Korom, Veronika --- "HUNGARY" [2019] ELECD 2742; in Nagy, Csongor (ed), "Investment Arbitration in Central and Eastern Europe" (Edward Elgar Publishing, 2019) 156

Book Title: Investment Arbitration in Central and Eastern Europe

Editor(s): Nagy, Csongor

Publisher: Edward Elgar Publishing

Section: Chapter 6

Section Title: HUNGARY

Author(s): Korom, Veronika

Number of pages: 64

Abstract/Description:

Hungary was one of the first States of Central-Eastern Europe to adopt bilateral investment treaties (“BITs”) in an effort to attract large-scale foreign investment. Although certain safeguards for foreign investment existed under domestic Hungarian law, the BITs represented a stronger guarantee to foreign investors because they were rooted in international law. In 1986, Hungary signed a BIT with Germany, France, Belgium and Luxembourg and by the time it gained independence in 1989-1990, it had BITs in place with all major capital-exporting Western-European economies. In addition, Hungary became a signatory to the New York Convention and the ICSID Convention, and later also joined the Energy Charter Treaty. In the 1990s, large segments of the Hungarian economy were privatised to foreign investors and the number and volume of foreign greenfield investments also rose continuously. Sixteen known investor-State disputes have been commenced against Hungary on the basis of its treaties to date. The majority of these disputes concerned investments made in the context of Hungary’s privatisations and were based on BITs signed in the late 1980s or early 1990s or on the ECT. Until recently, Hungary was relatively successful in defending these investment claims. The Hungarian newspapers and online media have reported on all investor-State disputes concerning Hungary, largely without any particular hostility or criticism against Hungary’s treaties or ISDS. The Hungarian academic community has recently shown considerable interest in the fate of intra-EU BITs and the need for ISDS in the new EU free trade agreements (“FTAs”). The recent Achmea judgment of the Court of Justice of the European Union, as well as the new EU FTAs, will fundamentally change Hungary’s treaty landscape as well as the number and likely success of any investment disputes that may be commenced against Hungary in the future.