OGH Affirms Bank Guarantee Enforceability

Jul 9, 2026 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) had to consider the question of the conditions under which the enforcement of a bank guarantee issued as security pursuant to Section 1170b of the Austrian General Civil Code (Allgemeines bürgerliches Gesetzbuch, hereinafter ABGB) may be prevented by an interim injunction. The matter under review pertains to a plant construction contract where, subsequent to considerable malfunctions, a dispute emerged regarding whether responsibility for the defects lies with the contractor or the client.

The contractor requested payment of the outstanding remuneration for services rendered and, pursuant to Section 1170b of the ABGB, sought security for this amount. The client subsequently furnished a bank guarantee in the sum of approximately EUR 4 million. Following the contractor‘s drawdown on the guarantee, the client sought an interim injunction, asserting that the drawdown represented an abuse of rights due to the client‘s objections concerning alleged defects.

Misuse of legal process and interim injunctive relief

The OGH underscored that issuing an interim injunction to prevent the execution of a bank guarantee necessitates establishing both a corresponding claim and a specific risk. Additionally, restriction on the drawing of an abstract bank guarantee is permitted only when it is demonstrated, with clear and unequivocal evidence, that the event triggering the guarantee has not taken place.

While it was uncontested that the client faced certain risks in this matter, attribution of responsibility for the system malfunctions could not be determined between the contractual parties. As a result, there was insufficient evidence to conclude that the contractor should forfeit any payment owed.

Realisation of the security despite customer objections

The decision focused on determining whether simply raising objections to a wage payment claim is adequate to constitute an abuse of law in invoking a bank guarantee issued pursuant to Section 1170b of the ABGB.

The OGH expressly refutes this perspective. Seizure would not fulfil its intended function if a customer could prevent the trader from accessing the security simply by asserting alleged defects. Section 1170b of the ABGB is designed to safeguard the trader not only against the customer‘s inability to pay, but also their unwillingness to do so. Consequently, mere objections or unresolved disputes generally do not preclude the enforcement of the security.

Clarification regarding Section 1170b of the ABGB

The Court conducted a thorough review of its prior case law, emphasising that objections by the purchaser which are unfounded or only alleged do not impede the enforcement of security pursuant to Section 1170b of the ABGB. Permitting otherwise would allow the purchaser to undermine the intended purpose of the provision merely by asserting defects.

The OGH has consequently departed from the stance that security must be upheld—even in cases of baseless objections—until the contract price claim is conclusively resolved. Instead, the fundamental requirement for drawing on the security continues to be the customer’s default on payment; unfounded objections do not postpone the maturity date.

OGH 8 Ob 147/25p (24 March 2026)