OGH: Lawyer's duty to warn about potential return of contributions

Dec 8, 2021 Benn-Ibler Rechtsanwälte

The Supreme Court (Oberster Gerichtshof, OGH) addressed the question of the extent to which lawyers have to examine and warn of possible violations of the capital preservation regulations, in particular the prohibition of return of capital contributions, and to issue specific warnings in the context of the administration of third-party funds. 

In the case at hand, the plaintiff was the administrator of an insolvent Austrian limited liability company (GmbH; “debtor”). The defendants were a law firm established in the legal form of an “Offene Gesellschaft (OG)” (partnership) and its partners, who, on behalf of the original sole shareholder and managing director, administered the debtor's funds in trust in an escrow account and made payments, including to the managing director himself, on the instructions of the managing director.

According to the plaintiff, the funds entrusted should not have been paid out to the shareholder without a shareholder’s resolution on the distribution of profits pursuant to Section 82 para 1 GmbH Act (GmbHG) and the defendants should have recognised the violation of the capital preservation regulations and also pointed the inadmissibility and refused the payments. The defendants would therefore be liable for the damage caused by their breach of duty.

The defendants objected, inter alia, that the law firm had not been mandated to check corporate law issues and capital preservation regulations.

In view of the previous case law, the OGH stated that the obligation of a lawyer to investigate suspicious circumstances and to prevent breaches of capital preservation regulations is not limited to the drafting and review of contracts. Rather, it applies to all contractual relationships concluded between the client and the lawyer.

Due to their duty to safeguard interests, the defendants should therefore have specifically warned the debtor against payments that could be void due to a violation of Sec. 82 GmbHG and should have done their best to prevent such payments. According to the OGH, this would have required an explanation that "goes beyond a general reference to a 'possible' violation of capital preservation regulations".

Since there were no findings on the causality of the breach of the duty to inform and on the question of whether the defendants should have refused the ordered payments - which, according to the OGH, is the case if a breach of Sec. 82 of the GmbHG should have been obvious after due enquiry - the OGH overturned the decisions of the lower courts and referred the case back to the court of first instance for a new decision.

OGH 6 Ob 26/21y (14.09.2021)