Civil Law Tradition

The Hungarian legal system is rooted in the civil law tradition. Legal provisions are included in acts and statutory instruments. As of April 2020, a so-called “limited law of precedent” has been introduced, in which courts generally cannot derogate from the decisions of the Kúria (the supreme court) published from 1 January 2012 on.

Adversarial Procedure With Inquisitorial Elements

The Hungarian law of civil procedure follows an adversarial model and is based on the principle of party disposition, complemented by inquisitorial features. The judge is in charge of the conduct of proceedings and may also provide guidance for the parties as to, inter alia, the substantive scope of the proceedings. The process is conducted primarily through written submissions. It is obligatory to hold at least one (by default) public hearing in the first instance.

The Court System: Four Levels of Courts

The Hungarian court system is made up of four levels: local courts, district courts, higher regional courts and the Kúria. General subject matter jurisdiction is vested in the 20 district courts, which thus function as general courts of first instance and to whose proceedings the Code of Civil Procedure’s (CCP) regime is designed. Local courts proceed in the first instance only if the amount in dispute does not exceed HUF30 million (approximately EUR75,000) and in certain designated subject matters, such as personal status claims and enforcement remedial proceedings. Even in cases with minor subject matter value (ie, below HUF30 million), where these have special qualified subject matter (such as in certain IP and corporate law matters, damages claims related to the exercise of public authority, actions brought in the public interest, international transport of goods, competition law claims, and arbitration award setting aside actions) the district courts have subject matter jurisdiction. District courts are courts of mixed functional jurisdiction, meaning that they function as appellate courts for local court decisions, whereas district court decisions taken in first instance can be appealed to the higher regional courts.

The Kúria (the Supreme Court)

The Kúria has competence to hear requests for the revision of final and binding (typically second instance) judgments in case of errors of law or derogations from an earlier decision of the Kúria. A special “uniformity council” of the Kúria renders uniformity decisions binding upon all courts and hears uniformity complaints against decisions of the Kúria that derogate from earlier precedents (see 10.1 Levels of Appeal or Review to a Litigation).

Court filings are not public. Only the parties, their representatives, experts and the attorney general have the right to inspect the case file and make copies of documents. Court hearings are generally public, but courts may hold hearings behind closed doors in whole or in part, both sua sponte and upon the reasoned motion of a party, if this is justified for the sake of protecting classified data, business or other secrets, good morals, minors or personality rights. Decisions of courts are published in an anonymised form.

Legal Representation in General

Legal representation is generally obligatory in court proceedings, except in proceedings that fall within the competence of the local courts. The obligation to proceed with a legal representative extends to the Kúria’srevision instance proceedings for the moving party, even in cases starting at local court level. The legal representative must be a member of the Hungarian bar, typically an attorney-at-law or a law firm. Companies may also be represented in court by their in-house legal advisors registered with the bar. In certain cases, an attorney general or patent attorney may also proceed, and appointed judges can also appear as legal representatives in representation of courts as parties to a litigation (eg, damages claims against a court with legal personality).

Legal Representation by Foreign Lawyers

Lawyers admitted to act as attorneys-at-law in the EEA may act as legal representatives before court only if they have been registered with the Hungarian bar as a “European Community lawyer” and concluded a co-operation agreement with a Hungarian attorney-at-law or law firm to this end, which must be filed with the court or other authority before which they intend to proceed. Where legal representation is not necessary, parties may be represented by any person without restrictions. Lawyers from other jurisdictions can be registered as “foreign legal advisors” and may advise clients on their home legal system and international law only without permission to appear in court as representative.

No Specific Regulation on Third-Party Funding

Third-party funding is not specifically regulated in Hungary, hence there are no restrictions either. The general rules of contract law in the Hungarian Civil Code shall apply to contractual arrangements. The Act on Credit Institutions and Financial Enterprises also has relevance, for it provides that financial services and complementary financial services listed in the Act can be provided only with the permission of the Hungarian National Bank. Third-party funding does not fall within any of the services currently listed in the Act. However, depending on the concrete arrangement, providers need to check whether (part of) their services may fall within a category requiring permission (for example the provision of loans, guarantees, or deposit services, or acting as a financial intermediary).

Relevant Provisions in the Attorneys’ Act

A relevant rule in the Attorneys’ Act provides that, without the consent of the obligor, attorneys’ fees and expenses claims cannot be transferred to third parties who are not entitled to know attorney-client privileged information that is necessary to enforce such claim (except if an enforceable deed has been issued for the claim).

The types of lawsuits that are available for third-party funding is currently not regulated in Hungarian law. It is to be assumed that monetary claims in commercial matters may be of relevance. Private individuals in need of legal representation may seek legal aid and exemptions. In practice, third-party funding from abroad plays a growing role – eg, in claims for the private enforcement of competition law and other claim types involving larger group interests.

As third-party funding is currently not regulated in Hungary there are no restrictions in place, both types appear in practice.

The question is currently not regulated in Hungarian law.

The question is currently not regulated in Hungarian law. However, the funding of all litigation costs may be considered by funders and clients, including all costs that necessarily arise in connection with the enforcement of a claim in a lawsuit, encompassing costs that arise before and after an action is brought. This may include court fees, attorneys’ fees, costs to be reimbursed to the opposing party as well as any other relevant expenses.

Attorneys’ fees are subject to the free agreement of the parties, hence contingency fees are also permitted. However, it is expressly mentioned in the Attorneys’ Act that success fees cannot be enforced in court to the extent they exceed two thirds of the attorneys’ fees that were in fact incurred. This does not mean that the parties cannot stipulate a higher success fee, but this will not be enforceable in court.

This issue is currently not regulated in Hungarian law.

No Direct Action in Case of Amounts in Dispute Under HUF3 million

If the amount in dispute does not exceed HUF3 million (approximately EUR8,000), either an order for payment procedure must be initiated or an attempt at pre-trial settlement must be made.

Order of Payment Procedures

Any notary public has competence for order of payment procedures. The creditor must request that an enforceable deed be issued for the amount claimed. First, this request is served on the opposing party. If the latter files an objection, the file is transferred to the competent court, the plaintiff must file a full statement of claim with the court, pay the full amount of the advance on court fees and the procedure turns into a litigation procedure. If no objection is filed, the notary public issues an enforceable deed for the amount claimed.

Settlement Attempt and Mediation

If a settlement attempt is requested, the court holds a meeting after having served summons on both parties.

Mandatory Proceedings Before Other Authorities as a Prerequisite for a Lawsuit

In cases where an action must be preceded by other proceedings that have not taken place yet, the court seized of an action dismisses the action without examining it on the merits. For example, a civil action for damages against an administrative agency must be preceded by a final and binding judgment of an administrative court stating the breach of law by that agency during the administrative proceedings.

Pre-action Evidence Gathering

In cases of “emergency of statement” and “emergency of evidence” situations dealt with below at 5.4 Alternatives to Discovery Mechanisms, parties might be required to prudently initiate evidence gathering from the adverse party even before filing of the statement of claim.

The General Statue of Limitations

According to the default rule in the Hungarian Civil Code, the statute of limitations is five years. In specific situations, different acts may provide for different limitation periods – eg, warranty claims also apply. Parties may also stipulate different limitation periods in writing, but they cannot exclude the statute of limitations.

Commencement and Suspension of the Limitation Period

The statute of limitation with respect to a claim commences when a claim becomes due. The limitation period is suspended if the obligee creditor cannot enforce the claim for an excusable reason. In that case, the claim may be enforced within one year, or, for limitation periods of up to one year, within three months after the obstacle ceases to exist (if the limitation period has already expired or only a period of less than one year or three months has remained of it).

Re-commencement of the Limitation Period

The limitation period is interrupted:

• by the obligor debtor’s acknowledgement of the debt;
• by the amendment of the obligation by agreement;
• by the conclusion of a settlement agreement;
• if court (or arbitration) proceedings are brought to enforce the claim, provided that the court (or arbitral tribunal) renders a final and binding decision on the merits; or
• if the claim is notified in bankruptcy proceedings.

In these cases, the limitation period commences anew.

International Jurisdictional Regimes and the Consequence of the Absence of International Jurisdiction

As Hungary is a member state of the European Union, international jurisdiction is regulated by EU Regulation law and – outside of its scope of application – by domestic jurisdictional law. In both regimes the main rule of general jurisdiction follows the principle of actor sequitur forum rei accompanied by a series of subject-matter-specific special jurisdictional heads. The general rule for the absence of international jurisdiction in the Code of Civil Procedure provides that the court dismisses the action (does not proceed on the merits) if the jurisdiction of Hungarian courts is excluded by virtue of an act, EU law or an international convention.

Legal Sources

Hungary is an EU member state, hence the Recast Brussels Regulation (No 1215/2012) applies in most cases in practice. Within the scope of application of EU law the Brussels-Ia Regulation (No 1215/2012) applies in most cases in civil and commercial practice.

Rules on jurisdiction are included in the Hungarian Private International Law Act, which do not differentiate between the courts seized of an action. The Private International Law Act applies only if there is no applicable EU or international law provision and includes both general and specific rules inter alia on disputes related to property, family law matters and matters related to personal status, jurisdictional agreements and exclusive jurisdiction.

In general, Hungarian courts will have jurisdiction if the defendant has its domicile or seat in Hungary. Other aspects that establish the jurisdiction of Hungarian courts include the place of performance stipulated in a contract or designated by law (eg, in tort cases the place where the damage emerged). The jurisdiction of Hungarian courts can also be stipulated by means of a forum selection clause.

Exclusive and Excluded Jurisdiction of Hungarian Courts

The Private International Law Act provides for the exclusive jurisdiction of Hungarian courts in:

• procedures concerning in-rem rights established on immovable property located in Hungary as well as the lease or usufructuary lease of such property;
• probate procedures concerning the estates of Hungarian nationals in Hungary;
• the annulment of deeds issued in Hungary; and
• enforcement in Hungary.

By contrast, the jurisdiction of Hungarian courts is excluded in procedures:

• concerning in-rem rights established on immovable property located abroad, or the lease or usufructuary lease of such property;
• concerning the estates of non-Hungarian nationals abroad;
• for the annulment of deeds or securities issued abroad;
• for the granting, scope and termination of industrial property rights abroad;
• concerning (i) the formation and termination of legal persons or legal entities without legal personality registered abroad, (ii) the validity of the contract or instrument of such incorporation, and (ii) the review of resolutions adopted by of the organs of such a legal entity;
• concerning the registration of rights, facts and data in public registers kept abroad; and
• enforcement abroad.

Filing of a Statement of Claim

Lawsuits must be initiated with a statement of claim. If the party has a legal representative, the statement of claim must be filed by the legal representative via an electronic filing system. Exceptionally, in matters where legal representation is not mandatory, private persons can file the statement of claim in paper form or even orally at the competent court.

Mandatory Components of a Statement of Claim

The Code of Civil Procedure includes detailed and rather stringent, mandatory form requirements with respect to statements of claim. In addition to the general rules applicable to written submissions, several specific requirements must be complied with so that a statement of claim may be considered on the merits.

Statements of claim must consist of three parts: an introductory part, a substantive part, and a closing part.

In the introductory part, the following shall be specified:

• the court;
• the parties’ names, positions, the plaintiff’s contact details, at least the domicile or seat of the defendant; and
• contact details of the plaintiff’s legal representative.

The substantive part shall include in particular:

• a specific relief (the decision sought);
• the claim and the legal basis thereof;
• the underlying facts;
• the legal argumentation; and
• supporting evidence and any evidentiary motions.

The closing part shall include in particular:

• the amount in dispute and how it was quantified (if possible);
• the facts serving as a basis for the competence/jurisdiction of the court; and
• the court fees paid (or a reference to a request for the reduction of costs or the legal provisions providing for an exemption).

Documents to be filed as exhibits include:

• a power of attorney (unless it has been registered earlier);
• the evidence identified in the substantive part;
• the request for the reduction of costs mentioned in the closing part, or in case of exemption by law the data specified in the relevant legal provisions;
• the documents supporting the statements made in the closing part; and
• a free translation of documents in a foreign language.

Additionally, and most importantly for the practice, the statement of claim may also include initial disclosure requests addressed to the defendant in case of “emergency of statement” and “emergency of evidence” situations dealt with at 5.4 Alternatives to Discovery Mechanisms.

Subsequent Amendments to a Statement of Claim

For the bifurcated structure of civil litigation proceedings in Hungary see 7.1 Trial Proceedings.

Unrestricted Amendments in the Preparatory Phase

The preparatory phase is closed by an order of the court, which is issued in a preparatory hearing (unless the court deems a hearing unnecessary). Until this order is issued, there are no restrictions in place with respect to the amendment of the statement of claim (except that the court may impose a fine if the party could have made the amended statement earlier).

Exceptional Amendment in the Substantive Phase and on Appeal

In the ensuing substantive phase, the statement of claim (as well as the statement of defence, any set-off claim and counterclaim) may be amended only if the amendment is in a direct causal relationship with a new statement as to the facts of the case by any of the parties or if the amendment is necessitated by the court’s conduct of the proceedings affecting the parties’ statements as to the facts and the law.

Further prerequisites of the amendment of the claim are that the amended claim must arise from the same legal relationship and the court must have competence for the amended claim too. Any amendment must be filed within a deadline of 15 days after becoming aware of the grounds for the amendment.

In addition, amendments may be made exceptionally in appeal proceedings:

• when the amendments relate to a new factual statement by a party;
• when the court of first instance considered a fact ex officio or deviated from the parties’ interpretation of the law or from the request without having informed the parties beforehand (provided that these procedural steps were admissible); or
• when the appeal court informs the parties of its intention to take the aforementioned steps.

Service by the Court by Mail

Service is the responsibility of the court. If the court admits the statement of claim, the court serves it on the defendant, at the same time requesting the defendant to file a statement of defence (within 45 days), with one prolongation option of another 45 days in complex matters.

By default, court documents are served by (registered) mail, but parties can also collect documents themselves at the court. If a party has a legal representative, documents shall be served on the legal representative. The legal representative has access to the electronic court file system and, after the representative’s first appearance, service is effectuated exclusively over that system. In case of legal persons, documents shall be served to the seat, or if not possible, on the statutory representative.

Service Outside Hungary

If a lawsuit is to be served on a defendant outside Hungary, service is subject to the European Service Regulation (Regulation (EU) 2020/1784) within the EU or international treaties outside the EU, notably the 1965 Hague Service Convention.

If the statement of claim has been served on the defendant and the defendant does not file a statement of defence (nor a set-off claim), the court holds no hearing but ex officio renders a default judgment granting the requests in the statement of claim. Any party may challenge such default judgment by filing a written objection within 15 days of service of the default judgment. Together with the objection, a statement of defence (or a set-off claim) must also be filed.

Collective Actions in the Code of Civil Procedure

Two types of collective actions are regulated in the Code of Civil Procedure: actions brought in the public interest and so-called “associated” actions (joint process).

Actions brought in the public interest

If the possibility of bringing an action for public interest is provided for in a legislative act (such provisions are included in the Civil Code and Acts on consumers, unfair commercial practices and the restriction of competition and the Hungarian national bank), such an action may be brought by the parties (persons or organisations) specifically designated in the relevant act. The action shall be brought in favour of a group of beneficiaries defined in the statement of claim (and later in the judgment to be rendered). Members of the group will be entitled to claim performance in view of the judgment. Where claims directed at performance are not possible, declaratory actions are also admissible.

Associated class actions (joint process)

In certain subject matters an associated action may be brought by at least ten plaintiffs provided inter alia that

• their claims are identical in content;
• this so-called representative claim is based on the same facts; and
• the associated lawsuit is approved by the court seized.

The court first examines whether these prerequisites of an associated action are fulfilled, but may also discretionally deny the request to approve an associated action if it deems such action to be inefficient.

Associated actions may only be brought in the subject matters designated in the Code of Civil Procedure. These are claims arising out of consumer contracts, labour law actions and (damages) claims arising out of damage to health because of the pollution of the environment. In associated actions the plaintiff designated in the statement of claim proceeds in the name of the associated plaintiffs too.

Compliance With EU law

Legislation transposing the Directive (EU) 2020/1828 on representative actions for the protection of collective interests of consumers (merely through amendments to the Consumer Protection Act) has already been passed.

Joinder of Parties

Several plaintiffs can also sue (a) defendant(s) jointly if the effect of the judgment would apply to them anyway, their claims arise from the same legal relationship or their claims arise from a similar factual and legal basis and the same court has territorial competence for all claims. This may have the result that separate actions must be brought before different regional courts (maybe before all of them) despite the cause of action and the defendants being the same.

There are no requirements to provide clients with a cost estimate of the potential litigation at the outset. In practice, clients typically do ask for estimates, which is of course advisable.

There are very limited possibilities to make applications and motions before filing a statement of claim. The two relevant scenarios in the Code of Civil Procedure are injunctive motions in exceptional cases (see 6.1 Circumstances of Injunctive Relief ) and the preliminary taking of evidence (see 5.4 Alternatives to Discovery Mechanisms).

Several applications and motions may be included in the statement of claim. These include, for example, injunctive motions or requests for an exemption from (part of the) costs.

Several applications may be made in the statement of defence as well. If the defendant seeks the dismissal of the statement of claim without its examination on the merits (for example for lack of competence or jurisdiction of the court seized or because mandatory elements of the statement of claim are missing), such decisions shall be dealt with first. The court grants an application for dismissal by order, which includes no final determination of the case and does not prevent the plaintiff from bringing the same action anew (compare 4.3 Dispositive Motions).

In general, there are no early judgment applications in Hungary.

Dismissal on Procedural Grounds (With No Decision on the Merits)

The defendant can apply for the dismissal of the statement of claim if at least one of the prerequisites of bringing an action is missing. The court then dismisses the claim and terminates the procedure by order. The court may also do so ex officio. This is, however, not a judgment and has no res judicata effect, thus it does not preclude the claimant from bringing the same claim anew. For example, if the ground for dismissal was that a mandatory element of the statement of claim was missing, the plaintiff can bring a new action to assert the same claim with a proper statement of claim.

Judgment in the First Hearing

The earliest point in time when a judgment can be made is the first hearing. If a preparatory hearing is held, which is typically the case, (see 3.4 Initial Complaint), it can be continued right away as a hearing on the merits.

Interim and Partial Judgments

Interim and partial judgments can also be rendered. Both can be rendered ex officio. Interim judgments can be rendered on (the legal basis of) the claim if the dispute as to quantum can be delimitated. Partial judgments can be rendered if (parts of) certain claims can be disposed of separately.

No Dispositive Motions Per Se

Dispositive motions as such are, technically, not provided for in the Hungarian Code of Civil Procedure. A defence on procedural grounds (on the ground that a prerequisite of instituting proceedings is not fulfilled) will not result in a judgment on the merits with res judicata effect.

Arguments in a Statement of Defence Akin to a Dispositive Motion and Early Judgments

There may be situations akin to the result of a successful dispositive motion. For example, if the defendant invokes the expiry of the limitation period applicable to the plaintiff’s claim in its (substantive) statement of defence, the latter is akin to a dispositive motion. If the court finds that the limitation period has expired, it will render a judgment on the merits dismissing the plaintiff’s claim with res judicata effect without going into the in-fact merits of the case. Such a decision will bar the plaintiff from raising the same claim against the defendant again. If the defendant pleads the plaintiff’s lack of standing, for example due to the invalidity of an assignment, the result will be similar.

Prerequisites of Intervention

Non-parties may join a lawsuit as an intervenor if they have a legal interest in the outcome to facilitate the success of the party having the same interest.

Application and the Court’s Decision

The intervenor must submit a written application to the court (or present it orally in a hearing), which must be granted. If necessary, the court may hear the intervenor and the parties before granting the application.

An application may be submitted until the order closing the preparatory phase is issued (for the bifurcated structure of civil litigation proceedings in Hungary see 7.1 Trial Proceedings). Exceptionally, this is possible until the closing of the last hearing before the first instance judgment is rendered if the intervenor becomes aware of its legal interest later through no fault of its own, provided that the judgment would be binding on the intervenor as well.

Exclusion of the Intervenor From Ongoing Proceedings

The court may exclude the intervenor from the proceedings if it turns out that the prerequisites of intervention were not fulfilled, or the intervenor’s legal interest ceases to exist.

Remedies

Decisions denying intervention or excluding an intervenor may be appealed. 

Prerequisites of an Order That the Plaintiff Must Provide Security for Costs

A defendant may apply for an order that the plaintiff must pay a sum of money as security for the defendant’s costs if the plaintiff’s domicile, habitual residence or seat is not in an EU member state, a party to an EEA Agreement or a state equivalent to the latter by virtue of an international treaty.

Exceptions

No security can be required if an international treaty provides otherwise, the plaintiff is exempt from costs, or a claim of a defendant acknowledged by the claimant or real or other registered property of the plaintiff in Hungary function as security.

Costs

In the absence of specific rules, the general rules on costs apply (see 11. Costs).

Provision of Security

In justified cases, the court may order the provision of security sua sponte and must do so upon the request of one party if that party substantiates a detriment corresponding to the security or if the applicant offers a security and the opposing party accepts it.

Time Limits Applicable to the Initial Procedural Steps in the Code of Civil Procedure

The Code of Civil Procedure includes a general time limit of 30 days within which the court must act (from receipt of a submission, expiry of the time limit within which a submission is to be filed or the occurrence of other events requiring action on the part of the court).

In addition, with respect to certain procedural acts and decisions, specific (shorter) timeframes are foreseen. For example, if a decision denying an application for intervention or excluding an intervenor from the proceedings is appealed, the court must transfer the appeal and the relevant documents to the second instance court within eight days, which needs to render a decision on the appeal within 15 days.

Other legislative acts may also provide for time limits within which a court must act. For example, in accordance with the relevant provisions of Hungarian copyright law in copyright cases, the court shall deal with an application (filed prior to initiating a lawsuit) within 15 days.

Proceedings on an Urgent Basis

The procedure can be conducted on an urgent basis if a legal provision so provides or if the president of the court so orders (sua sponte or upon request), especially if public interests and children’s rights are at stake.

The National Judicial Council (a body overseeing the administration of courts) can also order that a case be decided on an urgent basis. Then by default, all procedural acts are to be taken immediately.

The Code of Civil Procedure designates several procedural acts and decisions that need to be taken on an urgent basis (for example decisions on recusal or injunctive motions) as well as several types of lawsuit that need to be conducted on an urgent basis (for example in matters related to personal status or certain labour law matters).

If the court proceeds on an urgent basis, the rules on court recess (between 15 July and 20 August as well as between 24 December and 1 January) shall not apply.

Hungary being a civil law jurisdiction, US-style pre-trial discovery does not exist. Generally, parties have the burden of persuasion and proof with respect to their statements of facts. There are, however, certain exceptions and procedural tools that are functionally comparable to certain aspects of pre-trial discovery (see 5.4 Alternatives to Discovery Mechanisms for more detail).

Documents in the Possession of Third Parties

In ongoing litigation proceedings, the court can obtain documents in the possession of third parties not participating in the proceedings that a party seeks to rely on. In such cases, the third party shall make the document available for inspection in the hearing (or if this is not possible, on-site), unless a circumstance exists in view of which the third party would be entitled to refuse to give witness testimony.

Otherwise, it is at the discretion of the court whether to allow the third party to refrain from making available the document in question. If the third party refuses to make the document available despite not being entitled to do so, the court may apply coercive measures and request police assistance. If the inspection is unsuccessful, the court may accept the fact invoked by the party intending to rely on the documents to be obtained as true.

Documents in the Possession of Organisations

The court may, upon request by a party, also obtain documents and data from courts, public notaries, authorities, administrative organs or other organisations, provided that the party cannot directly obtain the documents and data in question.

Although there is no US-style pre-trial discovery in general, the Code of Civil Procedure provides for certain disclosure obligations in ongoing proceedings.

Upon the request of the party intending to prove a fact, the court may order the opposing party to provide documents that the latter party is obliged to produce in accordance with the relevant substantive law provisions. Such a disclosure obligation exists when the document in question has been issued in the interest of the party seeking their disclosure and in the case of documents proving a legal relationship of said party. Such documents include, for example, performance certificates or documents that need to be issued by the sender so that goods can be transported. See 5.2 Discovery and Third Parties with respect to documents to be produced by third parties.

Witnesses heard in a hearing shall also make available any relevant (parts of) documents in their possession for inspection. The court may include copies thereof in the case file. Although intervenors do not participate in the proceedings as parties, they may be heard as witnesses, in which case they may be ordered to show documents in their possession for inspection.

Preliminary Taking of Evidence

Exceptionally, upon a party’s motion, the competent district court may order the taking of evidence even before a lawsuit is brought, provided that the taking of evidence at a later stage would be unsuccessful or excessively difficult, the taking of evidence in a preliminary manner would help prevent a lawsuit or close it within reasonable time, or a provision of law allows the preliminary taking of evidence. The general rules on the taking of evidence shall apply.

“Emergencies” in Making Statements of Fact and Adducing Evidence: Adverse Inferences

The Hungarian Code of Civil Procedure specifically deals with the so-called “emergency” situations when (i) a party does not have the necessary information to make a specified factual statement (“emergency of statement”), or (ii) can make a factual statement but does not have the information it needs to be able to make an evidentiary motion (“emergency of evidence”).

In these scenarios, invitations may be addressed to the opposing party to provide the necessary information. If the opposing party does not do so, the court may draw adverse inferences.

If the party incapable of making a factual statement substantiates that it has taken the necessary steps to obtain the information in question, said information is in the possession of the opposing party and the latter does not provide it despite the court’s order to do so, the court may deem the relevant statement true.

If the party intending to make an evidentiary motion substantiates that it has taken the necessary steps to acquire the information it needs to be able to make its motion, said information is in the possession of the opposing party, the moving party cannot prove its factual statement but the opposing party can be expected to prove that the relevant fact does not exist, or the fact could not be proven because of the opposing party’s conduct, the court can deem the fact that the moving party intends to prove to be correct.

The rules on attorney-client privilege are included in the Attorneys’ Act, and apply to external and in-house counsel as well. All facts, information and data that attorneys become aware of in the course of their work are privileged. Privileged information (including the relevant documents and data carriers) must be kept confidential. Attorneys must refuse to give testimony and provide data in any proceedings before courts and authorities unless they have received permission to do so from the person entitled to dispose of the relevant privileged information. No such permission may be given with respect to information acquired by defence attorneys.

Witnesses and third persons in possession of documents may refuse to disclose a document if they are entitled to refuse to give witness testimony. Witness testimony cannot be taken from persons who have acquired the relevant information as a defence attorney and, with respect to classified data, if the witness has not received permission to disclose such data. In several further scenarios, witnesses may refuse to give testimony:

• those involving relatives, self-incrimination or incrimination of relatives with the testimony;
• where professional secrets or business secrets could be revealed;
• where the witness was a mediator or expert in mediation proceedings concerning the dispute; or
• where the witness is a media content provider and the testimony would reveal the sources.

Organisations from which the court seeks to obtain documents may refuse to provide the documents concerned only if they contain classified data. In that case, the court seeks the permission of the secret-holder to use the documents in question. If the organisation informs the court that the document provided contains classified data, business, professional or other secrets for the disclosure of which the secret holder has not given permission, the court seeks permission from the secret-holder to use said documents. If the secret-holder denies consent within eight days, the relevant part of the document may not be used. Otherwise, the secret-holder shall be deemed to have given consent to the use of the documents. As coercive measures only may fines be imposed. These provisions do not apply if the subject matter of the proceedings is the denial of permission to use the documents or the question of whether information is classified.

Interim Measures in the Code of Civil Procedure

During ongoing litigation proceedings interim measures may be ordered:

• so that an existing situation will be upheld where it would be impossible to reinstate it later;
• where the applicant would otherwise become unable to exercise a right;
• in the case of any imminent detriment to the applicant, to avert such detriment; and
• in other situations that require special consideration.

The applicant may seek that the opposing party be ordered to perform such acts that the applicant can claim in the lawsuit.

Interim measures may exceptionally also be ordered already before filing of the statement of claim if the applicant can substantiate that making such motion after having brought the lawsuit would jeopardise the aim of the interim measures. In order to maintain the operation of accordingly granted measures, the applicant has to file the ordinary full statement of claim within a deadline specified by the court with the upper statutory limit of 45 days. Applicants are favoured in certain subject matters such as IP and competition law claims where instant protection of infringed exclusivity rights demands swift granting of interim measures.

It is noted that Hungarian law contains specific provisions with respect to interim relief – eg, in IP matters.

Preliminary Enforceability

Certain types of first instance decisions listed in the Code of Civil Procedure may be declared preliminarily enforceable despite not being final and binding yet. Decisions ordering interim measures are ex lege preliminarily enforceable.

Protective Measures Pursuant to the Enforcement Act

Protective measures directed at securing the plaintiff’s pecuniary claims or the seizure/freezing of the defendant’s assets may be ordered in several scenarios.

For example, protective measures may be ordered by the court having competence to issue an enforcement certificate when no such deed can be issued yet because the claim is based on a decision that is not yet enforceable (when the decision is not yet final and binding or when the time limit for performance has not yet expired).

Further, protective measures may be ordered in ongoing lawsuits by the court seized of:

• a matrimonial property action;
• an action brought because of the violation of IP rights and business secrets; or
• any other action in which it has been proven with public deeds or private deeds of full probative value that a claim in a certain amount exists and has expired (this latter ground applies mutatis mutandis if an arbitration has been initiated).

Protective measures in the amount of up to HUF400 million (approximately EUR1 million) may be ordered in some further scenarios too, in particular if fees under a construction contract for design and build are payable pursuant to a judgment in the sum determined by the so-called Expert Body for the Certification of Performance (a Hungarian institution) or if an action has been brought to assert such a fee claim based on an expert determination of said Expert Body.

If a measure directed at securing pecuniary claims is issued, the court bailiff serves the order on the defendant in person and first invites the debtor to pay them the determined amount. In cases of non-compliance, the bailiff instructs the defendant’s bank to freeze the amount in question and, if necessary, seizes the defendant’s property (property may be seized only to the extent the claim is not covered by the frozen amount).

The court seized of an injunctive motion or an application for protective security measures shall deal with the application immediately, but at the latest within eight days.

Interim Measures in the Code of Civil Procedure

It is generally not possible to obtain interim relief on an ex parte basis. In the case of an injunctive motion, the court shall provide the other party with an opportunity to respond to the injunctive motion. If the court deems it necessary, it may hear the parties on the injunctive motion. Interim measures can also be appealed by any party. In certain matters, however, special rules may be applicable. For example, in line with the relevant EU directives, in IP cases, and in the context of private enforcement of competition law, interim measures may be ordered without hearing the opposing party if the ensuing delay could cause irreparable harm.

Protective Measures in the Code of Civil Procedure

In the case of protective measures, the court may also hold a hearing. Orders granting protective measures may also be appealed by any party.

The court may make interim relief subject to the provision of a security if the opposing party substantiates that, if granted, the interim relief may cause them such detriment that, in the event that they won, they would be entitled to claim damages or compensation from the party requesting the interim relief.

The court shall order that a security be provided if the opposing party substantiates the loss suffered or if the party requesting interim relief offers a security and the opposing party accepts it. The acceptance of a certain sum does not amount to a waiver of the right to claim damages in a higher amount later.

Damages and compensation for harm caused by interim measures that have turned out to be baseless may be sought only by parties to the proceedings who were directly affected by the interim measure in question.

Within the EU, such measures are equivalent to judgments and are thus enforceable pursuant to the Brussels 1a Regulation (No 1215/2012). Outside the EU, the enforceability of such measures depends on any international convention or treaty in force between Hungary and the intended place of enforcement in pending proceedings, whereas the application before the statement of claim defines the petitioned person as party.

Injunctive relief cannot be obtained against third parties.

If a respondent does not comply with the terms of an injunction, the general rules governing non-compliance with final and binding decisions will apply – ie, the injunction will be enforced.

Bifurcation of Civil Litigation Proceedings into a Preparatory and a Substantive Phase

The preparatory (“procedure entry”) phase

The preparatory phase is aimed at determining the scope of the proceedings through the accumulation of the parties’ statements as to the facts and the law and the accompanying evidence.

The lawsuit is instituted when the court serves the statement of claim on the defendant, with the instruction to file a statement of defence in 45 days. It is up to the court whether it orders a further (or even more) round(s) of submissions (typically a reply and a rejoinder are also filed) and whether it holds a preparatory hearing (which typically takes place). The parties may amend their claim and defence without restrictions in this phase, which is closed with a court order.

The substantive phase

In the substantive phase, further rounds of submissions may be exchanged, and this is the phase for the actual taking of evidence. Parties have only restricted opportunities to state new facts and amend their claim and defence.

At least one hearing must be held.

Second (appeal) and third (revision) instance proceedings

In appeal proceedings and in revision proceedings before the Kúria, parties generally request a hearing and the court may also hold one sua sponte if necessary, so that hearings constitute the main rule in practice even if the general rule in the CCP does not make it compulsory.

In the preparatory phase, courts typically hold (at least) one preparatory hearing, the aim of which is to delimitate the scope of the proceedings through identifying and fixing the claims, defences, statements of facts and law, and the accompanying evidence. If the court deems it effective, it may also continue the preparatory hearing as a substantive hearing (in more simple cases) at the same time and close the proceedings. Otherwise, the court issues an order closing the preparatory phase.

No jury trials are available in Hungary. However, the participation of laypersons is provided for in first instance labour disputes, where three-member senates consisting of one professional judge and two laypersons adjudicate.

Statements of fact and evidentiary motions are made in the preparatory phase. The taking of evidence takes place in the substantive phase, within the frames determined in the preparatory phase.

In the substantive phase, different or new statements of fact may be made (within a subjective deadline of 15 days) only if a party states a fact that it became aware of (with no fault on its part) after the order closing the preparatory phase had been issued, or a fact that occurred after that. Additionally, a new statement of fact may also be made  if such fact became relevant in view of the aforementioned scenarios.

The parties’ possibilities to make evidentiary motions and adduce evidence are also limited in the substantive phase and are restricted to the scenarios when the motion or the evidence adduced serves to:

• prove a fact that serves as the basis of a party’s claim or defence, and that the party only became aware of (with no fault on its part) after the order closing the preparatory phase had been issued, or that occurred thereafter;
• refute the probative value of evidence or the result of evidence-taking (provided that the party could ascertain the means of taking evidence to refute said evidence in view of the evidence-taking that has taken place);
• prove or refute facts that the party relies on as the ground for amending its statement of claim or defence (provided that the court has admitted the amendment, see 3.4 Initial Complaint);
• justify or refute a new factual statement; and/or

• when it has become necessary to take or adduce evidence because of the effect of the court’s conduct of the proceedings on the scope of the proceedings (see 7.7 Level of Intervention by a Judge).

The relevant motion shall be made or the evidence shall be adduced within a time limit of 15 days after becoming aware of the relevant fact, etc, which may be extended by the court by an additional 15 days.

Expert evidence may proceed on three different tracks: by party-appointed expert(s), by court-appointed experts and by introduction of an already existing expert opinion acquired earlier in another litigation. Once there is a motion for one of these types of expert evidence, both other types are excluded from the pending litigation.

If a party intends to engage a private expert, the party shall make a respective motion. If this is granted by the court, the party shall submit the private expert opinion within the deadline set by the court. The private expert then has extensive obligations to involve the adverse party in the process of the preparation of their expert opinion.

Parties may also request that an opinion provided by a court-appointed expert in another procedure be used at trial.

The court appoints an expert upon motion if neither of the parties have moved for any of the other types of expert evidence, or where doubt arises with respect to the expert opinion introduced from another procedure or if doubt arises with respect to all private expert opinions already provided.

If the parties agree on the person of the court-appointed expert, the court shall appoint the expert selected by the parties, otherwise the court shall be free to select an expert.

The court may pose questions to the expert from among the questions submitted by the parties (and may disregard irrelevant ones). The court shall instruct the expert to provide a written expert report and may also hear the expert at a hearing if necessary.

By default, hearings are open to the public, but closed hearings may be ordered both upon a party’s request or ex officio (see 1.3 Court Filings and Proceedings).

Twofold Role of the Judge: Conduct of Proceedings and Guidance as to the Scope of the Proceedings on the Merits

The role of the judge in conducting the proceedings is twofold: in addition to conducting the procedure in a procedural sense (ie, disposing of procedural matters, allowing further exchanges of written submissions, setting hearings, keeping order and deciding on motions, etc), the judge may also contribute to shaping the material scope of the proceedings. When the court takes cognisance of any discrepancies, missing elements, and inconsistencies in the statements of law and fact, motions, and evidence submitted by the parties, it may provide guidance and pose questions to them with the aim of clarifying these and of triggering effective motions.

Delivery of Judgments

By default, the judgment is delivered orally at the (last) hearing, where the operative part and the possibility of recourse are announced. The deadline to make recourse against the judgment is triggered by service of the written judgment on the party. The court drafts and delivers the written judgment including the reasons within another thirty and three days, respectively.

Judgment may also be deferred. In that case, the judgment is delivered orally at a predetermined date. The judgment is served on the parties attending the announcement right away, whereas its service on any defaulting parties is ordered within three days.

Most other decisions may be delivered orally. There are a few exceptions – eg, for decisions on closing the preparatory phase, decisions made at the hearing or concerning parties who had not properly received summons for the hearing. Such decisions setting new hearing dates and decisions that may be appealed by parties that did not attend the hearing – such decisions shall also be served on the parties.

The court seized shall examine whether the statement of claim may be admitted within 30 days. If admitted, the statement of claim is served on the defendant, who has 45 days to file a statement of defence. This deadline may be extended by another 45 days. If an additional round of submissions follows in the preparatory phase, the court usually provides 15 days for both the reply and rejoinder.

This is usually followed by the preparatory hearing. Whether the preparatory phase can be closed thereafter and how long the substantive phase will be depends heavily on the circumstances of the case. Trials in complex lawsuits may take years, whereas more simple cases may be decided within months. Judgments may be appealed within 15 days of service. Appellate proceedings are typically shorter, with only one hearing or – in the absence of a motion for such – even without a hearing. If followed by the extraordinary relief of revision at the Kúria, the recourse phase may take up to one to two years.

Parties intending to settle a lawsuit must first enter into a substantive law agreement, which may be submitted to the court or made orally at a hearing (in which case it is recorded in the protocol). If the terms of such settlement agreement do not violate the law, the court approves of the substantive agreement of the parties by order. This court order has the effect of a final and binding judgment closing the proceedings.

There are no specific rules in place with respect to the confidentiality of settlements in court. In accordance with the general rules, court hearings are public, but closed hearing may be ordered in justified cases. Court decisions are published in an anonymised form.

Settlement agreements approved by a court are enforced as final and binding judgments.

Orders approving of settlement agreements may be appealed as any court judgment.

If a party intends to subsequently challenge the agreement of the parties (eg, when it turns out later that the settlement agreement is invalid because the party was in error when concluding it), the substantive law agreement may itself also be challenged by way of a separate action aimed at a declaration of the invalidity of the substantive law settlement agreement. The procedural means for challenging the court order approving the settlement agreement is an action for retrial against the order itself.

Types of Relief

In Hungarian civil procedure law, three types of actions are generally recognised, which may result in three types of awards:

• judgments ordering performance (monetary or specific performance, enjoining judgments);
• declaratory judgments; and
• judgments creating or terminating rights or a legal status.

Means of Recourse

The ordinary means of recourse available against first instance decisions is the appeal, which can be brought within 15 days of service of the decision (see 10. Appeal).

Final and binding decisions (first instance decisions that were not appealed within the relevant deadline as well as second instance decisions) are subject to two types of extraordinary means of recourse: revision and retrial.

The revision of final and binding decisions by the Kúria may be requested in the case of legal errors and derogations from precedents previously issued by the Kúria. The retrial of the case may be requested from the court of first instance in cases of:

• subsequent discovery of facts or evidence which the party making recourse could not discover and rely on in the main proceedings, with no fault on its part, and which could have resulted in a different decision;
• subsequent discovery of another res judicata decision (on a preliminary issue);
• a subsequent decision of a criminal court in view of which the contested decision turns out to have been influenced by a criminal offence;
• the judgment was obtained after service by publication rules had been breached;
• the judgment is based on a breach of the European Convention of Human Rights, and this is established in an ECHR decision; or
• the judgment is based on a breach of the Fundamental Law, and this is established by a Constitutional Court decision.

A further, newly introduced extraordinary means of recourse against decisions of the Kúria is the so-called uniformity complaint, which may be filed with the Kúria against decisions that deviate from published decisions of the Kúria (see 10.1 Levels of Appeal or Review to a Litigation).

Punitive damages are generally not available in Hungarian civil law, but traces of a punitive function can be detected in some decisions. Monetary compensation may be awarded for violation of personality rights, and damages may entail some punitive function in the fields of IP, competition, and data protection law, for example.

There are no specific rules limiting the maximum amount of damages. However, only damages that are caused by a breach of contract or a legal provision may be compensated. Consequential damages to the assets of the aggrieved party and lost profit may be compensated for only to the extent the aggrieved party proves that such damages were foreseeable at the time of the conclusion of the contract as possible consequences of a breach of contract. In the case of an intentional breach of contract, the damages shall be compensated for in full.

Contractual penalties may also be reduced by the court when deemed exaggerated under the circumstances.

Statutory interest is to be paid after any sum (monetary debt) becomes due. If payment is delayed, the starting point of interest accrual is the point in time from which the debtor is in delay – ie, the date when payment becomes due. For sums owed in Hungarian forint, the statutory interest rate is the current interest rate (effective on the first day of the relevant half year) determined by the Hungarian National Bank. The same rules apply in case of pre-judgment and post-judgment interest as well.

First, the court of first instance issues an attestation of enforceability of the judgment, which is the prerequisite of the in-fact enforcement of the judgment by a court bailiff.

As an alternative to an attestation of enforceability, the court may also order the assignment of earnings when the claim is to be satisfied solely from the debtor’s wage.

Monetary Claims

Monetary claims may be enforced, inter alia, through:

• the assignment of earnings;
• execution against attachment/freezing of bank accounts;
• execution against attachment of movables (seizure and sale through auction or to the buyer specified by the parties);
• the seizure of claims (the obligors of which shall pay the amount owed to the bailiff’s bank account);
• the sale of securities to an investment services provider;
• the auction of shares; and
• execution against attachment of real property (seizure and sale through electronic auction or to the buyer specified by the parties).

Specific Performance

If the obligee debtor does not perform, the court determines the mode of enforcement and may:

• order monetary payment;
• allow the party seeking enforcement to perform the relevant acts;
• impose a monetary fine on the obligee debtor (up to HUF500,000, approximately EUR1,300); and
• have the act enforced with police assistance.

For judgments falling within the scope of the Brussels 1a Regulation (No 1215/2012), enforcement is governed by the same rules that apply to judgments rendered in Hungary.

Foreign judgments not falling within the scope of the Brussels Regulation can be enforced based on a legislative act, international convention, or reciprocity. Parties seeking enforcement of such foreign judgments shall apply for a court order granting an exequatur (stating that the foreign judgment is enforceable in the same way as a judgment rendered in Hungary).

Once the exequatur order becomes final and binding (in the second instance or when the time limit to appeal the order has expired with no appeal having been filed), the court can also grant the (simultaneous) application for an attestation/declaration of enforceability, which is a prerequisite of the enforcement of a title by a bailiff.

This declaration of enforceability must be issued by the competent court in cases of foreign and domestic judgments alike (including judgments falling within the scope of the Brussels Regulation, in which case no separate order on exequatur is necessary), and in cases of arbitral awards (see 13.4 Procedure for Enforcing Domestic and Foreign Arbitration). The procedure is formal, the request and the court’s decision are based on a form. The court examines only the prerequisites of issuing the declaration of enforceability and issues the declaration if:

• the decision imposes an obligation (orders performance);
• is final and binding (or preliminarily enforceable); and
• the deadline for performance has expired.

Three means of recourse make it possible to have a decision reviewed by a higher forum:

• appeal (against first instance decisions);
• revision (typically against second instance decisions); and
• a uniformity complaint (against revision/third instance decisions).

This provides altogether for three levels of review.

Appeal

Appeal is the ordinary means of recourse against first instance decisions and results in a broad review by the court of second instance. The appeal filed within the statutory deadline prevents the judgment from becoming final and binding and leads to a substantive continuation of the litigation (effects of suspension and devolution) in the appellate instance.

Revision

Revision is the extraordinary remedy against final and binding judgments. It may be sought before the Kúria (the supreme court of Hungary) on the grounds of legal errors in the decision or the deviation of the decision from the practice of the Kúria.

In general, judgments rendered in the second instance by courts of appeal are subject to revision; in those cases, revision is ex lege admissible (revision is not admissible against several types of decisions, whereas in certain cases revision may be allowed if the statutory prerequisites for it are fulfilled). The grounds for revision are mistakes of law that have affected the merits of the case and derogations from the published decisions of the Kúria, from which neither lower courts nor senates of the Kúria can deviate.

Uniformity Complaint

An additional extraordinary means of recourse against decisions of the Kúria (rendered after 1 July 2020) is the so-called uniformity complaint, which may be filed with the Kúria against decisions that deviate from published decisions of the Kúria rendered after 1 January 2012. Uniformity complaints fall within the competence of a special uniformity complaint senate of the Kúria. The senate may annul the contested decision of the adjudicating (revision-level) senate of the Kúria and instruct the latter to proceed anew and render a new decision.

Constitutional Complaint

Final and binding judgments – including uniformity complaint decisions of the Kúria – are subject to constitutional review by the Constitutional Court, which, in case of a breach of the Fundamental Law, can annul court decisions. In such cases the Constitutional Court’s decision functions as a kind of extraordinary relief and will be channelled back into the litigation by way of a retrial.

Appeal

Taking an appeal is subject to compliance with the form requirements provided for in the Code of Civil Procedure and the payment of the applicable court fee. The grounds for appeal to be specified in the motion are the points that are subject to review by the court of second instance (see 10.4 Issues Considered by the Appeal Court at an Appeal). The motions for relief shall also be aligned with the powers of the second instance court (see 10.6 Powers of the Appellate Court After an Appeal Hearing). The party opposing the appeal may file a defence within 15 days of service of the appeal on it by the court.

Revision

The revision of final and binding (by default second instance) decisions may be requested:

• because of the violation of a provision of (procedural or substantive) law that has affected the outcome on the merits; and
• when the final decision derogates from a published precedent rendered earlier by the Kúria.

Revision is excluded in several subject matters as well as in cases where the disputed amount does not exceed HUF5 million (approximately EUR13,000), Further, revision is also excluded where the second instance court has upheld the decision of the first instance court with reference to the same legal provisions and with the same reasons. In these cases, the Kúria may still admit a request for revision upon a separate request for admission where this is justified by the necessity of the further development of case law, the significance of the question of law at hand, public interest, or the necessity of obtaining a preliminary ruling of the CJEU.

Uniformity Complaint

A uniformity complaint may be filed against a decision of the Kúria derogating from an earlier Kúriaprecedent:

• if the derogation has already been invoked earlier (in a request for revision) but has not been eliminated by the Kúria in the revision proceedings; and
• when the Kúria has derogated from a precedent without having initiated uniformity proceedings and without such derogation having been made by a lower court earlier.

Appeal

An appeal must be lodged within 15 days of service of the decision of the first instance court. The appeal is to be filed with the court of first instance, which:

• instructs the party lodging the appeal to remedy any formal defects;
• dismisses the appeal if it is inadmissible; or
• when neither of the former applies, forwards the appeal to the second instance court to proceed.

No hearing needs to be held unless a party so requests, the court deems it necessary, or evidence needs to be taken in a hearing.

Revision

A request for revision is to be brought within 45 days of receipt of the decision contested in the revision proceedings. The request for revision shall be filed with the court that has proceeded in the first instance. By default, revision proceedings are governed by the rules applicable to appeal proceedings. Requests for revision have no automatic suspensive effect but a stay of enforcement may be granted upon request.

Uniformity Complaint

Uniformity complaints may be filed with the Kúria within 30 days of receipt of the contested decision of the Kúria. Uniformity complaints have no automatic suspensive effect, but a stay of enforcement may be granted upon request. Interim measures may also be requested. The uniformity complaint senate renders its decision in a closed deliberation.

Scope of Limits of Review by the Appeal Court

Generally, the court of second instance may review both the conduct of procedure and the decision rendered by the first instance court as to both the procedure and the merits. With respect to the merits, the second instance court may review the decision as to:

• the (taking of) evidence;
• the facts;
• the deliberation;
• the law;
• whether the first instance procedure was conducted in compliance with the applicable rules; and
• whether the contested decision complies with the applicable substantive law.

The court of second instance may:

• draw different conclusions from the evidence taken or take evidence itself and modify the factual basis established in the contested decision;
• draw different conclusions from the facts than the first instance court;
• redeliberate discretionary decisions of the first instance court even if no violation of the law is present; and
• decide questions on which the first instance court did not deliberate and did not render a decision.

The second instance court may exercise these powers only within the limits of the appeal and the defence to the appeal, except for grounds for mandatory annulment, which shall be taken into account ex officio.

If the court of second instance notices a procedural shortcoming in the procedure conducted by the first instance court or when the second instance court notices that the court of first instance did not provide appropriate guidance as to the substance of the dispute, it shall point this out to the parties and deal with these only if the party having lodged the appeal so requests.

Altogether the second instance appellate proceedings amount to more than a mere review and rather form a continuation of the first instance (devolution effect of appeal) and thus a re-hearing.

Revision and Uniformity Complaint

The adjudicating senate and the uniformity council of the Kúria can only review questions of law and derogation from the existing case law within the limits of the respective motions and cannot review the facts of the case. No evidence may be taken. The adjudicating senate of the Kúria renders its decision on the evidence that was present when the final and binding (second instance) decision was rendered. The scope of review encompasses only those facts that had occurred until said decision was rendered and that were adjudicated upon.

Appeal

Only remediable formal defects may be cured by the party lodging the appeal. If a ground for the termination of the proceeding exists which can be cured by a party or by approving of the procedure, the court requests the parties to do so within a time limit set by the court before annulling the first instance judgment in whole or in part and terminating the procedure (see 10.6 Powers of the Appellate Court After an Appeal Hearing).

Otherwise, the court does not make granting the appeal conditional upon further acts to be performed by the parties, and no additional prerequisites are imposed in case of requests for revision and uniformity complaints either.

Appeal

The second instance court may:

• annul the first instance judgment and terminate the proceedings in whole or in part if a ground for the termination of proceedings existed in the first instance procedure or exists in the second instance procedure;
• annul the first instance judgment in whole, remand the case and instruct the first instance court to proceed anew and render a new decision (this is mandatory in the case of specified serious procedural mistakes and optional if the first instance procedure needs to be complemented or repeated if significant non-compliance with procedural rules has affected the decision on the merits and it is not possible or not reasonable to cure the defect in the second instance);
• decide on the merits by affirming the contested decision;
• decide on the merits by modifying the contested decision (including the decision on motions on which the court of first instance did not deliberate and did not render a decision) if there is no ground for annulling the decision;
• render an interim or partial judgment;
• render a decision on who bears the part of costs related to motions on which a final decision has been rendered; and
• approve a settlement reached in the second instance proceedings.

Revision

The Kúria may:

• dismiss the request for revision as inadmissible;
• stay the revision proceedings and initiate uniformity proceedings, the Kúria may do so:
1. when a lower court has derogated from a precedent, but such derogation is justified in view of the Kúria; and
2. if the Kúria itself derogates from a precedent with no lower instance decision having been rendered to this effect;
• uphold the contested final and binding decision; and
• annul the contested decision in whole or in part and render a new decision or instruct the first or second instance court to proceed anew and render a new decision.

Uniformity Complaint

The uniformity senate of the Kúria can dismiss the uniformity complaint as inadmissible or annul the contested decision of the Kúria and instruct the adjudicating revision senate of the Kúria to proceed anew and render a new decision.

Generally, the losing party shall bear the costs incurred by the winning party.

If neither side entirely wins or loses, the parties shall bear the costs proportionately to the outcome of the case. There are some exceptions too. For example, if one party incurs unnecessary costs due to the other party’s unsuccessful or unnecessary procedural acts, delays or omissions, the latter party shall bear such costs without regard to the outcome of the case. If it was unnecessary to bring a lawsuit because the defendant acknowledges the claim without submitting a defence, the plaintiff shall bear the defendant’s costs too.

The court’s decision on costs, which is included in the closing part of the decision closing the proceedings, may be challenged by making recourse against the relevant decision. The amount of court fees cannot be challenged. Attorney’s fees may be challenged. Typically, parties request either an increase or a reduction in view of the circumstances of the case.

The amount of court fees is determined in accordance with mandatory legal provisions and are a percentage of the amount in dispute. However, there are minimum fees (typically very small amounts) and fee caps too. In first instance proceedings, court fees are capped at HUF1.5 million (approximately EUR4,000), whereas in appeal proceedings court fees are capped at HUF2.5 million (approximately EUR6,500).

Parties may either request the reimbursement of the attorney’s fees they in fact incurred (in which case they have to file their respective agreement with their legal representatives and accompanying documentation substantiating the costs incurred), or they may seek the reimbursement of default attorney’s fees in accordance with the Fee Decree issued by the Minister for Justice. In accordance with the latter, attorney’s fees are determined in view of the amount in dispute. Minimum fees are also set forth in this case, in relatively smaller amounts. In view of the circumstances of the case at hand and the quantity and quality of work product, the court may increase or reduce the fees.

Interest is not awarded on costs by the court. However, if court fees are not paid within the time limit set forth by the court, fines are imposed in accordance with the provisions on taxation law. Statutory interest on legal costs not paid by the losing party may be requested in enforcement proceedings.

The two most popular methods of alternative dispute resolution in Hungary are mediation and arbitration. As of 2018, the arbitration court attached to the Hungarian Chamber of Commerce and Industry (the “Commercial Arbitration Court”) has a separate set of rules for institutional mediation proceedings, which is based on the relevant UNCITRAL materials and has been updated as of 2022. It is also possible to have an award on agreed terms issued by the mediators as arbitrators based on a settlement reached in an institutional mediation.

Pre-trial Settlement Attempt in Court

If the amount in dispute does not exceed HUF3 million (approximately EUR8,000), either an order for payment procedure must be initiated or an attempt at pre-trial settlement must be made (see 3.1 Rules on Pre-action Conduct).

If a settlement attempt is requested, the court holds a hearing after having served summons on both parties. If a settlement is reached and it complies with the relevant legal provisions, the court approves it and includes it in the protocol. If no settlement is reached, the court declares the settlement attempt unsuccessful and terminates the proceedings. The court proceedings can be suspended upon the joint request of the parties in order that they can participate in mediation proceedings.

Conciliation Bodies in Consumer Disputes

There are conciliation bodies attached to the (20) territorial chambers of commerce and industry. Consumers can initiate the resolution of B2C disputes by these bodies. Businesses have the obligation to participate in such conciliations but are free to decide whether they will recognise any decision by the conciliation body.

The Commercial Arbitration Court is Hungary’s permanent arbitral institution, under the aegis of which commercial disputes are decided by arbitral tribunals under the new arbitration rules drafted in line with the new Arbitration Act, in effect as of 2018 and updated as of late 2022. There are also three designated permanent institutions for sports, agricultural and food-related, and concession disputes.

The Commercial Arbitration Court actively promotes ADR in Hungary. In addition to arbitration, the Commercial Arbitration Court also provides mediation services in accordance with its institutional mediation rules.

Model Law-Based Lex Arbitri in the Hungarian Arbitration Act

The Hungarian lex arbitri is included in the Hungarian Arbitration Act. The current Act is applicable to arbitrations that commenced on or after 1 January 2018. Hungary is a Model Law jurisdiction. The concept behind – and the majority of the provisions in – the Act follow the UNCITRAL Model Law, with some national peculiarities. Within domestic awards, no differentiation is made between awards made in Hungary in purely domestic matters and international arbitrations.

Statutory Rules on the Framework of Institutional Arbitration in Hungary in the Hungarian Arbitration Act

In addition to regulating arbitration law in Hungary, the Hungarian Arbitration Act also regulates the framework of institutional arbitration in Hungary, including the Commercial Arbitration Court, its presidium, the prerequisites of inclusion in the list of recommended arbitrators, the prerequisites of acting as an arbitrator in Hungary etc.

Legal Framework for the Recognition and Enforcement of Arbitral Awards in Hungary

The enforcement of domestic arbitral awards is governed by the Hungarian Arbitration Act, which includes only two grounds for the (ex officio) refusal of the enforcement of domestic awards (non-arbitrability and the violation of public policy). The recognition and enforcement of foreign arbitral awards is governed by the New York Convention. Specific rules on procedural aspects are included in the Hungarian Act on Judicial Enforcement and a decree containing additional rules for the implementation of the New York Convention (see 13.4 Procedure for Enforcing Domestic and Foreign Arbitration).

Non-arbitrable subject matters are:

• disputes arising out of consumer contracts (except matters arising out of trust agreements);
• certain specific (non-commercial, non-pecuniary) types of civil lawsuits regulated in the Code of Civil Procedure (including lawsuits concerning personal status, guardianship, matrimonial matters, descent, parental responsibility, alimony to minors, certain personality right claims, labour law disputes, enforcement-related actions, actions challenging the decision of the competent local authority in possessory matters); and
• procedures within the scope of the Act on Administrative Court Procedure.

Arbitral awards may be challenged before the Metropolitan District Court (of Budapest) by means of an action for setting aside, and also before the arbitral tribunal by means of a request for retrial. The setting aside litigation is a one-instance procedure yielding res iudicata right at the district court level, which can be challenged only by the extraordinary remedy of revision to the Kúria.

The provisions on the action for setting aside have been adopted from the UNCITRAL Model Law. All subjective and objective grounds for setting aside have been adopted. Recently (as of June 2023), a new ground has been introduced: when the arbitral tribunal has not taken into consideration an expert determination provided by a so-called Expert Body for the Certification of Performance, including the grounds for relying on or disregarding such an expert determination.

The time limit for filing an application for setting aside is 60 days from the receipt of the arbitral award (or any correction, interpretation or additional award). Upon request by a party, the court may suspend the setting aside procedure for a maximum of 90 days and remit the case to the arbitral tribunal to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as, in the arbitral tribunal’s opinion, will eliminate the grounds for setting aside.

Arbitral retrial is a separate means of recourse that is available within one year from the receipt of the award if a party invokes facts or evidence that it could not have invoked in the arbitration through no fault of its own, provided that the fact or evidence could have resulted in a decision more favourable for that party. Requests for retrial are heard by the arbitral tribunal itself, which may either uphold its award or annul it in whole or in part and render a new award. The arbitral retrial as a unique additional means of recourse can be – and is indeed in most cases – excluded in the parties’ arbitration agreement.

Enforcement of Domestic Arbitral Awards

The Hungarian Arbitration Act provides that arbitral awards rendered in Hungary have the same effect as final and binding court judgments. No additional exequatur requirement that would entail the review of the award, or a double-exequatur, is imposed on domestic awards. However, so that the award can be enforced, the competent court must issue a declaration of enforceability of the award, which is a formal prerequisite of enforcement by a bailiff. In this formalistic exequatur procedure both the request for a declaration of enforceability and the decision of the court are based on a form. Grounds for the refusal of enforcement may be invoked by making recourse against the declaration of enforceability, which may be made by means of a request for the withdrawal of the declaration, the decision on withdrawal being subject to appeal too. The same declaration of enforceability must be issued by the competent court in the case of a court judgment as well, regardless of whether it was rendered in Hungary or abroad. The prerequisites of issuing a declaration of enforceability are the same (see 9.5 Enforcement of a Judgment from a Foreign Country).

The Hungarian Arbitration Act provides for only two grounds for the refusal of the enforcement of domestic awards: the non-arbitrability of the subject matter of the dispute and the violation of public policy.

Enforcement of Foreign Arbitral Awards

Foreign arbitral awards are recognised and enforced in accordance with the New York Convention. The same declaration of enforceability must be issued by the competent court as is the case for domestic arbitral awards, but this may be done only once a separate order granting an exequatur has been issued by the court and the latter has become final and binding. In the order granting the exequatur, the court declares that the foreign arbitral award is enforceable in the same way as a domestic arbitral award. The order may be appealed, and the second instance decision on the application for an exequatur may be challenged by means of a request for revision before the Kúria as well.

Given the overhaul of the law of procedure and the relatively recent entry into force of codes of procedure (including a new Code of Civil Procedure, a new Arbitration Act and a new Code of Administrative Court Procedure) as well as the recent introduction of the so-called limited precedent system and the uniformity complaint, there is currently some uncertainty as to the timing of future reform needs in the dispute resolution system of Hungary. It is to be expected that – as has been the case since the entry into force of the new CCP – modifications necessitated by everyday litigation practice will be continuously on lawmakers’ agendas.