OGH on Deposit Insurance for Trust Accounts

Jun 2, 2023 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) has clarified that in the case of multiple-party trust accounts, all trustors are to be considered as depositors for the purpose of deposit insurance.

The first and second plaintiffs are the buyer and seller of a property. The agreed purchase price of EUR 167,000 was to be deposited in an escrow account and transferred to the seller after incorporation notification. Shortly after transfer of the funds to the escrow account, deposit guarantee became an issue. At the request of the trustee, the defendant deposit protector, AUSTRIA GmbH (ESA), which had been entrusted with the deposit guarantee, transferred EUR 100,000 to a new trust account disclosed by the trustee.

The claimants are now seeking payment of the remaining EUR 67,000 in deposit insurance from ESA. In their opinion, the refundable deposit was to be considered proportionately for each of them individually. The defendant replied that in the case of trust accounts the deposit guarantee claim is due to the entitled depositor, i.e. the person from whom the money deposited in the account originated. In this case, that would be the buyer.

According to the OGH, the plaintiffs are in principle in the right.

Pursuant to Section 7(1)(6) of the Austrian Deposit Guarantee and Investor Compensation Act (Einlagensicherungs- und Anlegerentschädigungsgesetz, ESAEG), EUR 100,000 per depositor and credit institution shall be covered. In the case of disclosed trust accounts (if the trustors are known to the credit institution), the deposits in such accounts are to be taken into account proportionately for each trustor when calculating the eligible deposits of the individual depositors in accordance with the regulations applicable to the administration of these deposits under Section 11 (2) ESAEG. Thus, a general liability cap of EUR 100.00 is provided for each depositor (each settlor).

In the context of real estate purchase contracts, there is usually a multiple-party trust, because the trustee is required to protect several interests. Therefore, both the buyer and the seller are settlors and thus both are depositors within the meaning of Section 11(2) ESAEG, as this is linked to the consideration of trusts under Austrian civil law.

The deposit in the trust account is therefore to be taken into account for both depositors on a pro rata basis, i.e. half each, in calculating the upper liability limit.

OGH 6 Ob 139/22t (18.04.2023)