21 December 2018

What kind of decisions can the arbitral tribunal make in Hungary? Which substantive law is applied? What are the requirements as to the form and content of arbitral awards? What kind of awards may be rendered, and what are the differences between them? We address these issues in this article.

Decisions of the arbitral tribunal

While the Hungarian Arbitration Act does not specify the types of decision of the arbitral tribunal, the Rules of Procedure of the Permanent Arbitration Court (“Arbitration Court”) of the Hungarian Chamber of Commerce and Industry (HCCI) (“Rules of Procedure”) provides that there are two types of arbitral decisions: the arbitral tribunal makes an award on the merits of the case, and decides all other questions by order.

Decision on jurisdiction by order

Based on “Kompetenz-kompetenz” doctrine, the arbitral tribunal shall have competence to rule on his own jurisdiction, which is possible either by adopting a separate order in this preliminary question during the proceedings, or by addressing this issue the final award.

In case the arbitral tribunal declares its jurisdiction in a separate order, either party may request the review of this decision by the Metropolitan Court within 30 (thirty) days. The request for review does not have suspensory effect in respect of the arbitral proceedings.

Closing of proceedings and decision making

Once the arbitral tribunal considers that the case, or certain part of it, is ready for decision, it closes the proceedings by an order. After that further submissions and evidence may only be filed with prior leave of the arbitral tribunal, who, in exceptional cases, may also set further hearings or it can order the parties to perform further procedural acts.

The arbitral tribunal shall make its decision by majority, if there is no majority standpoint, the presiding arbitrator shall decide.

Applicable substantive law

The dispute shall be decided based on the law agreed upon by the parties, failing which the arbitral tribunal shall apply the law determined by the conflict of laws rules which it deems applicable.

The arbitral tribunal shall decide on the merits in accordance with the provisions of the contract between the parties, if any, and shall take into account the relevant trade usages applicable to the transaction.

The arbitral tribunal may decide “ex aequo et bono” or as “amiable compositeur” only in cases where the parties have expressly authorised it to do so.

The form of the award

The arbitral award shall be made in writing and shall be signed by the members of the arbitral tribunal. In arbitral proceedings with more than one arbitrator, the signatures of the majority of the members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature is stated.

The content of the award

The award always shall indicate the name and addresses of the parties and representatives, the decisions on the claims, the amount of the arbitration fees and costs and the decision as to who shall bear them, finally the date of the award, and the place of the arbitration. It shall be presumed that the award was rendered at that place.

The arbitral award must state reasons, save if contains only the parties’ settlement.

Notification of award

The Rules of Procedure provides that the arbitral tribunal shall present the award to the Arbitration Court within 45 (forty-five) days from the closing of proceedings the latest. Following the presentation of the award the Arbitration Court shall deliver it to the parties if payment of the advance on all the costs and expenses required throughout the proceedings have been made.

Legal effect of the award

According to the Hungarian Act on Arbitration, an arbitral award shall have the same legal effect as a final and binding court judgment, rendered by state courts in Hungary. In respect of the enforcement of the arbitral award, the provisions on judicial enforcement shall apply.

Types of awards

As mentioned, the arbitral tribunal shall make award on the merits on the dispute, however in addition to the classic “final award” that closes the whole dispute of the parties, under special circumstances the following awards may be also rendered by the arbitral tribunal:

Partial award: the arbitral tribunal may resolve certain claims, that can be adjudged separately by means of partial award if further hearing is required with a view to adopting a decision regarding the other claims. The partial award may be quashed, upheld or amended, as appropriate by a later award if necessary, with respect to the outcome of the proceedings.

Interim award: where the dispute is severable in terms of the existence of the right, and of the amount or quantity of the claim sought by the claimant, the tribunal may render an award about the the existence of the right before going further with the dispute.

Additional award: within 30 (thirty) days of receipt of the award, a party may request the arbitral tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted from the award. If the arbitral tribunal considers the request to be justified, it shall make the additional award within sixty days.

Consent award: the parties can settle their dispute with consent at any stage of the proceedings. If the parties request it, the arbitral tribunal shall include the settlement with the conditions as set out in the agreement in the award.