If you intend to pursue a claim against a Hungarian debtor, based on the contract on which a dispute is based, you may need to bring a case before an ordinary Hungarian court or to initiate Hungarian arbitration proceedings. In this short article we summarise the 5 key differences between the two procedures.
A potential plaintiff, who intends to initiate a civil law litigation against his debtor in Hungary, often aims to enforce the Hungarian judgment only in Hungary. However, a Hungarian judgment may be enforced also in other EU or EEA Member States without any intermediary procedure ('exequatur'). Moreover, a Hungarian Judgment may be also enforced in a third country which recognises the Hungarian Judgment.
The passing of time makes claims unenforceable in front of courts. While in some countries, a simple notice letter interrupts the limitation period, in Hungary creditors who want to avoid the limitation of their claim must initiate a lawsuit. Is it always enough to start litigation to interrupt the limitation of claims in Hungary? The Hungarian Supreme Court addressed this question in a recent case.
In Hungarian civil and commercial litigations, the second instance court reviews the case in camera, yet either party has the right to request an oral hearing in the appeal procedure. Is the second instance court bound by such a request? Is the failure to hold an oral hearing considered as a serious breach, based on which new procedure shall be conducted? We answer these questions by analysing recent decision of the Hungarian Supreme Court in this article.
When a plaintiff decides to litigate only part of his claim, the question arises whether the ‘res judicata’ effect of the final judgment precludes a new lawsuit for the unclaimed part of the claim? The Hungarian Supreme Court’s recently issued a uniformity decision on this question. What will be the impact of this ruling? We address the question by analysing the uniformity decision
In our previous article, we introduced the costs of the litigation in Hungary. In this article, we will examine which party is liable to pay these costs and whether the debtor be liable to pay court costs in Hungary.
When it comes to litigating in Hungary, foreign parties often only take into account the court duties and attorney's fees as costs. However, in addition to these, there may be additional expenses that may come as a surprise. In order to avoid this, in our short article, we will summarise the costs of litigating in Hungary.
Foreign creditors often come to us with saying that they have a debtor in Hungary, or that the debtor has assets in Hungary and intends to initiate legal proceedings against it. When analysing the initiation of a civil action, the question often arises whether the debtor can be sued in Hungary?
What can the judge do if the facts support the claimant's claim, but the party incorrectly stated the legal title of the claim? Can the court award the claimant's claim on the correct legal title? The Civil Procedure Code, which has been in force since 2018, provides a clear answer to this question, and in our short article we will explore the issue of the limits of action by legal title through a recent decision of the Supreme Court.
Can a valid, but inapplicable choice-of-court clause, be regarded as a "tacit" jurisdiction agreement? Is it sufficient to establish the jurisdiction of the courts of a member state under the Brussels I Regulation? This article addresses these questions based on a judgment that the Hungarian Supreme Court delivered in a cross-border dispute between a Hungarian claimant and a Romanian defendant.
In the first part of our article, we explained that in case of outsourcing of tasks to an external company, in addition to its benefits, a special labour law rule, the so called “transfer of employment” must also be taken into account. We highlighted that the employer must be cautious if it is possible that material or human resources will be taken over by the external company, as it is possible that special labour law rules will come into effect due to the takeover of resources. In this article, we examine the aspects of takeover based on the relevant Hungarian and EU case law.
The only thing more annoying than an award-debtor concealing their assets after successful arbitral proceedings is an award-debtor trying to further frustrate the award-enforcement by concluding a choice-of-court agreement. But does this kind of jurisdiction clause extend to the non-signatory award-creditor? This article analyses the recent decision of a Hungarian appellate court, delivered under the EU Brussels Ibis Regulation,(1) in which the court had to rule on the personal scope of a jurisdiction clause.
Business life involves a variety of contracts that are not regulated by the civil codes in continental jurisdictions. In cases where the parties conclude a so-called "atypical contract", it is for the judge to decide whether the default rules of a nominated contract regulated by the Civil Code can be applied in a gap-filling function. The recent decision of a Hungarian appellate court, which was also published in the Hungarian Collection of Court Decisions, analysed whether a workforce supplier could invoke the rules applicable to agency contracts to support their damage claim under Hungarian law.
In business, it often happens that the parties enter into a contract with a choice of court agreement for eventual legal disputes and then, years or even decades later, the legal dispute occurs. What is the effect of changes that have occurred in legislation on the choice of court agreement? Will the applicability of the choice of court agreement be decided according to the rules in force at the time of the conclusion of the contract or those applicable when the lawsuit was initiated? A recent decision of the Hungarian Supreme Court allows for an analysis of these questions.(1)
While the reviewing of questions of law by higher courts is generally permitted at the judicial remedy stages of civil litigation in Hungary, questions of fact, and the free deliberation of evidence, can only be reviewed exceptionally by the Hungarian Supreme Court under well settled case law. Is this rule also applicable under the new Civil Procedure Code? This article answers this question by analysing the recent judgment of the Supreme Court in a case concerning the impacts of covid-19 on the Hungarian phase of the Giro d'Italia cycling race.
The assignment of claims is a common practice in business, yet under Hungarian law, it has not been made clear what rights are transferred to the new owner of the claim, and what claims can be litigated by the assignee. It is also unclear whether the assignor and assignee can determine the extent of the rights transferred by assignment. Due to a recent decision of the Hungarian Supreme Court, analysed in this article, this situation has become clearer.
Based on the basic principle of international civil litigation, a person can usually be sued only in the courts of their own country. However, this makes it very difficult for a claimant who wants to enforce their rights against several defendants living in different countries. Can the jurisdiction of the Hungarian courts that exists in respect of a domestic defendant (the so-called "anchor defendant") be extended to foreign defendants as well? This article analyses the practical application of the new rules enforced in 2018 based on a recent decision of the Hungarian Supreme Court.
A common reason for the failure of debt recovery is that the debtor company's managing director, during years of legal proceedings, takes the company's assets and then bankrupts the company. How does the Hungarian Bankruptcy Act and the provisions of the Civil Code of Procedure support creditors who are usually "in the dark"? This article answers this question by examining a recent Hungarian appellate court judgment.
One of the major innovations of the new Civil Procedure Code ("CPC"), which entered into force in 2018, was the introduction of the so-called "substantive legal guidance by the court", under which the judge may "assist" the parties under certain conditions to define the framework of the dispute as soon as possible and to bring the dispute to a conclusion within a reasonable time. Can the judicial assistance extend to the type of action that the plaintiff may bring? We examine the above question in the light of a recent decision of the Curia.
Conflict of laws issues can have a pivotal effect on the effectiveness of arbitration when state courts are asked to enforce arbitration agreements. Has the approach of Hungarian courts crystalized in the last years in this respect? Can the contemporary Hungarian judicial practice and the new domestic legislation be characterized as arbitration friendly? This post provides the answers to these questions.
In its recent decision, the Hungarian Supreme Court examined whether liquidation proceedings can be started against a debtor who received online invoices via email and failed to pay them. Is the principle of free evaluation of evidence in civil litigation also valid in insolvency proceedings in Hungary? Are contract provisions relating to the service of contractual notices applicable in such cases? This article analyses the decision and answers the above questions
After several condemnations from the European Parliament, the Hungarian legislature has introduced a new legal remedy to get financial compensation from the state in the case of excessively long civil litigations, so that the injured parties will not need to apply to the European Court of Human Rights (ECHR) for redress. This article summarises the main features of this new remedy and its potential effects on litigations in Hungary.
Under what conditions can a minority shareholder sue the managing director on behalf of the company if the majority of shareholders do not support the motion? Should these conditions be interpreted restrictively or broadly? This article analyses the above questions in the context of a recent Supreme Court judgment.
The Supreme Court recently ruled in the case of a British Academy of Film and Television Arts award-winning composer who sued a French company in Hungary because of the illegal use of his music in video games distributed on online platforms. Besides the issue of the Hungarian courts' jurisdiction on a matter involving a foreign defendant and international copyright infringements, the other issue was whether the original licence granted by the claimant covered these different modes of exploitation.
Drawing a well-defined line of demarcation between domestic and international public policy when enforcing foreign arbitral awards sends a clear pro-arbitration message from national courts in any jurisdiction. Does Hungarian case law come close to this level of sophistication? This post analyses this question in the context of procedural public policy, and it does so based on two recent appellate court decisions rendered in the context of enforcement of arbitral awards in accordance with the New York Convention.
Can the shareholder of a company assert claim on its own right against a third-party causing damage to the company, by contending that the damage suffered by the company has also decreased the value of its share? To what extent can the right to access to court limited in the name of the sound administration of justice? We address these questions by analysing a recent judgment of the Hungarian Supreme Court.
Our Managing Partner, Richard Schmidt LL.M, held a webinar on asymmetrical jurisdiction and arbitration agreements in international dispute resolution, co-organised by the Hungarian Arbitration Association, the Essec Business School and the Hungarian Bar Association.
Can a judge be disqualified from deciding a legal dispute on the grounds of bias if they have delivered a judgment which is unfavourable to the plaintiff in another case? Can a court be biased if a plaintiff has challenged a previous decision thereof before the European Court of Human Rights (ECtHR)? This article answers these questions by analysing a recent Supreme Court judgment
This article analyses a recent Supreme Court decision(1) and seeks to answer the following questions: - Can a defendant which is domiciled abroad be sued in Hungary under the EU Brussels Recast Regulation (1215/2012/EU) 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 a lower court expressly established its jurisdiction at the beginning of the litigation? - How is the Ex Works (EXW) clause to be interpreted within the meaning of the EU Brussels I Regulation?
The Supreme Court recently concluded that the res judicata effect of a final judgment precludes the claimant from starting new litigation on the same legal grounds for a part of the claim which was not sought in the preceding lawsuit. This article answers the following questions: - Is this judgment reconcilable with case law? - How will this judgment affect party autonomy in civil litigation? - How will this judgment affect test cases in Hungary?
Our managing partner, dr.Richard Schmidt has recently participated as national reporter in a project, launched by the International Council for Commercial Arbitration, focusing on the legality of remote hearings in international arbitration.
After three years, the legislature has finally amended the Civil Code of Procedure (CCP), which took effect in 2018 and has since been criticised for sacrificing fundamental rights in favour of accelerated civil proceedings. This article examines the key changes, which took effect on 1 January 2021, and whether a fairer balance has been reached between form and content in civil litigation.
In the recent past, the Court of Justice of the European Union had to deal with the question whether an accommodation operator registered to Booking.com can sue the latter because of abuse of dominant position. In this short article we analyse the background of the case and the decisions of the Court of Justice of the European Union.
Can parties' conduct during litigation amount to an implied choice-of-law agreement based on EU Regulation 593/2008 (Rome I Regulation)? This article analyses a recent Supreme Court judgment concerning this question.(1)
Due to the protective measures of the EU Recast Brussels I Regulation (1215/2012), persons domiciled in an EU member state can be sued in another member state only in limited cases. One of these exceptions is the jurisdiction granted by the regulation to the courts of the place of the performance of a contract. However, does this exception apply in cases of legal succession or subrogation? The Supreme Court addressed this issue in a recent decision.
In the emergency situation due to COVID-19 the rules of the civil litigation were modified: the most important change was that courts did not held court hearings at all or only through electronic telecommunication channels. Because of the moderation of the epidemic, from 1st June 2020 the civil litigations can return to “normality” with a few slight changes. In our short article we summarize the new rules.
While COVID-19 has been dominating the headlines, a new act, which entered into force on 1 April 2020 and fundamentally reforms the role of judge-made law in Hungary, has received less attention. This article examines why this landmark bill was passed, the extent to which it means the adoption of common law and what its potential impact will be on litigation in Hungary.
The coronavirus and the state of emergency ordered by the Hungarian government to fight this epidemic affects every part of our life. Civil and business litigations are not exceptions either. In our short article we summarize what are the most relevant changes in the ongoing and envisaged court procedures in Hungary.
Although efforts are being made around the world to curb the spread of the epidemic, it can already be seen that entire sectors of the economy have to face a difficult situation, which is also affecting companies ’contracts. For example, many businesses request the reduction of the rent for the premises they lease for business, due to the coronavirus situation. The question arises as to whether there is another option for amendment if the parties fail to reach a mutual agreement.
Can the conduct of the parties during litigation amount to an implied choice-of-law agreement based on the Rome I Regulation? We analyse the fresh judgment of the Hungarian Supreme Court in this article.
Can a party commence litigation in Hungary despite a jurisdictional agreement in favour of a court of a non-EU state which is optional for one of the parties? The Supreme Court recently answered this question in a case which highlights the negative effects of such asymmetric choice-of-court agreements.
Is a penalty for delayed performance enforceable if the purchaser fails to reserve its rights immediately? Or is enforceability excluded only if the purchaser expressly waives its right? This article analyses the Supreme Court's judgment in a recent construction dispute, in which the court appears to have maintained its estoppel-based practice despite recent legislative changes.
Our managing partner Richard Schmidt gave a lecture on the law governing the arbitration agreement at a conference organized by his Alma mater, the Pázmány Péter Catholic University Faculty of Law and Political Sciences.
How to balance between the employer’s business interests and the employee’s right to freedom of expression? Can the employer restrict the employee’s freedom of expression and terminate his employment because of a blogpost? The European Court of Human Rights (ECHR) addressed these questions in his fresh judgement brought in the case of a Hungarian applicant. In this short article we summarize the facts of the case and the findings of the Court.
The case law of Hungarian construction disputes in the last years sheds light on the intention of courts to protect the “weaker party”. The Supreme Court has already started to protect subcontractors by declaring certain contract terms invalid, and its recent decision even places more risks at general contractors. How to cope with these challenges in Hungary? We address this question in our article.
This post analyses the decisions of Hungarian courts, rendered under the New York Convention (“Convention”) and published in the last two decades. The decisions were initially made available to the international arbitration community in the ICCA Yearbook of Commercial Arbitration series. This case law of 20 years is summarized below by identifying the main directions of the application of the Convention in Hungary.
“I only believe in statistics that I doctored myself” goes the famous quote attributed to Winston S. Churchill. Well, it is out of question that the late British prime minister has not participated in the publication of the Hungarian Court Statistics for 2018, it is worth to have a look at the figures, how the New Civil Procedure Code has changed the appetite for litigation in 2018 in Hungary.
To what extent shall the engineer be independent and impartial under FIDIC construction contracts? Are the same standards applicable to the members of the dispute board? Do they have an obligation of disclosure? We address these questions in the light of the Hungarian court practice.
Infringement of the public order is one of the “most popular grounds” of challenging arbitral awards in Hungary. Whether this ground shall be invoked by the parties or it can be considered by the state court from its own motion? What is the standard of review of Hungarian state courts? We summarise the answers in this article.
What is the standard of review of Hungarian state Courts, when arbitral awards are challenged on the basis of procedural grounds? What are the most frequently invoked procedural faults? We address these question in our article.
How domestic and international arbitral awards are enforced in Hungary? On what basis can be the enforcement refused? What kind of remedies are available against the “exequatur”? We summarise the answers for these question in this article.
What kind of decisions can the arbitral tribunal make in Hungary? Which substantive law is applied? What are the requirements as to the form and content of arbitral awards? What kind of awards may be rendered, and what are the differences between them? We address these issues in this article.
On what grounds can arbitrators be challenged and removed in Hungary? What are the main features of the challenge procedure? What is the difference in case of institutional arbitration? What happens if an arbitrator becomes incapable of performing his duties? We address these question in our article.
Who can be arbitrator in Hungary? How and when the arbitral tribunal is constituted, and what happens if one of the parties fails to appoint arbitrator? What are the basic obligations of arbitrators and how does their mandate terminate? We address these questions in this article.
Whether a mobile payment system can be nationalized in an EU member state relying on the doctrine of services of general economic interest? The Luxembourg court this time examined the Hungarian national mobile payment system. We analyze the reasons of the decision in our article.
In which cases does Hungarian law govern an international arbitration agreement? What are the basic requirements of formal and substantive validity of an arbitration agreement under Hungarian law? What are the consequences of a valid arbitration agreement in Hungary? We address these question in this article.
How the arbitration procedure is started in Hungary? Until which point is it possible to modify the claim and the statement of defence? What are the consequences of the default of the claimant and the respondent? When oral hearing is mandatory? We summarise the answers among others to these question in our present article.
Can the government take your clients by setting up a new state monopoly? What are the boundaries of state intervention into the free market under the European Convention on Human Rights? We address these questions by summarizing the ruling of the Strasbourg Human Rights’ court in the Hungarian schoolbook market case.
What are the basic procedural principles of arbitration proceedings in Hungary? To which extent are the parties free to choose procedural rules? What is the applicable law and is there any time limit to deliver the arbitral award? We address among others these question in this article.
On what grounds can arbitral awards be set aside by state courts in Hungary? What is the deadline for starting the setting aside procedure, which court is competent to try the case, and what are the main features of the procedure? We summarise the answers to these questions in this article.
Has your debtor just gone bankrupt? Has he alienated his assets to a foreign company before that? When can you sue the latter in your home country for concealment of assets to avoid an expensive foreign litigation? In its judgment in the Feniks case the Court of Justice of the European Union, answers the above question, which we summarise in our article.
The new Civil Procedure Code (CPC) entered into force on 1st January 2018, with the aim to accelerate civil and business litigations in Hungary. One of its means is the strong limitation of modification of claims and submitting evidences during the procedure. We summarise the most important provisions in this subject below.
The new Civil Procedure Code (CPC) entered into force on 1st January 2018, has reformed significantly the Hungarian Civil litigation in order to speed up litigations. One of its major novelty is the division of the first instance court procedure into 2 parts, the preparatory phase and the trial phase. We summarise the most important features of these two phases of first instance court procedure below.
The Hungarian Arbitration Act entered into force on 1st January 2018. In this article we summarise its material scope (arbitrability), territorial scope and its other general provisions, like interpretation, the rules of written communications.
Arbitration in Hungary is governed by different sources of law. In addition to the sources of international and national law, the rules of proceedings of permanent arbitration institutions, and the case law of state courts and arbitration tribunals must be also considered.
For a long period, it was very comfortable in cross-border litigations that in most cases translation was necessary the Hungarian state advanced such costs, or even provided translation entirely for free. However, this possibility came to an end with the new civil procedure act. If you plan to start a cross-border litigation, or need translation in a Hungarian litigation for any reason, better to prepare for extra costs from now on.
The new Hungarian Arbitration Act, effective from 1st January 2018 introduced important changes in relation with commercial arbitration in Hungary. Whether the new law will change the former restrictive case law regarding the effect of insolvency to arbitration proceedings? We address this question in our latest article.
The New Arbitration Act, entered into force on 1st January 2018 has introduced major changes in the field of interim measures in arbitration proceedings in Hungary, rarely used in practice. Whether these changes will make interim measures more popular in arbitration proceedings in the future?
Can illegal recordings be used at court as evidence? What is more important: the protection of a voice recording, as a personal data, or the professional decision of a court case, in which the illegal recording is used as evidence? These questions were addressed in the Hungarian Supreme Court’s latest ruling.
Can the raw material supplier be liable for defects, if the specification is incomplete, but he knows what the end-product is? Who has to prove this under the Vienna Convention on the International sale of goods? These questions were decided by the Hungarian Supreme Court in the case of our Italian client, against a Hungarian company.
Auchan Hungary started this year with a HUF 15 Million data breach fine for operating CCTV at workplace in breach of data protection principles. Given that CCTV lies in the heart of GDPR entering into force in May 2018, it is worth to learn from the Auchan case so that you can avoid a similar penalty in Hungary.
Can the employer open files on employee’s company notebook in a folder entitled “personal data”? Can the employer fire the employee if he founds a ton of sexual content? These were the key questions in the case Libert vs. France in front of The European Court of Human Rights. Read our article in which we summarise the judgment.
Almost 4 years after the deletion of usufructs on agricultural lands of foreign investors in Hungary, the European Court of Justice ruled that the Hungarian Land Act breaches the free movement of capital. What are the reasons of the judgment? What can do those who suffered damage, but has not yet started litigation? We summarize the judgment and its consequences.
The above question emerged in front of the Curia (Hungarian Supreme Court) in a case where the basic issue was whether the Hungarian freight forwarder shall check the shipment taken over from the Chinese seller at loading, and if he is liable for the damage sustained by the buyer because there was a different product in the closed container.
This was the basic question in a lawsuit in Austria filed by a private person against the social media giant. In this short article we explain the decision of the European Court which was published these days.
The new Hungarian Arbitration Act, entered into force on 1st January 2018 has reshaped the institutional landscape of Hungarian arbitration, and introduced some noteworthy changes in arbitral proceedings in order to increase the international competitiveness of Hungarian arbitration. We sum up the most important changes in this article.
Unlike the Hungarian Constitutional Court, who thinks not paying interest for money blocked on security deposit during a 10 years’ litigation is fine, the judges of the European Court of Human Rights seem to be closer to the business world, based on their recent ruling against Hungary. If you want to know how they calculate interest and compensation, do not miss our latest update!
The European Court of Human Rights usually condemns Hungary because of too slow legal proceedings, breaching the fair trial principle as human right. However, the latest judgment of the Court, condemning Hungary was delivered because of a too fast judicial decision.
On 1st January 2018 a new Civil Procedure Code enters into force in Hungary with the principal aim to speed up civil & business litigations, through divided litigation structure and important restrictions for the litigants. In this short article we collected the 5 most important changes which will affect you if you start a litigation in Hungary from 2018.
In a fast-changing legal environment like Hungary, you should always check whether your legal situation has been changed by reason of a new legislation, because courts tend to decide based on current legal environment if nobody invokes the principle of prohibition of retroactive justice.
Arbitration is more and more popular way of settling business disputes worldwide, and in the past few years Hungary follows the same trend. In this article we summarize the pros and cons of arbitration in Hungary as compared to the litigation before state courts.
In the first part of this article we shared some useful information about civil and commercial litigation in Hungary, such as how to find the competent courts, what are the main costs of litigation and what are the types of evidences in the procedure. In this part we sum up what kind of judicial remedies are available in Hungary if the decision of the court is not favourable. Besides presenting the situations in which the remedies are available, we summarise the costs and deadline for lodging these complaints.