, section 16 of the Austrian Civil Mediation Act also defines the duties of a mediator under Austrian law. A mediator is obliged to remain impartial and independent throughout the mediation process. Further, a mediator shall inform the parties about the process and legal implication of mediation. However, a mediator shall not provide legal advice regarding the actual dispute to the parties, instead a mediator is obliged to alert the parties that legal advice should be sought. It is also on the mediator to document certain aspects of the mediation, such as its beginning and end. In all other aspects of the mediation the mediator is bound to strict confidentiality which is also protected by law as a mediator may not be called to testify before civil courts (section 320 of the Austrian Civil Procedure Code) and may refuse testimony before criminal courts (section 157 of the Austrian Criminal Procedure Code).

As in most jurisdictions, mediation in Austria differs from arbitration and litigation in terms of the resolution of the conflict not being delegated to a neutral (arbitrator or judge). Instead, the decision-making competence remains with the parties, whereas the neutral (mediator) is only responsible for process management.

Further, Austrian law only provides for very few instances in which mediation is mandatory. Therefore, whether mediation takes place is overwhelmingly subject to parties’ agreement.

The main source of rules and regulations regarding mediation under Austrian Law is the Austrian Civil Mediation Act. This is supplemented by the specific regulations in the Austrian Civil Procedure Code and the Austrian Law on Non-Contentious Proceedings in Civil Matters (Ausserstreitgesetz).

In the limited matters that are subject to mandatory mediation, these provisions are contained in the laws on the specific subject matter, e.g., the Austrian Law on Apprenticeship which requires termination of employment as an apprentice to be mediated.

Importantly, the rules and regulations only apply to mediators that are qualified as mediators under Austrian law, specifically in accordance with the Austrian Civil Mediation Qualification Regulation (Zivilrechts-Mediations-Ausbildungsverordnung).

Austrian law encourages mediation in various ways:

First, Austrian law provides a robust and attractive legal framework for mediation. Inter alia, Austrian law regulates that prescription periods are interrupted by a mediation which relieves parties from the need to escalate a dispute to court only for the reason of preventing a claim from becoming time barred. To allow parties to speak openly in mediations, the confidentiality of mediations is afforded a high level of protection by placing mediators in the same category as priests in terms of not allowing them to be called as witnesses, even with permission of the parties.

Second, there are several programmes in place at the civil and commercial courts which encourage judges to promote mediation by actively informing parties of this option and, in some cases, also offering cost-free court-annexed mediation. Mediations in certain areas, such as in divorce cases, are also subsidised.

Third, if parties have already filed their dispute to be decided by a court, mediation is incentivised by a refund of 50% of the court fees if the dispute is referred to and settled in mediation. Further, no further fees are charged should the parties wish to have the court issue the mediated settlement agreement as an enforceable title.

If there is no mediation agreement in place between the parties or no mandatory law obliging the parties to mediate, the courts cannot mandate parties to mediate.

Austrian law does not provide for penalties for a party refusing to mediate or properly negotiate.

However, the courts will observe both parties’ agreement and laws that oblige the parties to mediate. If parties are obliged to mediate, Austrian courts may decline to hear a case (discussed in more detail under Question 11, below).

The timing of mediation lies entirely in the hands of the parties. As such, mediation can take place at any time before or during court or arbitration proceedings.

Based on experience, mediation most often takes place before court or arbitration proceedings are initiated or in the very early stages of court proceedings. The reason lies in the typical design of dispute resolution clauses that operate on the concept of escalation, i.e., move from negotiation to mediation to litigation/arbitration. This has led to the notion that mediation is a step before litigation or arbitration.

In civil and commercial cases, mediation is considered most effective in disputes concerning parties that are or have been in a long-term relationship, be it commercial or private in nature.

However, since the introduction of mediation as a formalised process, it has found its way into nearly all areas of law. For example, special forms of mediation are offered as part of a restorative justice programme for certain criminal offences (Aussergerichtlicher Tatausgleich). The concept is to prevent offenders who admit to guilt and show remorse from perhaps entering into a negative spiral that might result from other forms of punishment. Mediation has also found its way into administrative law regarding permissions for projects that affect communities or may have significant environmental impact. In these cases, mediation is perceived as pre-empting disputes and protests.

Per definition, all matters that fall into the competence of the civil courts may be subject to mediation under Austrian law. This definition includes commercial fraud.

In other areas of law, the matters that may be subject to mediation are limited to certain cases.

The Austrian court system is known to be both affordable and efficient. Therefore, parties have little reason to seek to avoid it. In practice, this means that many, especially low-value contracts, contain no dispute resolution clauses or that such clauses are limited to a choice of court. Based on experience, dispute resolution clauses mandating mediation are most often contained in contracts concluded by dispute-savvy companies.

In case of a mandatory mediation clause, the courts cannot enforce the clause by an order that forces parties to participate in mediation. However, such clauses are nonetheless given effect because courts can decline to hear the case until at least an attempt to mediate is evidenced to have been made. This is qualified as a temporary procedural obstacle and, therefore, the claim must be dismissed. The refusal to participate in mediation by one party is considered an abuse of rights.

The Austrian Supreme Court has quite recently dealt with the prerequisites for legally binding mediation agreements under Austrian law (see the cases 3 Ob 98/22s dated 22.06.2022 and 6 Ob 229/22b dated 25.09.2023). According to the Austrian Supreme Court, the minimum formal requirements for a mandatory mediation clause are the determination of: (i) the number of mediators and their qualifications; (ii) who is to appoint the mediator(s) and under what conditions; (iii) the place of the mediation; and (iv) the timeframe within which mediation shall take place. At the same time the Austrian Supreme Court has described the formal prerequisites it has set out as “guidelines for an effective (mandatory) dispute resolution clause”. It is thus currently unclear how rigorously these prerequisites must be complied with for a mediation to be legally binding. Based on case annotations by leading scholars, if a mediation agreement is unclear, interpretation is the tool by which to determine whether mediation is legally binding on the parties.

Very often mediation agreements are kept short, sometimes only containing the actual agreement to mediate. More extensive agreements may also contain terms setting out the place of the mediation, its prospective duration, the language to be used, and stipulate the confidential nature of the mediation. In addition or in the alternative, parties may refer to a set of institutional mediation rules such as those provided for by the Vienna International Arbitration Centre (VIAC) which also administers mediations.

Austrian Law provides for extensive requirements in order to qualify as an Austrian certified mediator (Eingetragener Mediator) who are officially registered by the Austrian Ministry of Justice. Specifically, the requirements to be registered are:

• training as mediator with training institutions approved by the Austrian Ministry of Justice under a curriculum with a minimum of 365 hours (or 220 hours for certain professions such as lawyers);
• minimum age of 28 years;
• trustworthiness as demonstrated by a certificate of good conduct (based on police records);
• professional liability insurance (minimum coverage: EUR 400,000);
• official address from which mediation services will be provided; and
• in order to uphold the registration, 50 hours of further training within five years.

It is also possible to practice as a mediator in Austria without being an Austrian-certified mediator officially registered by the Austrian Ministry of Justice.

Further, under the EU Mediation Directive, a mediator is simply defined as “a third person who is asked to conduct a mediation in an effective, impartial and competent way, regardless of the denomination or profession of that third person in the Member State concerned and of the way in which the third person has been appointed or requested to conduct the mediation”.

However, it is important to note that Austrian law only affords the benefits of interruption of prescription periods and enhanced protection of confidentiality by not allowing mediators to be called as witnesses to Austrian-certified mediators officially registered by the Austrian Ministry of Justice.

The Austrian Ministry of Justice is the sole official governing body for officially registered Austrian-certified mediators, including the power to revoke the registration.

Separately, there are a number of mediation associations that (registered and non-registered) mediators may join. In addition to associations with no particular restrictions, there are also regional associations, associations for specific fields of mediation, associations for specific professions, etc. However, all of these associations are private in nature and have no governing function.

Austrian law contains various safeguards to ensure ethical conduct of mediators. For example, officially registered mediators must fulfil strict requirements (see above, Question 13) and the obligation of independence and impartiality is set out in Austrian Civil Mediation Act.

In addition, many mediators are subject to the ethical rules of their primary profession, such as lawyers or psychologists. Specifically, lawyers are bound to observe the Guidelines for Lawyers acting in the Framework of Mediation (Richtlinien für die Tätigkeit von Rechtsanwälten im Rahmen von Mediation) issued by the Austrian Bar Association.

Many mediators also voluntarily subject themselves to ethical guidelines. In Austria, one of the mediation associations has issued such ethical guidelines in German (Ethikrichtlinien für MediatorInnen). Mediators practising internationally often subject themselves to the European code of conduct for mediators or the guidelines of the institution that administers the mediation.

Austrian law does not prescribe specific stages of the mediation process. Based on the legal definition of mediation, the process shall be designed to “promote communication between the parties with the aim of enabling them to find their own solution”. This is generally understood to mean that mediation shall be a flexible process designed for the specific circumstances of the dispute. In practice, many mediators will follow the guidelines for principled negotiation (commonly referred to as the Harvard Concept).

Parties seeking to mediate will find that Austria provides a robust legal framework, highly qualified mediators, and courts that encourage mediation. The only obstacle is the statutory fee (in the amount of 2% of the obligations undertaken in the settlement) that is due on all out-of-court settlements, including mediated settlement agreements. However, this provision is currently under review and may soon be amended. In all other respects, Austria is a mediation-friendly jurisdiction.

Mediation is (with few exceptions) voluntary in Austria, therefore it is not as well known or frequently used as in jurisdictions that make mediation mandatory. To the extent that there is a misconception of mediation at all, it relates to the fact that a mediated settlement is not only binding upon the parties but can also easily be turned into an immediately enforceable title.

Any perceived advantages or disadvantages of mediation do not seem to be specific to Austria. In most cases, parties perceive the main advantages of mediation to be its confidentiality and the efficiency of the process in terms of time and costs. The main disadvantage that parties perceive is the risk of frustrated costs should mediation not result in settlement of the dispute.

There are no restrictions on the format in which a mediation can take place under Austrian law, provided that the parties agree.

Due to the strict confidentiality of mediation under Austrian law, there are no reliable statistics on the use of mediation. However, based on market knowledge of the authors, there seems to be a slow but steady increase in the use

There is currently no data available on the use of AI in mediation in Austria. Based on the existing and prospective development of: (i) guidelines on the use of AI in mediation; and (ii) mediation-specific AI tools, it is likely that use of AI in mediation will become a standard feature and increase accordingly.