International arbitration law and rules in Hungary

1.1.1 The Hungarian legal system was historically shaped by German and Austrian law, and the influence of 19th century German and Austrian civil and commercial legal codes remains apparent today despite significant developments to reflect modern commercial demands. 

1.1.2 In 1911, not long after the Austrian Code of Civil Procedure was introduced in 1895, a commercial arbitration system was established in the Hungarian Code of Civil Procedure.

1.1.3 In 1952, the Hungarian Code of Civil Procedure was replaced by Act III of 1952 on the Civil Procedure Code and, in line with the communist legislative tendencies at the time, existing Hungarian arbitral tribunals were closed. Afterwards, only foreign trade disputes could be referred to arbitration. These were submitted to a newly formed Court of Arbitration, which was attached to the Hungarian Chamber of Commerce (Hungarian Economic Chamber from 1985 and now the Hungarian Chamber of Commerce and Industry). Under the Moscow Convention of 1972 (Moscow Convention), all disputes between trading organisations in different Member States of the Council for Mutual Economic Assistance (COMECON) (including Hungary) had to be referred to the arbitral tribunal attached to the chamber of commerce in the country of the respondent. Alternatively, the parties could choose a third country’s arbitral tribunal, provided that the third country was also a member of COMECON.

1.1.4 In 1994, as a result of democratic changes to Hungary’s political system, the new Act LXXI of 1994 on Arbitration (old Hungarian Arbitration Act) was introduced. The Hungarian Arbitration Act, which is based on the Model Law (1985) 1 For the text of the Model Law (1985) see CMS Guide to Arbitration, vol III, appendix 2.1. , removed both the restrictions on arbitration contained in the Moscow Convention and the previous laws governing arbitration in Hungary. 2 Hungarian Arbitration Act, s. 1(1).

1.1.5 In 2017, partly due to the need for harmonisation with the amended UNCITRAL Model Law (2006), which it closely mirrors, Act LX of 2017 on Arbitration (Hungarian Arbitration Act, or Act) was passed by the Hungarian Parliament. The Hungarian Arbitration Act entered into force on 1 January 2018, establishing a completely new structure in terms of institutional arbitral tribunals but retaining the majority of the previous arbitration act’s procedural provisions. 

2.1.1 The provisions of the Hungarian Arbitration Act apply to both ad hoc and institutional arbitral tribunals, if the place of arbitration is in Hungary.  

2.1.2 Unless otherwise provided for by an international agreement, certain provisions of the Hungarian Arbitration Act apply to arbitral proceedings of the permanent Commercial Court of Arbitration even if the venue of those proceedings is outside Hungary. Those provisions relate to court enforcement of arbitration agreement-based claims (Section 9); the arbitration agreement’s compatibility with court and notary public measures (Section 10); court proceedings (Section 28); court assistance in evidentiary matters (Section 40); and the enforcement of arbitral awards (Sections 53-54). 3 Ibid., s. 1(2).   

2.2.1 Arbitration may take place regarding any civil dispute (commercial, contractual or tort) excluding (1) disputes concerning consumer contracts; (2) special proceedings regulated in Chapter 7 of Act CXXX of 2016 on Civil Procedure (such as family law, public and private guardianship issues, as well as labour and enforcement disputes); and (3) disputes falling within the scope of Act I of 2017 on Administrative Court Procedure. 4 Ibid., s. 1(3).  Other than these particular exceptions, all other issues may be resolved through arbitration. 

2.3.1 The Hungarian Arbitration Act is structured as follows:

• Chapter I: Contains the general rules governing arbitral proceedings. 
• Chapter II: Sets out the requirements relating to the arbitration agreement (the arbitration clause). 
• Chapter III: Deals with the formation and composition of the arbitral tribunal. 
• Chapter IV: Governs the jurisdiction of the arbitral tribunal.
• Chapter V: Addresses the rules of issuing interim and preliminary measures. 
• Chapter VI: Sets out the powers of the courts relating to arbitral proceedings.
• Chapter VII: Details of the procedural rules applicable to arbitration.
• Chapter VIII: Deals with setting aside arbitral tribunals’ awards. 
• Chapter IX: Regulates the “retrial” procedure.
• Chapter X: Governs the enforcement of the arbitral award. 
• Chapter XI: Contains miscellaneous provisions.
• Chapter XII: Regulates the structure of the permanent Court of Arbitration attached to the Hungarian Chamber of Commerce and Industry (hereinafter: “Commercial Court of Arbitration” or “CCA”). 
• Chapter XIII: Contains the closing provisions of the Hungarian Arbitration Act.   

2.4.1 Comparable to the UNCITRAL Arbitration Rules, the Hungarian Arbitration Act is based on and construed in accordance with three guiding principles:

• Equality of the parties, meaning that the parties shall enjoy equal treatment during the course of the arbitral proceedings; 5 Ibid., s. 29.
• party autonomy, meaning that the parties are free to determine the rules that will govern the proceedings; 6 Ibid., s. 30. and
• due process, meaning that each party must be given a proper opportunity to present its case. 7 Ibid., s. 29.    

2.5.1  As of 1 January 2018, there are three Hungarian institutions competent to administer institutional arbitration. The Commercial Court of Arbitration attached to the Hungarian Chamber of Commerce and Industry has general and exclusive competence over domestic institutional arbitral proceedings other than those related to sport and agriculture. 8 Ibid., ss. 59(1) and 60(1).  Two additional and specialised institutions exist: the Permanent Court of Arbitration for Sport and the Permanent Court of Arbitration maintained by the Hungarian Chamber of Agriculture. 9 Ibid., s. 59(2).   

2.5.2 The Permanent Court of Arbitration for Money and Capital Markets and the Permanent Court of Arbitration for Energy were abolished on 31 December 2017 when the Hungarian Arbitration Act came into force. 10 Ibid., s. 67(1).  Any arbitration agreement concluded before 1 January 2018 under the jurisdiction of one of the abolished permanent courts shall be considered to mean a provision for the jurisdiction of the Commercial Court of Arbitration, which shall be competent to administer such disputes. 11 Ibid., s. 67(6).

3.1.1 The Hungarian Arbitration Act defines an arbitration agreement as an agreement in which the parties agree to submit to arbitration: 

1. any and all, or specifically designated, disputes; 
2. whether present or future; 
3. arising from a contractual or non-contractual legal relationship between them. 12 Ibid., s. 8(1).   

3.2.1 The Hungarian Arbitration Act sets out the formal requirements of an arbitration agreement. An arbitration agreement must be in writing. 13 Ibid., s. 8(2).  It can be a separate agreement or a clause forming part of a larger contract. 14 Ibid., s. 8(1).  An arbitration agreement made by way of electronic communication is deemed to be in writing if it is capable of producing a permanent record of the agreement, in particular: electronic data exchange, electronic mail (email), telegram, telex or fax. 15 Ibid., s. 8(3).  The agreement is also deemed to be in writing if the claimant asserts in its request for arbitration or statement of claim that an arbitration agreement exists between the parties and the respondent does not dispute this assertion. 16 Ibid., s. 8(4).  Reference in a written contract to a document containing an arbitration clause will also qualify as a written arbitration agreement if the referenced clause constitutes part of the contract. 17 Ibid., s. 8(5).

3.2.2 The parties are free to stipulate the rules of procedure to be followed by the arbitration panel within the limits set out in the Hungarian Arbitration Act. 18 Ibid., s. 30(1).  Accordingly, the parties may nominate an existing set of procedural rules, such as that of the Commercial Court of Arbitration. The Commercial Court of Arbitration has its own detailed procedural rules ( CCA 2022 Rules), which will apply by default to proceedings before that body unless there is a contrary provision in the arbitral agreement. 19 CCA 2022 Rules, Art. 1(1).  The parties may include other provisions in the arbitration agreement if they wish, such as provisions regarding the number and method of appointment of arbitrators and other procedural issues.

3.3.1 Aside from the requirements described in paragraph 2.2.1 and section 3.2 above, there is an additional restriction relating to assets forming the subject of liquidation proceedings initiated under Hungarian law. Under this restriction, pecuniary claims connected with such assets against the company subject to the liquidation proceedings can only be made within the framework of the liquidation proceedings themselves (in accordance with Act XLIX of 1991 on Bankruptcy and Liquidation proceedings). This, however, does not affect non-pecuniary claims or pecuniary claims brought by the company against which the liquidation proceedings were initiated. 20 Hungarian Arbitration Act, s. 55.   

3.4.1 Arbitration clauses shall be treated as a separate and independent part of the contract. Accordingly, a decision by the arbitral tribunal to the effect that the contract did not come into existence or is otherwise invalid will not necessarily affect the validity of the arbitration clause contained therein. 21 Ibid., s. 17(1).

3.5.1 If a valid and binding arbitration agreement exists between the parties, the courts are excluded from assuming jurisdiction over the subject matter specified in the arbitration agreement. The Hungarian Arbitration Act expressly provides that the courts shall not intervene in arbitral proceedings except as provided for by the Hungarian Arbitration Act. 22 Ibid., s. 6.   

3.6.1 The parties may only deviate from the provisions of the Hungarian Arbitration Act where the Act itself so provides. 23 Ibid., s. 2.   

3.6.2  By way of example, the parties may not agree for the award to be appealable as, under the Hungarian Arbitration Act, the effect of the arbitration award shall be the same as that of a final court judgment. 24 Ibid., ss. 47(1) and 53(1).  

3.7.1 Under the Hungarian Arbitration Act, the only relevant factor in terms of domestic versus international arbitration is whether the place of arbitration (whether permanent or ad hoc) is located within Hungary. The Act’s provisions apply to all arbitral proceedings whose place of arbitration is in Hungary, and certain provisions may apply even if the place of arbitration is outside Hungary 25 Ibid., s. 1(2).  (see section 2.1.2 above for details).

3.8.1 Unless the parties agree otherwise, in the case of contractual succession and assignment the effect of the arbitration agreement concluded by the legal predecessor shall extend to the successor. 26 Ibid., s. 56.  

4.1.1 Unless there is an agreement by the parties to the contrary, nobody can be excluded as an arbitrator from the proceedings on the grounds of their nationality. 27 Ibid., s. 12 (1).  

4.1.2 The following persons may not be arbitrators: 28 Ibid., ss. 12 (7) and (8), 12 (1) and (5).  

• persons under 24 years of age;
• persons barred from public affairs by a final and binding court ruling;
• persons who have been sentenced to imprisonment by a final and binding court ruling, until the conviction has been erased from their criminal record;
• persons who have been placed under guardianship or otherwise lack full legal competence; 
• persons barred from any profession requiring a diploma in law; 
• persons placed on probation by a final and binding court ruling for the duration of the probationary period; 
• any person who formerly acted as a mediator, representative or expert on behalf of one of the parties involved in the legal dispute before the arbitral tribunal.

4.1.3  Additionally, court judges are prohibited from accepting an appointment as an arbitrator during their tenure in office. 29 Act CLXII of 2011 on the status and compensation of judges, s. 40(5).  A similar requirement applies to very senior state officials, thus the president of the Hungarian Republic, 30 The Fundamental Law of Hungary, Art.. 12(2).  justices of the Constitutional Court, 31 Act CLI of 2011 on the Constitutional Court, s. 10(1).  ombudsmen 32  Act CXI of 2011 on the Supervisor of Fundamental Rights, s. 8(2). presidents, vice-presidents, senior accountants and accountants of the State Audit Office, 33 Act LXVI of 2011 on the State Audit Office, s. 18(3).  prosecutors, 34 Act CLXIV of 2011 on the Legal Status of the Prosecutor General, Prosecutors, and Other Employers of the Prosecutor Service and Service of Prosecutors and the Carrier of the Prosecutors, s. 45(1).  senior officials of the Hungarian National Bank 35 Act CXXXIX of 2013 on the National Bank of Hungary, s. 153(1).  and members of Parliament 36 Act XXXVI of 2012 on the National Assembly, s 80(1).  may not be appointed as  an arbitrator for the duration of their time in office, and all other senior public officials may do so only with the prior permission of their employer. 37 Act CXCIX of 2011 on the Public Officers, s. 85(2)

4.1.4 The parties to the arbitration are free to agree on the number of arbitrators that shall constitute the arbitral tribunal, provided that they choose an odd number. 38 Hungarian Arbitration Act, s. 11(1).  Unless there is an agreement to the contrary, the default number of arbitrators is three. 39 Ibid., s. 11 (2).  

4.2.1 Subject to certain limitations, the parties are generally free to agree the appointment procedure for arbitrators. 40 Ibid., s. 12 (2).   

4.2.2 Unless there is an agreement to the contrary, the provisions of the Hungarian Arbitration Act apply as follows:

• In arbitral proceedings with a tribunal of three arbitrators, each party appoints one arbitrator and the two party-appointed arbitrators appoint the third (presiding) arbitrator. If any party fails to appoint its arbitrator within 30 days following receipt of the appointment by the other party, or the two party-appointed arbitrators cannot agree on the third arbitrator within 30 days following their acceptance of their own appointment, any party may petition the Budapest Metropolitan Court to make the appointment. Alternatively, in the case of arbitration under the auspices of the Commercial Court of Arbitration, the Board of the Commercial Court of Arbitration shall appoint an arbitrator from the list of suggested arbitrators published on the institution’s website. 41 Ibid., s. 12(3)(a).
• In the case of a sole arbitrator or an arbitral tribunal comprising five or more arbitrators the same procedure is followed, with the caveat that each party shall appoint an equal number of arbitrators in the latter case. 42 Ibid., s. 12(3) (b)-(c).   

4.2.3  With respect to both agreed and statutory appointment procedures, in the event that: 

1. one party fails to appoint an arbitrator or otherwise departs from the agreed procedure; or
2. the parties or arbitrators fail to reach an agreement based on the procedure; or 
3. a third party fails to carry out the tasks related to his or her appointment under the agreed procedure,  either party may petition the Budapest Metropolitan Court to make the appointment, 43 Ibid., ss. 12 (4), 7 (2).  except when the agreement on the appointment procedure or the rules of the designated permanent arbitration court provide for an alternative appointment procedure. 44 Ibid., ss. 12 (4).

4.2.4 When appointing an arbitrator in these circumstances, the appointing authority must pay due regard to the arbitrator’s professional qualifications and any other factors set out in the arbitration agreement, as well as to all other circumstances relevant to ensuring the appointment of an independent and impartial arbitrator. 45 Ibid., s. 12(5).  In cases falling under the jurisdiction of the Commercial Court of Arbitration, if arbitrators from the list of suggested arbitrators do not satisfy the requisite professional qualifications or other characteristics set out in the arbitration agreement, then the Commercial Court of Arbitration shall not be confined to that list when making the appointment. 46 Ibid., s. 12(5).  

4.2.5 As to the relevant provisions under the CCA 2022 Rules, Art. 21 provides as follows:

• The claimant shall nominate an arbitrator or submit a request for the appointment of an arbitrator by the Commercial Court of Arbitration in its statement of claim, whereas the respondent shall nominate an arbitrator in the statement of defence even if it objects to the jurisdiction of the Arbitration Court. 47 CCA 2022 Rules, Art. 21(1).  
• In case of an arbitral tribunal comprised of three arbitrators, each party nominates one arbitrator, and the two arbitrators thus nominated shall elect the presiding arbitrator. If a party fails to nominate an arbitrator within 30 days from receipt of the request to do so, or if the two arbitrators do not agree upon the person of the presiding arbitrator within 30 days from their nomination, the missing arbitrator shall be appointed by the Arbitration Court upon a request by any party. 48 CCA 2022 Rules, Art. 21(2).  
• In the case of a sole arbitrator or an arbitral tribunal comprising five or more arbitrators the same procedure is followed, with the caveat that each party appoint an equal number of arbitrators in the latter case. 49 CCA 2022 Rules, Art. 21(3) and (4).  

4.2.6  A proposed arbitrator shall disclose to the parties without delay any circumstances likely to give rise to justifiable doubts as to his or her independence or impartiality and shall continue to disclose any such information from the time of his appointment to the conclusion of the proceedings. 50 Hungarian Arbitration Act, s. 13(1).  An arbitrator shall accept the appointment through a written declaration addressed to the parties. 51 Ibid., s. 12(9).  The arbitrator’s signature on the document containing the appointment will be regarded as acceptance. 52 Ibid., s. 12(9).  

4.3.1 The challenge procedures are set out in sections 13-14 of the Hungarian Arbitration Act. A party may challenge an arbitrator, including the president / chair, if circumstances exist that give rise to justifiable doubts as to the arbitrator’s independence or impartiality, or if the arbitrator does not possess the qualifications or other characteristics specified by the parties in their arbitration agreement. 53 Ibid., s. 13(2).  A party may challenge its appointed arbitrator or an arbitrator in the appointment of whom it participated only if the circumstances justifying such a challenge first became known to the party after the appointment was made. 54 Ibid., s. 13(2).

4.4.1 The parties are free to agree on the procedure to challenge an arbitrator’s appointment, but cannot exclude the provisions of the Hungarian Arbitration Act relating to unsuccessful challenges. 55 Ibid., s. 14(1).  Without such agreement, the challenging party must send a written statement containing the reasons for the challenge to the arbitral tribunal within 15 days of becoming aware of the composition of the arbitral tribunal, or within 15 days of becoming aware of the underlying reasons for the challenge. 56 Ibid., s. 14(2).  

4.4.2 If the challenged arbitrator does not voluntarily withdraw from office, or if the other party does not agree to the challenge, the arbitral tribunal will decide on the merits of the challenge. 57 Ibid., s. 14(3).  Under Art. 28(3) of the CCA 2022 Rules, the challenged arbitrator cannot vote on the motion to exclude. However, the Act has no such provision, and consequently, unless the parties agree otherwise, there is no reason the challenged arbitrator cannot vote on his or her own continued participation as an arbitrator.

4.4.3 If the arbitrators cannot reach agreement, or if at least two arbitrators or the sole arbitrator have been challenged, the Budapest Metropolitan Court shall decide on the merits of the challenge upon the application of the challenging party. 58 Ibid., ss. 14(4), 7(2).  Until the time when the court's decision is delivered, the arbitral tribunal – including the challenged arbitrator(s) – may continue the arbitral proceedings and render an award. The court’s decision in challenge proceedings is final and binding. 59  Ibid., s. 14(5).

4.4.4 In institutional arbitral proceedings before the Commercial Court of Arbitration, the Board of the Court of Arbitration will decide on the challenge if the arbitral tribunal cannot agree. If the Board of the Commercial Court of Arbitration rejects the challenge, the party that initiated it may, within 30 days, request the Budapest Metropolitan Court to decide on the merits of the challenge. 60 Ibid., s. 14(4).

4.5.1 If an arbitrator for any reason becomes incapable of performing his or her duties or unreasonably delays the proceedings and does not resign, the parties may agree to terminate his or her mandate. 61 Ibid., s. 15(1).  Without such agreement, any party may submit a petition to terminate the arbitrator’s mandate. The petition must contain the grounds for objection, and should be submitted to the Budapest Metropolitan Court or, in proceedings before the Commercial Court of Arbitration, the Board of the Commercial Court of Arbitration. 62 Ibid., s. 15(1).  In the event that the Board of the Commercial Court of Arbitration dismisses the petition, the petitioning party may request the Budapest Metropolitan Court to rule on the termination of the arbitrator's mandate within 30 days from the receipt of the dismissal. Any decision made by the court is final and binding. 63 Ibid., s. 15(2).  

4.5.2 Termination of an arbitrator’s mandate shall not amount to an admission or confirmation of the underlying reasons alleged by the petitioning party. 64  Ibid., s. 15(3).

4.6.1  If the mandate of an arbitrator terminates for any reason, a substitute arbitrator shall be appointed in accordance with the same rules used to appoint the original arbitrator. 65  Ibid., s. 16.

4.7.1 The arbitrator’s resignation or parties’ agreement to terminate the arbitrator’s mandate shall become effective once all members of the arbitral tribunal - or in the case of resignation - all parties, have been notified. 66 Ibid., s. 57(1).   

4.8.1 The Hungarian Arbitration Act states that the rules of a permanent court of arbitration (or, in the case of ad hoc arbitration, by agreement between the arbitral tribunal and the parties) may exclude or limit the arbitrators' liability, except liability for damage caused intentionally or by gross negligence. 67 Ibid., s. 57(3).  In lieu of such an exclusion, the arbitrators' liability is determined in accordance with the rules of the Civil Code. 

4.8.2 Additionally, arbitrators qualify as public officers for the purposes of the Criminal Code, 68 Act C of 2012 on the Criminal Code, s. 459, 11.e).  which imposes potential criminal liability entailing commensurately more severe penalties on arbitrators for offences such as abuse of official position, 69 Ibid., s. 305.  accepting a bribe 70 Ibid., ss. 294., 296.  and forgery, 71 Ibid., s. 343(1).  but, conversely, also provides for severe criminal sanctions for crimes committed by others in connection with the arbitrator (eg offering a bribe) 72 Ibid., s. 293.  or against the arbitrator’s person. 73 Ibid., ss. 160(2)(e), 190(2)(e), 310., 365 (3) f).

4.8.3 In the case of proceedings before the Commercial Court of Arbitration, the CCA 2018 Rules exclude any liability of the arbitrators, the Court of Arbitration, the Hungarian Chamber of Commerce and Industry and any of their organs or employees, except for loss caused by intentional breach of duty or gross negligence. 74 CCA 2022 Rules, Art.. 50.

4.9.1 The Hungarian Arbitration Act contains no provisions on the fees and expenses of the arbitrator(s), merely stating that the Commercial Arbitration Court’s Board shall determine institutional fees in the rules of procedure. 75 Hungarian Arbitration Act s. 62(1)(e).  In institutional arbitral proceedings, the fees are typically set by the fee schedule of the arbitral institution. In ad hoc arbitral proceedings, the fees are determined based on the agreement between the parties and the arbitrators. 

4.9.2 In proceedings continued after the setting aside of the award the parties shall not be obliged to pay arbitration fees or administrative costs. 76 Ibid., s. 57(2).  However, the rules of the permanent arbitration court (or, in ad hoc arbitration, by agreement between the arbitral tribunal and the parties) may exclude or limit the liability of the permanent arbitration court, the arbitration panel and the arbitrators, except for liability for damage caused intentionally or by gross negligence. 77 Ibid. s. 57 (3).  Since the CCA 2018 Rules exclude all liability for any loss not caused by intentional breach of duty or gross negligence (see section 4.8.3 above), in arbitration proceedings governed by those rules the arbitral tribunal will be entitled to fees even in the event that the award is set aside, unless there is intent to cause loss or gross negligence.

5.1.1 The jurisdiction of the arbitral tribunal is determined by the arbitration agreement. The arbitral tribunal may rule on its own jurisdiction, including the existence or validity of the arbitration agreement. 78 Ibid., s. 17(1).  As described above at paragraph 3.4.1, an arbitration clause which is part of another agreement is treated as an independent (and severable) arbitration agreement. 79 Ibid., s. 17(1).

5.1.2 A plea that the arbitral tribunal does not have jurisdiction should be raised no later than at the time of submission of the statement of defence. 80 Ibid., s. 17(2).  The appointment or participation in the appointment of an arbitrator does not preclude the right to challenge the tribunal’s jurisdiction. 81 Ibid., s. 17(2).  A plea that the arbitral tribunal has exceeded its jurisdiction should be made without delay after the alleged excess of jurisdiction occurred. 82 Ibid., s. 17(2).  Nevertheless, the arbitral tribunal may admit a plea raised at a later stage if it considers such a delay justified. 83 Ibid., s. 17(2).

5.1.3 The arbitral tribunal may rule on a plea of lack of jurisdiction either as a preliminary issue or in its final award. If the arbitral tribunal bifurcates proceedings and rules on its own jurisdiction as a preliminary issue, any party may, within 30 days of receiving notice of such a ruling, request the Budapest Metropolitan Court to rule on the jurisdiction of the arbitral tribunal. 84 Ibid., ss. 17(3). 7(2)  Regardless of such a request, the arbitral tribunal may continue the proceedings and make an award pending the decision of the Court on jurisdiction. 85 Ibid., s. 17(3).

5.2.1 The Hungarian Arbitration Act adopted the articles of the Model Arbitration Law’s 2006 amendments relating to interim measures and preliminary orders, albeit with some potentially significant modifications to the wording.

5.2.2 Unless the parties agree otherwise, the arbitral tribunal may, upon either party’s request, make an order for interim measures. 86 Ibid., s. 18(1).

5.2.3 It is noteworthy, that the arbitral tribunal may only issue an interim measure or preliminary order in the form of an order and therefore such will not be enforceable under the 1958 New York Convention on the Enforcement and Recognition of Foreign Arbitral Awards (hereinafter “New York Convention”). Equally, interim measures issued in the form of an order by an international arbitral tribunal administered by a permanent arbitration court having its seat outside the territory of Hungary or an ad hoc arbitral tribunal whose place of arbitration is outside Hungary will not have its order for interim or preliminary measure enforced in Hungary.

5.3.1 With an order for interim measures the arbitral tribunal may, before the final award is issued, direct the parties to, 

• maintain or restore the status quo pending determination of the dispute; 
• take action or refrain from taking action to prevent probable loss, or prejudice to the arbitral process itself; 
• take measures to ensure that assets that serve to satisfy a subsequent award are available, or to provide collateral corresponding to their value; and/or 
• preserve evidence that may have significance in the resolution of the dispute. 87 Ibid., s. 18(2).  

5.3.2  The party requesting an interim measure as per a), b) or c) shall satisfy the arbitral tribunal that:

1. without such measures being taken, prejudice not adequately reparable by an award of damages by the arbitral tribunal is likely to result, and that such prejudice exceeds that which the affected party would presumably suffer were the measure granted; and 
2. it is probable that the requesting party will succeed on the merits of its claim. The determination as to this possibility shall not bind the arbitral tribunal in making any subsequent determination. 88 Ibid., s. 19.   

5.4.1 Unless otherwise agreed by the parties, a party may make an ex parte request for an interim measure together with an application for a preliminary order directing the other party not to frustrate the purpose of the interim measure requested. 89 Ibid., s. 20(1).  The arbitral tribunal may grant such a preliminary order if it considers that prior disclosure of the request for the interim measure to the party against whom it is directed risks frustrating the purpose of the measure. 90 Ibid., s. 20(2).  

5.4.2 After deciding on the application for a preliminary order, the tribunal shall notify all parties of its decision and simultaneously inform the parties of all communications, including any oral communication, between any party and the arbitral tribunal in relation thereto. 91 Ibid., s. 21(1).  

5.4.3 After deciding on the application for a preliminary order, the arbitral tribunal shall provide the party against whom the preliminary order is directed with an opportunity to present its case at the earliest practicable time. 92 Ibid., s. 21(2).  The arbitral tribunal shall decide on any objection to the preliminary order immediately. 93 Ibid., s. 21(3).   

5.4.4 A preliminary order shall expire after 20 days from the date on which it was issued by the arbitral tribunal. 94 Ibid., s. 21(4).  The arbitral tribunal may issue an interim measure adopting or modifying the preliminary order, after the party against whom the preliminary order is directed has been given notice and an opportunity to present its case. 95 Ibid., s. 21 (5).  A preliminary order shall be binding on the parties but shall not be subject to enforcement by a court. 96 Ibid., s. 21 (6).  

5.5.1 The arbitral tribunal may modify, suspend or terminate an interim measure or a preliminary order it has granted upon the application of any party or, in exceptional circumstances, on its own initiative and without prior notification of the parties. 97 Ibid., s. 22.  The arbitral tribunal shall require the party requesting an interim measure to provide appropriate security in connection with the requested measure, unless the arbitral tribunal considers it unnecessary to do so. 98  Ibid., s. 23(1) and (2).

5.5.2 The arbitral tribunal may require any party  to promptly disclose any material change in the circumstances based on which the measure was requested or granted. 99 Ibid., s. 24(1).  The party applying for a preliminary order shall disclose to the arbitral tribunal all circumstances that are likely to be relevant to the arbitral tribunal’s determination of whether to grant or maintain the measure, and such obligation shall continue until the party against whom the measure has been requested has had an opportunity to present its case. The obligation to disclose material changes will continue to apply thereafter. 100 Ibid., s. 24(2).

5.5.3 The party applying for a preliminary or interim measure shall be liable for any costs and loss caused by the measure to any party, if the arbitral tribunal later determines that, in the circumstances, the measure should not have been granted. The arbitral tribunal may award such costs and damages at any point during the proceedings. 101 Ibid., s. 25.  

5.6.1 An interim measure issued by an arbitral tribunal shall be enforced in accordance with rules on court enforcement, subject to the grounds for refusing enforcement set out below (Section 5.7). The party requesting enforcement of an interim measure and any other benefitting parties shall promptly inform the court of any termination, suspension or modification of that interim measure. 102 Ibid., s. 26.

5.7.1 Enforcement of an interim measure may be refused only: 

• at the request of the party against whom it is applied for, if the court is satisfied that: 
  • such refusal is warranted on the grounds that one or more of the conditions for setting aside exist (see Section 9.1 below); or 
  • The arbitral tribunal’s decision with respect to the provision of security in connection with the interim measure has not been complied with; or 
  • The interim measure has been rescinded or suspended by the arbitral tribunal or, 
• if the court determines that: 
  • the interim measure is incompatible with the jurisdiction of the court; or 
  • the dispute is non-arbitrable under Hungarian law or the arbitral award is in conflict with Hungarian public policy. 103 Ibid., s. 27.  

6.1.1 Unless otherwise agreed by the parties, the arbitral proceedings commence in relation to the dispute on the day when the respondent is served with the request for arbitration. 104 Ibid., s. 32.  

6.1.2 In arbitral proceedings governed by the CCA 2022 Rules, proceedings are commenced when the statement of claim is received by the Commercial Court of Arbitration. 105 CCA 2022 Rules, Art. 14(2).  

6.2.1 The parties shall receive equal treatment throughout the arbitral proceedings and all parties shall be given the opportunity to present their case. 106 Hungarian Arbitration Act, s. 29.

6.2.2 The parties are free (within the confines of the Hungarian Arbitration Act) to agree upon the rules of procedure to be applied by the arbitral tribunal. 107  Ibid., s. 30(1). In the event that there is no agreement on applicable procedure, the arbitral tribunal, subject to the provisions of the Hungarian Arbitration Act, may determine the rules of procedure at its own discretion. 108 Ibid., s. 30(2).

6.2.3 The arbitral tribunal’s competence includes deciding on the admissibility, relevance and weight of evidence. 109 Ibid., s. 30(2).

6.2.4 Unless the parties agree otherwise, the arbitral tribunal makes its decisions by majority and, in the absence of a majority, the presiding arbitrator shall decide. In addition, the presiding arbitrator may decide on procedural issues, if the parties or the members of the arbitral tribunal have so authorized him or her. 110 Ibid., s. 42.  

6.2.5 Subject to the parties agreeing otherwise, in institutional arbitral proceedings before the Commercial Court of Arbitration, the arbitrators will usually apply the procedural provisions set out in the CCA 2022 Rules. If the CCA 2022 Rules do not address a specific issue, and if the parties do not agree otherwise, the arbitrators are free to determine the applicable rules (within the confines of the non-derogable provisions of any rules applicable at the place of arbitration). The arbitral tribunal may consider principles, practices and guidelines established in domestic and international arbitration. 111 CCA 2022 Rules Art. 31(2)

6.3.1 The parties are free to agree on the place of arbitration. 112 Hungarian Arbitration Act, s. 31(1)  Without such an agreement, the place shall be determined by the arbitral tribunal, having taken into account all the circumstances of the case and the suitability of the place for the parties. 113 Ibid., s. 31(1).

6.3.2 Irrespective of the above provision, the arbitral tribunal may convene at another place for the purpose of deliberation, hearing of parties, witnesses or experts and inspecting exhibits and documents (unless the parties agree otherwise). 114 Ibid., s. 31(2).

6.3.3 The Hungarian Arbitration Act allows the parties to determine the language or languages of the arbitral proceedings. 115 Ibid., s. 33(1).  Without such agreement, the arbitral tribunal shall decide the language or languages of the proceedings. 116 Ibid., s. 33(1).  The agreement or decision on the language of the proceedings is applicable to the parties’ submissions, hearings, the arbitral tribunal’s award and any other statements (subject to the agreement of the parties). 117  Ibid., s. 33(2).

6.4.1 Where there is a mutually agreed and proper arbitration agreement in place, in arbitral proceedings governed by theCCA 2022 Rules it is possible to initiate arbitration against multiple respondents or to have multiple claimants in the proceedings. In such circumstances, multiple claimants shall jointly appoint one arbitrator. Multiple respondents shall also jointly appoint one arbitrator. For calculation of the deadline for the nomination of an arbitrator by the respondent(s), the date of receipt of the request to nominate an arbitrator by the last respondent shall be used. If the respondents cannot agree on the arbitrator to be jointly nominated by them, the Arbitration Court shall appoint an arbitrator for each of the claimant(s) and respondent(s). Any earlier nomination of an arbitrator by the claimant shall thereby become ineffective. Taking into account the circumstances of the proceedings, the Arbitration Court may, however, decide to appoint an arbitrator for the respondent only. In this case, the nomination by the claimant remains effective. For the nomination of the presiding arbitrator the general rules shall apply in all cases. 118  CCA 2022 Rules, Art. 21(5)

6.4.2 Unless the parties agree otherwise, a third party, who is not party to the arbitration agreement, may participate in the proceedings as a party, if the claim made by or against it may only be decided together with the legal dispute that is the subject of the proceedings, and if this person provides a written statement submitting to the jurisdiction of the arbitral tribunal. 119 Hungarian Arbitration Act, s. 35.

6.4.3 Upon the request of either party, the arbitral tribunal shall notify any person who has a legal interest in the outcome of the arbitral proceedings that they may intervene in the proceedings on behalf of, and to assist, the party with similar interests to their own. 120 Ibid., s. 37(1).  The arbitral tribunal’s order permitting such an intervention cannot be appealed. 121 Ibid., s. 37(2).  The intervener may submit evidence, participate at the hearing and perform all other procedural acts related to discovery and inspection of evidence. 122 Ibid., s. 37(3).  

6.5.1 Unless otherwise agreed by the parties, the claimant shall submit its statement of claim, the supporting facts and disputed questions in accordance with the deadline agreed upon by the parties or determined by the arbitral tribunal. 123 Ibid., s. 34(1).  The respondent shall present its defence to the above, unless the parties have agreed otherwise in relation to the content of statements of case. 124 Ibid., s. 34(1).  The parties must present their evidence together with their statements. 125  Ibid., s. 34(1).

6.5.2 Unless otherwise agreed, the parties may amend or supplement their statements of claim and defence throughout the proceedings, unless the arbitral tribunal prohibits such submissions due to the delay in the proceedings caused thereby. 126 Ibid., s. 34(2).  

6.5.3 Any submission, document or other information provided to the arbitral tribunal shall be notified to the other party, and the parties must be notified of any evidence that the arbitral tribunal may take into account in its deliberation. 127 Ibid., s. 36(4).  

6.5.4 In ad hoc arbitral proceedings, the arbitral tribunal will give directions and set the timetable for the parties’ submissions, unless otherwise agreed by the parties. In institutional arbitral proceedings, the arbitral tribunal will follow the procedural rules of the institution in relation to submissions, in the absence of prior agreement. 128 Ibid., s. 30(2).  

6.5.5 In arbitral proceedings governed by the CCA 2022 Rules, Art. 15 of those Rules requires the claimant to provide the following information in its statement of claim:

• The names and addresses of the parties and their representatives, including email addresses if known;
• any facts establishing the jurisdiction of the Commercial Court of Arbitration and reference to any supporting evidence;
• the right seeking to be enforced by the claim and any facts serving as its basis including reference to specific supporting evidence;
• the claimant’s claim;
• the amount in dispute, if determinable;
• the identity of the claimant’s appointed arbitrator, a request for the Court of Arbitration to appoint the arbitrator or a suggested arbitrator in the case of a sole arbitrator; 
• a declaration regarding the language and applicable substantive law; and
• signature of the claimant or its representative. 129 CCA 2022 Rules, s 15(1).  

The claimant must also attach to the statement of claim the document(s) containing the arbitration agreement and a certificate showing that the registration fee has been paid. 130 CCA 2022 Rules, s 15(2) and (3).   

6.5.6 Art. 18 of the CCA 2022 Rules contains provisions in relation to the statement of defence and extends the provisions applicable to the statement of claim to the contents of the statement of defence, where appropriate.

6.6.1 Subject to any agreement of the parties to the contrary, the arbitral tribunal shall decide whether to hold hearings to establish and present positions and evidence or conduct the proceedings without such hearings. 131 Hungarian Arbitration Act, s. 36(1).  Upon the request of either party, the arbitral tribunal will hold a hearing at an appropriate stage in the proceedings, even if the parties had previously agreed that the proceedings would be conducted without hearings. 132 Ibid., s. 36(2).  The parties are to be given sufficient prior notice of any hearings or any procedural action of the arbitral tribunal which involves the inspection of exhibits or documents. 133 Ibid., s. 36(3).  The arbitral tribunal will prepare minutes of the proceedings and provide copies of such minutes to the parties. 134  Ibid., s. 36(6).

6.6.2 The arbitral tribunal’s proceedings are not public unless the parties agree otherwise. 135 Ibid., s. 36(7).  

Pursuant to the Hungarian Arbitration Act, unless the parties agree otherwise, the arbitral tribunal shall terminate the proceedings if the claimant fails to present its statement of claim without giving sufficient or satisfactory reasons for such failure. 136 Ibid., s. 38(a)  If the respondent fails to present its statement of defence, the arbitral tribunal shall continue the proceedings without considering such failure in itself as acceptance of the claimant’s allegations. 137 Ibid., s. 38(b).  If any of the parties fail to attend any of the hearings before the arbitral tribunal, or fail to produce evidence, the arbitral tribunal may continue the proceedings and make an award on the basis of the evidence it has before it. 138 Ibid., s. 38(c).

6.8.1 There is no specific provision in the Hungarian Arbitration Act dealing with the taking of evidence. The parties are free to prove their respective case by the usual means of documentary, witness or expert evidence. The arbitral tribunal’s competence includes deciding on the admissibility, relevance and weight of evidence. 139 Ibid., s. 30(2).  Section 36(5) of the Hungarian Arbitration Act clarifies that the arbitral tribunal has no power to compel witnesses and experts to attend and give evidence before it, including the imposition of monetary fines. 140 Ibid., s. 36(5).  In arbitral proceedings governed by the CCA 2022 Rules, Art. 40 of those Rules contains specific procedural rules in relation to the taking of evidence.

6.9.1 Unless otherwise agreed by the parties, the arbitral tribunal has the power to appoint one or more experts to give opinions on any specific issues identified by the arbitral tribunal as requiring expertise that the arbitral tribunal does not possess. 141 Ibid., s. 39(1) a).  The arbitral tribunal may require any party to provide such expert(s) with all relevant information or to present or make available an exhibit for the purpose of inspection. 142 Ibid., s. 39(1) b).

6.9.2 Unless otherwise agreed by the parties, upon request of either party (or, if the arbitral tribunal considers it necessary) the expert, after presenting his or her oral or written expert opinion, shall appear at a hearing, where the parties may pose questions or appoint their own expert(s) to dispute contentious allegations. 143 Ibid., s. 39(2).

6.9.3 Any person who has acted as a mediator, legal counsel or expert on behalf of one of the parties in the dispute before the tribunal (or a previous, related dispute) shall not be an expert in the arbitral proceedings. 144 Ibid., s. 39(3).

6.10.1 The Hungarian Arbitration Act contains an express provision that arbitral proceedings are private and confidential and not open to the public unless otherwise agreed by the parties. 145 Ibid., s. 36(7).  However, the Hungarian Arbitration Act also states that an anonymised and searchable extract of any award or order terminating the proceedings in arbitrations administered by the Commercial Court of Arbitration shall be published and made available on the Commercial Arbitration Court’s website six months after it is made. 146 Ibid., s. 62(2) b).  

6.10.2 In the case of court proceedings to set aside an award, the anonymised decision of the ordinary court will be made public.

6.11.1 The arbitral tribunal, or either party (with the consent of the arbitral tribunal) may request the assistance of the county court (in Budapest, this would be the Central District Court of Pest) in relation to the production of evidence or the examination of witnesses. 147 Ibid., s. 40.  The court will proceed in accordance with the rules of the Civil Procedure Code on preliminary evidence, except that the conditions to order preliminary evidence shall be inapplicable and the parties do not need to be heard on the issue of ordering the production of evidence. 148 Ibid., s. 40.  

7.1.1 The parties are free to choose the substantive law applicable to the contract and governing the disputes arising from it or in connection with it.  If the parties did not agree to the contrary, stipulation of the law or legal system of a state shall directly mean the substantive law of the relevant state, not including the international private law rules thereof. 149 Ibid., s. 41(1).   

7.1.2 In the absence of the parties’ selecting choice of law, the applicable substantive law shall be determined by the arbitral tribunal in accordance with the private international law rules it considers applicable. 150 Ibid., s. 41(2).  

7.1.3 The arbitral tribunal may only make its decision based on principles of equity if the parties have authorised it to do so. 151 Ibid., s. 41(3).

7.1.4 The arbitral tribunal shall in all cases decide the dispute in accordance with the terms of the contract. It will also take into account the trade practices applicable to the transaction at issue. 152 Ibid., s. 41(4).  

Timing

7.2.1 The Hungarian Arbitration Act does not stipulate an express deadline by which the tribunal must render its decision, other than stipulating that the arbitral tribunal shall make its decision as soon as possible. In arbitral proceedings governed by the CCA 2022 Rules , the award and the reasons on which it is based shall be delivered in writing to the Commercial Court of Arbitration within 45 days from the date of the final hearing, and sent to the parties if all the advance fees and costs have been paid. The Commercial Court of Arbitration may extend this deadline once for exceptional reasons. 153  CCA 2022 Rules, Art. 43(3).  

7.2.2 The arbitral tribunal shall make its decision by a simple majority of votes, unless the parties agree otherwise. 154 Hungarian Arbitration Act, s. 42(1).  In the absence of a majority, the chair of the tribunal shall make the decision. 155 Ibid., s. 42(1).   

Form

7.2.3  The award and any order terminating the proceedings must be in writing and be signed by all of the arbitrators. 156 Ibid., s. 44(1).  However, in arbitral proceedings with more than one arbitrator, it is sufficient that the award is signed by a majority of the arbitrators, provided that the award states the reason why the other signatures are absent. 157 Ibid., s. 44(1).  The award and any order terminating the proceedings must also contain the date and place of arbitration. 158 Ibid., s. 44(4).  The award and order terminating the proceedings are to be considered as having been concluded at the stated place. 159 Ibid., s. 44(4).

Content

7.2.4 The Hungarian Arbitration Act requires that the award must state the reasons on which it is based, unless based on a settlement between the parties. 160 Ibid., s. 44(2).   

7.2.5 Art. 44 of the CCA 2022 Rules contains similar provisions as to the form and content of an award in institutional proceedings before the Court of Arbitration.

Notification

7.2.6 A signed copy of the award and an order terminating the proceedings shall be sent to each of the parties. 161 Ibid., s. 44(5).

7.3.1 If the parties settle their dispute during the proceedings, the proceedings will be terminated by an order of the arbitral tribunal. 162 Hungarian Arbitration Act. s. 43(1).  If requested to do so by the parties, the arbitral tribunal shall record the settlement in the form of an award on agreed terms (provided that the settlement is in accordance with the law). 163 Ibid., s. 43(2).  An award on agreed terms has the same legal effect as an award on the merits. 164 Ibid., s. 43(3).  

7.4.1 Under Hungarian law, an arbitral tribunal is generally entitled to award default interest, calculated pursuant to the relevant provisions of the applicable substantive law.

7.4.2  If requested by any party, the arbitral tribunal must render a decision on the costs of the proceedings (including the remuneration of the tribunal and legal fees), and who shall bear the resultant costs, which decision must be contained in the final award. 165  Ibid., s. 44(3). In practice, the losing party is usually ordered to pay the costs of the proceedings, including the other party’s legal fees. However, if the winning party is successful only in part, the arbitral tribunal may require the parties to pay the costs in proportion to their relative success or failure.
7.5  Termination of the proceedings

7.5.1 Arbitration proceedings can be terminated by a final award on the merits or by an order for termination. 166 Ibid., s. 45(1).  The arbitral tribunal shall issue an order for termination if: 

• the claimant fails to submit its statement of claim in accordance with the requirements set out in s. 35(1) of the Hungarian Arbitration Act;
• the claimant withdraws its statement of claim, unless the respondent objects thereto and the arbitral tribunal recognises the respondent’s legitimate interest in obtaining a final award;
• the parties agree to terminate the proceedings; or
• the arbitral tribunal finds that continuing the proceedings has become unnecessary or impossible for any other reason. 167 Ibid., s. 45(2).  

7.5.2 Art. 46 of the CCA 2022 Rules contains similar provisions on the termination of arbitral proceedings before the Commercial Court of Arbitration without a final award on the merits, with the additional grounds for termination of: 

1. failure to pay the Commercial Court of Arbitration’s fees; 
2. finding of a lack of jurisdiction; and 
3. settlement of the dispute by the parties (where the parties have not requested that such settlement be concluded in the award). 168 CCA 2022 Rules, Art. 46(1).  

7.5.3 The mandate of the arbitral tribunal ends when the proceedings terminate, but the arbitral tribunal shall act in the subsequent correction and interpretation of the award or in issuing a supplemental award in connection with the set-aside of the award or in case of retrial (which is dealt with in further detail in section 7.8 below). 169  Hungarian Arbitration Act, s. 45(3).

7.6.1 The award is final and binding without possibility of appeal notwithstanding parties’ agreement to the contrary. 170 Ibid., s. 47(1).  The award has the same effect as a final and binding court ruling and can be enforced accordingly. 171 Ibid., s. 53(1).  

7.6.2  If the parties agree or the applicable rules of proceedings allow, the arbitral tribunal may render an interim or partial award if it determines that there is no need for further hearings on a particular issue. 172 CCA 2022 Rules, Art. 43(1).  A partial award has the same legal effect as a final award of the arbitral tribunal.

7.7.1 The relevant rules regarding the correction, clarification and issuance of a supplemental award are set out in Section 46 of the Hungarian Arbitration Act, which provides as follows:

• At the request of either party, or on the arbitral tribunal’s own initiative, the tribunal may correct any typographical or computational error in the award. 173 Hungarian Arbitration Act, s. 46(1) and (4).  
• At the request of either party, subject to the notification of the other parties, the arbitral tribunal may interpret a specific part or point of the award if it considers the request to be well-founded. The interpretation becomes part of the reasoning of the arbitral award. 174 Ibid., s. 46(2) and (3).
• Unless the parties have agreed otherwise, a party, may - with the simultaneous notification of the other party - request the arbitral tribunal to supplement the arbitral award with regard to a claim which had been presented during the proceeding but which the arbitral award did not rule on. 175 Ibid., s. 46(5).  

7.7.2  A request for correction or interpretation of the award, or for an additional award, must be submitted to the arbitral tribunal within 30 days of receipt of the award unless the parties agree otherwise. 176  Ibid., s. 46(1)-(2).

7.7.3 If the arbitral tribunal considers the request to correct or interpret the award as well-founded, then it shall correct the award or provide an interpretation of the award within 30 days. 177 Ibid., s. 46(3).  If the arbitral tribunal considers the request for a supplemental award well-founded, then it shall issue a supplemental award (if necessary, the tribunal can first require a hearing) within 60 days. 178 Ibid., s. 46(5).  If necessary, the arbitral tribunal may extend the deadline for the correction, interpretation of the award or the issuance of a supplemental award by 30 days. 179 Ibid., s. 46(6).  

7.7.4 The rules on the form and content of the arbitral award shall also apply to the correction, interpretation and supplementation of the arbitral award. 180  Ibid., s. 46(7).

8.1.1 If a valid and binding arbitration agreement exists between the parties, the ordinary courts are excluded from assuming jurisdiction over the subject matter specified in the arbitration agreement. The Hungarian Arbitration Act expressly provides that the courts shall not intervene in arbitral proceedings except where so provided by the Hungarian Arbitration Act. 181 Ibid., s. 6.  

8.1.2  The Hungarian court, in relation to the enforcement of an arbitral award, shall have competence and jurisdiction in accordance with the Hungarian rules on enforcement. 182 Ibid., s. 7(1).  The Budapest Metropolitan Court shall have competence over arbitral proceedings in relation to the appointment, challenge or termination of the mandate of arbitrators, decisions regarding the competence of an arbitral tribunal and the setting aside of an arbitral award. 183 Ibid., s. 7(2).

8.1.3 The Court shall conduct litigious proceedings in stay of court and set-aside motions. In all other cases the Courts will administer non-litigious proceedings - with the exception that in relation to the competence of the tribunal, the court will make its decision only after hearing the parties. 184 Ibid., s. 7(3).  The provisions of the Civil Procedure Code shall apply and there is no appeal against the decision of the court. 

8.1.4 A request for extraordinary court review proceedings before the Supreme Court (Kúria) may be brought against the decision to stay proceedings, the decision on an objection to the competence of the arbitral tribunal and a decision made in the course of proceedings to set aside the award. 185 Ibid., s. 7(4).

8.1.5 In connection with the arbitral proceedings and irrespective of its venue, the Hungarian Courts have competence under the Civil Procedure Code to order preliminary evidence, interim measures and interim protective measures in accordance with domestic procedural law, to place an enforcement seal on a document, and to request that security is provided in ordinary court proceedings separate from the arbitration proceedings (in case of imminent danger). In the course of these proceedings, the court with competence and jurisdiction shall proceed with due consideration for the characteristics of arbitration. 186 Ibid., s. 28.

8.1.6 The courts’ proceedings shall be expedited, except in the case of set-aside proceedings. 187 Ibid., s. 7(7).  

8.2.1 In the event that a matter falling under an arbitration agreement is brought before the court (or such a claim is sought to be enforced by a payment order that automatically triggers litigation due to opposition), the court must dismiss the claim without issuing a writ of summons or terminate the proceedings upon the request of a party, unless it finds the arbitration agreement to be null and void, inoperative or incapable of being performed. 188 Ibid., s. 9(1)-(2).  The objection to the jurisdiction of the court must be raised no later than in the respondent’s response on the merits. 189 Ibid., s. 9(2).  Therefore, the court has jurisdiction to determine the validity of the arbitration agreement before dismissing the claim. The court also has jurisdiction to review the arbitral tribunal’s assumption of jurisdiction on the application of a party.

8.2.2 Such proceedings are not an obstacle to commencing or continuing the arbitral proceedings nor handing down an arbitral award. 190 Ibid., s. 9(3).  Nevertheless, arbitrators are very cautious not to render an award before such proceedings are closed to ensure the legitimacy of the arbitral award. Still, if an arbitral award were to be rendered before the state court made a final and binding decision on determining whether or not the arbitral tribunal had jurisdiction, the court proceedings would be terminated. Arguments challenging the legitimacy of the arbitral process may then be raised in separate proceedings to set aside the award.

8.3.1 If the arbitral tribunal finds that is has jurisdiction pursuant to Section 17 of the Hungarian Arbitration Act and issues an interim award to that effect,  any party may request - within 30 days of receiving notice of the interim award - that the Budapest Metropolitan Court rule on the jurisdiction of the arbitral tribunal. 191 Ibid., ss. 17(3). 7(2).

8.3.2 Until such a time as a decision has been made by the Budapest Metropolitan Court, the arbitral tribunal may continue the arbitral proceedings. 192 Ibid., ss. 17(3), 7(2).

8.4.1 Any party may, at any stage during arbitral proceedings, apply to the competent county court for interim measures which, if ordered, are enforceable. Such applications are permitted despite the existence of an arbitration agreement. 193 Civil Procedure Code, Chapter VIII.  

8.4.2 The court may order measures to safeguard the claim of either party (eg by freezing a bank account) in a case pending before an arbitral tribunal if the party requesting such measure provides sufficient grounds for the measure to be granted and the claim is supported by appropriate documentary evidence (ie authentic instruments or private documents with full probative force). 194 Act LIII of 1994 on Enforcement, s. 185-201/B.

8.5.1 The arbitral tribunal or either party (with the consent of the arbitral tribunal) may request the assistance of the county court (in Budapest, this would be the Central District Court of Pest) in relation to the production of evidence or the examination of witnesses. 195 Hungarian Arbitration Act, s. 40.  The court will proceed in accordance with the rules of the Civil Procedure Code on preliminary evidence, except that the conditions to order preliminary evidence are not applicable and the parties do not need to be heard on the subject of ordering the production of evidence. 196 Ibid., s. 40.

9.1.1 There is no appeal against an award. However, the Hungarian Arbitration Act provides specific circumstances in which a party can apply to the Budapest Metropolitan Court to set aside an award. 197 Ibid., ss. 47(1)., 7(2)  The request of the party to set aside an award must be filed within 60 days from the receipt of the award. 198 Ibid., s. 47(3).  

9.1.2 A party may apply to the competent county court for the award to be set aside with the following reasons:

• a party to the arbitration agreement did not have legal capacity;
• the arbitration agreement is not valid under the law which the parties have chosen, or in the absence of such a choice, under Hungarian law;
• a party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present its case;
• the award was made in relation to a dispute not contemplated by, or outside the terms of, or containing decisions on matters beyond the scope of, the parties’ submission to arbitration. If the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions not submitted to arbitration may be set aside; 199 Ibid., s. 47(2)a).    
• the constitution of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties - unless such agreement was in conflict with a mandatory provision of the Hungarian Arbitration Act - or, in the absence of such an agreement, the constitution of the arbitral tribunal or the arbitral procedure was not in accordance with the Hungarian Arbitration Act. 200 Ibid., s. 47(2)a).    

9.1.3 The setting aside of the award may also be requested if:

• The subject matter of the dispute is not capable of settlement by arbitration under Hungarian law; or
• the award is in conflict with the rules of Hungarian public policy. 201 Ibid., s. 47(2)b).  

9.1.4 The court may suspend the enforcement of the award during the proceedings to set aside and also during the appellant supervisory proceedings, if non-suspension results in prejudice not adequately reparable, and such prejudice exceeds that which the party affected by the suspension is likely to suffer, or it is reasonably likely that the requesting party’s claim will succeed. The determination on this possibility shall not bind the arbitral tribunal in making any subsequent determination. 202 Ibid., s. 7(5).

9.1.5 The court may also suspend the set-aside proceedings at the reasonable request of either party for a period of 90 days in the interest of providing the arbitral tribunal an opportunity to reopen the proceedings and correct, clarify or issue a supplemental award with which the reason for setting aside can be addressed. In this case, the arbitral proceedings that would otherwise be terminated by the rendering of an award will continue with the purpose, and for the duration determined by the arbitral tribunal. In the case of reopened arbitral proceedings, the set aside of the award can be requested within 60 days from its receipt by an amendment to the claim or the counterclaim. 203 Ibid., s. 47(4).  

9.2.1 The Hungarian Arbitration Act has introduced retrial proceedings to Hungarian arbitration regulation, the purpose of which is to provide the opportunity to examine new facts or evidence that may have come to light following the termination of the arbitral proceedings.

9.2.2 Unless the parties agree otherwise, retrial proceedings may be initiated up to one year after the receipt of the arbitral award. The initiating party must refer to facts or evidence that it could not submit in the initial proceedings (for reasons that were not its own fault) if it believes submission of such facts or evidence could have resulted in a more beneficial initial award. 204 Ibid., s. 49.  

9.2.3 The arbitral tribunal shall issue an order regarding the admissibility of the request for retrial, against which there is no appeal. 205 Ibid., s. 50(1).  The arbitral tribunal shall hear the parties before deciding on the admissibility of the request. 206 Ibid., s. 50(3).  

9.2.4 The request for retrial shall be denied if:

• It has been submitted more than one year after the receipt of the award;
• the issues raised by the party submitting the request would not, even if proven, result in a more beneficial award for the submitting party; or
• the fact or evidence raised in the party’s request had not been invoked in the initial proceedings due to the party’s own fault. 207  Ibid., s. 50(4).

9.2.5 If the arbitral tribunal decides on the admissibility of the retrial proceedings and the request appears likely to succeed, the arbitral tribunal may suspend the enforcement of the award. 208 Ibid., s. 51.  In the event that the retrial is permitted, the proceedings shall be limited to the scope of the request and the arbitral tribunal may maintain the challenged award, or partially or fully revoke its effect and issue a new award. 209 Ibid., s. 52.

9.2.6 In the event that any arbitrator is unable to perform his function, the arbitrator appointed in his or her stead - in accordance with the procedures for the appointment of arbitrators - shall carry out the proceedings. 210 Ibid., s. 50(2).   

9.2.7 The same rules apply to the retrial proceedings as to the initial proceedings unless provided otherwise. 211 Ibid., s. 48.  

10.1.1 The effect of an award is the same as that of a final and binding non-appealable court judgment. 212 Ibid., s. 53(1).  The court which has jurisdiction for enforcement is the county court located where the respondent has its seat or place of business or where it has sellable assets - or in the case of foreign entities, the seat of its Hungarian branch or commercial representation. The enforcement proceedings are governed by the relevant local statute. The court may only refuse enforcement of the award if the subject matter of the dispute is not arbitrable under Hungarian law, or if the award is contrary to the rules of Hungarian public policy. 213 Ibid., s. 54  

10.2.1 Awards issued outside Hungary are enforceable in Hungary pursuant to the provisions of multilateral conventions and bilateral treaties ratified by Hungary or on the basis of reciprocity. 214 Act LIII of 1994 on the Judicial Enforcement Proceedings (Enforcement Act), s. 205.  The most significant arbitration convention to which Hungary is a party is the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

10.2.2 If there is an international treaty under which the award may be enforced, the competent court for enforcement of the foreign award is the same as described above, ie the county court where the respondent has its seat or place of business or where it has sellable assets – or, in the case of foreign entities, the seat of the Hungarian branch or commercial representation. 215 Ibid., s. 16(d).  The party applying for enforcement must supply the original award or a certified copy, 216 Hungarian Arbitration Act s. 53(2).  and upon the request of the court must attach a Hungarian translation of such documents if issued in a foreign language. 217 Enforcement Act s. 207.

11.1.1 The Hungarian Arbitration Act specifically excludes arbitration involving consumers, 218 Hungarian Arbitration Act, s. 1(3).  and it should be noted that unfair arbitration clauses in business-to-consumer contracts which the business seeks to rely on, may be null and void where the contract has not been individually negotiated, and the clause is incorporated into the general terms and conditions. 219 Act V of 2013 on the Civil Code. s. 6:104(1)(i).  The clause will be considered unfair if it is contrary to the requirements of good faith, or if it causes significant and unjustifiable imbalance of the parties’ rights and obligations arising under the contract. 220 Act V of 2013 on the Civil Code, s. 6:104.  Nullity may only be referred to for the benefit of the consumer.

11.2.1 According to the Hungarian Arbitration Act, no arbitration may take place in relation to employment issues. 221  Hungarian Arbitration Act, s. 1(3).