Debt Collection in Austria

In Austria, there is no minimum amount for initiating proceedings to collect a claim. A legal action can be brought irrespective of the claim amount in question.

In the so-called “Order for Payment Procedure” (“Mahnverfahren”) - a simplified procedure for debt collection - there is no minimum but a maximum amount of the claim, that may not exceed EUR 75.000,00 (see question 2).

However, fees may vary depending on the claimed amount, as follows:

• Court and judicial fees

Depending on the amount in dispute (Streitwert), the claimant must pay a court fee before filing the action. The lower the amount claimed, the higher the court fees in relation to the claim amount.

For example: for an amount in dispute at the court of first instance of EUR 7.000,00, the court fee is currently EUR 314,00. If the amount in dispute is up to EUR 35.000,00 the court fee is EUR 743,00. If the amount in dispute is up to EUR 70.000,00 the court fee is EUR 1.459,00.

• Attorney’s fee

Both plaintiff and defendant pay their respective lawyers according to their own fee agreement.
Yet, the court may order the losing party to reimburse the other party their lawyer’s fees and/or the costs of experts or translators that the court had appointed in the proceedings. In this case, the amount of reimbursable attorney fees is set out by the law depending on the claim.

The amount of the claim affects the following:

• Competence of the court – place of jurisdiction

The amounts in dispute determine the type of Court in charge of the civil procedure.

Regarding the types of courts, a general distinction is made between the district court and the regional court in the first instance.

• for amounts up to EUR 15.000,00 the relevant district courts (“Bezirksgericht”) have competence
• for claims exceeding EUR 15.000,00 the relevant regional courts (“Landesgericht”) have competence
• district court may also have competence for specific matters, regardless of the dispute amount (e.g., family law disputes)
• special courts - such as the Labour and Social Law Court (“Arbeits- und Sozialgericht”) for labour and social law disputes - may have exclusive competence, regardless of the claimed amount.

• "Simplified Order for Payment Procedure”

For claims in Austria that do not exceed the amount of Eur 75.000,00, the so-called “Simplified Order for Payment Procedure” (“Mahnverfahren”) can be requested.

Please note that the following legal requirements must also be met for the initiation of a Simplified Order for Payment Procedure:

• the claim is due and payable; this is the date from which the creditor can demand payment from the debtor
• the defendant is domiciled or resident in Austria
• the claim is purely pecuniary. This means that only a sum of money is owed.

If these requirements are met, the court is obliged to initiate the Order for Payment Procedure.

In this kind of proceeding, the court can issue an order for payment to the defendant without a hearing.

• the court does not verify whether the plaintiff has a claim to the debt. No documents or other evidence must be presented to the court
• with the payment order, the defendant must pay the amount claimed together with default interest within 14 days or file an appeal against the order within 4 weeks
• if the defendant pays the amount claimed in time the procedure terminates without any further steps to be undertaken by the Court
• if the defendant appeals against the order to pay, this leads to the suspension of the order for payment. Consequently, the ordinary civil procedure is initiated, and a court hearing is scheduled
• if the defendant does not pay nor file an appeal, the payment order becomes final and enforceable. This means that enforceability proceedings may be started against the debtor.

• Mandatory legal assistance by a lawyer

A duty to be represented by a lawyer in court may also depend on the amount in dispute. In fact, there are certain court proceedings for which representation by a lawyer in court is mandatory.

• before the district court there is no legal obligation to be represented by a lawyer for claims up to EUR 5.000,00
• in the case of a claim exceeding EUR 5.000,00, and in the “order for payment” procedure parties shall be defended by a lawyer.

However, it is highly recommended to contact a lawyer qualified in Austria to seek legal advice and safeguard one's rights. An Austrian lawyer is essential for foreign parties especially in order to draft the claim or the appeal in German, the official language in Austria.

There is no obligation to send a warning letter before initiating a civil court procedure. This means the claim can be brought before the court even without a "warning" to the debtor.

Nevertheless, a payment reminder is usually the first step taken when an invoice is not paid on time. If a reminder letter is sent, the debtor is obliged to pay for the reminder charges (see question 7).

In case of business transactions B2B (where both contracting parties are entrepreneurs), a lump sum of EUR 40,00 may be charged as costs for a demand letter for debt collection in case of a reminder letter sent without any proof of damage or fault.

In addition (or in the case of B2C consumer transactions in general), the law provides that in the event of default of payment by the contracting party, the creditor may also claim compensation for other damages for which the debtor is responsible, and which accrue to him, in particular the “necessary" costs of extrajudicial debt collection or recovery measures, in addition to the default interest.

In any case, it is NOT necessary to send seventeen demand letters within a week. It is certainly necessary to send a letter of demand and then to make a proposal for payment in instalments in a second letter, to announce legal action in a third reminder and to make phone calls in between.

If the defendant has not given cause to a court action by his conduct because she or he never received a reminder letter from the creditor and has immediately acknowledged the claim in the court action raised in the action at the first opportunity, the costs of the proceedings are to be borne by the plaintiff. The plaintiff shall also reimburse the costs incurred by the defendant due to the legal proceedings initiated.

Whenever possible, creditors should carefully retain in writing all documents that prove the existence of the debt. This includes, in particular, contracts, general terms and conditions, e-mails (under Austrian law, a contract can also be concluded through the exchange of e-mails), invoices, takeover protocols, delivery notes, and contact details of the contractual partners. This saves time-consuming activities of taking evidence and enables a quicker procedure in court.

Above all, it is strongly advisable for creditors:

• to conclude contracts with the business partner in writing. The exchange of e-mails can also lead to the conclusion of a contract
• to verify what general terms and conditions apply to the transaction
  
• o verify if there is an agreement on the place of jurisdiction and the applicable law
• to verify whether there are deadlines for asserting the claim
• to agree on a retention of title

Furthermore, verifying the debtor’s financial situation before concluding a contract and starting a business relationship with the potential business partner - and before starting a court proceeding - is utterly important. It is also important to verify that there is no ongoing insolvency proceeding against the debtor.

Both national and foreign creditors can start a civil proceeding following the requirements outlined above regarding the court's competence and place of jurisdiction and the duty to receive legal assistance from a lawyer before the court, depending on the amount in dispute.

Moreover, there is an optional, non-mandatory, European Order for Payment Procedure, applicable if the following criteria are met:

• there must be a cross-border situation. That means that the plaintiff and the defendant are domiciled in different Member States of the European Union
• unlike the “Simplified Order for Payment Procedure, the European Order for Payment Procedure does not set any maximum amount
• the defendant is entitled to appeal against the payment order within 30 days after receipt.

A distinction must be made here between the “Simplified Order for Payment Procedure” (see question 2) and "ordinary" civil proceedings.

• Simplified Order for Payment Procedure

For Payment Procedures, the court does not initially check whether the plaintiff is entitled to the claim. This means the claimant does not have to enclose any documents proving the obligation to pay.

The same also applies if the creditor initially merely sends the debtor a warning letter: proof of the claim does not have to be provided either.

As soon as the defendant files an appeal and a court hearing takes place, the plaintiff must prove the claim's existence.

• Ordinary civil proceeding

The situation is different in "ordinary" civil proceedings, as the plaintiff must enclose all documents proving the existence of the debt. This includes contracts, general terms and conditions, e-mails, invoices, takeover protocols, delivery notes, and contact details of the contractual partners.

• Evidence

Courts may admit the following means of proof: documents, witness testimony, expert opinion, visual inspection.

An interim measure such as an “interim injunction” can be used as a provisional measure to secure the monetary claim.

• Purpose of the interim injunction

An interim injunction is a summary court proceeding designed to secure claims before the court renders a final decision. It is a matter of securing a possible enforcement of a court judgment.

The purpose of the interim injunction is to protect the applicant (the endangered party) against a change in the debtor’s current situation, which would be associated with imminent and irretrievable damage for the former.

• Application for an injunction by the party at risk

Interim injunctions can be ordered even before a lawsuit is pending. If an interim injunction was applied for prior to the commencement of litigation, the lawsuit must be filed and the proceeding initiated thereafter because, otherwise, the prerequisites for the preliminary injunction cease to apply.

• Requirements for the issuance of an interim injunction for monetary claims

Application for issuance of a temporary injunction

• Monetary claim

For the issuance of an injunction, it is sufficient for the creditor to merely assert and certify his claim, which must be money.

• Danger of non-recoverability of the claim

In addition, the creditor must claim that there is a danger that his claim may not be collected due to the opponent's behaviours endangering the future execution.

This means that it must be probable that, without the issuance of an injunction, the debtor will make it considerably more difficult for the endangered party to collect the debt (e.g., by damaging, destroying, or concealing assets). These circumstances must be concretely asserted and certified.

The risk of not recovering the credit must depend on the debtor’s conduct. For example, the opponent may say he will move his residence to a country outside of Europe, taking his assets with him.

• Binding to the main claim

Only the monetary claim that is or should be the subject of the lawsuit can be secured. The preliminary injunction is bound to the main claim (the claim at issue in the lawsuit). The endangered party may not be granted any measures to which it would not be entitled, even if the main claim were enforced.

Measures (means of security)

The following may be considered as measures to secure the claim:

• safekeeping and administration of the debtor's property or deposit of money
• prohibition of sale of the debtor's property
• prohibition of third parties (if the opposing party has a claim against another person, the latter shall be prohibited from collecting the claim)
• administration of real estate
• prohibition of alienation and encumbrance of real estate

After a warning letter has been sent to the debtor, how a matter develops depends on the debtor's reaction:

• The debtor decides to pay

If the debtor finally decides to pay the invoice, he must also pay the fees and costs for the lawyer's intervention.

• The debtor cannot meet the deadline for payment

If the debtor is willing to pay, but for economic reasons is unable to do so within the timeframe set by the creditor, it is advisable to agree on a repayment plan.

• The debtor does not pay

1. if the debtor does not pay the invoice despite a warning letter, initiating a civil court proceeding might help to reach one’s goal. Yet, starting a court proceeding must not be regarded as a guarantee to obtain the amount due
   
2. ss an alternative to filing a claim, the claimant may try to find an alternative way to solve a dispute with the debtor through an Alternative Dispute Resolution (ADR), thereby trying to avoid a long-lasting and costly court procedure.

A receivable is irrecoverable if its collection cannot be expected in the foreseeable future, based on a reasonable commercial assessment (according to business life experience). It is sufficient that the claim is "not collectible for a considerable period of time".

A receivable is irrecoverable if its collection cannot be expected in the foreseeable future, based on a reasonable commercial assessment (according to business life experience). It is sufficient that the claim is "not collectible for a considerable period of time".