Category: Hungary

In February 2020 the Hungarian Competition Authority initiated a competition supervisory procedure against Viber Media (operator of the Viber app, seated in Luxembourg) which was likely to infringe the prohibition of unfair commercial practice against consumers. During the procedure, Viber made commitments aiming at the avoidance of penalties. The procedure ended on 16 May 2024 with a decision where the authority, without finding an infringement or lack of infringement, obliged Viber to fulfil its commitments.

The reason for the Hungarian Competition Authority’s investigation firstly was that the tech company stated about its product that it is free, e.g. by advertising the Viber app with the ‘Free and secure calls and messages’ slogan, which could be misleading for consumers, as far as they had to transfer their personal data as consideration for the ‘free’ use of the Viber app, and, according to the Hungarian Competition Authority, that transfer of personal data is likely to be a kind of compensation. Secondly, by stating that its app is ‘secure’, Viber could also mislead consumers, because it is likely that not every message on Viber was encrypted. Thirdly, Viber failed to make available a notice in Hungarian about the app’s most important conditions of use for Hungarian customers, which could also be classified as unfair commercial practice.

Therefore, in order to comply with the applicable EU and national competition and consumer protection laws and to avoid competition fines, Viber made the following commitments: preparation and continuous updating of privacy notices and in-app information in Hungarian; providing additional information on data management before the registration begins; making available the ad-free Viber Plus for Hungarian users (Viber Plus users’ personal data is not used for advertising and they do not receive any more ads as long as their Viber Plus subscription is active); increasing the role of consumer consent in case of the non-paid basic Viber in order to reduce the amount of personal data that can be used by the company by default; improving consumer information on privacy and security issues; and last but not least, developing and operating – at least for two years – a privacy bot in Hungarian to inform users about online privacy and security.

According to the Hungarian Competition Act, if an undertaking fails to fulfil such commitments, the Hungarian Competition Authority can observe the non-performance of those commitments and therefore impose a fine. These consequences of non-performance and the fact that in the last few years, the Hungarian Competition Authority has imposed serious competition remedies or fines on several global tech companies (e.g. Google, PayPal, Apple or Booking.com) are likely to encourage Viber to satisfy the obligations listed above.

By Rita Parkanyi, Partner, KCG Partner

With ESG and AI becoming increasingly important for all businesses, the two are set to impact law firms in Hungary as well while the country looks to tackle immigration reforms and enhance consumer protections, according to Schoenherr Hungary Managing Partner Daniel Gera. Against this background, a noticeable trend of FDI sources tilting East is registered.

“ESG and AI are the buzzwords right now,” Gera begins. “We are betting on ESG becoming a key area of focus for law firms, significantly impacting both our corporate and real estate practices. AI is another major area, not just in terms of how we use it in our practices, but also how it will affect our clients and the legal areas it touches,” he says.  For instance, in the area of labor law, Gera reports that “clients are starting to use AI to scan CVs or assess behavior which will have interesting legal implications. Even in our own practice, we have decided to use the Harvey software for AI applications. Also, there will be new legislation on the use of AI at the EU level.”

Focusing on the wider legislative landscape, Gera says that “the change in immigration laws at the end of last year is noteworthy. January and February saw a grace period where procedures were on hold, but now the process for granting work permits has changed.” According to him, “the aim was to make it easier, but in practice, we have not yet seen much advantage. Hungary generally still faces a shortage of workforce, and while importing workers could help sectors like construction, it does not solve the broader problem, especially for white-collar jobs. Hungary is not particularly attractive for white-collar workers, making it difficult to bridge this gap,” Gera explains. 

To address these workforce shortages, Gera says that companies are “implementing measures to enhance their attractiveness as employers, focusing on retention and involving previously inactive groups like those returning from maternity leave, offering flexible solutions, targeting youth, or reactivating pensioners. While importing workers might help certain sectors, it’s more realistic to focus on these internal reserves.”

Moreover, Gera says that changes were made to the consumer protection and competition law framework, “setting new obligations for online accommodation intermediaries, including a requirement to operate a customer service and complaint handling mechanism in the Hungarian language, as well as a prohibition of certain unfair commercial terms in contracts with accommodation providers.” As for the wider topic of FDIs, Gera says these are nowadays “primarily coming from Asia, not only China but also South Korea. This is particularly evident in the car manufacturing and battery sectors, which have sparked political debates.” Additionally, Gera shares that there has “also been an uptick in activity in the energy sector, especially in wind and solar projects, largely driven by Asian investors. While smaller energy projects are up for sale, this sector is generally booming.”

In conclusion, Gera feels that it is fair to give a cautious yet steady outlook for the Hungarian legal market. “The focus on ESG, AI, and energy sectors, along with adapting to new immigration and competition laws, will shape our work in the coming years,” he says. “While this year may not be the best of the decade, it could still be reasonably good despite some market caution. Political developments, such as the government’s acquisition of the airport and pressures on food retail chains, indicate a shift toward Asian and Eastern investors and we may expect M&A activity from traditional western investors to slow down a bit compared to the past,” Gera concludes.

Recently, the Artificial Intelligence Coalition (MIK) informed the relevant committee of the Hungarian Parliament about possible trends in the sector. The MIK’s goal is clear: to put Hungary at the forefront of AI developments and applications in Europe and to become a member of the international AI community. In this process, it will bring together users, market players, academia, professional organisations and public institutions.

The founding chairman of MIK informed the Consumer Protection Subcommittee of the National Assembly’s Economic Committee that Hungary needs a supercomputer where research and educational projects can be carried out, but it would also be very important for SMEs to have the necessary computing capacity, and the creation of data repositories and the right to control data assets would help to make Hungarian economic development more dynamic. He also stressed the need to build knowledge centres in the next period, providing concrete applications for all professions, manufacturing and service companies, small and large industries. These could be made available with relatively little investment.

The President said that the legal regulatory environment for SME sector developers also needs to be improved to empower SMEs. In his presentation, the Deputy Chief Operating Officer of MIK drew attention to European trends, noting that the AI Act was passed in the EP barely a month ago, but the full 466-page set of rules will not come into force until mid-2026. He also stressed that under the AI Act, the kind of social credit system that is being built with AI in Asia will be strictly prohibited in the EU. On the subject of interception and personalised advertising, he said that human uniqueness in the digital space is not so diverse, our online actions are similar, and they can be categorised.

In the field of the use of artificial intelligence, it is also expected that capital-strong companies will have an advantage, Hungarian micro-enterprises and start-ups will certainly not be able to break into this market en masse on their own. MIK would consider it a fair solution if giant multi-companies are generating extra profits were to pay a one percent tax on the extra profit and this amount would be paid into the Hungarian fund. According to MIK, by paying a one percent tax, these large companies would also be able to base their own long-term investments, as it would become possible to finance the training of their workforce, and thus the small, well-functioning Hungarian companies with strong capital would also appear in the supply chain, on whom they can rely.

By Rozsa Rusvai-Darazs, Attorney at law, KCG Partners Law Firm

Former DLA Piper Senior Associate Mate Hajas has joined Kapolyi as Head of the firm’s corporate team.

Before the move, Hajas spent over eight years with DLA Piper. Hajas began his career at Kapolyi as a Trainee Lawyer in 2015.

“It is important for me to keep up with the rapidly changing legal environment and the needs of our clients, so I will pay particular attention to professional development and innovation,” Hajas said. “My aim is to integrate digital technologies into our legal processes to provide our clients with an even more efficient and faster service.”

“We are delighted that Mate Hajas has returned to us after nine years and now strengthens our corporate practice group as the head thereof,” added Managing Partner Jozsef Kapolyi. “Mate’s extensive experience and expertise will enable us to support our existing and prospective clients even more effectively. With his return, we can offer faster and more effective solutions, so our clients can be confident that their legal affairs are in the best hands. We look to the future with great anticipation and we are confident that Mate’s arrival will open up new opportunities for our clients.”

Former Cerha Hempel Budapest Partner has joined Erdos Partners to head the firm’s M&A and corporate practice.

Albert joined Cerha in 2020 from Schoenher (as reported by CEE Legal Matters on March 27, 2020). She worked for Schoenherr between 2017 and 2020 after moving from Dentons (as reported by CEE Legal Matters on March 7, 2017), which she joined in 2015 along with everyone else from White & Case’s Budapest office (as reported by CEE Legal Matters on April 15, 2015).

“Zita, with her 18+ years of experience in cross-border and domestic M&A transactions, is a great addition to our office,” Erdos Partners Partner Gabor Erdos commented. “As a transaction-focused boutique law firm, we believe that her presence will boost our activities on the local market. With her knowledge and experience, we will continue to serve our clients in a manner and quality that is expected from us.”

“Being a former colleague and friend to Luca and myself, Zita is a perfect fit [for] our young, energetic, and friendly team,” added Erdos Partners Partner Balazs Varszeghi.

Peter Ruff was appointed to Partner at Pontes Budapest, where he will lead the corporate, M&A, private equity, and venture capital practices of the firm.

Ruff first joined Pontes in 2017 as a Junior Associate and was promoted to Associate in 2021. 

“Peter has spent almost his entire legal career with Pontes and his agility and reliability, combined with his client-friendly approach and razor-sharp mind proved to be a great asset,” commented Pontes Budapest Founding Partner Csaba Polgar.

Linklaters, Freshfields, Bittera, Kohlrusz & Toth, and Herbert Smith Freehills have advised AviAlliance and co-shareholders on the sale of Budapest Airport to a consortium consisting of Hungarian state-owned Corvinus Zrt and French co-investor Vinci Airports for a total purchase price of EUR 3.1 billion and net debt of EUR 1.2 billion. CMS advised Corvinus. Kinstellar, working with Orrick, advised Vinci Airports. Wolf Theiss, working with Latham & Watkins, advised the lenders on financing the transaction.

AviAlliance is a private airport investor and manager. It has been invested in the Budapest airport since 2007. Corvinus Zrt. is an investment vehicle of the Hungarian Ministry for National Economy.

According to Wolf Theiss, “Corvinus will acquire an 80% stake of the Budapest airport concession and Vinci Airports will acquire the remaining 20% stake and become the airport operator.”

The Linklaters team included London-based Partners David Martin, Ross Schloeffel, and Subir Rajadhyaksha and Associate Katie Rivers, Duesseldorf-based Partners Achim Kirchfeld, Christoph Barth, and Julian Boehmer, Counsel Sebastian Klingen, Managing Associates Kristina Willmes and Sebastian Ploetz, and Associate Lea Schuermann, Frankfurt-based Partner Julia Grothaus, Managing Associate Hannes Ingwersen, and Associate Julia Funke, and Berlin-based Partner Jan Endler and Managing Associate Rico Kassmann.

The Freshfields team included Duesseldorf-based Partners Simone Kaempfer and Daniel Travers and Principal Associate Marcel Michaelis as well as London-based Partner Ben Morgan and Associate Fiona McHugh.

The Wolf Theiss team included Managing Partner Zoltan Faludi, Partner Janos Toth, Counsel Melinda Pelikan, Senior Associate Gergely Szaloki, and Associate Laszlo Lovas, Kinga Kajcsos, Timea Csajagi, Viktoria Horvath, Lilla Lantai, and Virag Locsei.

The Kinstellar team included Partners Annamaria Csenterics and Peter Voros, Managing Associates Mate Nagy, Peter Gullai, and Daniel Peter, Associates Gergely Liptak, Fanni Oroszi, Bertalan Vanya, Alexandra Cseri, Judit Sos, and Szabolcs Szilagyi, and Junior Associate Viktoria Karnyaczki.

The Orrick team included Partners Yves Lepage, Christophe Lefort, Patrick Hubert, Werner Brickwedde, Foucaud Jaulin, and Paul Loisel, Managing Associates Marc Diab Maalouf, Adil Kourtih, Ahmed Boulahcen, and Carole Schertzinger, and Associate Camille Heissat.

The Bittera, Kohlrusz & Toth team included Partners Csaba Bittera and Peter Toth and Attorneys at Law Zsolt Slujtner and Zoe Szekeli.

The CMS team included Managing Partner Erika Papp, Partners Andreas Koehler, Aniko Kircsi, Eszter Torok, and Dora Petranyi, Senior Counsel Zoltan Poronyi, Counsel Arpad Lantos, Senior Associates Sandor Kovacs, Dorottya Varga-Giesz, and Aranka Nagy, Junior Associates Marton Lazar and Marton Angyal, and further team members from London and Brussels.

Editor’s Note: After this article was published KCG Partners announced it also advised Corvinus Zrt. on the deal. The KCG team was led by Managing Partner Eszter Kamocsay-Berta and included Founding Partners Gabriella Galik, Rita Parkanyi, and Levente Csengery, Partner Laszlo Madak, Attorney at Law Balint Zsoldos, and Associates Reka Fulop and Tamas Zsiros.

Subsequently, CEE Legal Matters learned PK Law Office also advised Corvinus Zrt.

The Hungarian Parliament recently adopted amendments to the notarial procedure, introducing significant changes that affect the reading of documents during notarial acts from 1 January 2025.

The new legislation allows parties involved in the creation of a notarial document to jointly decide to waive the reading of the document by the notary. This will apply regardless of whether the parties are natural or legal persons and whether they are represented by legal representatives.

The new amendment is welcome. The reading obligation is considered outdated and disadvantageous for the parties, since it prolonged the duration of the notarial procedure, i.e. the time that the parties spent at the notary’s office. Furthermore, the mandatory reading emptied the institution of transactional representation and made notarisation more expensive.

The change is particularly important for branches of foreign entities. Currently, the notary must read out the notarial deed in full if one of the parties is a natural person or an entity without legal personality, such as a branch, even if acting through legal representatives. The reading can only be waived for legal persons, provided they act through legal representatives.

Under the new amendment, the parties to the document will be entitled to jointly request the notary to waive the reading of the notarial deed. The parties or their representatives must declare in a separate document to be attached to the notarial deed that they have read and understood the draft of the notarial deed. This declaration may be made in the form of a notarial deed or a private deed authenticated by a notary, a court, another authority or a Hungarian consular officer. Notaries can still decide at their discretion to read out the notarial deed, even if the parties request otherwise. If the reading is waived, the notary must inform the parties or their representatives of the conditions of direct enforceability of the notarial deed.

Crucially, the new amendment only abolishes the reading obligation but not the notary’s other obligations associated with preparing a notarial deed, such as providing impartial legal service and information to the parties about the essence and legal consequences of the legal transaction. 

The legislator reserved the notary’s obligation to read out the notarial deed in some cases, based on the subject matter of the case or the reason inherent in the persons of the parties or their representatives. Therefore, the reading cannot be waived in the following cases:

• when the notarial deed contains a will or another testamentary disposition;
   
•  when the legal statement can only be made personally;
   
• when the party or the representative is illiterate, unable to read or sign their name, does not understand the language of the notarial deed or is blind.

The amendment aims to reduce formalities where the parties are sufficiently informed and have acknowledged their understanding of the document. However, it also safeguards the interests of parties who may be vulnerable due to language barriers, disabilities or illiteracy, ensuring that the notary’s reading of the document serves as a protective measure in such cases.

All in all, the recent amendment should be seen as an important and positive step, one that reflects the level of understanding of the transactions by market participants. It should make document notarisation less painful for the parties.

By Gabor Pazsitka, Partner, and Noemi Csiki, Associate, Schoenherr

Former Noerr Partner Edina Schweizer has joined Dentons as Partner and Head of the Hungarian Banking and Finance team. Barbara Vighne Herczegfalvi also joined as an Associate.

According to Dentons, Schweizer “brings over 15 years of experience in handling complex domestic and cross-border transactions including project finance, acquisition finance, real estate finance, debt restructurings, and insolvency matters.”

Before joining Dentons, Schweizer spent almost seven years with Noerr, before most of its CEE offices transferred to Kinstellar (as reported by CEE Legal Matters on April 3, 2024) with Noerr’s Hungary office deciding to remain an independent law firm (as reported by CEE Legal Matters on May 31, 2024). Before her time with Noerr, Schweizer spent almost nine years with Kinstellar, two years with Linklaters, and almost four years with Freshfields Bruckhaus Deringer.

Kinstellar has advised the MOL Group on its  EUR 1.3 billion new polyol complex in Tiszaujvaros, Hungary.

MOL is an integrated oil and gas company.

According to Kinstellar, “the new polyol complex, which has just been inaugurated, has the capacity of producing around 200,000 tonnes of polyol per year and providing long-term employment for nearly 300 people. As a result of this project, MOL has become the first company in the CEE region to have a fully integrated value chain from crude oil to polyol production.”

The Kinstellar team included Firm Managing Partner Kristof Ferenczi, Budapest Office Managing Partner Balazs Sepsey, and Senior Associate Laszlo Bujaki.

Kinstellar could not provide additional information on the matter.