Hungary: Scope And General Provisions Of Hungarian Arbitration Act

Last Updated: 16 April 2019
Article by Richard Schmidt
Most Read Contributor in Hungary, March 2019

Entering into force

The Arbitration Act entered into force on 1st January 2018, its provisions govern arbitration proceedings started on and after this day.

When it comes to arbitration agreements, the Arbitration Act has retroactive effect, since its provisions govern not only arbitration agreements concluded after 1st January 2018, but also those concluded before this date, except the following rules:

  1. the provision rendering arbitration agreements invalid in consumer disputes;
  2. the provision determining the substantive law to be applied in arbitral proceedings;
  3. the provision relative to legal succession in arbitration agreement.

Material scope - Arbitrability in Hungary

The Arbitration Act regulates both ad hoc and institutional arbitration in Hungary.

The Arbitration Act regulates arbitrability in broad sense by providing that any dispute arisen in a contractual or extra contractual commercial relation, may be subject to arbitration by ad hoc or permanent arbitrator bodies, instead of state court procedures. The term "commercial relation" has to be clarified by the case law.

The following legal disputes are excluded from arbitration:

  1. consumer disputes
  2. employment disputes
  3. enforcement cases
  4. actions against notarial decision made in real estate related possession disputes
  5. procedures regarding press remedies
  6. bankruptcy & liquidation
  7. administrative proceedings
  8. competition law proceedings
  9. family law matters

Territorial Scope

When it comes to the question of territorial scope, the provisions of the Arbitration Act shall be applied whenever the place of arbitration is in Hungary.

In addition, the Arbitration Act may have extra-territorial application, because it provides that in case the procedure is conducted abroad by the Permanent Court of Arbitration attached to the HCCI, certain provisions still apply1, save international treaties provide otherwise.

Limited party autonomy

The party autonomy is limited, because deviating from the provisions of the Arbitration Act by party agreement is only permitted in case the Arbitration Act itself so provides.

The most notable examples of party-autonomy, granted by the Arbitration Act are the following:

  1. Arbitrators: the parties are free to exclude a person from being arbitrator based on nationality, and they can determine the number and appointment of arbitrators and the procedure of challenging arbitrators, with certain limitations and exceptions;
  2. Proceedings: the parties can determine the rules of proceedings, among others the presumption of receipt of written notifications, the time when the arbitration proceeding shall be deemed as started, the place of hearings, the language of the procedure, the content of submissions, the condition of claim modifications, the consequences of party-default, the conditions of third-party participation in the proceedings, etc.;
  3. Tribunal's competence: the parties can limit the tribunal's competence to appoint expert-witnesses, or to apply interim measures or iii) preliminary orders;
  4. Remedies: the parties are free to regulate the deadline for requesting the correction of the award and the conditions of the interpretation and substitution of the award; to waive the retrial as remedy against the award.

Interpretation

The Arbitration Act expressly refers to "good faith" and to the explanatory note of the UNCITRAL Model Law, revised in 2006, as guiding principles, in case any question arises as to its interpretation.

Written notifications

The Arbitration Act regulates the receipt of written notifications in a detailed manner, setting up presumptions of receipt, and thereby creating an effective communication regime.

Save the parties agreed otherwise, any written communication shall be deemed as received by the other party, if

  1. it was personally delivered to the other party, or
  2. it was delivered at the place of business, domicile, habitual residence or postal address of the addressee.

In case the receipt of the written communication cannot be established after reasonable investigation, it shall be deemed as received, if it was sent to the last known place of business, domicile, habitual residence or postal address of the other party by a registered letter, or by any other means which certifies the attempt of delivery, save the parties agreed otherwise. The written communication shall be deemed as received within 8 (days) in case of domestic addressee, and within 15 (fifteen) days in case of foreign addressee.

Footnote

1 (e.g. provisions regulating the relation between arbitration and certain court proceedings and the legal assistance of courts, the provisions relative to enforcement of interim measures, and certain security measures, the provisions relative to the enforcement of arbitral awards, etc.)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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