Current Case Law on Arbitration Issues: Section A-I-2: Hungary

CYArb - CZECH (& CENTRAL EUROPEAN) YEARBOOK OF ARBITRATION: Borders of Procedural and Substantive Law in Arbitral Proceedings (Civil versus Common Law Perspectives), Vol. III, pp. 201-210, A. Belohlavek & N. Rozehnalova & F. Černý, eds., JurisNet LLC., 2013

22 Pages Posted: 12 Mar 2013 Last revised: 15 Mar 2013

Date Written: March 8, 2013

Abstract

Arbitration is popular in most of CEE countries, incl. Hungary. Hungary has a large tradition of Arbitration, incl. the communist time before 1990. There is therefore available number of case-law of Hungarian court adjudicating on arbitration issues (mostly in set-aside proceedings and regarding enforcement of arbitral awards). The case-law practise of Hungarian courts regarding arbitration and arbitral awards is rather stable.

The Hungarian doctrine follows traditionally the separability of arbitration agreements from main contracts, as well as the priority of arbitrators to decide on their jurisdiction. If a party lodged a lawsuit in court despite a valid arbitration agreement, the court terminates the proceedings without a hearing upon a motion filed by the respondent. However if a party raises a jurisdictional challenge, the court must assess whether the arbitration clause is valid and in force, and whether the parties may comply with it. The court does not decide which arbitral tribunal has jurisdiction over the dispute; the court’s decision terminating the proceedings only compels arbitration. (See decision of Regional Court of Appeal in Debrecen No. 2011.2399). The court is not allowed to assess the subject matter of the dispute in proceedings initiated by a motion to annul an arbitral award. If a claimant petitions the court for the annulment of an arbitral award, the court focuses exclusively on the compliance of the arbitral proceedings with the mandatory rules of [procedural] law, and with the obligations of the arbitrators to protect the legitimate interests of the parties. The court also assesses the will of the parties. Reviewing the assessment of the subject matter of the dispute is prohibited. (Decision of a Supreme Court annotated in the published paper).

The proper service of a request for arbitration (statement of claim) is a fundamental procedural requirement. Defective service of the request for arbitration (statement of claim) is a major procedural defect, which constitutes grounds for the annulment of the arbitral award. (Decision of a Supreme Court annotated in the published paper). At the same time the principle of equal treatment (equal rights of the parties) must be honoured throughout the arbitral proceedings. (Another decision of a Supreme Court annotated in the published paper).

An arbitral award has in Hungary the same material effects as a court judgement.. The effects of an arbitral award must be assessed according to the same evaluating criteria as the effects of a court decision. If the subject matter of a dispute was resolved by an arbitral award, the claim cannot be reasserted. The arbitral award constitutes res judicata. The subject matter of the dispute must be assessed according to its real substance. The effects of an arbitral award in terms of res judicata are part of [Hungarian] public policy. (Decision of a Supreme Court annotated in the published paper).

There are also other decisions of Hungarian courts annotated in detail in the published paper. The paper summarising newest case-law practise from Hungary adjudicated in the period of 2010-2011.

Keywords: arbitration, jurisdiction, separability, set-aside, annulment, agency, service, liquidation of a company, defective proceedings, Res Judicata, Hungarian law, public policy, mandatory rules, interest of the parties, prohibition of review, equal treatment, shareholders' agreement

JEL Classification: K10, K11, K33, K40, K41, K49

Suggested Citation

Belohlavek, Alexander J., Current Case Law on Arbitration Issues: Section A-I-2: Hungary (March 8, 2013). CYArb - CZECH (& CENTRAL EUROPEAN) YEARBOOK OF ARBITRATION: Borders of Procedural and Substantive Law in Arbitral Proceedings (Civil versus Common Law Perspectives), Vol. III, pp. 201-210, A. Belohlavek & N. Rozehnalova & F. Černý, eds., JurisNet LLC., 2013, Available at SSRN: https://ssrn.com/abstract=2231701

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