Limits on Repayment Arrangements

Apr 9, 2026 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, or OGH) has recently reviewed a case concerning the repayment of several million euros following a consultancy agreement with an Austrian bank that subsequently went bankrupt.

Once insolvency proceedings started in 2020, the administrator requested the defendant to return about EUR 3.9 million in consultancy fees and over EUR 5.3 million in travel expenses received between 2016 and 2019. While the lower court initially dismissed the claim, the court of appeal concluded that the contract breached public policy and issued a partial judgment in favor of the administrator.

Principal deliberations of the Supreme Court

The OGH confirmed that the consultancy agreement was invalid but made it clear that existing case law regarding service or supply contracts conflicting with public policy did not automatically apply. The situation differed from typical cases; here, the focus was not on one party exploiting another, but rather on unjust enrichment at the company's and its creditors' expense. Therefore, a thorough evaluation of all relevant circumstances in each specific case was essential.

In this instance, the contractual arrangement resulted in a pronounced imbalance: the defendant was not subject to any specifically identifiable, or enforceable obligation to perform, while the bank was required to make long-term, unconditional payments. This led to a continual outflow of liquidity, despite the bank’s already precarious financial situation. Subsequent assertions regarding actual expenditure did not alter this outcome, as no equivalent consideration existed. Accordingly, the OGH determined that the contract, in its entirety, was contrary to public policy and therefore void pursuant to Section 879(1) of the Austrian Civil Code (Allgemeines bürgerliches Gesetzbuch, ABGB). The decision was based on the finding that it was not only specific provisions but the overall contractual structure that demonstrated a significant disparity between performance and consideration. Consequently, issues related to insolvency challenges—specifically, the intent to disadvantage creditors—were rendered moot.

17Ob 3/25b (25 February 2026)