A. LEGISLATION AND RULES
A.1 Legislation
A new set aside ground was introduced into Hungarian arbitration law in 2023. From 5 June 2023, an arbitration award may be set aside on the grounds that the arbitration panel has disregarded an expert opinion prepared by the Technical Forensic Expert Panel (Teljesítésigazolási Szakértői Szerv). This does not mean that an opinion of the Technical Forensic Expert Panel must be accepted by the arbitration panel, but at least the grounds for not accepting that as evidence need to be detailed in the award. The Technical Forensic Expert Panel is an expert institution organized at the Hungarian Chamber of Commerce and Industry, the officials and members of which are appointed by government officials. Importantly, this rule only applies to arbitrations seated in Hungary.
A.2 Institutions, rules and infrastructure
There were no significant developments concerning institutions, rules and infrastructure.
B. CASES
B.1 Award No. 2/11/2021
The dispute concerned the supply and installation of technical equipment. The relevance of the case lies in that the arbitration panel assessed the role of the Technical Forensic Expert Panel’s opinion in arbitration proceedings, which is particularly interesting in light of the recent changes to Hungarian arbitration law (please see Section A1).
The arbitration panel took the position that the opinion of the Technical Forensic Expert Panel is not an expert opinion obtained by the arbitration panel nor a private expert opinion submitted by either of the parties. Rather, it is the declaration of an independent and competent institution, which must be taken into account by the arbitration panel, among other pieces of evidence.
B.2 Award No. 5/5/2022
The case concerns the lack of jurisdiction of the arbitration court because of conflicting provisions in the arbitration agreement.
In its statement of claim, the claimant requested that the respondent pay the contractor’s fees based on both a contract of work and a subcontracting agreement with the respondent. The contract of work stipulated the competence of general courts, while the subcontracting competence of arbitration court has been stipulated.
The arbitral tribunal found that the claim can only be assessed under the provisions of both contracts. Therefore, both contracts are relevant in the case. The conflicting dispute resolution clauses in the two contracts constitute contradictory terms that are null and void under the relevant provisions of the Hungarian Civil Code. Therefore, the arbitral tribunal terminated the proceedings.
B.3. Award No 1/12/2021
The dispute concerned a lease agreement, and it is relevant because the panel addressed a number of issues pertinent from an arbitration point of view, including mistakenly identifying the arbitration forum in an arbitration clause.
First, the panel considered the validity of an arbitration clause, pointing to the competence of the “Arbitration Court attached to the Budapest Chamber of Commerce and Industry.” There is no Budapest Chamber of Commerce and Industry. However, the arbitration panel found that the arbitration clause clearly pointed to the Arbitration Court attached to the Hungarian Chamber of Commerce and Industry because it is the only arbitration court organized besides a chamber of commerce and industry seated in Budapest.
Second, the panel awarded certain repair costs to the lessor on the grounds of unjust enrichment, stating that unjust enrichment may also occur alongside a contractual relationship. Unfortunately, the published version of the award did not specifically address the grounds on which the arbitration panel established its jurisdiction over such an unjust enrichment claim. The underlying arbitration clause was rather vague, stating that the contracting parties will settle disputes amicably, and if that is not possible, they submit to the competence of the Arbitration Court.
B.4. Award No. 2/9/2022
The case confirms that an arbitration agreement concluded by the predecessor extends to the successor in title.
The respondent, as lessee, entered into a foreign currency finance lease contract with the predecessor of the claimant bank. The claimant acquired the claim under the lease by an assignment agreement. The respondent’s primary objection was that the limitation period had elapsed. However, the claimant was able to prove in the proceedings that it had tried to notify the respondent of the assignment but was unsuccessful as the respondent had moved but had not notified the plaintiff’s predecessor in title of its new address.
The arbitral tribunal examined its competence and found that the arbitration clause under the lease agreement was not concluded between the parties to the dispute. However, it found that in the case of assignment and/or legal succession, the arbitration agreement concluded by the predecessor in title extends to the successor in title. The arbitral tribunal also found that the claimant’s notification interrupted the limitation period because the respondent did not notify the plaintiff’s predecessor in title of its change of address and thus failed to comply with its duty of cooperation.
B.5. Award No. 2/1/2022
The dispute arose from a leasing agreement, and it is relevant because the arbitration panel made important findings regarding the statute of limitations in an arbitration setting.
Specifically, the arbitration panel found that submitting a claim with the ordinary court interrupts the limitation period even if the court terminates the litigation due to an arbitration clause. The panel argued that if the claim is submitted to the wrong court, the court transfers it to the competent court. Such a transfer is not possible in the case of an arbitration proceeding. However, an arbitration clause may not cause a disadvantage for the concerned party on this basis. As a background, the Hungarian Civil Code provides that bringing an action in court interrupts the limitation period, provided that the court renders a final and binding decision on the merits.
B.6. Award No. 3/9/2022
The case concerns unjust enrichment.
The claimant was engaged in the business of providing accommodation services in a condominium. For this purpose, he wanted to procure a hotel system software.
The software provided by the respondent did not fully meet the claimant’s needs, and the claimant requested a correction, which was not made. The claimant requested that the respondent pay him the license fee paid on grounds of unjust enrichment and claimed compensation for loss of profits. The respondent requested dismissal of the claim because in its view, the software met the claimant’s needs. According to the respondent, the loss of profits was due to the claimant’s fault or negligence.
The arbitral tribunal concluded that unjust enrichment is a subsidiary claim; therefore, if the claim can be made on other legal grounds, unjust enrichment cannot be applied. The respondent’s invoices for the fees paid were not disputed by the claimant, and the claimant could not prove that the services provided therein were not performed by the respondent. The claimant’s claim for unjust enrichment is thus unfounded.
B.7. Award No. 2/3/2022
The dispute concerned challenging of corporate decisions based on alleged conspiracy aimed at circumventing mandatory public offering rules. The award raised a number of interesting points.
First, the arbitration panel took the view that in the case of an alleged conspiracy, the standard of proof must take into account the specifics of the case, and therefore, full certainty or probability close to full certainty is not required. Instead, it is sufficient if the alleged conspiracy is very likely in the sense that it is not merely a possibility but is acceptable to the arbitration panel as the likely course of events based on general commercial experience. Accordingly, indirect evidence may be sufficient, but it must create a comprehensive and logical structure of evidence. The panel added that the strict legal consequences of the alleged conspiracy increase the threshold of the necessary likelihood.
Second, the arbitration panel noted that it is not bound by the so-called unity of law decisions of the Kúria (the Hungarian Supreme Court), which are otherwise binding on the ordinary courts. At the same time, it followed the unity of law decision at hand and cited a number of other court decisions on the basis of their rationale.
Third, the panel also assessed the constitutionality of the strict deadline applicable to bringing this specific action but had no constitutionality concerns. It would have been interesting to see what steps the panel would take if it had constitutionality concerns.
B.8. Award No. 4/9/2022
The case concerns additional services and unjust enrichment.
The parties to the dispute have concluded an engagement contract for the performance of engineering services, and the claimants based their statement of claim on an unauthorized agency.
The claimants requested that the respondent pay them the value of the work carried out, which was acknowledged by the respondent since during the performance of the contract, they had also undertaken a number of tasks that they would not have been obliged to carry out under the engagement contract. The respondent submitted that it had paid to the claimant the contractual consideration fixed in the form of a lump sum in the engagement contract.
The arbitral tribunal found that based on the expert opinion of the Technical Forensic Expert Panel, the additional works performed by the claimants were closely linked to the engagement contract but were not part of that. However, the parties have not amended the engagement contract, and it is not disputed that the value for the works in excess of the lump sum fee should have been a material issue to be regulated in the contract. Therefore, the arbitral tribunal dismissed the statement of claim.
B.9. Award No. 1/3/2022
The dispute concerned freight forwarding services, and the panel made interesting findings concerning limitations incorporated in dispute resolution clauses.
The arbitration clause at hand required notification of the other party before bringing any action and limited the possibility of bringing actions in time to six months from the date the other party learned or could have learned about the circumstances giving rise to the dispute. The arbitration panel found that the six-month deadline is a strict deadline on the basis of the language used in the clause. The arbitration panel argued that once the parties are allowed to reduce the limitation period, they are also allowed to specify a strict deadline for bringing an action or to set additional conditions, such as prior notice. Nonetheless, the arbitration panel also examined whether the deadline would have been kept if the six-month deadline had been interpreted not as a strict deadline but as a deadline subject to the rules of the statute of limitations, which allows for avoidance of delay. In that examination, the arbitration panel did not exclude that the COVID-19 infection of the managing director of the party may be sufficient grounds for avoiding the delay. At the same time, it found that the COVID-19 infection of the legal representative was not sufficient to avoid the delay because the party could have employed another legal representative.
B.10. Award No. 1/7/2022
The case concerns the storage of crops.
The parties have concluded a framework contract for the sale of crops and a storage contract for the storage of the crops. The claimant requested the respondent to pay the damages arising from the purchase price of the crops because the respondent did not hand out the crops bought by the claimant from storage. The respondent argued that the claimant could have transfer the crops at any time and that the damage suffered by the claimant (i.e., the deteriorated and destroyed crops) resulted from its own fault.
The arbitral tribunal first assessed its jurisdiction because in the framework agreement, the parties stipulated the competence of the general courts, while in the storage contract, they agreed on an arbitration clause. The arbitral tribunal found that the dispute related to the storage contract and therefore, the jurisdiction of the arbitration court is well founded. The arbitral tribunal also found that the claimant was not able to prove the respondent’s breach of the storage contract; the respondent did not refuse performance, which would otherwise have been a sui generis breach of contract. The respondent did not have an obligation to offer the transportation of the crops, and the claimant failed to prove that the respondent attempted to remove the crops.
