18 September 2018

Arbitration in Hungary is governed by different sources of law. In addition to the sources of international and national law, the rules of proceedings of permanent arbitration institutions, and the case law of state courts and arbitration tribunals must be also considered.

International law

Hungary is party to the most important international arbitration treaties.

The Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (New York Convention) was promulgated on22th October 1962 by Law Decree No. 25 of 1962. Hungary made two reservations to the New York Convention: i) it applies only to awards made outside Hungary, and ii) the concept of “commercial relationship” shall be interpreted in the light of national law.

Hungary has signed and ratified the European Convention on International Commercial Arbitration of 1961 (Geneva Convention), which was promulgated on 26th March 1964 by Law Decree No. 8. of 1964.

The Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965 (ICSID Convention) was promulgated on 7th March 1989 by virtue of Law Decree No. 9 of 1989.

The Energy Charter Treaty of 1994 was promulgated on 8th April 1999 by Act XXXV of 1999 in Hungary.

In addition, Hungary has signed almost 60 (sixty) bilateral investment protection treaties with different European and other countries.

National Law

The basic national source of law in the field of arbitration is Act LX of 2017 on Arbitration (the Arbitration Act), which entered into force on 1st January 2018 and repealed the former arbitration act. The Arbitration Act was drafted in the light of the UNCITRAL Model Law, as revised in 2006, and the vast majority of its provisions are in line with the latter.

The Act XXVIII of 2017 on Private International Law (PIL Code) entered into force on 1st January 2018, and it contains important choice-of-law provisions in relation with the law applicable to arbitration agreements, and it also regulates the recognition and enforcement of foreign arbitral awards.

In addition to the above, Act CXXX of 2016 on the Civil Procedure Code and Act LIII of 1994 on judicial enforcement contains some provisions in relation with the arbitration procedure and concerning the enforcement of the arbitral award.

Institutional law

Besides national law, the rules of procedure of the permanent arbitration institutions plays a key role. From 1st January 2018, there are 3 (three) permanent arbitration institutions in Hungary:

  1. the Permanent Commercial Arbitration Court attached to the Hungarian Chamber, which is the legal successor of the following three arbitration institutions, which operated formerly individually: the Arbitration Court attached to the Hungarian Chamber of Commerce, the Arbitration Court of Money and Capital Markets and Arbitration Court of Energy
  2. The Permanent Arbitration Court for Sport and
  3. the Arbitration Court attached to the Hungarian Agricultural Chamber

Each of the above arbitration institutions has its own rules of procedure, which contains important rules regarding the whole arbitration proceedings.

Case law

The case law of state courts and arbitral tribunals has growing importance in the field of arbitration in Hungary.

Disputes concerning the appointment or challenge of arbitrators, the jurisdiction of arbitral tribunals, and the review of awards belong to the exclusive competence of the Metropolitan Court of Budapest, which guarantees the specialized knowledge of judges needed in arbitration related litigations. Court decisions are published frequently and often invoked by parties in litigations.

The publication of arbitral awards rendered in the framework of the Permanent Commercial Arbitration on the website of the latter is a novelty of the Arbitration Act, and it will be a useful tool for practitioners.

The publication of arbitration related case law also contributes to the development of legal theory of arbitration in Hungary.