OGH: General Meeting Is Not an Arbitration Board

Jun 30, 2023 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has clarified important questions concerning Austrian association law in matters of the competence of arbitration board and the general meeting of members when a member of the executive board is being expelled.

The plaintiff had been a member of the defendant association since 1990 and most recently had also been a member of the association’s executive committee. According to the association’s statutes, the executive committee is elected and dismissed by the general meeting, whereby only association members may be on the executive committee. The expulsion of members is the task of the executive committee, whereby an appeal against one’s expulsion is possible before the members’ general meeting. According to the statutes, the association’s arbitration body is expressly not in charge of expelling members.

The plaintiff had been expelled from the association by a majority decision of the board, which also ended his function as a board member. He appealed his expulsion before the general meeting, which, however, agreed with the decision of the board. The arbitration board to which the plaintiff appealed did not consider itself competent.

The plaintiff then brought an action against his expulsion by having the board’s decision declared null and void.

According to Section 8 (1) of the Austrian Associations Act, the statutes must provide that membership status disputes must be settled before an arbitration board. The ordinary legal process is open after conclusion of an arbitration procedure or otherwise after 6 months from the date of referral to the arbitration board. Expulsion is such a legal dispute and must be submitted to the association’s internal arbitration procedure.

The OGH has ruled that the general meeting of members cannot act as an arbitration board, since the will of a general meeting is regularly formed by a vote of the members. How the general meeting should thereby fulfil the duty of an arbitration board in order to settle disputes is not evident to the OGH.

Therefore, the general meeting cannot be established as an arbitration board in the statutes of the association.

The OGH also found that if only members of the association are allowed to serve on the board, expelling a board member by the association’s board is inadmissible if constituting the board is reserved for the general meeting. An expulsion by the board is only possible if the general meeting has previously removed the respective member from their board function.

OGH 2 Ob 25/23z (16.05.2023)