FROM PEN TO PENDRIVE - PART III: PROVING THE CLAIM WITH EMAILS DURING DEBT COLLECTION IN HUNGARY?

09 March 2023

Sometimes it happens in business life that the other party does not pay. In case the creditor takes legal action to recover the debt, it is very important to prove his claim against the debtor, which is usually based on written evidence. In this article, we examine how can the creditor use electronic texts or other communication to prove its claim during debt collection in Hungary.

The previous part of the article is available here: FROM PEN TO PENDRIVE - PART II: CONSERVATIVE CIVIL LAW - Blog - Smartlegal

In B2B relations, creditors usually use one or more of the following legal proceedings to collect debts: payment warrant procedure; civil litigation; liquidation; judicial enforcement.

In the above procedures, there are different rules and court practice regarding the suitability of electronic documents or texts to prove the claim against the debtor.

In payment warrant procedures, the notary public does not examine any evidence, creditors cannot attach evidence to the request form. On the other side, enforcement procedure is always based on an enforceable document issued by an authority (court, notary, etc…). Therefore, the question of electronic evidence is not relevant in these two procedures, so we will focus on litigation and liquidation.

1. E-writing in debt collection litigation

In debt collection litigations, the debtors usually do not have substantial defence against the claim, so they use formal defence (such as the form of documents, communication, etc…) to avoid or at least delay the judgment against them.

Such defence can be effective, because in civil litigation, the burden of proof regarding the claim is generally on the plaintiff (the creditor in our case).

Given that based on law, some type of contract (e.g. real estate sale-purchase) and some provisions in any contract (e.g. choice of court, liquidated damages) may only be valid in written form, furthermore, the parties can also make writing mandatory in connection with the legal relationship, the defendant may dispute the validity of the contract or a provision due to the lack of written form.

Where written form is not mandatory, defendants still can dispute the evidentiary value of an SMS, email, Viber, etc… evidence, by stating that it is not conclusive enough.

Although in civil litigation there is a free assessment of evidence, debtors may convince judges who have formalistic approach, that the creditor cannot sufficiently prove his claim with an SMS or Viber message.

To sum up the above, businesses have better chance to win a debt collection lawsuit in front of a civil court in case they can support their claim by hand-signed or electronically signed documents (under eIDAS Regulation).

2. E-writing in liquidation procedure

Liquidation is a procedure where the court can order the liquidation of the company in case it does not pay its previously uncontested debt. Since liquidation is based on written correspondence without oral hearing, the procedure is very formal, the questions arising in the procedure are usually limited to questions of formality.

In debt collection related liquidation, the court usually examines three important declarations, all of which must be in a specific form to be admissible in the liquidation procedure:

First notice: For a company required to issue invoices, the first notice means issuing the invoice and sending it to the debtor. According to the judicial practice, if the parties have agreed in the agreement, that they primarily communicate by electronic means (e-mail) and that letters and invoices sent electronically to the specified e-mail address of the other contracting party are deemed to have been delivered, than the invoices sent via e-mail are considered delivered.[1]

Contest by the debtor: The debtor may dispute the claim (e.g. an invoice) by sending a contest to the creditor, which may prevent the order of liquidation. The previous court practice did not recognize a declaration sent by email as a valid dispute.[2] However in latter decisions the judicial practice accepted a simple exchange of e-mails if the logical sequence of letters confirmed that the debtor disputed the debt and the creditor reacted to it[3].

Last notice letter: The last notice letter before the request for liquidation shall be sent to the debtor in written form.  Based on the law and judicial practice, the creditor must be able to sufficiently prove the receipt of the notice letter by the debtor. Taking into account that, this is primarily possible in the case of a document sent by post, by presenting the certificate of delivery, we do not encounter cases where the last notice was sent electronically.

3. Summary

In B2B debt collection matters, there are multiple areas where it can be important whether electronic documents and texts considered written or not.

In litigations, the debtors usually use formal defence against the creditor, who has the burden of proof. This means that the debtor often argues that the creditor must present evidence (contract, termination, correspondence) in written form to sufficiently prove its claim, which argument can be successful, in case the judge has formal approach.

Liquidation is a highly formalistic procedure, as it is solely based on documents in most cases.  There are three specific documents always examined by the court, all of which must be in a specific form to be admissible. In the case of the first notice and the contest of the debtor (if any), a simple e-mail could be sufficient, however in the latter case the logical sequence of letters must confirm that the debtor disputed the debt and the creditor reacted to it. The last notice letter before the liquidation is usually send by a law firm, via registered mail with return receipt, since that method is the most sufficient to prove the sending of the notice letter.

In our next article we will examine the area of company law.