The Lesson of a Short-Lived Mutiny: The Rise and Fall of Hungary’s Controversial Arbitration Regime in Cases Involving National Assets* – Vol. 27 No. 2

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Author: Csongor István Nagy**

Published: October 2016



In 2011 and 2012, the Hungarian parliament enacted laws that excluded arbitration for disputes involving Hungarian national assets. These provisions were fiercely criticized because they arguably ran counter to international treaty law and were, from a business perspective, not sustainable. In 2013, the antiarbitration provisions passed the test of the Hungarian Constitutional Court (“CC”), which refused to pronounce them unconstitutional and, in a controversial judgment, established that they were not irreconcilable with international treaty law. However, the concerns related to economic sustainability proved to be real:
in 2015, Hungary revoked these provisions in order to execute a major international economic transaction.

This article presents and analyzes Hungary’s recent legislative efforts and ultimate failure to exclude arbitration in matters involving Hungarian national assets, demonstrating the difficulties a country faces if it attempts to defy the prevailing pattern of dispute settlement in international trade. The lesson of the Hungarian arbitration saga is that, unsurprisingly, arbitration is not only a “take it or leave it,” but even a “take it or leave” rule of the club of international economic relations.


The Hungarian rules adopted in 2011 and 2012 prohibited entities in charge of
national assets from agreeing to arbitration and declared cases concerning national…

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*Current Developments
**Csongor István Nagy, LL.M., Ph.D., S.J.D., dr. juris is a professor of law in Hungary, the head of the Department of Private International Law at the University of Szeged, Faculty of Law, and research chair and the leader of the Federal Markets “Momentum” (“Lendület”) Research Group of the Hungary Academy of Sciences. He is admitted to the Budapest Bar. Furthermore, he is recurrent visiting professor at the Central European University (Budapest/New York), the Riga Graduate School of Law (Latvia) and the Sapientia University of Transylvania (Romania). This paper is based on research supported by the Hungarian Scientific Research Fund, within the framework of the OTKA PD-101612 research program. When writing this paper, the author was senior research fellow with the International Law Research Program of the Center for International Governance Innovation and gratefully acknowledges its support. The author is indebted to Professor Tibor Várady for his comments on an earlier draft of this article. Of course, all views and any errors remain the author’s own.