English »Legal Updates
One less potential way to “negative interest”
A borrower sued a bank for interest. Due to negative reference rates, the interest rate for the loan became negative. The Supreme Court in Civil Matters ruled that the bank does not need to pay interest to the borrower. Even where a rule of doubt regarding the interpretation of the loan agreement to the detriment of the bank (and to the benefit of the borrower) applies, the bank would not have to pay “negative interests”. Nevertheless, the Supreme Court in Civil Matters does not rule out the payment of negative interests for certain “atypical” contracts (OGH dated 26.02.2020, 1 Ob 16/20i).
22. May 2020
The ECJ on the right of withdrawal from a loan agreement for consumers
In a recent decision, the ECJ addressed the question of the right of withdrawal from a loan agreements for consumers. Companies have to provide certain information in the case of loan agreements for customers. If in these statements, reference is made to a law, which refers to yet another law, it’s classified as a series of national provisions (“Kaskadenverweis”). This is declared inadmissible by the ECJ in the case of information on the right of withdrawal from a loan. Consumers could neither identify the scope of the contractual obligation nor verify whether the contract contains all the necessary information. Consumers can also not verify whether the withdrawal period has already commenced. (ECJ C-66/19 dated 26.03.2020). Note: The German BGH declared a series of national provisions for loan agreements for consumers and real estate loans to be permissible.
8. May 2020
Notification of a prospectus is not required for jurisdiction
An investor filed a suit in Austria claiming that a capital market prospectus was incorrect. The relevant incorrect prospectus was not notified in Austria. In this case, the Supreme Court for Civil Matters ruled on the jurisdiction of Austrian courts. According to this ruling the notification of a prospectus in Austria is not a mandatory requirement for the jurisdiction of Austrian courts. It is sufficient if the investments were made by an Austrian account, the contractual documents were signed in Austria and the settlement account was an Austrian account (6 Ob 239/18t, 5 Ob 240/18g).
8. April 2020
On the obligation of confidentiality of authorities
The Supreme Court in Administrative Matters (VwGH) recently dealt with the obligation of confidentiality of authorities. The appellant asked for information concerning him on the exchange of information between domestic and foreign authorities. The request was rejected. This was justified with the “protection of the interests of foreign relations”. In general, the interest in information and the interest in confidentiality must be weighed up. If there are public interests however, as in the present case, there is no need to weigh interests. Public interests (acc to Art 20 B-VG) always prevail (VwGH Ra 2017/01/0140 dated 28.01.2019).
31. January 2020
New minimum standards for internal audit
On 02.01.2020, the Austrian Financial Market Supervisory Authority (FMA) issued new minimum standards for internal auditing. With very few exceptions, they affect all Austrian credit and financial institutions. Changes compared to their 15 year old predecessor concern, among others, the communication between the internal auditing and the FMA. The new minimum standards also include several clarifications, such as specifications on the requirements for heads of internal auditing. Minimum standards of the FMA are so called soft-law and as such are not legally binding. Nevertheless they play a very important role in practice.
17. January 2020