Enforcing Foreign Arbitral Awards in Hungary

• Published in: Dispute resolution journal 2022-01, Vol.76 (1), p.115-136
• Main Author: Kovács, Dalma
• Format: Magazinearticle
• Language: English
• Subjects: Agreements; Arbitration; Competent authority; Conventions; Enforcement; Federal court decisions; Law; State court decisions
• ISSN: 1074-8105; 2573-606X

Besides practical considerations, the article elaborates on how certain pitfalls under the former Hungarian legal framework now may seem purely theoretical. Under Hungarian law, an award is considered to be foreign if (i) it was rendered outside the territory of Hungary, or (ii) it was rendered in the territory of Hungary, but the institutional seat of the court of arbitration is not in the territory of Hungary and the majority of the members of the ar2019), http://arbitrationblog.kluwerarbitration.com/2019/09/11/the-new-york-conventioninthehungariancourtpracticeintwodecadesformalisticyetproarbitrationapproach/. accession came with two conditions: (i) it will apply the Convention only to recognition and enforcement of awards made in the territory of another contracting State,8 and (ii) it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, that are considered commercial under the national law.9 The Convention was incorporated into Hungarian law by Government Decree No. 25 of 1962.10 As a result, foreign arbitral awards from signatory nations are recognized and enforced in Hungary according to the rules of the New York Convention. In accordance with the foregoing, whether an award is considered foreign or domestic is determined by the laws of the country where their recognition and enforcement are sought. bitration panel or the individual arbitrator are not Hungarian citizens.1112 However, it should be noted that an arbitral award rendered outside the territory of Hungary-but in an arbitration proceeding conducted by an arbitral institution having its seat in Hungary13-will be enforceable as a domestic award.14 In contrast, under Chapter 2 of the Federal Arbitration Act,15 an award is considered to be foreign and therefore falls under the Convention if (i) it arose out of a relationship between foreign citizens and citizens of the United States,16 or it arose out of a relationship entirely between citizens of the United States, but (ii) involves property located abroad, (iii) envisages performance or enforcement abroad, or (iv) has some other reasonable relation with one or more foreign states.17 American courts deemed the award to be foreign in an arbitration held in New York between a Norwegian and a Swiss party where the dispute arose from a contract for transporting chemicals abroad.18 Similarly, the Seventh Circuit considered the award to be foreign in an arbitration conducted in Wisconsin betwe