1 POTENTIAL PROBLEMS IN POLISH-HUNGARIAN CONTRACTUAL RELATIONS Gábor Bisztrai, attorney at law (HU) Izabela Kisłow-Bisztrai, legal councelor (PL) BISZTRAI LAW FIRM Attorneys & Councelors

2 CASE STUDY MOTO Kft. (Seller), a Hungarian company sold and delivered a brand new car to the Polish CARS PARK Sp. z o.o. (Buyer). Both parties agreed in the contract that in the case of any dispute between them the Arbitration Court attached to the Chamber of Commerce and Industry will be competent. After a few months CARS PARK Sp. z o.o. noticed that the sold car had defects, terminated the contract and filed a claim for the car’s price against MOTO Kft. to the Polish ordinary court. During the litigation it turned out that both MOTO Kft. and CARS PARK Sp. z o.o. lost their exemplar of the undersigned contract.

3 POTENTIAL QUESTIONS to your lawyers Which court will be competent to solve this dispute: Arbitration Court or ordinary court? If the Arbitration Court is competent, then which language should be used in the proceeding? The courts of which country (Polish or Hungarian) will be competent herein? Which law will be applicable to the dispute: Polish, Hungarian, European or International?

4 POTENTIAL QUESTIONS of your managers What is favorable to my company: litigation at Arbitration Court or at the ordinary court? There are many Arbitration Courts attached to the different Chambers of Commerce and Industry i.e. Chamber of Commerce and Industry in Warsaw, Krakow, Budapest. Which one should I choose? If I win the suit at the Arbitration Court in Hungary, do I have a chance for execution of the court’s decision in Poland where all the property of my business partner is?

5 PRACTICAL MEANING OF PRESENTED QUESTIONS litigation in Arbitration Court may be quicker but at the same time more expensive for your company; litigation in your own country costs you potentially less but the positive decision of your country's court is only a partial success, since the execution will be in the country of your ex-business partner; differences of law and business culture aggregate additional costs and risks in your business practice; without a written contract you can not prove your choice of which national law or which court jurisdiction will be aplicable.

6 PRACTICAL ADVICES IN YOUR CONTRACTUAL POLISH-HUNGARIAN RELATIONS Be sure of the jurisdiction of your courts and your material law rules in your contract. In case of arbitration clause, use the original clause defined in the proceeding rules of the chosen Arbitration Court. With this, you can avoid the mistake MOTO Kft. / CARS PARK Sp.z o.o. made, since there is an Arbitration Court attached to the Chamber of Commerce and Industry in Warsaw/Krakow/Budapest as well. If it is possible, use european norms to define the quality of the products in your contract.

7 PRACTICAL ADVICES FOR DOING BUSINESS 1.Be sure your business partner is a (authentic) person entitled to conclude the agreement with your company. 2.Use always written communication, even if the common way of communication is phone. 3.React quickly if something unusual happens in your contractual relationship with your business partner.

8 PRACTICAL ADVICES IN CASE THERE ARE ALREADY PROBLEMS IN THE CONTRACTUAL RELATIONSHIP In case the goods - delivered upon the contract - have any defect, take minutes about it and if possible do this in the presence of all parties or witnesses. Inform your business partner in writing of any defects noticed on the delivered goods. The amicably way of solving the dispute is the quickest and cheapest way. If your business partner sues you in his own country, react very quickly and do not ignore the foreign court’s calls. What is not possible in your judicial system may be possible in the judicial system of your business partner. You can choose Arbitration Court after the dispute is arising as well, but it is recommended to use written form signed by all parties.

9 THANK YOU FOR YOUR ATTENTION BISZTRAI LAW FIRM Attorneys & Councelors