Category: Hungary

The Hungarian Government introduced two special taxes from 1 May 2020 in order to tackle the financial effects of the coronavirus disease: the special tax on credit institutions and the tax on commercial chains. According to the official communication of the Ministry of Finance „the goal is that the burden of these taxes – that contribute to the improvement of the balance of public finances – are borne not by the consumers but by the actors that are capable of such.”

The tax on credit institutions is only payable in the tax year of 2020 in three instalments. The tax has to be paid after the corrected balance sheet total that exceeds HUF 50 billion, at a rate of 0.19%. The payable tax can be reduced by supporting popular team sports. According to the official communication of the Ministry of Finance, this special tax will be deductible from the already existing tax that has to be paid by financial institutions. Further details of this tax have not yet been elaborated in the laws.

The tax on commercial chains must also be paid from 1 May 2020 until the end of the state of emergency special legal order. The tax base is the net turnover of the taxpayer and the tax rate is specified progressively, provided that the net turnover reaches HUF 500 million on a yearly basis. This special contribution targets not only Hungarian but also international commercial chains (available in Hungary), such as Amazon, Wish or Aliexpress. According to the official statements this special tax will be a permanent tax also after the end of the state of emergency.

By Eszter Kamocsay-Berta, Managing partner, KCG Partners Law Firm

Former Dentons Partner Edward Keller has joined alternative investment firm Alpha Blue Ocean as its General Counsel and Chief Legal Officer.

Keller was part of White & Case’s Budapest office, which moved in its entirety to Dentons in 2015 (as reported by CEE Legal Matters on April 15, 2015). He first joined White & Case in 2000.

“After 20 years of private practice it was time for a new challenge and to get involved more on the business side,” Keller explained. “ABO is an incredible and very dynamic group and I am really excited to be part of the team. My practice at Dentons was going well which made the decision difficult but ABO was increasingly becoming my biggest client and the worked with them was incredibly gratifying, which lead to my ultimate decision to join them. I am looking forward to being a client of Dentons now.” 

 

Hungary announced and successfully notified to the European Commission a HUF 50 billion (approximately EUR 140 million) aid scheme in April 2020. The subsidy to improve competitiveness has been designed to help the medium-sized and large enterprises that are active in the manufacturing or business services sector that face difficulties due to loss of income and liquidity resulting from the economic impact of the pandemic.

Medium-sized and large companies with a setback of at least 25% in their net turnover or orders due to COVID19 can apply for the grant for new investment yet to be commenced but to be finished by 30 June 2021. As a pre-requisite, the volume of the new investment should be at least HUF 50 million (EUR 150,000) and the applicant should undertake to maintain the average staff number at least until 31 December 2020 (until the completion of the investment indicated).

In order to provide effective aid for the companies, the cash grant – once approved – is paid upfront (pre-financing) and is uniquely also available in the Budapest region.

By Balint Zsoldos, Head of Tax, KCG Partners Law Firm

With in-store shopping often relegated to a secondary role, online forms of trading have come to the fore of late. Nowadays, merchants that don’t adopt web commerce solutions alongside or instead of their physical stores can find themselves at a distinct disadvantage in the market. It’s worth bearing in mind, however, that besides implementing various IT developments and having to organise home deliveries, running a webshop requires some major preparatory work in the legal area as well.

Administration, administration, administration…

It’s important to note that the launch of a home delivery service must be reported to the local municipality. It can be completed by filling in a form (the document is usually available for download on the municipaliity’s website). Online service providers selling daily consumer goods, as well as online caterers, are temporarily exempt from this reporting obligation: they are not required to register during the coronavirus crisis.

Besides reporting the service, a webshop is required to display a lot of information on its site. Some of this information is obvious (such as the merchant’s particulars and contact details), while other things are not obvious at all. For example, the particulars and the contact details of the company hosting the webshop must also be included, as must the rules on how shoppers can contact the complaints ombudsman.

With online orders, it’s natural for the merchant to record a lot of details about its customers (name, address, contact details, etc.). This is necessary just to be able to make the deliveries. Since this information is classed as personal data, a well-designed data protection regulation (“privacy policy”) is essential for an online store. When running the site, it’s good to be aware of the data protection rules more generally: you’re still not allowed, for example, to send advertisements to your customers after they’ve bought something on your site – not without their express consent.

GTC: more than just a formality

A commercial website is required to publish its general terms and conditions (GTC) in a way that makes it accessible to customers. However, preparing the GTC is not just a formality, it has major legal implications.

For example, it is important that the GTC covers the customer’s right to cancel a purchase. As most people know, with a few exceptions, an online shopper can change his or her mind and cancel a purchase at any time up to 14 days. However, if the merchant – whether in the GTC or elsewhere – does not inform the customer about the right of cancellation prominently and specifically (or does not make the statement of cancellation form required by law available to customers), the cancellation period is extended by 12 months.

Another subject of dispute in several cases has been whether the confirmation sent automatically by the merchant after an order is placed already constitutes acceptance of the order and the conclusion of a contract. This matter, too, is best addressed in the GTC. But it’s also a good idea to include in the terms and conditions what happens if the customer does not take receipt of the package or gives a wrong address for delivery, and whether the seller in such case is eligible to, rescind the contract and recover its costs from the customer in such cases.

There’s a lot at stake

It would be naive to think that due to the lack of a physical presence, the authorities are more lenient in enforcing compliance with the rules on online trading. In fact, due to the shift in favour of online shopping among customers, inspections in this area are likely to be increasingly frequent and strict.

Depending on the subject of the inspection, the operation of your webshop may be investigated by the local authorities, the consumer protection authority, the data protection agency or the competition authority, who may be entitled to impose severe fines, of up to several million forints, for infringements. It’s therefore important for you to have a thorough knowledge of the regulations, so that any additional profits you make through your innovations do not go on paying fines.

By Levente Bihari, Senior Attorney, Jalsovszky

The focus today is on the COVID-19 world epidemic, and the special legal orders implemented by the affected countries. While Hungary has also adopted numerous extraordinary and temporary measures in this respect, attention must also be drawn to legislative developments which are not related to the coronavirus. The Parliament has recently adopted a new act which amends the Hungarian Competition Act (“Competition Act”) and brings numerous changes to Hungarian competition law.

Relevant new rules

The majority of the new rules intend to ensure that the Competition Act is fully compliant with the ECN+ Directive which strives to strengthen cooperation of European national competition authorities (NCAs) through the existing ECN network. It intends to ensure that NCAs have the appropriate and harmonized enforcement tools reflecting the powers held by the European Commission when applying the same legal basis, i.e. the EU antitrust rules (Article 101 and 102 of TFEU). Member states of the EU must implement the ECN+ Directive by 4 February 2021. Hungary has opted for an early adoption of the necessary implementing provisions, almost a year ahead of the deadline.

The Hungarian legislator has chosen to incorporate most of the rules of the ECN+ Directive with respect to all antitrust proceedings, regardless of whether they are conducted on a Hungarian or an EU legal basis. However, in certain cases the scope of the newly enacted provisions is limited to proceedings on EU legal basis.

1. More possibilities for the HCA to acquire evidence

The Hungarian Competition Authority (“HCA“) will no longer be limited in carrying out on-site inspections of private premises, real estate and movable property. Based on previous rules, on-site inspection can be carried out in these places only if they are connected to the undertaking subject to the proceedings through the company’s activities or personnel (e.g. if the real estate is used by the investigated company’s CEO). Going forward, the HCA will be allowed to inspect any private premises, real estate and movable property (e.g. motor vehicles, data carriers). However, the amendment does not change the requirement that on-site inspections must be carried out with a prior court permission.

Furthermore, the amendment explicitly allows for the use of secret (covert) recordings as evidence, provided that such recording is not the only proof of the infringement. This new rule – based on a recital, not a specific article of the Directive – is likely to be debated in legal literature, as it generally seems to allow, but at least not to discourage making secret recordings, which are typically recorded in a way of breaching individual rights and GDPR rules.

2. New rules regarding commitments

If the HCA’s antitrust proceeding is initiated on an EU law basis (Art. 101 or 102 TFEU), the HCA will have to consult with companies and other affected parties active on the relevant market before approving a commitment. However, since such mandatory consultation is likely to prolong proceedings, it will remain only an option for the HCA in proceedings initiated on national law basis.

Furthermore, the HCA will have the right to revoke a decision approving a commitment if the commitment has been approved based on incomplete, incorrect or misleading information provided by the investigated company. Such right has already been incorporated and practiced in connection with clearance decisions in merger control proceedings, to the dismay of companies who have already experienced such revocation of previously granted clearance decisions.

3. Further regulations concerning leniency applications

In order to comply with the ECN+ Directive, the preconditions for granting a leniency application will be stricter. More detailed rules will regulate the required cooperation with the HCA, e.g. prohibition to destruct, conceal or falsify evidence from as early when the company is only considering applying for leniency. The exact definition of “considering an application” is not explained and this might lead to legal uncertainties in cases when e.g. an employee starts destroying evidence while the management is conducting an internal audit to map the extent of the infringement. In this case, is it the start of the internal audit that should be viewed as a time when the company is considering a leniency application, or is it only the board meeting discussing the result of such internal audit? The wording of the Hungarian amendment is based on that of the Directive, which does not provide for guidance in this respect.

Good news for companies: the amendment opens the possibility of submitting incomplete leniency applications (so-called “markers”) not only for immunity from, but also for reduction of fines. Furthermore, as opposed to current rules, companies will be able to submit marker applications even after the HCA conducted a dawn-raid. This latter possibility has been reinstated after a few years’ unwelcome break. The amendment clarifies that in case of markers, the company must undertake to gather the remaining evidence within a deadline set by the HCA. Widening the possibilities for marker applications will likely result in an increase of leniency applications to the HCA.

As a result, leniency applicants will be able to choose from the following possibilities to submit their application:

• application for immunity from or for reduction of fines supported by all required evidence;
• incomplete leniency application (“marker”) for immunity from or for reduction of fines, if additional time is needed to collect and submit all evidence;
• in connection with a breach of EU competition law, summary application which is submitted parallel to submitting a leniency application to the European Commission.

Another novelty is that under the new rules, companies will be entitled to submit all leniency applications not only in Hungarian, but also in any other language of the EU (typically in EN), provided it is bilaterally agreed between the HCA and the applicant. The previous rules only allowed for submitting summary leniency applications in English.

The amendment also strives for a better protection of the information contained in leniency and settlement applications. Evidence obtained from leniency and settlement applications by granting access to the case files may be used only for the purpose of exercising the rights of defense, and only in court proceedings relating to that competition supervision procedure in which access to the file was granted. A more thorough protection of data contained in leniency applications applies also towards other competition authorities, who can access Hungarian leniency applications only with the consent of the applicant, or if the applicant submitted a leniency application also to these authorities.

4. New rules regarding fines imposed on associations of undertakings

Currently the maximum fine which may be imposed on an association of undertakings (e.g. a professional chamber or an association) is 10% of the previous financial year’s net sales revenue of all member companies. This is in line with the requirements of the Directive and will not change after its implementation.

However, the extent of liability of each of the members of such association of undertakings has not been sufficiently regulated prior to the amendment. In line with the ECN+ Directive, the financial liability of each member will be limited to 10% of the given member’s net turnover in the previous financial year.

The new maximum fine for each member of the association, however, at least pursuant to the ministerial reasoning of the amendment, does not affect the possibility of the HCA to enforce even the full amount of the fine from the individual members under joint and several liability of such members in the newly introduced multi-stage enforcement system:

• First, the HCA must try to enforce the fine from the association. If the association cannot pay the fine, and the enforcement proceeding is unsuccessful, the association is obliged to call for contributions from its members to cover the amount of the fine;
• If the contributions do not cover the fine, the HCA may require the payment of the fine directly from any of the member companies whose representatives were members of the respective decision-making body of the association who has issued the decision which the HCA has identified as the infringement. Payment can be required only from those companies who were named in the HCA’s decision; however, these companies will be jointly and severally liable to pay the fine;
• If the fine is still not fully paid, the HCA may require the payment of the outstanding amount of the fine from any of the members of the association which were active on the market on which the infringement occurred (which would in most cases be all members of the association) – again, payment can be required only from those companies who were named in the HCA’s decision, and they will be jointly and severally liable to pay the fine;
• However, payment cannot be required from member companies which evidence that they did not implement the infringing decision of the association and either were not aware of its existence or have actively distanced themselves from it before the investigation started.

The old system is similar, albeit less detailed then the one introduced by the Directive, which will also require certain issues for clarification by the practice. At least it is declared that the HCA will need to be able to wait for the requested capital contributions from the members of the association before going after the individual companies. Welcomed novelty however that the new rules explicitly list the innocent member companies’ grounds of exemptions from the payment obligation.

On the above basis the new limitation of financial liability of member companies of an association to 10% of their turnover do not seems to have relevance as regards to the actual payment of the fine in cases when the HCA cannot recover the fine from the association. I.e. in these cases the new system also allows the HCA to request – at its own choice – a member of the association to pay the full fine, which may be over 10% of that member’s turnover.

However, the 10% maximum may give munition in civil proceedings to the company from whom the HCA requests to pay the entire fine under joint and several liability when such company requests recovery from the other infringers.

5. Enhanced cooperation between the NCAs

In the framework of cooperation, the HCA will have more possibilities to cooperate with other national authorities in the ECN. The NCAs in future not be limited to seek legal assistance from each other only for certain procedural acts, but they will be able to request the service of documents in another Member State, or seek assistance in the enforcement of fines and procedural fines imposed in their decisions. The detailed rules will form a whole new chapter in the Competition Act.

Effective date / limitation

Most of the amendments, including the main changes mentioned above, will enter into force on 1 January 2021. They will apply also in those cases which were initiated before this date.

By Anna Turi, Counsel, and Márk Kovács, Associate, Schoenherr

The Hungarian Government has established a so-called Economy Protection Action Plan in order to respond to the economic situation caused by coronavirus. One of the main pillars of this Action Plan is a state aid for employees for the purpose of retaining workforce set out in Government Decree No. 105/2020 (“State Aid”). As a response to the criticism made by several employers addressed to the criteria for application and granting the state aid, the legal regulations has been recently modified by the Government Decree No. 141/2020.

About the State Aid in general

The State Aid may be provided to those employees agreeing to be employed in reduced working time, provided that the criteria set forth in the (modified) Government Decree No. 105/2020 have been fulfilled (see below). The reduced working time shall reach 25% of the recent working time (i.e. working time applicable at the time of the application for the State Aid) but shall not exceed 85% thereof.

The State Aid may be claimed based on the modified rules as of 29 April 2020, for a maximum period of 3 months.

 The employer and the employee shall apply for the State Aid together. In the case the State Aid is applied for more employees employed at the same site of the employer, the applications shall be submitted at the same time and the State Aid may only be claimed for the same duration regarding all affected employees.

The amount of the State Aid

Lost working time may be 15-75% of the initial working time. The amount of the State Aid shall be 70% of the employee’s net base wage due to the period of the lost working time. Base wage shall mean the base wage of the employee effective on the day of the application for the State Aid.

The Government Decree No. 105/2020 maximizes the eligible sum of net base wage in HUF 214,130 (twice the net monthly minimum wage).

Criteria for the State Aid

The criteria defined by the Government Decree No. 105/2020 shall be met regarding each and every employee concerned by the application. The main criteria are the following:

• Employing the employee in reduced working time for the duration of the State Aid;
• In the case the part-time work exceeds 50% of the recent working time, the monthly wage to be paid to the employees shall reach together with the amount of the State Aid the employee’s base wage effective on the day of the application for the State Aid;
• In the case the part-time work exceeds 50% of the recent working time , the parties may agree on a so called individual development period and payment of wage for the individual development period;
• The employer undertakes to retain the employment of the employee applying for the State Aid for the period of the State Aid and for one more month, i.e. altogether for a maximum period of 4 months;
• No overtime can be ordered during the granting of the State Aid;
• Justification that retaining workforce of the employer is the interest of national economy;
• Justification that the employer satisfies the legal requirements of distinguished labour relations;
• Justification that the employer is not involved by any final resolution under dissolution proceeding, liquidation proceeding, bankruptcy proceeding or other proceedings specified in legal provisions tended to its wind up;
• The employer does not have any payment obligation related to the state aid recovered by the final resolution of public employment service.

Further amendments by Government Decree No. 141/2020

Furthermore, Government Decree No. 141/2020. has introduced following changes:

• the employer shall not be obliged to prove that he has exhausted all available possibilities of working time schedule;
• the State Aid may also be applied in case there is a working time banking in progress;
• the State Aid can also be applied for temporary agency workers and for employees working from home office;
• the employer is neither obliged to present its economic conditions justifying the employment in reduced working time, nor to prove that is not deemed to be an undertaking in difficulty in accordance with European competition law on 31. December 2019. 

If you have any further questions regarding the above, please contact our employment professionals, who are at your service to answer any employment-related questions raised by the possible epidemiological situation.

By Zoltan Nadasdy, Partner, Edina Czegledy, Counsel, and Adam Gyorgy Bodor, Counsel, Noerr

With respect to the declared state of danger and in order to alleviate the economic difficulties resulting from the Covid-19 epidemic, the government has taken several measures, the following document summarizes the most significant provisions of governmental decrees in the field of labour law and related to the operation of legal persons.

Governmental Decree no. 102/2020. (IV. 10.) establishes special rules regarding – among others – the operation of legal persons and non-legal person organizations established on the bases of civil law rules (hereinafter legal persons), which special rules are to be applied during the state of danger.

Provisions related to the supreme body and the management’s decision making:

The meetings of the supreme body may not be held with the personal participation of the members or their representatives, even if the meeting was convened prior to the Decree’s entry into force. The supreme body’s meeting shall be held by means of electronic communications or the resolutions shall be adopted without holding a meeting, even in those cases, when the articles of association does not regulate the possibility to do so or regulates differently than established by the Decree.

If the rules of holding the meeting by means of electronic communications or of adopting resolutions without holding a meeting are not established in the articles of association, the management of the legal person is entitled to establish the relevant rules and to provide information to the members about them. If the legal person has more than one executive officer entitled to act independently, it is the responsibility of the executive officer exercising the employer’s rights to establish the rules and communicate them to the members. Detailed information on the agenda shall not be omitted during the establishment of the rules and drafts of the resolutions shall be communicated to the members. With regard to participating by means of electronic communications, the means of electronic communications and IT applications used shall be defined. If the management is not familiar with the members (or with their representatives) personally, the method of their identification shall be specified as well. In case of adopting resolutions out of session, members shall be given at least 15 days for sending their votes. The rules of the Civil Code related to the effectiveness of the decision making and the determination of the outcast of the voting shall be applied after the Decree’s entry into force. Members may not request to convene a meeting or to hold a meeting by means of electronic communications. The member’s vote shall be considered valid if it identifies the member and contains the draft of the resolution in question and the vote casted to the resolution. The member may send its vote by means of e-mail, with respect to the rules of “Making legal statements” established below.

The meeting of the supreme body shall be held by means of electronic communications or resolutions shall be adopted out of sessions, if

• the legal person has a maximum of 5 members and a quorum can be foreseen (the conditions and methods of the decision-making process shall be defined in a way that all members have the opportunity to participate);
• the legal person has more than 5, but not more than 10 members, for the request of the members holding a majority of votes; or
• the legal person has more than 10 members and the management initiates to do so.

The meeting of the supreme body shall be governed by the appointed executive director, whose task includes the preparation of minutes. The previously summarized provisions are not applicable to public limited companies, the Decree establishes special rules related to the decision-making process of these legal persons.

In the event if it is not possible to hold a meeting by means of electronic communications or to adopt resolutions without holding a meeting, the management shall decide

• on the adoption of the annual report;
• on the use of the after-tax profit;
• on urgent matters within the competence of the decision-making body, necessary for the maintenance of the lawful operation of the legal person and in matters related to the handling of the situation related to the state of danger and in urgent matters to uphold responsible management.

The management is entitled to adopt the listed decisions if the members holding the amount of vote specified in the Decree – or the member with a qualified majority or majority influence – do not submit a prior objection in writing.

The management

• generally, may not amend the articles of association; 
• may not decide on the dissolution of the legal person without succession;
• may not decide on the transformation, merger or division of the legal person and may not adopt decisions instead of the decision-making body in ongoing proceedings;
• may not decide on the reduction of subscribed capital in case of private limited-liability companies and limited companies and
• may decide on additional payments or capital injections only with the prior written consent of the members obliged to pay and the payments shall not affect the extent of the members’ shareholding in the legal person.

The annual report may be audited if it was adopted by the management. If a supervisory board operates at the legal person, the management shall adopt its decision after the receipt of the written report of the supervisory board.

The decisions made by the management shall be put on the agenda of the extraordinary meeting of the supreme body, which shall be convened no later than the 90^th day after the end of the state of danger. Subsequent modification or revocation of the resolution shall not affect any rights and obligations obtained prior to it.

The management shall take any measures necessary in order to inform the members about its decisions.

If a resolution made by the supreme body or the management is reviewed by the court, the resolution in question may not be set aside by the court for conflicting with the articles of association if the conflict is solely because of the application of legal regulations with respect to the state of danger.

The provisions summarized above shall not be applied to those legal persons, in which the decision-making body or the single member – in compliance with the rules of curfew – has not been prevented from adopting decisions.

Provisions related to other bodies of legal persons:

The legal person’s management body, supervisory board, audit committee, and any other body set up by law or by its articles of association (“body”) may hold its meetings by means of electronic communications or by any other electronic means providing identification or they may communicate in writing. They are entitled to adopt their decisions related to the management of the legal person in writing. In the event of lack of relevant regulation, the president of the body shall establish the rules of meetings and adopting decisions. Written consultations and decisions may also be adopted by electronic message exchange (“e-mail”). If the number of members of the body decreases under the number prescribed by law or by the articles of association during the state of danger or the member is unable to carry out its duties because of the Covid-19 pandemic, the other members are entitled to adopt decisions. The rules regarding the quorum shall be determined with respect to the number of members able to adopt decisions, and resolutions shall be adopted with a simple majority. Only one person may adopt decisions, if other members become unable to do so.

If the mandate of an executive officer or another body’s member or the auditor terminates during the course of the state of danger – with the exceptions established in the Decree -, the mandate shall remain in force without a resolution adopted by the decision-making body or by the founder[s], until the 90^th day after the end of the state of danger. The executive officer, the member of another body or the auditor shall carry out its tasks until this date at latest.

Making legal statements:

The bodies of the legal person may also send written legal statements (including documents related to the operation of the decision-making body), to the member’s e-mail address with a qualified security electronic signature or with a qualified security electronic signature based on a qualified certificate or with an electronic stamp based on a qualified certificate, or – in case of lack of the prior – signed with a document authentication service.

The members may submit their legal statements related to the legal person by e-mail to the legal person. If the member is a legal person itself, the statement shall be signed with a qualified security electronic signature or with a qualified security electronic signature based on a qualified certificate, or – in case of lack of the prior – signed with a document authentication service. If the member is a natural person, its legal statement may not be signed with an electronic signature, although the legal statement must include the data necessary for the identification of the member.

Statements made in electronic messages shall be considered written electronic legal statements.

Special provisions related to public limited companies:

The Decree establishes further special provisions related to state-owned enterprises, private limited-liability companies and limited companies. The special provisions related to public limited companies are summarized below.

Public limited companies shall publish the invitation for the general meeting and proposals related to the matters listed on the agenda with the reports of the supervisory board and the drafts of the resolutions on their website. The management is entitled to adopt decisions in every resolution listed on the agenda and in matters referred to the competence of the management by the Decree – in lack of a supreme body’s decision.

The management of the public limited company shall adopt its decision related to the annual report until 30 April, 2020. At the same time, the management may adopt a decision related to the use of after-tax profit, including dividends.

Within a 30-day preclusive period of the cessation of the state of danger, shareholders holding at least 1 % of voting rights may request that the general meeting to be convened for the subsequent validation of decisions adopted by the management during the state of danger. One exception is established by the Decree from this period: the decision related to the annual report and related to the use of after-tax profit may be validated in a general meeting, in which case the convening of the general meeting may be initiated until 31 May, 2020.

By Zóra Lehoczki, Associate, Nagy és Trócsányi

The Hungarian Parliament has started the discussion of the bill that is implementing the provisions of Directive (EU) 2018/1808 of the European Parliament and of the Council of 14 November 2018 (Audiovisual Media Services Directive) (the “Directive”). According to the Directive, Member States must ensure their compliance with the Directive by 19 September 2020.

The Directive is reflecting to the technical developments that allowed for new types of services and user experiences to change viewing habits, which resulted in the fact that the European legislator extended the scope of the Directive to media service providers as well. By this extensions, the EU acknowledged the growing importance of online services in the consumption of media content and the need for intermediary service providers to be liable for third party contents (changing their previous passive role).

The Hungarian legislator intends to incorporate the implementing provisions in the Act on Electronic Commerce and on Information Society Services, thus, the provisions applicable for the same types of service providers and services can be found in the same act. The bill contains provisions (i) on the obligation of the competent national regulatory authority (who is the National Media and Infocommunications Authority) to keep an up-to date record on media service providers (notification requirement of the service providers), as well as (ii) the framework of the media service providers’ obligations (e.g. provisions on its commercial communications, provisions protecting minors etc.). The competent regulatory authority can control the compliance of media service providers with the provisions of the applicable laws. The proposal also contains the possible legal consequences applicable in case of violation of the law.

In addition to the above, the proposal also creates the framework and conditions of self- and co-regulation in the context of media service providers and involves professional self-regulatory organisations and alternative dispute resolution forums in the framework of regulation and legal enforcement.

By Rita Parkanyi, Partner, KCG Partners Law Firm

The extent to which a judge may be active in obtaining the facts necessary to adjudicate a dispute or in finding the legal norms on which a decision is based is a fundamental question of any legal proceeding. Can judges invite the parties to present facts which they consider essential? Or can a judge tell the parties that in his or her view the dispute can be settled on the basis of legal provisions which they have not invoked? These fundamental questions apply to arbitrators as well. In this respect, does arbitration give arbitrators a smaller or greater role than that which judges have? Perhaps surprisingly, arbitrators may in fact have stronger powers in this respect than state-authorized judges.

A key element of the procedural rules for litigation in national courts is the regulation of the statement of claim and defendant’s counter-claim, which determine the subject-matter of the dispute. Other important legal concepts, such as lis pendens, res judicata,  and the extent and limits of judicial activity are also linked to these rules. The Hungarian Arbitration Act does not contain such rules; it merely defines the minimum contents of the claim and the defense in a general clause, without any details. It is a striking difference that the Arbitration Act does not require any indication of the law to be enforced; the claimant is merely required to state the nature of the dispute, what the claimant requests from the arbitral tribunal, and what facts support such request. There is no word on the activity of arbitrators.

Although the law does not resolve these important issues, arbitrators, while conducting proceedings, are confronted with them on a daily basis. For example, the parties may have a different legal view on the matter than the arbitral tribunal, and may even disagree as to what law should be enforced by the facts presented – and it may also happen that the facts presented are not in line with the specific law being enforced, or the parties present information to which they do not attach great importance but the arbitral tribunal does. A typical case is where the arbitral tribunal resolves a matter on the basis of a provision of the written contract filed in the case to which the parties failed to refer, or, if they did refer to it, the arbitral tribunal interprets it differently than the parties did. It may also happen that a party requests the arbitral tribunal to oblige its opponent to file a document or other evidence that the petitioner considers to be relevant but does not possess. These situations must be dealt with by the arbitrators in practice.

One possibility is that, even in the absence of specific rules, the arbitral tribunal will attempt to construct a dogmatic system similar to the procedure judges apply. Alternatively, the arbitrators may accept that the Arbitration Act does not regulate the above issues, and may therefore conclude that the arbitral tribunal has more freedom than the national courts to determine the manner of the procedure, and in particular to set the limits of its own activity. The arbitrators choosing this interpretation may argue that this greater freedom is rooted not only in the less-regulated legal environment but more importantly in the fact that the competence of the arbitral tribunal is based on the consensus and agreement of the parties, which provides a contractual basis for the view that the arbitrators should actively do everything necessary to carry out their task. The parties thereby implicitly undertake in the arbitration agreement to provide all assistance to this effect, to submit themselves to the target-oriented procedures of the arbitral tribunal, and to accept its active role. This contractual background provides a solid conceptual basis for the arbitrators to adopt a different approach and play a different role than the national courts. The only limit to this more informal and looser procedural regime is that the parties should be treated equally. As any step taken by an arbitrator in the spirit of active engagement may “favor” one party and “disadvantage” the other, the arbitrators must always act with great care when making such decisions.

By Lajos Wallacher, Counsel and Co-Head of Arbitration Practice at Wolf Theiss Hungary

This Article was originally published in Issue 7.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

 

Former Counsels David Kohegyi, Szilard Kui, and Viktor Radics have been promoted to Local Partners at DLA Piper Hungary.

According to DLA Piper, Kohegyi, who heads the firm’s Compliance and Investigations team, has “significant international professional experience in conducting corporate internal investigations, international litigation and arbitration proceedings, and financial regulatory procedures.” He has a JD from the University of Miskolc and has also attended Leiden University and the University of Michigan Law School. Prior to joining DLA Piper in 2009, he spent almost two years with Freshfields Bruckhaus Deringer. 

According to the firm, Szilard Kui, who heads DLA Piper Hungary’s Real Estate practice, “has extensive experience of real estate law, advising on all aspects of acquisition, development, construction, leasing, and management of commercial real estate.” He has a JD from the ELTE University. Prior to joining DLA Piper in 2015, he spent almost a year with MOL Group and almost seven and a half years with Baker McKenzie.

Radics, who heads DLA Piper’s Dispute Resolution practice in Budapest, has — according to the firm — more than ten years of experience in “litigation, domestic and international commercial arbitrations, including in the fields of capital markets, insurance, financing transactions, construction, infrastructure development, corporate litigation, and pharmaceuticals.” He is a graduate of the University of Miskolc and holds a Master’s degree from Budapest Corvinus University. He joined DLA Piper in 2015.

“With the introduction of the Local Partner status, we wanted to encourage and support the career ambitions of our legal experts and to reward the individual professional reputation they acquired among their clients,” said Andras Posztl, Country Managing Partner of DLA Piper Hungary. “The initiative has been established in accordance with domestic and international best practices. It will contribute to achieving further dynamic development for our integrated legal services team.”