Special Case Law of the Courts on the Relation of Arbitration and Constitutional Issues: Hungary

Abstract:     
Arbitration in Hungary has a long standing tradition and there is also available extensive case law of Hungarian national courts regarding arbitration. It was confirmed repeatedly that courts may not intervene in arbitral proceedings in the event a valid arbitration clause exists and that arbitration courts and arbitral institutions are not a part of the judiciary and not subject to the oversith authority of the Supreme Court of Hungary (for instance decision of the Supreme Court of Hungary as from 2001). A full authonomy of the Parties has been confirmed by the court practise in respect to the annulment proceedings as a demand for the annulment of an arbitral award may only be made by a party to the particular arbitral proceedings or by a person that is subject to an abligation imposed by the arbitral award, provided that the arbitral award has been delivered to such a person. The Hungarian courts (or any authority) are therefore not entitled to set-aside an award ex officio (Ruling of the Péct Reginal Court as of 2006). The same decision confirmed inter partes effects of arbitral awards.

Very interesting judgment has been issued by Debrecen Regional Court in 2006. The court stated that If an enforceable arbitral award has the nature of a court judgment for the purposes of its enforcement, regulations pertaining to the enforcement of court rulings may be applied to such an award, including a mutual legal assistance (rogattory) treaty (in this case, an agreement between Hungary and Ukraine) that guarantees the enforceability of court judgments. Due to the nature of an arbitral award, which is qualified as identical to a court judgment for enforcement purposes, regulations pertaining to the enforcement of foreign arbitral awards (in this case, the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards) are used together with regulations pertaining to the enforcement of court judgments, where those regulations apply that allow recognition and enforcement to a larger extent.

Extraordinarity of public policy issues has confirmed the Supreme Court of Hungary in 2006 when ruling that in arbitral proceedings, it is permissible to restrict some constitutional rights with regard to the process of law finding. Public policy violation only as an especially serious violation of rights. Arbitration restricts or excludes, in a constitutionally conforming manner, certain fundamental rights guaranteed by the constitution with regard to legal protection. An assertion claiming the absence of fair and impartial trial in arbitration does not mean that the public policy of [Hungary] has been violated at the same time. A violation of fundamental rights may represent a violation of the public policy of [Hungary]. However, a violation of public policy is committed only if fundamental principles of law are violated.

Number of Pages in PDF File: 24

Keywords: arbitration, annulment proceedings, annulment of award, authonomy, constitutional rights, court intervention in arbitration, enforcement, fair trial, foreign award, fundamental principles of law, gross violation, inter-pates effect, impartial trial, legal protection, more advantageous conditions

JEL Classification: K10, K11, K12, K33, K40, K41, K42

Accepted Paper Series