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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
This ICC Guide to National Rules of Procedure for Recognition and Enforcement of Foreign Awards under the New York Convention is the third, updated edition to mark the 60th anniversary of the New York Convention. Country Answers, which reflect the state of law at 1 October 2018, have been provided in response to a Questionnaire drawn up by a task force of the ICC Commission on Arbitration and ADR.
A. The Contracting State and the New York Convention
1. Name of Contracting State (also specify jurisdiction(s), if relevant)
Hungary.
2. Date of entry into force of the New York Convention
3 June 1962.
(Source: Section 3, Decree Law No. 25 of 1962.)
3. Has any reservation been made under Art. I(3) of the New York Convention regarding:
(a) reciprocity?
Yes.
(b) commercial relationships?
4. In addition to arbitral awards made in the territory of another State, the New York Convention (Art. I(1)) also applies to arbitral awards not considered as domestic awards in the State where recognition and enforcement are sought. Are there any awards rendered in your country that are not considered as domestic awards such that the New York Convention and the answers to this Questionnaire are
applicable to them?
Yes. Section 1(b) of Decree No. 12 of 1962 (X. 31.) of the Minister of Justice on the implementation of the New York Convention (the ‘Implementation Decree’) provides that Hungarian courts shall also apply the New York Convention to arbitral awards rendered in the territory of Hungary if the seat of the arbitral tribunal is in a foreign country and the majority of the arbitrators (or the sole arbitrator) is not a Hungarian national.
B. National sources of law
5. What specific sources of law are applicable to recognition and enforcement of foreign awards (e.g. statutes, regulations, codes, directives, other legal instruments)?
(i) Act LIII of 1994 on judicial enforcement proceedings (Bírósági Végrehajtásról szóló törvény), as amended (the ‘Enforcement Act’);
(ii) Act CXXX of 2016 on civil procedure (Polgári Perrendtartás), as amended (the ‘Civil Procedure Code’);
(iii) New York Convention itself, as incorporated into Hungarian law by Decree Law No. 25 of 1962;
(iv) Decree No. 12 of 1962 (X. 31.) of the Minister of Justice on the implementation of the New York Convention;
(v) Act V of 2013 constituting the Civil Code (Polgári Törvénykönyv) (the ‘Civil Code’);
(vi) Act CCXXII of 2015 on General Rules for Electronic Administration and Trust Services. (the ‘Electronic Administration Act’); and
(vii) Act XXVIII of 2017 on international private law.
Relevant EU regulations are also directly applicable.
C. Limitation periods (time limits)
6.
(a) Is there a limitation period (time limit) applicable to the commencement of legal proceedings for recognition and enforcement of foreign awards?
No. However, the limitation period applicable to claims applies to the enforcement of the arbitral award.
(Source: Enforcement Act, s. 57; Civil Code, s. 6:22.)
(b) If yes, what is the applicable limitation period (time limit) and when does it start running?
If Hungarian substantive law is to be applied, the relevant limitation period is five years (exceptions apply).
This limitation period starts to run when the time set in the award for payment has passed without payment being made. The limitation period restarts every time the award creditor takes legal steps to enforce its claim, upon acknowledgment of the debt and upon amendment of the underlying legal relationship. The expiry of the period is not examined by the court on its own motion, but only in connection with the objections raised by the respondent.
D. National courts and court proceedings
7. What authority or court has jurisdiction over recognition and enforcement of foreign awards?
As a general rule, legal proceedings for recognition and enforcement of foreign awards may be brought before the county court in the county where (i) the debtor’s domicile/seat is situated or, failing this, (ii) the debtor’s assets subject to enforcement are located or (iii) in the case of foreign entities, the debtor has a branch or agency.
(Source: Enforcement Act, ss. 16(d) and 208.)
8. What requirements, if any, must be met for the authority or court to accept jurisdiction over recognition and enforcement of foreign awards (e.g. domicile or assets of respondent in the jurisdiction, etc.)?
See Q.7 above.
9. Is the first decision granting or denying recognition and enforcement obtained through ex parte or inter partes proceedings?
The first decision is rendered by way of ex parte proceedings initiated by the petitioner. On occasion, the judge may send the creditor’s motion to the award debtor for comment.
(Source: Enforcement Act, s. 9.)
10.
(a) Is the first decision granting or denying recognition and enforcement subject to any form of appeal or recourse?
(b) How many levels of appeal or recourse are available against this decision?
There is one level of ordinary appeal against the first decision granting or denying recognition and enforcement. Appeals are heard and adjudged by the competent Regional Court of Appeal, typically within six months of the submission of the appeal. In addition, an extraordinary appeal may be brought against a decision of the Regional Court of Appeal granting recognition if the party challenging the award is able to show a miscarriage of justice owing to a legal error on the part of the arbitral tribunal. The appeal is examined by the Hungarian Supreme Court but the application must be filed with the first instance court within 60 days following the Regional Court of Appeal’s decision.
(Source: Civil Procedure Code, ss. 365(2)(b) and 406; Enforcement Act, ss. 213,214.)
11. What is the earliest stage in legal proceedings for enforcement of foreign arbitral awards at which a party can obtain execution against assets (i.e. party actually obtains possession of assets as opposed to simply freezing assets)?
The party seeking recognition of a foreign award makes its initial application on an ex parte basis. If successful, the court will issue an enforcement certificate. That certificate is then sent to the award debtor. If the debtor fails to appeal, or any appeal is dismissed, the enforcement certificate becomes final and binding and the award creditor may apply to the court for an enforcement document which permits action against the debtor’s assets. Therefore, the earliest stage when it is possible to obtain execution against assets is when the enforcement certificate becomes final and binding.
(Source: Enforcement Act, s. 213(2).)
E. Evidence required
12.
(a) What evidence must be supplied for recognition and enforcement of foreign awards (e.g. arbitral award, contract containing arbitration clause, affidavits, witness statements, etc.)?
The applicant must provide the court with the documents set out in the New York Convention: the arbitral award (original or certified copy) and the arbitration agreement (original or certified copy).
(Source: Enforcement Act, ss. 11, 12; 210; New York Convention, Art. IV; Decree 12/1962, s. 4 (X.31).)
(b) Is it necessary to provide the entire document or only certain parts (e.g. entire contract or only arbitration clause)?
All relevant documents must be provided in their entirety (together with their appendices).
(c) Are originals or duly certified copies required?
Originals are not necessary; duly certified copies are acceptable. Certification means apostillized pursuant to the Hague Convention of 5 Oct. 1961, or authentication by a Hungarian consular officer. In addition, subject to bilateral treaties, notarisation might also be accepted.
(d) How many originals or duly certified copies are required?
One original or duly certified copy of the award and one original or duly certified copy of the arbitration agreement. However, where the parties have communicated electronically (electronic communication is mandatory for any business entity or party represented by counsel and is optional for others), only electronic or ‘soft’ versions of the originals shall be submitted. The originals have to be archived by the party submitting them. The court may request that the original document be presented.
(Source: Electronic Administration Act, s. 9; Civil Procedures Code, ss. 613(1) 613(3).)
(e) Does the authority or court keep the originals that are filed?
Yes, courts keep all documents submitted, including the originals filed in case of proceedings on paper. Parties who submit electronic or ‘soft’ copies in appropriate cases shall archive the original hard copy.
13.
(a) Is it necessary to provide a translation of the documents supplied?
Yes, a certified translation must be attached. In practice, most judges are satisfied with translations of only the relevant parts of the documents.
(Source: New York Convention, Art. IV(2); Enforcement Act, s. 210.)
(b) If yes, into what language?
Hungarian.
(c) Is it necessary for the translations to be certified and, if yes, by whom (official or sworn translator, diplomatic or consular agent (of which country?) or some other person)?
Yes. The translation must be certified by an official or sworn translator or by a diplomatic or consular officer. Occasionally, judges will accept free translations.
(Source: New York Convention, Art. IV(2).)
(d) Is it necessary to provide a full translation of the documents or only a translation of certain parts (e.g. entire award or only part setting forth the decisions; entire contract or only arbitration clause)?
Full translation is required, although in practice, most judges are satisfied with translations of only the relevant parts of the documents.
F. Stay of enforcement
14.
(a) Can the authority or court stay legal proceedings for recognition and enforcement pending the outcome of an application to set aside or suspend the foreign award before the competent authority referred to in Art. V(1)(e) of the New York Convention?
Yes, the court hearing the recognition and enforcement proceedings may order a stay of the proceedings in accordance with the New York Convention.
(Source: Enforcement Act, s. 210; New York Convention, Art. VI.)
(b) On what other grounds, if any, can the authority or court stay legal proceedings for recognition and enforcement (e.g. forum non conveniens)?
If the award debtor is the subject of liquidation or bankruptcy proceedings, the proceedings for recognition of a foreign award are not stayed. However, as from the day of the declaration of liquidation or bankruptcy, it is no longer possible to proceed with the enforcement if this would affect the debtor’s assets. Once an order for liquidation is issued by a competent court, all enforcement proceedings shall cease, although the award creditor can still seek recognition of the award. Thereafter, it must prove its claim in the liquidation.
The court granting enforcement may in exceptional circumstances honour the request of the debtor and suspend the enforcement procedure if the debtor is able to prove reasonable cause (e.g. serious illness, number of dependents), provided that the debtor has not previously been fined for contempt during the enforcement procedure. Upon request, enforcement of measures resulting in vacating property may be put on hold for six months.
(Source: Act XLIX of 1991 on bankruptcy and liquidation proceedings, ss. 11, 38; Enforcement Act, ss. 48(3), 48(5).)
(c) Is the granting of a stay of legal proceedings for recognition and enforcement conditional on the provision of security?
No.
G. Confidentiality
15.
(a) Do the documents filed in legal proceedings for recognition and enforcement form part of the public record? If yes, can any steps be taken to preserve the confidentiality of such documents?
No, the court file is not publicly available. Only the parties, their authorized representatives and public prosecutors are permitted access to or to make copies from the court file. Third parties may access the court file only after proving a legitimate interest in the subject matter of the proceedings.
(Source: Civil Procedure Code, s. 162.)
(b) If there are hearings on recognition and enforcement, are such hearings confidential? If not, can steps be taken to maintain the confidentiality of the legal proceedings?
In recognition and enforcement proceedings, no trial is held under general circumstances. Nevertheless, the judge might consider it necessary to have a hearing. With a few exceptions, court hearings are open to the public in Hungary. However, parties may request the judge to close the hearing to the public. The judge has full discretion in deciding on such a request.
A decision to exclude the public will be made only in exceptional circumstances. Such circumstances most often relate to the sensitivity of the case from the perspective of the public interest (e.g. business secrets, qualified data, i.e. State secret, etc.). It is rare that commercial interests would be sufficient to justify the exclusion of the public from a hearing. Judges decide this question on a case-by-case basis.
As a practical matter, the public rarely attends court hearings. It is, in fact, difficult for the public to learn when and where particular cases will be heard because the court schedule is published in advance only at the court where the hearing is held and notice of the hearing is sent only to the parties, their counsel and any witnesses (not applicable in enforcement proceedings). Thus, the public usually only knows about a specific hearing if this information is made available by one of the parties.
(Source: Civil Procedure Code, ss. 164, 231.)
(c) Are judgments on recognition and enforcement published? If yes, can steps be taken to remove the names of the parties or avoid publication of confidential information (such as business or State secrets)?
Judgments in general, including those on recognition and enforcement, are published on the official home page of the Hungarian court system (http://www.birosagok.hu) in anonymized form. However, the recognition and enforcement of arbitral awards does not take the form of judgments, but court orders that are not published.
In addition, a special court committee (composed of qualified judges and akin to an editorial board of the relevant law reports) has discretion to decide which decisions are of general interest for legal practitioners and worthy of publication in the Gazette of Court Decisions (Bírósági Határozatok, commonly referred as ‘BH’). It is not possible to take any steps to prevent the publication of court decisions, as this is a matter that falls within the discretion of the higher courts. Most decisions are published only in summary form and the names of the parties are always replaced with initials.
(Source: Act CLXI of 2011 on the Organisation and Administration of the Courts, ss. 42, 163)
H. Other issues
16. When, if ever, can a party obtain recognition and enforcement of interim or partial foreign awards?
The recognition and enforcement of interim and partial foreign awards is possible if (i)Â the award in question imposes a specific enforceable obligation in the form of a precise duty, (ii)Â it is binding or enforceable on a preliminary basis, (iii)Â the deadline for voluntary performance has passed and (iv)Â the documents set out in Art. IV of the New York Convention are submitted (see section E below).
(Source: Enforcement Act, ss. 13, 205 and 209.)
17. When, if ever, can a party obtain recognition and enforcement of non-monetary relief in foreign arbitral awards (e.g. order requiring a party to deliver up share certificates or other property)?
A party can obtain recognition and enforcement of non-monetary relief (‘specific performance’). If the award debtor fails to perform the obligations imposed by the arbitral award at the request of the court bailiff, the competent court shall decide on the means of enforcement. They may include the following:
(Source: Enforcement Act, s. 174.)
18. When, if ever, can a party obtain recognition and enforcement of only part of the relief granted in foreign awards?
This issue is not directly addressed in Hungarian law.
Enforcement is carried out at the request of the award creditor; therefore, the award creditor is free to request that only part of the relief granted in the foreign arbitral award be enforced, provided that the nature of the obligation does not exclude partial performance.
(Source: Enforcement Act, s. 48.)
19. When, if ever, can a party obtain recognition and enforcement of foreign awards which have been set aside by the competent authority referred to in Art. V(1)(e) of the New York Convention?
If the court acquires knowledge that the award for which enforcement is sought has been set aside, it will dismiss the award creditor's request for an enforcement certificate. It could acquire such knowledge in first instance proceedings (which are ex parte, see Q. 9 above) only if so informed by the award creditor. The award debtor has the opportunity to bring an appeal against the enforcement certificate issued by the first instance court (see Q.11 above) in which it may produce the foreign judgment setting aside the award. Such an appeal will prevent the enforcement certificate from becoming final and binding.
If the foreign judgment setting aside the award is made after the enforcement certificate has become final and binding, the award debtor may bring an action against the award creditor to terminate (or limit) enforcement.
(Source: Civil Procedure Code, s. 528.)
If the award is set aside after the issuance of the enforcement document but before enforcement has been effected, the award debtor might request that the enforcement certificate (recognition) proceedings be reheard and that the competent court order a stay of enforcement in the meantime. Although it is questionable whether the conditions set out in the Civil Procedure Code for a rehearing are met, it can be reasonably assumed that a Hungarian court would give relief to the award debtor if during the enforcement proceedings it transpired that the award had been set aside. However, there is no relevant case law on the issue at this time.
(Source: Enforcement Act, ss. 205, 208, 209, 210 and 211; Civil Procedure Code, s. 393; New York Convention, Arts. III and V(1)(e).)
20. Are there any other procedural or practical requirements relating to recognition and enforcement of foreign awards which are worth mentioning (e.g. unusually high court costs, filing fees, stamp duties, obligation to post security as a condition for seeking recognition and enforcement, obligation to identify the assets that will be the object of enforcement, etc.)?
Recognition and enforcement proceedings typically last six to 12 months including appeal, due to the possibility of appealing separately against the request for the enforcement certificate (recognition) and the subsequent request for an enforcement document. Court costs for the first instance proceedings are 3% of the value enforced but no more than HUF 800,000 (approx. €2,500); other court costs are also reasonable.
Notwithstanding the applicable rules of arbitration or lex loci of arbitration, notification of the request for arbitration (or that of other appropriate document necessary to launch the arbitral proceedings) and the summon to appear is required to be addressed to the respondent at his domicile or place of usual residence.
(Source: Enforcement Act, s. 210; Act 2017/XXVIII on international private law, s. 109(4)(b).)
As explained in Q.7 above, if the debtor has no registered seat/domicile in Hungary, jurisdiction will be determined on the basis of the location of the debtor’s assets. Since jurisdiction must be proved by the petitioner and it is not possible to search by name in most public registries, it may be difficult to determine the competent court in such a case.
Country Rapporteur: Zsolt Okanyi