OGH: COFAG Subsidies Are Garnishable

Jun 16, 2023 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has ruled that COFAG¹ subsidies are, in principle, garnishable.

In the original case, the court of first instance had granted the petitioning energy supplier, among other things, the execution of claims by seizure and transfer of the claims owed to the obligated party against COFAG (the third-party debtor). Two unresolved applications for subsidy products called Lockdown Turnover Compensation III and Fixed-Cost subsidy) were pending with COFAG.

In COFAG’s view, however, the subsidies were in any case non-garnishable by analogy with Section 290 of the Austrian Debt Collection Order (Exekutionsordnung, hereinafter EO), because they were granted for the purpose of maintaining solvency and bridging liquidity difficulties in connection with COVID-19. This legal purpose could be frustrated by executions for the purpose of merely satisfying individual creditors, if they were garnishable.

However, the OGH did not share this view.

The Lockdown Turnover Compensation III Ordinance (Federal Law Gazette II 2021/518) and the Fixed- Cost Subsidy Ordinance (Federal Law Gazette II 2020/479) do not contain any explicit provision on a possible non-garnishability of the subsidies to be granted.

However, an analogous application of Section 290 EO is not warranted.

The non-garnishable claims under Sec 290 EO, such as allowances for expenses, rent subsidies, allowances to cover additional expenses due to physical or mental disabilities, serve to cover very specific needs and are therefore, economically, mere `transitory items’ for the recipient. Already due to the different economic function of COFAG subsidies as a substitute for income, an analogy cannot be considered.

An analogy to other claims under Section 290 EO, which are not ‘transitory items’ (such as family allowance or study allowance payments), was not even rudimentarily substantiated by COFAG in the appeal, according to the OGH.

Moreover, the garnishability of COFAG subsidies does not contradict their very purpose, since they are intended to enable companies to meet their due liabilities despite a drop in their turnover. If the COFAG subsidies were non-garnishable, law-abiding entrepreneurs who voluntarily pay their debts would be in a worse position than those who do not.

OGH 3 Ob 42/23g (19.04.2023)

¹ COVID-19 Finanzierungsagentur des Bundes GmbH is in charge of providing COVID-19 subsidies.