17 September 2015

Civil or commercial disputes often arise, and when they cannot be resolved through negotiation they turn into litigation before courts. In this article we share some useful information about civil and business litigation in Hungary.

Hungary, litigation, civil and business casesWhen can Hungarian courts try the case?

This question is regulated by the so-called Brussels I Regulation of the EU, and the Hungarian law decree on private international law.

In general Hungarian courts can try the case if the defendant domiciled or has its registered seat in Hungary. Hungarian courts can try contractual disputes if the place of performance of the contract was in Hungary (the goods were delivered, or the service was provided in Hungary). In case of action for damages Hungarian courts can try the case if the activity leading to the damage was performed in Hungary or the damage occurred in Hungary.

Only Hungarian courts can try the case involving a dispute in connection with an ownership or similar right related to real property situated in Hungary, a shareholders’ or other company dispute in relation with a company registered in Hungary, a dispute in connection with public registers held by the Hungarian authorities (e.g. real estate, company register, etc.) and a dispute related to IP Rights registered in Hungary.

Which court will be competent?

If Hungarian courts can try the case, the next step is to decide which one of the many state courts will be competent. The competence of the court shall be decided firstly by the type of the case and secondly on territorial base.

Most claims generally start at one of the 111 local courts. Claims exceeding HUF 30 million (ca. EUR 100.000) and some special claims, like intellectual property, company law and international transport, must be filed with county courts or with the Metropolitan Court of Budapest.

In general, the court in whose area the defendant is domiciled or has its registered seat will be competent in the commercial or civil dispute.

In some cases, an action can be brought before a different court: in case of claims arising from contracts, the place where the contract was signed, or the place of performance can determine the competent court. In case of action for damages, the claim can be filed with the court in whose area the damage occurred, etc.

What are the costs of litigation and who bears them?

There are certain types of cost which the parties have to take into account. Generally it is the plaintiff who advances the costs and the losing party shall bear them.

The plaintiff shall pay a court duty when submitting his claim, which is 6% (up to max HUF 1.500.000) at first instance, 8% (up to max HUF 2.500.000) before the court of appeal and 10% (up to max. HUF 3.500.000) in review procedure before the Curia (former Supreme Court)

The costs of the evidentiary procedure (eg. cost of the court-appointed expert, travel costs of witnesses), shall be advanced by the party who wishes to prove its statements, and the same applies for the costs of the legal representatives. 

The cost of the translator, who is needed because the oral use of the mother tongue on the hearing (e.g. in case of a witness) shall be advanced and paid by the Hungarian State. However the cost of the official translation of documents shall be advanced by the party, who uses the foreign-language documents as evidence and shall be paid by the losing party.

It should be noted that upon the request of the defendant, the court may order the foreign plaintiff to pay security for the procedural costs. This rule may not be applied if the plaintiff is the citizen of the European Union or has its registered office in the EU.

In general, all of the costs shall be borne by the losing party, however the judge may order the partial reimbursement of the attorney’s fee, occurred on the winning parties’ side.

Is the personal attendance obligatory at court hearings?

Generally if the party has a legal representative he shall not personally attend the court hearing, unless he has been summoned for personal hearing by the judge. It can be the case when the oral testimony of the party is needed in order to clarify the facts.

In some cases the legal representation is mandatory (eg. before the county court if the litigated amount is more that HUF 30 million, before the courts of appeal and the Supreme Court).

The attendance of the parties is of great importance, since

  • in case the plaintiff does not have a legal representative and he does not attend on the first hearing, upon request of the defendant, the court may terminate the case,

  • on the other hand if the defendant fails to appear at the first hearing without submitting a statement of defence, the court may issue a default judgement upon request of the plaintiff.

What are the basic rules and types of evidence?

In Hungary save from few exceptions the court does not carry out any evidence taking ex officio. Therefore it is the parties’ obligation to present their evidence, although the court will decide whether he takes of evidence or not.

Generally the burden of proof lies with the party in the interest of which it is that the court accepts the alleged fact as true and that party shall advance the costs of the evidentiary procedure.

Facts that are the part of public knowledge or of about which the court has official knowledge shall not be proved by the parties.

Appropriate means of evidence are documents or other material evidences, witness testimonies and expert opinions. In case fact can be proved by a document, other evidence may not be necessary.

Witnesses usually only give oral evidence in person, first they are heard by the court, then by the party who called the witness, and then by the other party.

If the decision in the legal dispute requires special expertise, upon request of the parties the court shall appoint a judicial expert. It is also possible for the parties to produce private expert opinions, although the judicial expert opinion’s probative force is considered to be stronger than the private expert opinion’s. In the meantime a well-founded private expert opinion can be suitable to challenge the statements of the judicial expert.

What are the grounds of the court’s decision?

Firstly, the court cannot rule ultra petita, so the basis of the court’s decision is the statement of claim of the plaintiff and the statement of defence of the defendant.

The court establishes the facts based on the comparison and deliberation of the statements of the parties and the evidences provided by the parties. The court also takes into account the fact that a party failed to comply with the court’s request or failed to answer the question of the judge.