Legal Updates

Arbitration Clause in an M&A Transaction: Does a Defect Affecting One Seller Also Affect the Others?

OGH 4 Ob 200/25b | 26.03.2026

Several individuals jointly sold their shares in a limited liability company (GmbH) to a purchaser. The share purchase agreement contained an arbitration clause requiring disputes to be resolved before an arbitral tribunal rather than the ordinary courts. Nevertheless, one of the sellers filed a claim before an ordinary court for part of the purchase price. He argued that the arbitration clause was invalid because other sellers had defects relating to the required form or powers of attorney when concluding the arbitration agreement.
The Austrian Supreme Court (OGH) rejected this argument. The decisive question is whether the sellers constitute a so-called “necessary joinder of parties.” If this is not the case, as the OGH held here, the validity of the arbitration clause must be assessed separately for each individual seller. Consequently, a defect affecting one seller does not invalidate the arbitration clause for the remaining sellers.
Practical takeaway: In M&A transactions involving multiple sellers, the validity of the arbitration clause should be documented carefully for each seller individually. A formal defect affecting one seller does not automatically jeopardize the arbitration clause for the other sellers.

No Access to the General Meeting: Supreme Court on Shareholder Rights Under EU Sanctions

OGH 6 Ob 60/26f | 22.04.2026

A Russian company controlled by a sanctioned individual was excluded from the general meeting of a Societas Europaea (incorporated in Austria). The company subsequently appealed the resolutions passed at the general meeting before the courts. The Austrian Supreme Court (OGH) has now dismissed the claim.

The decision was based on a judgment of the Court of Justice of the European Union (CJEU) issued shortly beforehand on 12 March 2026 in Case C-465/24. The CJEU held that sanctioned shareholders are to be excluded entirely from participating in shareholder meetings and from exercising voting rights. This exclusion applies categorically and without regard to the subject matter of individual resolutions. The right to appeal resolutions before the courts, however, remains unaffected.

In practise, this means that boards of directors and managing directors would be well advised to review the relevant sanctions lists prior to every shareholder meeting.

ZIAG also applicable to pending rent proceedings

On 01.01.2026, the Civil Law Indexation Adjustment Act (ZIAG) entered into force. By amending Section 6 para 2 no 4 of the Austrian Consumer Protection Act, the ZIAG clarified that value adjustment clauses in continuing obligations generally remain permissible. In its decision dated 10.03.2026 (1 Ob 87/25p), the Austrian Supreme Court addressed the question of how the ZIAG affects proceedings already pending before the courts.

In the specific case, former tenants sought repayment of rent from their landlord due to the alleged invalidity of a value adjustment clause. The Austrian Supreme Court dismissed the claim and clarified that the ZIAG also applies to proceedings already pending before the courts.

For practice, this means the following: Claims for repayment based on the previous legal situation regarding Section 6 para 2 no 4 of the Austrian Consumer Protection Act are now significantly more difficult to pursue. Landlords should actively invoke the amended legal situation in any pending proceedings.

Timing of application for a decision for granting citizenship to minors

An Italian woman, still a minor, whose mother was already an Austrian citizen, applied for Austrian citizenship. The applicable provision (Sec 12 para 1 no 3 StbG) requires, inter alia, that the applicant be a minor. During the application process, the applicant came of age. The application was then rejected. The Austrian Constitutional Court ruled that this violated the principle of equality. It must not depend on coincidences or manipulative circumstances whether an application is granted. Therefore, a legal claim must not be made dependent on how long an administrative procedure takes. (Austrian Constitutional Court of 01.07.2022 to case E3398/2021)

Rescission of a foreign currency loan

The borrower took out a foreign currency loan with the defendant bank in 2004. It was not until 2018 that he sued for cancellation and rescission. He based his claim, among other things, on the fact that the exchange rate had not been determined. The Supreme Court has now ruled that the loan agreement cannot be rescinded.. Anyone wishing to invoke the invalidity of an ongoing contract would have to inform his contractual partner of this in a timely manner. However, the borrower had received account statements and annual statements from the bank for 18 years and had not objected to them. (4Ob208/21y)