Blog » ON THE WAY TOWARDS COMMON-LAW? – NEW LAW REFORMING LITIGATION IN HUNGARY
ON THE WAY TOWARDS COMMON-LAW? – NEW LAW REFORMING LITIGATION IN HUNGARY
06 May 2020
While COVID-19 has been dominating the headlines of the press, a new act, entered into force on 1st April 2020, fundamentally reforming the role of the judge-made law in Hungary, has received less attention. Why this landmark bill has been passed? To what extent does it mean the import of common law and what will be its effects for litigations? We address these question in this article.
The radically different approaches of the continental and common law systems on judge-made law can be demonstrated by two quotations. The principle of “praetor ius facere potest, ius dicere non potest”, derived from Roman law, according to which the judge can apply the law, but cannot make the law, on the one hand, and the adage of Oliver Wendell Holmes, according to which “the prophecies of what the court will do in fact, and nothing more pretentious, are what I mean by the law.” on the other.
The act adopted by the Hungarian Parliament in December 2019, effective from 1st April 2020, marks a milestone in the development of Hungarian law, belonging to the Romano-Germanic legal family, since it is a shift from the above principle according to which law is made by the legislature, towards common law, where the existence of judge-made law is widely accepted.
2. Judge-made law in the Hungarian legal system
So far, the judge-made law has not been present officially in the Hungarian law system as the Fundamental law did not mention the decision of the high courts among the law sources, albeit lower courts tended to invoke Supreme Court (hereinafter called “Curia”) judgments in the reasoning of their decisions.
Nevertheless, according to the Fundamental Law, the main function of the Supreme Court was not to “make law” but rather to ensure the uniformity of the application of law. To achieve this objective, it was given by the legislature the following instruments:
- making uniformity decisions which are binding on courts;
- publishing decisions, affecting wide range of society or having significant impact from the aspect of public interest as “decisions on principles” from which the lower courts could not derogate from (so called EBH, EBD);
- establishing jurisprudence-analysing working groups, which analyse the final decisions and publish non-binding summary opinions under which uniformity procedure can be established or initiate legislation in front of the lawmaker;
- issuing department opinion, in which the designated judges in each department, interprets the legislation, also with a non-binding nature.
In addition to fulfilling its legal obligation by publishing its final decisions in the Collection of Court Decision, the Curia published other guidelines without any authorization by law, which were also considered as “non-binding” guidelines.
For example, from 2017, the Curia issued general guidelines in the field of civil-and business law, to interpret new Civil Procedure Code, entered into force in 2018.
3. Theoretical and practical problems
Based on the above, judge-made law was present in practice, as a kind of “secondary law” filling with content the general provisions of legal rules and the gaps of legal provisions.
However, it is apparent, that more instruments of the Curia were not judicial decisions, delivered in individual cases, but rather abstract guidelines of administrative nature, which were hardly reconcilable with the classic function of a court.
The above practice, according to which higher courts issue general guidelines as “quasi-lawmakers”, was often criticized by the Venice Commission in respect of other countries already, and instead of these, this advisory body of the Council of Europe rather proposes to ensure the consistency of case law through judicial decisions brought in individual cases.
In addition, since 2012, the published decisions of the Curia in individual cases have not had the same binding force in Hungary. While the decision in principles (so called EBD and EBH), which were selected by judicial leaders in administrative way, were binding for lower courts, other published judicial decisions could be derogated from. This caused some legal uncertainty in practice.
4. Major novelties of the reform
The base concept of the reform effective from 1st April 2020 is that instead administrative activity, the uniform application of law shall be ensured by classical judicial decisions, and the published individual decisions of the Curia will have equal weight.
To this effect,
- Curia will not be entitled to issue general resolutions, guidelines on its own initiative, it can use only the instruments laid down by law for the uniform application of the law;
- the distinction, made through administrative means, between the binding “decision in principles” and non-binding other decisions of the Curia will cease to exist;
- a so-called “limited precedent system” will be introduced, according to which all published decisions of the Curia will be equally binding for lower courts as a main rule;
- a new kind of legal remedy, the so-called uniformity complaint is introduced.
We discuss the latter two novelties in the following.
5. The “limited precedent system”
The essence of the “limited precedent system” introduced by the lawmaker is that the lower courts are obliged to follow the interpretation of the individual decision published by the Curia as a main rule, and they can exceptionally derogate from this. In the latter case, the lower court shall indicate the reasons in the judgment, justifying the departure.
The individual decisions published by the Curia will not be a “source of law” in the classic sense, as the judges can derogate from these on a discretionary basis, but their role will become significantly stronger, because lower courts will risk the derogation from the previous decision of the Curia only in duly justified cases.
It will presumably happen if the facts of the case before the lower court are different from the case, which was the basis of the previous decision of the Curia, or the previous decision of the Curia can not be maintained due to the changes of social-economic situation.
6. The Uniformity Complaint
According to previous system of remedies, the final second instance court decision could be challenged before the Curia by a request for judicial review, and there was only one legal remedy against the judgement of the Curia made in the judicial review procedure, the constitutional complaint, by which the review of the unconstitutional judgement could be requested in front of the Constitutional Court.
The lawmaker now introduces the uniformity complaint as new legal remedy, which can be used
- in case the lower courts derogate from the published decision of the Curia, however the Curia is of the different view when allowing or conducting the judicial review procedure, on one hand;
- when the lower courts respect the previous judicial practice of the Curia, but the Curia itself derogates from its previous published decision in question of law without initiating uniformity procedure, on the other.
A separate chamber of the Curia, the so-called uniformity council adjudicates the uniformity complaint, the members of which are the president of the Curia and other judges of this court, appointed by him.
If the uniformity complain procedure is successful, the judgment delivered has the same effect as a decision made in a uniformity procedure by the Curia, it is published in the Hungarian Gazette, which means that in addition to bind the parties in the litigation, the judgment will also oblige courts adjudging the same legal issue in the future.
7. Assessment of the reform
The reform intended to make a clearer, more transparent legal situation than before, to strengthen the legal certainty, therefore its aim cannot be contested.
Critics of the reform point out that there is no guarantee that importing a well-established legal institution from a foreign legal system, namely the system of precedent of common-law jurisdictions, will have a positive effect in a country, which legal culture has developed differently for centuries. 
When it comes to the practical difficulties of the situation caused by the reform, it is worth considering that the Curia has almost 40.000 published individual judgments. As a main rule, all of these have become mandatory and have the same legal effect since 1st April 2020.
At first sight, it seems a big opportunity for legal representatives to find the most suitable decision of the Curia, which supports the case of their client. However, the legal practitioner can easily be spoiled for choice, as this enormous legal database has not been organized properly yet, therefore it will rather make the litigation more difficult and delay the proceedings in short term.
When it comes to the new extraordinary legal remedy, the uniformity complaint, in addition to the fact that the president of the Curia got a relatively broad power, because he is entitled to choose the judges, who adjudicate the complaint, it is easy to predict that this “extra” legal remedy will also lead to the delays in litigations.
Finally, it is a question how effectively can an organization “monitor” itself, as in the uniformity complaint procedure the judges of the Curia review the decisions of their colleagues.
In conclusion, the objective of the reform cannot be called into question, however the devil is always in the details, and it seems to be doubtful how much these novelties are suitable for strengthening the legal certainty in Hungary.
 O.W. Holmes Jr. : Path of the Law. Harward Law Review 1897
 Fundamental Law Article T) (2) Laws shall be Acts, government decrees, prime ministerial decrees, ministerial decrees,
decrees of the Governor of the Hungarian National Bank, decrees of the heads of independent
regulatory organs and local government decrees. In addition, decrees of the National Defence
Council adopted during a state of national crisis and decrees of the President of the Republic
adopted during a state of emergency shall also be laws.
 These were the so-called CKOT guidelens. Altogether 255 guidelines were published on civil procedure between 2017 and 2020.
 CDL-AD (2010) 004 - REPORT ON THE INDEPENDENCE OF THE JUDICIAL SYSTEM PART I: THE INDEPENDENCE OF JUDGES, "70. The practice of guidelines adopted by the Supreme Court or another highest court and binding on lower courts which exists in certain post-Soviet countries is problematic in this respect. 71. (...) Under a system of judicial independence the higher courts ensure the consistency of case law throughout the territory of the country through their decisions in the individual cases. (...)"
 OSZTOVITS András: Törvénymódosítás a bírósági joggyakorlat egységesítése érdekében - jó irányba tett rossz lépés? Magyar Jog, 2020/2. 80
ONLINE SALE OF MEDICINAL PRODUCTS WITHOUT BORDERS? LUXEMBURG RULED
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.Read more »
HOW REPORTING OF EMPLOYEE-TRAININGS HAS CHANGED FROM SEPTEMBER 2020 IN HUNGARY?
From September 2020 the rules, which regulate the status of the adult educators and the organisation of adult educations have changed. There are significantly more educations, which are considered as adult education and performing an adult education entails a lot more obligation. The changes affect almost every employer who organises certain kind of educations for its employees. We summarize the most important changes concerning the adult education.Read more »
LUXEMBOURG RULED: MESSI DRIBBLED PAST EVEN THE EUROPEAN TRADEMARK OFFICE
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.Read more »