The Setting Aside of National Arbitral Awards on the Ground of a Violation of Substantive Public Policy in Austrian Arbitration Law

Background: Arbitration constitutes a party-autonomous adjudicatory system whose awards possess strong legal validity and are generally not subject to multi-instance review. Arbitral awards are binding and may be set aside only in cases of serious procedural or substantive violations, a principle underpinning all major arbitration regimes. The Austrian Code of Civil Procedure (ACCP) incorporates arbitral tribunals into the state system of legal protection and provides minimum guarantees that justify granting arbitral awards the same legal effect as ordinary court judgments (Section 607 ACCP). To address grave irregularities, Austrian law offers a single remedy: an action for setting aside under Section 611 ACCP, enabling the annulment of an award through a cassatory decision, typically by the Austrian Supreme Court. Violations of public policy represent a central ground for annulment across arbitral systems. Distinctively, Austrian law differentiates between procedural and substantive public policy violations—unlike the UNCITRAL Model Law and the German Code of Civil Procedure. Method: In the first stage, the author examined the relevant provisions of Austrian law currently in force in accordance with established legal methodology. In the course of historical interpretation, the predecessor provision was also taken into account. Comparable regulations in related legal systems were analysed. In a second step, an in-depth examination of Austrian supreme court case law was carried out. In order to define the concept of ‘public policy’ (‘ordre public’), German supreme court case law and decisions of the European Court of Justice (ECJ) were also analysed. This result was compared with the findings from the evaluation of Austrian case law in order to identify differences and similarities. Results and Conclusions: This study defines the concept of public policy in Austrian arbitration law through an analysis of national and international case law and a strict distinction between substantive and procedural public policy, as required by Section 611 para. 2 ACCP. It establishes that only infringements of the fundamental values of the Austrian legal system – namely the core principles of the Federal Constitution, the ECHR, and essential norms of criminal, private, procedural, and public law – constitute violations of substantive public policy. Case law illustrates which infringements meet this threshold. Due to the narrowly construed scope of Section 611 para. 2 no. 8 ACCP, this ground for setting aside does not allow review of factual or legal correctness of arbitral awards; erroneous arbitral awards must generally stand. Setting aside an arbitral award is justified only where an evident breach of fundamental values exists, provided there is sufficient domestic connection, and where the incompatibility concerns not merely the reasoning but the substantive outcome of the award.