New significant decision on the possible annulment of arbitration award

The Curia of Hungary has taken a new major decision on the possible annulment of the Arbitration Court’s decision.

In the initial arbitration procedure the claimant, based on a contractual arbitration clause, brought his action before the Money- and Capital-market Arbitration Court (“Arbitration Court”). At the hearing held by the Arbitration Court the defendant declared in a statement, recorded in writing, that he accepts the competence of the Arbitration Court and expressed its will that the dispute in question shall be decided in the arbitration procedure. In its decision, the Arbitration Court ruled against the defendant. Subsequently, the defendant requested the annulment of the arbitration award before the Budapest-Capital Regional Court. He argued that, since being a consumer, the contractual arbitration clause applied by the claimant is unfair, therefore it is not binding on him according to the Council Directive 93/13/EEC on unfair terms in consumer contracts, to which he can refer even following the arbitration award is taken.

The Curia in its decision declared that the Council Directive 93/13/EEC shall not apply in the present case. As the defendant expressed its will, recorded in writing, that the dispute in question shall be decided by the Arbitration Court, a valid negotiated arbitration agreement was set up between the parties. Based on this arbitration agreement the Arbitration Court had competence to decide the dispute and the Arbitration Court’s decision is binding on the defendant.

The Curia also examined whether the defendant, who was a legal person, may be regarded as consumer under Hungarian law. The Curia has confirmed that the fact that the defendant was categorized as ‘retail client’ by the claimant which is an investment firm under the rules of MiFID, does not automatically qualify the client as consumer. The question whether a party qualifies a consumer can be answered by applying the relevant rules of the Hungarian Civil Code.

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