Originally from European International Arbitration Review (EIAR)

I. Introduction

It is axiomatic that the greater the freedom of the parties to resort to arbitration in a particular country, the more attractive that country is for foreign parties as a potential seat of arbitration. Indeed, party autonomy is a cornerstone of legal certainty: parties can expect that their arbitration clause will be upheld according to its terms and that any award rendered in their favour will be enforced. Ideally, the role of the state is limited to putting in place a mechanism that provides for minimum intervention into the arbitral process. Conversely, if the state interferes with the parties’ freedom to arbitrate, that particular country becomes less attractive and the parties’ sense of certainty will suffer: “Will my arbitration clause be upheld or will it be ignored and my dispute referred to the local courts?” The more the parties have to turn their minds to these concerns, the less likely it is that they will choose a given country as their seat. In turn, of course, the risk of being exposed to local courts may deter potential investors, causing an economic loss to the country.

It is with this simple observation in mind that this article addresses recent developments in Hungary which jeopardise the country’s suitability as a seat of arbitration.