In early January 2024, many managing directors in Hungary of companies with any agriculture-related activity could be surprised to receive a letter of the Hungarian Chamber of Agriculture stating that the company has become a member of the Chamber by law from 1st January. What does this chamber do, and what are the main consequences of the membership? Why it is worth to consider an opt-out from the Chamber? In this article, we address these issues.
Aiming to create a modern, transparent, and unified regulatory framework by replacing the current fragmented regime, the new Hungarian Construction Act was adopted in December 2023.The new Act makes such substantial changes that most of its provisions will enter into force in phases between 2024 and 2027. In the following, we outline the basic features of the new Act.
The draft of the new Hungarian Construction Act was recently published for public consultation. Although the act only lays down the general rules, and details will be laid down in other regulations that are not yet known, several new features can already be seen in the draft. In our short article we summarise a few important changes.
The Hungarian Whistleblower Protection Act has entered into force this July. While bigger companies have to operate the internal whistleblowing system since the above date, medium sized businesses (50-250 employees) were given a prolonged period until the 17th of December 2023 to implement the reporting channel. Since the deadline is approaching, we summarize how Hungarian SMEs can comply with the Act
There is no doubt that the coronavirus pandemic was a fundamental shock to the Hungarian economy. Many business operators have tried to reduce their losses by terminating contracts, referring to the coronavirus as force majeure cause and there have now been more court decisions in such cases. A recent one deals with the question whether a long-term framework contract may be terminated because of the impossibility of the performance, invoking the coronavirus as a force majeure.
The „start-up capital” of the limited liability company (LLC) is the initial capital which is the totality of the capital contributions provided by the shareholders. In this article we will examine the rules on the capital contribution.
In this article we summarise the key points of forming a limited liability company (LLC) in Hungary. We present the steps and costs of the formation procedure. If the necessary documents are available, the company formation will not take more than a few days.
Finding the most appropriate company form is essential for every business. Hungarian company law offers a wide range of company forms available for foreign entrepreneurs and investors. We prepared this summary to help you to find the form that mostly fits your business goals.
Hungary is a popular target for investing in the Central Eastern European region thanks to the 9% tax on capital gains for SMEs and 15% personal income tax for individuals, which tax rates are among the lowest for both businesses and private individuals across Europe. However, there are extra requirements for foreigners that are important to pay attention to. In order to avoid unpleasant surprises, we would like to draw your attention to the following when you are setting up your company in Hungary as a foreigner.
Trade secrets are protected on more levels in Hungary. While the Business Secret Act provides general protection, the Labour Code protects the business secrets of employers in the employment context. Yet this abundance can cause problems when it comes to the question which court is competent to protect employer’s rights in case of theft of trade secrets by an ex-employee. Can an employer file a damage claim against an ex-employee and a competing company as co-defendants in front of the commercial court? Or is it the labour court which is competent to hear the case? A fresh decision of the Hungarian Supreme Court, analysed in this short article, deals with these questions.
Due to the recent amendment of the Companies Act with effect from 1 August 2022, EU citizens and companies can form a limited liability company or a branch office in Hungary fully online, in a fast-track registration procedure. The new provisions make it easier and faster to start a business in Hungary, even if there is minor restriction in relation with capital contributions. In this article we sum up the most important new rules.
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.
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
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.
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.
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?
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.
Black Friday is once again around us: the time when online shops and the consumer protection authority cash in some extra income every year. We guess you’ve already read about the extreme discounts and the record-breaking fines by the authorities, so in our article, we will explain, that without your knowledge, your own business can easily step into the field of consumer protection, in which case, your contracts are subject to special rules. In our article, we show you how you can recognize these situations and, of course, summarize the obligations.
Can parties stipulate in a commercial lease that a user charge amounting to three times the monthly rent will apply if the lessee fails to vacate the leased premises? Further, can a judge qualify such an excessive fee as a penalty which the court can reduce? This article analyses a recent Supreme Court decision in order to address these questions.
Cross-border online sale of medicinal products is a recurring issue before the Court of Justice of the European Union. This is no coincidence, as trade in medicines is a strictly regulated area in all Member States, which can easily conflict with the EU principle of freedom to provide services, and in the end, the "price" of excessive national restrictions is borne by the consumers. In our article, we summarize the recent ruling of the Court of Justice of the European Union on the limitation of the principle.
Messi hit the legal news again, this time not because of his tax issues. In September, the match between the EUIPO and the world-famous football player, which was ongoing since 2011, finally ended. Messi won the match, as the European Court of Justice ruled that because of his significant reputation, his name can be registered as a trademark despite the fact that it is similar to several earlier trademarks, which is otherwise a ground for exclusion. In our short article, we summarise the details of the case and the legal significance of the decision.
The legal debate surrounding the “infamous” legislative amendment in 2015 introducing the right to unilaterally increase land rents has taken another turn. In its decision this spring, the Hungarian Supreme Court disregarded the previous decision of the Constitutional Court on this matter and omitted the application of the disputed provision when deciding a legal issue. Our article will discuss the significance of the decision, as well as the contradiction between the two highest organs of the judiciary.
The European Union adopted the so called P2B (Platform-to-business) Regulation, providing enhanced protection to the business users against dominant online intermediation service providers like Amazon, eBay, Booking.com and other similar online marketplaces. In this short article we summarize the most important provisions of the Regulation applicable from 12th July 2020.
The „start-up capital” of the limited liability company is the initial capital which is the totality of the capital contributions provided by the shareholders. Since the shareholders may declare that the capital contribution shall only be provided after the establishment of the company in a later date, the painful situation might occur that the shareholder does not provide or only partly provides the capital contribution. Given that this may create unwanted consequences, the settlement of the capital-related problem is the common interest of the shareholders. In this article we summarize the possible methods to solve this issue.
After the bill, passed in 2018 on restrictions of foreign investments, Hungary further limits the domestic investments of the foreigners because of the COVID-19. The new decree extends the scope of the investments to be notified and introduces fines, too. We explain the most important provisions of the decree in this article.
On 11 March 2020, the Hungarian Government declared a state of emergency in Hungary , which is still in force until revocation. In the last two months, nearly 100 government decrees have been adopted in connection with the pandemic, nearly a third of which are economic measures. In our article, without going into the very details, we summarize the most important measures affecting businesses to give economic operators a comprehensive picture of the benefits and reliefs available in different areas.
Measures taken due to the corona virus in recent weeks in Hungary affected the enforcement of securities over real estate, as well. The Governmental Decree regarding this matter provides more assistance to the Debtors who got into trouble due to State of Emergency to overcome the difficult period and may affect indirectly the enforcement proceedings started earlier, weakening the chances of creditors to satisfy their secured claims within reasonable time.
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.
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.
The coronavirus has significant impact on the whole world economy, including the sale of goods. Whether the epidemic is considered as a force majeure event, which automatically exempts from liability to perform an international sale contract? We answer this question under the Vienna Sales Convention and its judicial practice.
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.
Can the unfairness of cross-border claim be reviewed ex officio in case of consumer contracts in such a simplified procedure, like the European order for payment procedure? In our article, we analyse the recent judgement of the Court of Justice of the European Union in the Bondora case and its possible effects on cross-border debt recovery, covering also the Hungarian legal regulations.
You can hear a lot of stories where the debtor “escaped with the money”, the construction contractor “disappeared” or the debtor company’s assets have been hidden. Essentially, failure to pay is a breach of contract, which is subject to civil action, eg. litigation. However, if a transaction is suspected to be a scam, criminal proceedings may be brought against the defaulting debtor, for example, for fraud, which we examine in this article.
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.
For companies operating internationally or with foreign background, it is common to work with documents in a foreign language and to sign corporate documents and contracts abroad. Although it is insignificant in the daily life of a company, the situation is different if you want to use a document signed abroad or in foreign language in a litigation or in other legal proceedings, as the foreign document has to comply with special rules. In our short article we will summarize what should you consider if you want to use foreign documents before the Hungarian authorities.
Employers often use non-compete agreement in Hungary, but labour courts frequently declare them invalid. Can a training course serve as compensation of the agreement? Or what to do, if it turns out after years, that the leaving colleague does not mean a real and serious threat for your company? In its opinion published recently, the Hungarian Supreme Court gave a guidance on non-compete agreements, which we summarise in this article.
Even winning a lawsuit and having the positive judgment in your hands are of no use if the debtor company is terminated in the meantime. In this case, the "winning" judgment will only be a worthless piece of paper, despite that you have spent a fortune on debt recovery. In this short article, we summarize the most important rules and deadlines so that you can avoid staying empty-handed at the end of the debt collection in Hungary despite winning the lawsuit.
In the recent days you may have heard the name of Amazon mostly because of the rainforest fires in Brazil. But if you operate a web shop, or just plan to do it, you will be more interested by the Amazon case in Luxembourg. Indeed, the Court of Justice of the European Union has delivered a judgment in the summer, which sheds light on how customer relation with online buyers should be maintained by web-shops in the EU
It has been one of the most annoying things for Hungarian companies that they had to pay Value Added Tax (VAT) in case of unpaid claims as well, so even if the invoice has never been paid by the business partner. Fortunately, from 2020, the above rules will change, and it will be possible to refund the VAT already paid on uncollectible claims. In our article we summarize the details.
One of the annoying things in business is when your invoices are not paid by your business partners. After getting bored of their excuses, there comes a time when you have to put pressure on your debtor. At that point, you either entrust a law firm or turn to one of the many debt collection agencies offering “simple and cheap, yet efficient” solutions. Are the latter solutions really that effective? Is it worth entrusting a debt collection agency in Hungary? In our article, we bring up three reasons why hire rather a law firm in Hungary instead collection agencies.
The initiation of a liquidation procedure is an effective debt collection method, since the debtor may only avoid being liquidated by paying the claim if the conditions specified in the Act on Bankruptcy Proceedings and Liquidation (Bankruptcy Act) are met. For this reason, in the case of liquidation, one of the most common defences of the debtor is the reference to offsetting. But can the debtor refer to offsetting without limitation during liquidation? In our short article we answer this question.
Construction trusteeship, as mandatory collateral management of major construction projects in Hungary, strives for protecting subcontractors against non-paying general contractor, by allowing direct payments from employer under certain conditions. How does it work in practice and what are the limits of subcontractor protection? We address these issues in this article.
What can be the basis of deletion if somebody has a registered trademark which is identical to the name of a world-famous footballer? What are the factors to consider when assessing whether the trademark applicant acted in bad faith? In his fresh judgement, the Court of Justice of the European Union gave answer to these questions and we shortly summarize them.
In business, signing a contract or making a declaration on behalf of a company is daily task. During this “routine” process, the parties often do not check whether the signatory of the other party can represent the company. Is the contract valid in Hungary if the signatory has no signing authority, or it is limited? Who, what and from whom can claim in such a case? In our article, you will find the answers to these questions.
In May 2019 the European Court of Justice condemned again the Hungarian Land Act of 2014 cancelling usufructs on arable lands in Hungary without providing any compensation for right-holders. What is the “added value” of this second judgment, and why it is important for investors seeking damages for losing usufructs on lands?
Collateral management is a key issue in every construction project. In Hungary a special regime, the so-called construction trusteeship protects the interest of the participants of major private construction projects, and secures that contractors and subcontractors receive their remuneration for the work performed.
Is it considered as a trademark infringement if a similar sign as the trademark has been put on products which are different from those for which the trademark is registered? Can the trademark-owner prevent such a usage? The European Court of Justice answered those questions in his very fresh judgement which revolved around a toothpaste. In our article we summarize the decision of the Court.
If you believe that the highest judicial forum of the EU only deals with matters that are far from everyday life, you have missed the recent decisions of the Court of Justice of the EU. Last year, the Court has drawn significant conclusions on copyright in a case concerning the taste of a cheese product, and now, in a legal dispute surrounding a returned mattress, the Court gave important guidance on online purchases. The decision concerns both consumers and sellers, so our short article is worth reading for everyone.
The European Commission makes a thorough investigation on a particular field from a consumer protection view, and issues a report about the results. Topics like airlines, electronic devices and consumer loans have already been discussed before. This time the report is made on online shopping, that can be useful for those who run an online store. In our current article we will introduce you three things to avoid when you operate an online shop.
In case of leasing an office, warehouse or other industrial property, lessees often make significant investments to the premises, which can easily result in a dispute when the contract is terminated. From our article, you can learn what should you to take into account as a lessor in relation to investments made by lessees.
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.
Changing your supplier is a common situation in business. Can you switch between suppliers without restrictions, if there is no fixed term or exclusive contract? Do you have to purchase from the supplier during the notice period? What are the risks of failing to give purchase orders? In our article, we answer the above questions by analysing the Hungarian judicial practice.
It has not been a good start for McDonald’s this year, as in January, the news that the major company has lost its EU trademark protecting BIG MAC spread like wildfire. Since the decision can be subject to an appeal, it would be premature to consider the loss of the trademark as a fact, however, the lesson can already be drawn, which we present in our article along with the details of the case.
Which artworks are protected in the European Union by copyright? Due to the constant development of technology and art the answer shall be reconsidered from time-to time. In our article we address this question on the basis of the landmark judgments of the European Court of Justice delivered in the field of copyright.
Can the executive employee undertake a non-competition obligation after the termination of the employment for free? It seems that the Hungarian Supreme Court finds the limits of party autonomy elsewhere than the legislator. We summarise the merits of the judgment in our article.
The Court of Justice of the European Union has ruled in a case, where the main question was whether the taste of a cheese product may be eligible for copyright protection under EU law. We summarize the case and answer the question what constitutes a “work of art” under EU copyright law.
On 1st January 2019 the Act on the Control of Investments Detrimental to the Interests of Hungarian National Security entered into force. On the basis of the new law investors who are considered as “foreign” have to report their newly acquired interest in Hungarian companies. Pursuant to the Act, the Minister of the Interior may prohibit the acquisition or may withdraw the right of the company to pursue a certain activity. In our article, we summarize the most important information regarding the new law.
The Christmas shopping fever began with Black Friday in late November, and not only the buyers are trying to exploit this period of discounts, but also the sellers. During this season the Competition Authority is also curious about the incredible sales and should they find any breach, their “surprise” to the seller will be a fine of ten millions of HUF. During the inspections of recent years, big companies have been caught in the authority's net such as Extreme Digital, Media Markt, Alzo or Lidl. If you are a seller or operate an e-shop, it is as easy to slip into a legal pitfall as slipping on ice. That's why we've collected the most important rules for discounts attracting customers and how to operate a compliant e-shop. Thus, you can avoid paying your end-of-year earnings to the Competition Authority.
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.
Do you operate an e-shop in Hungary, but you refuse to sell your products to a German customer? By doing so you might be noncompliant with the EU law, more specifically with the Geo-blocking Regulation which prohibits certain forms of discrimination in cross-border sales. In this article we explain you the key elements of the new law which will be applicable from 3rd December 2018.
When we talk about work, employment relationship comes to everyone’s mind first, although you can work for someone’s interest in other ways outside the “9-5”, monthly paid job system, for example by an engagement contract. Whether you are an employer or an employee, you need to know what the differences are between the two most common forms of working, especially because in some cases the employment authority or the court may re-classify the engagement as employment and may impose a significant fine on the principal.
If business secrets are mentioned, most people think of big companies and tenders worth millions. Nevertheless, not only big companies are affected by leaks of confidential information, causing serious disturbance and financial loss. If you think this problem cannot affect your business, this article is for you. In our article, we will show you what can be considered as a a business secret, how you can protect this information, and what are your options when the breach has already occurred.
There are many requirements for international road transportation. These usually concern the carrier, but in some cases you also have obligations as a recipient and failure to comply with them may result in a fine. In this article, we tell you how you can avoid the “fine trap” set by the authority, in case your company is waiting for a shipment from outside the EU.
We are no longer keeping it secret: in August, the new law on the protection of business secrets entered into force, which, unlike the fragmented rules that have been applied so far, will protect business secrets and know-how in Hungary more uniformly and effectively. We summarize the most important aspects of the new law in our article.
The Devil is always in the details. The truth of the old adage is proven by the new bill adopted by the Hungarian Parliament during the hot summer sessions of July 2018. The new law amending the Bankruptcy Act modifies only one section of the liquidation procedure, but it will further erode the already low paying moral in Hungary, giving more months of grace to non-paying debtors.
Businesses come, businesses go, and there are times when you reach a point when you decide it is better to finish your business in Hungary. Similar to creating a company, closing a company is also a legal procedure at the court of registration. You will need professional help in this issue: a lawyer and an accountant. Let’s see how it goes.
Just 10 years ago, the Hungarian registration tax case was brought before the European Court of Justice, where the national tax on second-hand cars imported from abroad has failed in Luxembourg. Hungary has no luck with taxes on foreign cars because in its recent judgement the EU Court has found that the Hungarian car tax also breaches EU law. The judgment will make happy rather international forwarding companies than Hungarian motorists, because the decision only applies to vehicles registered abroad, and passing through Hungary.
An unsigned contract can cause serious problems, if any of the parties dispute its content later by ‘cherry picking’ contract terms. Nowadays, when the vast majority of commercial contracts is negotiated via e-mails, and parties often forget to sign hard copies, the risk is higher than in the good old times. Fortunately, the recent ruling of the Supreme Court in one of our clients’ case gives clear guidance in this issue.
After having found the perfect location for your business you might think that all you need to do is to move in and start. However, before moving in the leased property, there is an important part of the process: negotiating the conditions of the lease. In this short article we share five tips with you in order to sign a favourable lease as tenant in Hungary.
Having a registered trademark in Hungary is essential if you want to differentiate your product or service from your competitors and protect your local market. If you are before Hungarian market entry, forming a Hungarian Limited Liability Company, who will be the owner of the trademark, makes this protection even more effective. In this article we summarise what can be registered as trademark, how the registration goes, and what are the benefits of a registered trademark.
Your worst nightmare as logistic provider in Hungary is a situation when your carrier blocks or sells the shipment due to an unpaid invoice. This is even worse if the invoice in question is unfounded but you decide to pay it to prevent further problems as dissatisfied customers, and the like. To avoid this situation, you have to know the 5 most important tips for subcontractor claim handling under Hungarian law, that we gathered in this article.
In the world of globalization interconnection agreements between telecommunication operators have growing importance. Efficient interconnection is not only important for customers, but also to enable activities like electronic banking, e-commerce or mobile roaming. If you decided to enter into an interconnection agreement with a Hungarian operator, this short article may be a useful guideline for you.