Dr. Alexander 太陽 Scheuwimmer

Rechtsanwalt / Attorney-at-Law

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If it’s written in the prospectus, it must be true?

The Brussels I Regulation requires an agreement on a jurisdiction clause; a clause contained in a prospectus for bonds fulfills the agreement-requirement only if the contract signed by the parties upon the issue of the bonds on the primary market expressly mentions the acceptance or contains an express reference to the prospectus. But what about a third party acquiring the bonds? Such third party is only bound by the jurisdiction clause if he succeeded to the rights and obligations attached to the bonds and had the opportunity to acquaint himself with the prospectus. And if not? The insertion of a jurisdiction clause into a prospectus may still be regarded as usage in international trade or commerce for purposes of the Brussels I Regulation provided that such conduct is generally and regularly followed by the operators in the concerned sector and either the parties had previously commercial or trade relations in the sector or the conduct is sufficiently well known. (C‑366/13)

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"Any” means “any”

Austrian investment fund law aims at controlling personal transactions of certain managers and employees. To this end it is required that the management company be informed of any personal transaction of a relevant person; certain personal transactions of relevant persons be prevented altogether. In a recent decision the Supreme Administrative Court (VwGH) ruled that “any personal transaction” really means any; the transaction does not need to fulfill any additional requirement in order to trigger the information obligation. (2016/02/0004)

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Fairness is in the eye of the beholder

As prescribed by MiFID, under Austrian law all information by investment firms to clients must be fair, clear and not misleading. But what’s fair? The Supreme Administrative Court (VwGH) recently found that the use of technical terms of the capital market may be not fair; the addressees of a certain offer by a bank had included retail clients and the offer had used the term “Qualified Investor”. If the technical term is relevant for the understanding of the information, it must be explained, ruled the court. (2014/02/0089)

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Never too big to monitor

Marketing funds in Austria requires certain documents to be filed with the Financial Market Supervisory Authority (FMA) within certain periods; and there are few excuses for missing deadlines. The managing director of a fund management company was fined for having missed a filing deadline by ten days. He argued that it was disproportionate to monitor the mailing of the 18,000 documents of the fund management company; especially because this is generally a relatively fail-safe activity. The Federal Administrative Court (Bundesverwaltungsgericht) rejected this argument. It pointed out that everything that’s technically feasible must be undertaken. (W148 2000397-1)

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Do! Don’t just say you do.

The Austrian conflict of interest rules for investment fund managers are among those rules which must be observed also by foreign investment fund managers who market their funds in Austria. As such it is advisable to monitor Austrian case law on these rules. In a recent decision, the Supreme Administrative Court (VwGH) made a clear distinction between having a conflict of interest policy and monitoring its observance. Both, lacking such a policy and not monitoring its observance, are subject to an administrative penalty. (2015/02/0025)

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Keep your data wisely

Marketing funds in Austria requires the sharing of data with different actors: A custodian bank, tax representative, perhaps a paying office. A recent decision of the Supreme Administrative Court (VwGH) dealt with certain data integrity and privacy issues in the course of such sharing: The primary investment fund rules which regulate these topics (sec 12 para 2 Investment Fund Act) are only applicable for those data which the investment fund manager himself aggregated; however the conflict of interest rules (sec 22 et seq Investment Fund Act) may be applicable also for data other than those which the  investment fund manager gathered. (2015/02/003)

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Not too close, please

Austrian law foresees a no-fault liability for certain agents. Financial institutions have previously been held liable for acts and omissions of “their” investment service providers, e.g. where they knew of a malpractice of the investment service provider. More recent case-law goes one step further: It is now established case-law that financial institutions are subject to a no-fault liability for those investment service providers with whom they have a close economic relationship. (6Ob84/15v)

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Proper proprietary trading

Austrian law requires a banking license for certain forms of proprietary trading. While the Supreme Administrative Court (VwGH) tends to classify many activities as banking business, the Supreme Court (OGH) recently took a more generous stand: Only where  proprietary trading is done “in a bank-like manner”, a banking license is required. Trading in a bank-like manner requires multiple counterparties, a professional analysis- and professional trading system. (6Ob229/14s)

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Believing is not knowing

Acts of Austrian authorities come in many different forms; Not always will a formal (written) notice be issued. That’s generally accepted and sometimes preferrable. Caution should be exercised though when it comes to silence or a failure to act. The Supreme Administrative Court (VwGH) pointed out that such acts by the Financial Market Supervisory Authority (FMA) cannot generaly be interpreted as the granting of a grace period - not even where the silence or failure to act follow a formal request for a grace period.  (2011/17/0081)

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Pin it on the auditor!

One of the requirements for tort under Austrian law is a certain nexus between action and damage. In a recent decision, the Austrian Supreme Court (OGH) relaxed this prerequisite. It held that an qualified auditors opinion does not need to directly cause damages to investors. Where such qualified auditors opinion is wrong and hence increases the risks for investors, such increase alone can already make the auditor liable for damage caused to an investor. (8Ob93/14f)

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No signature required

As a general rule, Austrian law requires that agreements to arbitrate must either be in the form of a signed document or included in exchanges letters. The Austrian Supreme Court (OGH) clarified that an exchange of letters - via telefax - is an equal option and that such exchanged letters do not need to be signed; what’s important is that the respective issuers are identifyable. The OGH also stated that the technological means by which the letters are exchanged are generally irrelevant. (18OCg1/15v)