From the beginning, Patr. Arsenije had many problems under Austrian rule. Hungarian nobility, Catholic [[clergy]], and German officers were all hostile toward the Serbs, but the wise patriarch saved his people from Catholic [[proselytism]]. He managed to negotiate with bishops who had signed the Union. After this, those bishops re-embraced Orthodoxy. Yet he failed in trying to re-establish an Orthodox bishopric in Transylvania (the Metropolitan of Transylvania signed the Union in 1699). He established relations with Russian court. He also started to negotiate with the Turks in order to return to Peć. His greatest enemy was Cardinal Leopold Kolonić, state chancellor of Hungary. Arsenije established five new [[diocese]]s in Hungary and Croatia, and with these and three previously established ones, he established the Metropolitanate of Karlovci as an autonomous unit of the Peć Patriarchate.
Patriarch Arsenije died in Vienna on [[October 27]]. He advised his bishops to re-establish relations with the Patriarch of Peć. Soon the Metropolitanate of Karlovci was formed as autonomous unit of the Serbian Orthodox Church.