Arbitration bodies

Arbitration bodies

If a consumer is unable to settle an individual dispute with a business, but would like to find a solution to the dispute out of court, they can turn to an arbitration body for a free and quick resolution.

A consumer may initiate the conciliation body's procedure if the matter is a consumer dispute relating to

- the conclusion or fulfilment of a contract for the sale of goods or the provision of services between the consumer and the trader, or

- the quality or safety of the service provided in the absence of a contract or the application of product liability rules.

In order to settle a consumer dispute, the arbitration board first of all tries to reach an agreement between the parties, failing which it decides the case by means of a binding decision or makes a recommendation. In reaching its decision, the arbitration board shall take into account the need to ensure that consumer rights are enforced quickly, effectively and simply.

The purpose of the arbitration board procedure

The arbitration board is an independent body run by the county (capital) chambers of commerce and industry. It has the power to settle consumer disputes out of court. Businesses have a duty to cooperate, which means that they must submit a reply to the arbitration hearing, participate in the hearing at least online and notify the arbitration body of the implementation of its decision. Otherwise, the consumer protection authority will impose a consumer protection fine.

From 1 January 2024, arbitration bodies will operate on a regional basis. As a general rule, the competent body will be the one where the consumer resides or stays, but the consumer may request that the arbitration body designated in the consumer's application replace the body competent for his/her place of residence or stay. The arbitration body shall provide consumers with a personal hearing in the county towns within its jurisdiction, once a week, if necessary, at the consumer's request.

Starting an arbitration procedure

The first step before starting an arbitration procedure is for the consumer, i.e. the buyer or user of the service concerned, to attempt to resolve the complaint directly with the business concerned. If direct settlement is unsuccessful, an application may be submitted to the conciliation body.

To initiate the procedure, the request must include the following information:

- the name, residence or domicile of the consumer, i.e. the person making the request,

- the name of the business subject to the complaint, its place of residence or domicile, or the address of the complainant, or the place where the complainant resides or resides,

- a brief description of the complaint, the facts supporting it and the evidence in support of the complaint (it is particularly important to refer to any written documents, contracts, delivery notes, invoices, receipts, etc., which relate to the substance of the matter); the documents must be attached to the application,

- a declaration by the consumer that he/she has tried to resolve the dispute directly with the trader,

- an explicit request for a decision on the matter.

If the consumer's application is incomplete, the arbitration body will ask the consumer to correct it.

Conduct of the procedure

If the request contains the information necessary to open the procedure, the chair of the arbitration body will set a hearing date. At the scheduled hearing, specific submissions will be examined by the sole member or by a panel of 3 members of the arbitration body chosen by the chairman. From 1 January 2024, the online hearing will be the general rule for hearings, except if the consumer requests a personal hearing.

There could be 4 types of decision:

1. decision approving a settlement: during the procedure, the chairman of the board of procedure tries to reach a settlement between the parties. If the settlement is in accordance with the law, the council will approve it by a decision. If an agreement is reached between the parties in the course of the procedure, it is incorporated in the form of a binding decision, which can also be enforced by a court.

2. binding decision: if the business declares during the procedure that it accepts the decision of the council as binding, i.e. that it submits to the decision, the council will, if the consumer's request is justified, issue a binding decision, which is equivalent in effect to a court decision and can be accompanied by an enforcement clause in the event of non-compliance. It may also issue a binding decision if there is no agreement between the parties and the business has not made a declaration of submission, but the consumer's request is well-founded, provided that the amount of the claim to be enforced does not exceed HUF 200 000, either in the request or at the time of the decision to impose an obligation. The consumer may apply to the court for enforcement of the binding decision of the council or the settlement approved by the decision, in the event that the business does not comply with the decision.

3. recommendation: if the business has stated at the outset of the procedure that it does not accept the decision of the Board as binding or has not made a statement, the Board will make a recommendation on the basis of its assessment of the available documents and evidence, subject to the consumer being in the right.

4. decision to terminate the procedure: if it is not possible to rule on the merits of the case or if the consumer's claim is without substance, the conciliation panel terminates the procedure.

Legal remedies, appeals

Under the law, the decision can be challenged in court only if the board has infringed a procedural rule, or the business may ask the court to set aside the order and recommendation in the event of an infringement.

It is important to underline that the decision of the arbitration body does not affect the consumer's right to pursue his or her claim in court. This means that judicial recourse is still possible after the Arbitration Body has completed its proceedings.