Recognition and enforcement of foreign arbitral awards in Hungary

1. Introduction

Over the past decades, commercial arbitration has become an increasingly popular means of settling legal disputes worldwide. Even though arbitral awards are typically enforced in the jurisdiction of origin, in certain circumstances – such as where the award debtor’s assets are located abroad – enforcement may need to be pursued in another jurisdiction, or even in multiple jurisdictions.

This question is highly relevant for our clients on both sides of the table: whether you are seeking to enforce an award or facing enforcement proceedings brought against you, it is essential to understand how Hungarian courts approach this process in practice, when it is worth pursuing enforcement, and what options are available to a Hungarian debtor in such situations. The purpose of this article is to provide a practical overview of the key rules and procedural considerations.

Under Hungarian law, the enforcement proceedings of foreign arbitral awards are divided into three successive phases:

1. the recognition and enforcement of the foreign arbitral award by the issuance of the enforcement certificate (exequatur certificate);
2. the ordering of the enforcement by issuing an enforceable document (enforcement sheet);
3. the implementation of the enforcement by the independent court bailiff.

This article provides a brief summary of the main rules governing the recognition and enforcement of foreign arbitral awards in Hungary pursuant to Act LIII of 1994 on Judicial Enforcement (hereinafter: the “JEA”) and the New York Convention 1958 on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter: the “New York Convention”).

2. Proceedings for the recognition and enforcement of foreign awards (exequatur)

2.1. Overview

Under Hungarian law, exequatur proceedings are non-contentious in nature, and as a general rule, the first decision is rendered ex parte – that is, without prior notification of the debtor.

Proceedings may be brought before the regional court where:

1. the debtor’s domicile/seat is situated, or failing this;
2. where the debtor’s assets are located; or
3. in case of foreign companies, where the debtor’s branch or agency is located.

At this stage, the award creditor may also request the issuance of the enforceable document (enforcement sheet) against the debtor, as well as the ordering of protective measures in respect of the debtor’s assets, an option worth considering if there is a risk of asset dissipation.

For the Hungarian court to issue the enforcement certificate, the foreign arbitral award must satisfy the following requirements:

1. an Act of Parliament, reciprocity or international convention must provide a basis for the recognition and enforcement of the decision of a foreign court or foreign arbitral tribunal; and
2. the foreign decision must be a condemnatory decision (judgment imposing an obligation, marasztaló határozat) rendered by a court or an arbitral tribunal in a civil or administrative matter.

Once the exequatur certificate is issued, the foreign award has the same legal effect in Hungary as a judgment rendered by a Hungarian court. Once the exequatur certificate becomes final and binding, the enforcement sheet may be issued, and subsequently the court bailiff proceeds with execution.

Based on our experience, exequatur certificates are typically issued within approximately four months. However, in more complex cases, especially where all available appeals are pursued, this process may take several years.

2.2. Recognition and enforcement under the New York Convention

The legal basis for the recognition and enforcement of most foreign arbitral awards in Hungary is the New York Convention. With 172 Contracting States – including all Member States of the European Union, as well as the United States, the United Kingdom, Israel, China, etc. – the New York Convention provides a predictable and uniform global framework for enforcement. In the following, we mainly focus on the specific features of Hungarian procedures.

2.2.1. Documents to be submitted with the exequatur application

Award creditors must submit the following documents with their exequatur application:

1. a certified copy of the arbitral award issued by the permanent arbitral tribunal (in case the award was rendered by a permanent arbitral tribunal); or a notarized copy of the award issued by the ad hoc tribunal (in case the award was rendered by an ad hoc tribunal);
2. a notarized copy of the arbitration agreement; and
3. duly certified translations of these documents.

From a practical standpoint, it is worth noting that Hungarian courts frequently require additional documents beyond those listed above — such as proof of the date of service of the award on the debtor’s representative, or a certificate of incorporation. It is advisable to anticipate these requests and prepare the relevant documents in advance to avoid delays.

It is important to note that translations may only be prepared by an official or certified translator, specifically, the Hungarian Office for Translation and Attestation (OFFI) or a Hungarian diplomatic/consular agent. Translations prepared by other translators are not accepted.

Moreover, the certified/notarized copy of the award and the notarized copy of the arbitration agreement must be legalized. However, legalization may not be required if the state where the award was rendered is a contracting state to the Hague Apostille Convention (in that case an apostille certificate may suffice), or if a bilateral treaty between the state of origin and the state where enforcement is sought waives this requirement.

2.2.2. Grounds for refusal

Even where the submitted documents are found satisfactory, recognition and enforcement may be refused – though the grounds for refusal are intentionally narrow under the New York Convention.

The court may refuse enforcement ex officio (i.e. without a party’s request) if:

1. if the court finds that the dispute was not arbitrable (inarbitrability);
2. or the award would violate public policy.

In addition, the award debtor may raise the following grounds for refusal:

3. incapacity of a party to the arbitration agreement; invalid arbitration agreement;
4. lack of notice or other due process violations;
5. excess of jurisdiction or competence of the arbitral tribunal;
6. improper composition of the arbitral tribunal; flawed arbitral proceedings;
7. award is not binding; has been set aside or suspended.

3. Procedural remedies available in the exequatur proceedings

Regardless of which side of the enforcement proceedings a party finds itself on, it is always worth carefully assessing what procedural tools are available — both to facilitate enforcement and to challenge or delay it. Below is a summary of the key remedies.

3.1. Ordinary appeal

There is one level of ordinary appeal against the first instance decision granting or denying recognition and enforcement. Importantly, an appeal has a suspensory effect: the enforceable document (enforcement sheet) cannot be issued until the court of second instance’s decision becomes final and binding. Appeals are typically adjudicated within six months of submission.

The appellate court generally decides on the appeal without a hearing; however, it may schedule one if deemed necessary, or request written submissions from the parties.

3.2. Extraordinary appeal (review)

A further extraordinary remedy, judicial review, may be sought before the Curia (Hungary’s Supreme Court) against a final second instance decision. This remedy may be invoked on two grounds: (i) a violation of law that had an impact on the merits of the case, or (ii) a departure from a published Curia decision on a question of law.

Applications must be filed with the first instance court within 60 days after the court of second instance’s decision.

4. Statute of limitations

The time limits for bringing actions for enforcement (right of enforcement) are governed by the rules applicable to the underlying enforceable claim. In other words, the law governing the claim (rather than Hungarian procedural law) determines the relevant limitation periods. As a general rule, limitation periods are only taken into account by courts upon a party’s express request — they are not applied automatically.