Blog » CORONAVIRUS: GOVERNMENTAL MEASURES PROTECTING COMMERCIAL LESSEES IN HUNGARY
CORONAVIRUS: GOVERNMENTAL MEASURES PROTECTING COMMERCIAL LESSEES IN HUNGARY
25 March 2020
The worldwide coronavirus epidemic is causing serious problems in the economy as well, businesses in sensitive sectors fear a total loss of income for months. For this reason, the Hungarian Government introduced a ban on termination and rent increase for commercial lease contract in case the lessee operates in specific, sensitive sectors. However, there are several legal uncertainties surrounding the measure, which will be discussed in our brief article.
1. What businesses are affected by protection?
The protection applies only to businesses active in the following sectors:
- catering (HoReCa)
- film industry
- performing arts
- event organizing and sport services.
2. What does the protection cover?
- prohibition on termination: commercial leases (eg.: shop, warehouse) concluded with lessees doing business in the above sectors, may not be terminated by the lessor.
- prohibition on rent increase: In addition, the rent cannot be increased in the case of the above contracts, even if otherwise permitted by the contract.
3. The duration of the protection?
The prohibition on termination currently lasts until 30 June 2020, but it may be extended by the Government until the state of emergency persists. During the prohibition, the contract may not be terminated. Therefore, notice may be given during the prohibition if, considering the notice period, the contract terminates after the prohibition has expired.
The prohibition on price increases is currently in force for an indefinite period of time until the state of emergency persists.
4. Uncertainties surrounding the measures
From a legal point of view, the measure, like other emergency measures, carries a number of uncertainties. First, it is questionable how to determine the activities of the company, based on which it can be eligible for the protection. In this regard, the Companies Registry contains “authentic” data, however, it rarely reflects reality as the companies generally have far more activities listed than they actually carry out, so the company’s eligibility for the protection can be a source of dispute.
The prohibition on rent increase can cause a practical problem on the lessor’s side. Due to the economic downturn, many lessees have already requested the temporary reduction of the rent fee, which the lessors usually accept in order to keep the lessees. The problem may occur when the original fee is reinstated, because, although there is no increase compared to the fee applied before the discount, but if we compare to the discounted fee, restoring the original fee may be considered an increase, which is prohibited pursuant to the literal interpretation of the govt. decree.
The Hungarian Government wants to prevent companies operating in the sectors most affected by the epidemic from being evicted from the leases used for their operations. At the same time, the interest of the lessor must also be taken into account, otherwise his operations can be endangered as well. In order to prevent future disputes, preserving legality should remain a priority even during the state of emergency.
IS THE JUDGE BIASED BECAUSE OF UNFAVOURABLE JUDGMENT IN OTHER CASE?
Can a judge be disqualified from deciding the legal dispute on the grounds of bias if he has delivered a judgment unfavourable to the plaintiff in another case? Can a court be biased if the plaintiff has "challenged" a previous decision of the court before the European Court of Human Rights? In this article, we answer these questions by analysing a recent judgment of the Hungarian Supreme Court.Read more »
CAN INCOMPATIBLE WORKPLACE BEHAVIOUR BE A GROUND FOR DISMISSAL IN HUNGARY?
Refusal of employer 's instructions, unjustified absence, intentional damage: some cases where the justification for dismissing an employee is relatively easy to determine. What happens, however, if the employee does not commit a severe breach of duty similar to the one above, but his or her colleagues consider him incompatible, with whom it is impossible to cooperate, or even afraid of him or her. Can dismissal be justified by behaviour that is incompatible with others and creates disharmony in the working environment? In our article, we seek the answer to this question in the light of Hungarian judicial practice.Read more »
CAN A JUDICIAL ERROR CREATE HUNGARIAN JURISDICTION DESPITE A PLACE OF PERFORMANCE ABROAD?
Can a defendant, domiciled abroad, be sued in Hungary under the Brussels I Regulation in the event of defective performance of an international sales contract if the place of performance is abroad? Can the jurisdiction of a Hungarian court be established based on the fact that the lower court expressly established its jurisdiction at the beginning of the litigation? How is the EXW clause to be interpreted within the meaning of the Brussels I Regulation? In our article, we analyse the recent decision of the Supreme Court of Hungary.Read more »