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Novelties and challenges in civil proceedings in Hungary

Pursuing an action is now more cumbersome and judicial dispute resolution takes longer because of new Hungarian procedural rules

On 1 January 2018, a new Code of Civil Procedure entered into force in Hungary.

The declared objective of the legislator was to speed up and simplify proceedings. Unfortunately, experience an adverse effect so far. In order to speed up proceedings the Code has introduced two main innovations.

The formerly unified proceedings are divided into two parts: a so-called case initiation stage and hearings on the merits.

The aim of the case initiation stage is to file final claims, factual and legal statements, motions for presenting evidence within a short period (usually 45 days, but a maximum 90 days) after filing the statement of claim. Thus, during the hearing on the merits, only evidence has to be given and a decision made. The main reason for prolongation of the proceedings according to the legislator – and not without reason – is that in practice the parties can freely change their allegations of fact and law and statement of claim. As a result, the taking of evidence and the extent of the burden of proof were changing constantly and the procedure was excessive.

Besides the divided procedural structure, extremely detailed regulation of the type, form and content of pleadings (statement of claim, defence, counter memorial, rejoinder, preparatory documents, counterclaims, setoff certificate) is another significant innovation.

Because specifying the content of pleadings in such a degree of detail has been unknown in Hungarian procedural law, this innovation is causing difficulties in bringing an action to court.

The number of judicial orders rejecting the statement of claim on the grounds of procedural defects has indeed significantly increased. Moreover, sometimes the reason for rejection cannot be deduced from the law. We came across such a case when the court rejected a statement of claim because of an alleged defect in the format of the telephone number of the legal representative, when in fact the Code only requires an indication of the phone number. Unfortunately, the interpretation of the courts differs, so what a court expects for admission of a statement of claim is unpredictable.

Although a rejected statement of claim can be filed again after corrections, this is not always so simple since the rejection order need not indicate every defect. It might occur – indeed, it often happens – that the same statement of claim is rejected again because of a new actual or perceived procedural defect different from the previous one.

Due to the increasing number of rejections, procedures are speeding up statistically – as most of the cases end within 30 days because of rejections – but this does not mean that disputes are being settled more quickly.

Lapse of time can be the only solution to the problem. The unifying activities of the higher courts will have their effects in the following months and difficulties in pursuing an action will end. With hindsight, we will see whether the new Code truly accelerates judicial dispute resolution.

In the meantime, we advise our clients to use alternative dispute resolution forums (e.g. mediation, arbitration) if possible, or delay taking action until the uncertainty caused by the new Code ceases. 

 

 

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