ARBITRATION PROCEEDINGS IN HUNGARY

12 April 2024

The Hungarian arbitration procedure, compared to the Hungarian state court procedure, is much simpler, less formal. However, it is still necessary to know these simpler procedural rules, to conclude the dispute successfully. Consequently, we summarize below the most important procedural principles and rules based on the Hungarian Arbitration Act and on the Rules of Procedure.

1. General procedural principles

The Hungarian Arbitration Act sets forth the following basic procedural principles:

1. the parties shall be provided with equal treatment and each party shall be given the possibility to submit his case (“equal treatment”);
2. the parties are free to choose the rules governing the procedure, within the limits set forth by the Hungarian Arbitration Act (“determination of procedural rules”).

2. Place and Language

The parties may freely agree on the venue of the arbitration. When no such agreement is made, the venue of the arbitration shall be determined by the arbitral tribunal by taking account the circumstances of the case.

The parties are also free to choose the language of the procedure; in the absence of that the arbitral tribunal shall determine the language.

3. Duration

The Hungarian Arbitration Act does not determine the maximum length of the arbitration procedure. The Rules of Procedure provides that the arbitral tribunal shall, to the extent possible, close the proceedings within six months from its constitution, which is a “softlaw” obligation.

4. Starting the procedure

The Hungarian Arbitration Act provides that the arbitration starts on the day on which the adverse party receives the request for arbitration.

The Rules of Procedure defines the mandatory minimum content of the statement of claim (data of parties, facts & evidence regarding jurisdiction, the right sought, the statement of relief, amount of dispute, nomination of arbitrator, statement regarding language and applicable law, payment of fees).

5. Statement of defence, counterclaim

The statement of defence shall be submitted within 30 (thirty) days from receipt of the statement of claim. Upon request by the respondent this time limit may be extended by thirty days.

The respondent may, until the closing of proceedings, file a counterclaim, if it was filed with unjustified delay, the tribunal may decide to hear the counterclaim in separate proceedings. The same deadline is applicable to filing a set-off claim, provided that the arbitral tribunal has jurisdiction over the claim to be asserted by set-off.

6. Hearings

The hearing is not open to the public. The members of the arbitral tribunal, the parties and their representatives, the recording secretary, interpreters, witnesses, and experts may be present at the hearing, as well as persons to the presence of whom all parties have consented.

7. Default of parties

In case the claimant fails to remedy the defaults of the Statement of Claim, the Arbitration Court terminates the procedure.

If the respondent fails to submit its statement of defence even within the additional time limit set forth by the arbitral tribunal, the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant’s allegations or claims, which is more favourable for the defaulting party, than the rules of civil litigation in Hungary.

In case without any proper reasons any of the parties fails to appear in the arbitration hearing or fails to submit their evidence, the arbitral tribunal may continue the proceedings and may adopt a decision based on the available evidence.

8. Evidence

The Hungarian Arbitration Act provides that the tribunal may order the taking of evidence of its own motion, even in the absence of any motion for evidence submitted by the parties.

The tribunal may order the parties to produce evidence, the taking of witness testimony, the inspection of an object or place and the appointment of expert.

The parties are entitled to submit evidence, witness testimonies, and the opinions of private experts. However, the arbitral tribunal may not apply any financial penalty or other coercive measures against the witnesses and experts.

9. Closing of proceedings

When the tribunal considers that the dispute is mature for decision, it closes the proceedings by a closing order. The arbitral tribunal has the obligation to notify the parties in advance, even if it decides the dispute without holding a hearing, of its intention to close the proceedings. After this notification, the tribunal can issue the closing order.

After the closing order has been issued, further submissions and evidence my only be filed with prior leave of the panel. After closing the proceedings but prior to issuing its award, the arbitral tribunal may in exceptionally justified case set a further hearing or order the parties to perform further procedural acts.