How long overpaid electricity bills can be refunded in front of Hungarian courts?

21 March 2024

Overpaying on energy bills happens frequently due to the complexity of invoicing. How long overpaid amounts can be claimed back in front of Hungarian courts? Should the claim for refund be understood as a statutory claim, governed by the general 5 years’ limitation period? Or is it a contractual claim, where the shorter limitation regime of the Electricity Act applies? In a recent decision, the Hungarian Supreme Court addressed these questions.

1. Facts

Due to a major technical modernisation, the electricity consumption of the plaintiff ("Plaintiff") has dropped significantly from 26 MW to 9 MW in February 2010. Subsequently, the Plaintiff and the defendant, an electricity trader company (“Defendant”), entered an electricity purchase contract (“Electricity Contract”).

Under the Electricity Contract, the Defendant assumed the Plaintiff's obligation to pay the general system usage charges and included these charges in one monthly invoice along with the price of electricity payable under the Electricity Contract.

However, the consumption of the lighting units was not adjusted in the invoicing records, so the invoicing was based on the higher values, which were valid before the upgrade. The invoicing had been based on the wrong figures for almost 10 years.

In January 2020, the Plaintiff notified Defendant that incorrect data had been used as the basis for the invoicing. The Defendant made a 36-months invoice adjustment and compensated the Plaintiff.

2. Statement of claim and defence of the Defendant

The Plaintiff submitted a statement of claim for unjust enrichment against the Defendant.

It argued that the Defendant had reimbursed the unlawfully collected fee for 30 months instead of 36 months, moreover, it also claimed the reimbursement of unlawfully collected charges for a further 24 months by applying the general 5 (five) year limitation period pursuant to the Hungarian Civil Code (“Civil Code”).[1]

The Defendant argued that the Plaintiff's claim was time-barred, since the 2-year limitation period specified in the Hungarian Electric Energy Act[2] („Electricity Act”), in force at the time when the claim was arisen, shall be applied to its claim.

3. First instance court decision

The first instance court (“First Instance Court”) rejected the Plaintiff’s statement of claim stating that the rules of unjust enrichment and the general 5-year limitation period can only be applied if the dispute cannot be decided under the special rules governing the legal relationship of the parties.

However, in the present case, there was a contractual relationship between the parties. Consequently, based on the lex specialis derogat generali principle it is not the general five-year limitation period of the Civil Code applies, but the special provisions of the Electricity Act, in force on 18 December 2018. According to the latter, civil claims arising from an energy purchase contract between an electricity trader and a user are subject to a limitation period of 2 (two) years.

Considering the 2-year specific limitation period, the Plaintiff cannot claim reimbursement for the period exceeding the 2 years.

4. Second Instance Court decision

Based on the appeal by the Plaintiff, the second instance court (“Second Instance Court”) modified the judgment of the First Instance Court and accepted the statement of claim of Plaintiff.

The Second Instance Court argued that the Defendant had been unjustly enriched, consequently, the provision regarding unjust enrichment shall be applied even though there was a contract between the Plaintiff and the predecessor of the Defendant.

However, as the 2-year limitation period in the Electricity Act was not in force when the parties concluded the Electricity Contract in 2010, the 5-years’ limitation period specified in the Civil Code shall apply to the present case.

Consequently, the Plaintiff was entitled to claim from the Defendant its claim for unjust enrichment for a period of 5 years.

5. Request for judicial review

By its request for judicial review, the Defendant sought to have the decision of the Second Instance Court set aside and the decision of the First Instance Court to be upheld.

It argued, among others, that the limitation period begins to run when the claim becomes due, consequently, the Second Instance Court infringed the rules of the limitation by applying the legal provisions in force at the time the legal relationship was established, and not the legal provision in force at the time the claims arose.

6. Decision of the Hungarian Supreme Court

The Supreme Court, among others, laid down that, the limitation period set out in the Electricity Act applies only to civil law claims arising from an electricity purchase contract.

However, the Plaintiff's claim is based on the statutory rules of unjust enrichment.

The claim for the recovery of unjust enrichment is not a contractual claim, therefore, the Second Instance Court did not infringe the law by not applying the limitation period laid down in the Electricity Act to the enforcement of the claim for unjust enrichment.

The Civil Code sets a limitation period of 5 years for unjust enrichment. The limitation period begins to run when the claim becomes due. Consequently, the Second Instance Court correctly held that the Plaintiff's claim was not time-barred.

In view of all the above, the Hungarian Supreme Court has upheld the decision of the Second Instance Court.

7. Comment

According to the Electricity Act, the special 2-years’ limitation period shall be applied only to claims arising from an energy purchase contract, while the general 5 years’ limitation under the Civil Code applies in case of claims arising from unjust enrichment.

The main question of this case concerned the legal basis of the claim for refunding the overpaid electricity bills.

In case the claim for refund is based on a contract, the shorter special limitation period applies, while in case it is conceived as a claim having its legal basis on the law (statutory claim), the longer general limitation period is applicable.

According to the well-settled case law of Hungarian courts, unjust enrichment cannot be established, if there is a contractual relation between the parties. However, the rules of unjust enrichment can be applied subsidiarily even if there was a contract between the parties, when the latter does not remedy the situation leading to unjust enrichment.[3]

In these cases, in addition to the underlying contractual relationship, a new legal relationship comes into existence between the parties, by reason of the unjust enrichment, which is based on the law.

In the case at hand, it was clear that the Plaintiff paid the bills because of a mistake, therefore it could not have been interpreted as a payment within the legal framework of the Electricity Contract. In addition, the provisions of the Electricity Contract containing some modus vivendi for unjust enrichment situations were not invoked by the Defendant in front of the lower courts, for this reason the Supreme Court could not take them into account in the review procedure.

Since the overpayment lacked the necessary contractual basis, the legal basis of the refund could not be interpreted as contractual. In case the legal basis of the refund is not the contract, but the law, it is logic to apply the general 5 years’ statutory limitation period, instead of the shorter specific limitation regime governing contractual claims.

Consequently, the Hungarian Supreme Court confirmed its established case-law, according to which the refund for overpaid invoice can be claimed back based on the unjust enrichment rules within the general limitation period, even if there was a contract between the parties.