Category: Hungary

In the past years, several new EU Member States have started investigations regarding the quality of products. Investigations showed that in many cases products have more detailed descriptions attached, or simply have more active substance if they are sold in the Western Member States than in the Central and Eastern European Member States. It was suspected for a long time that there are quality differences between the same products, sold in the same packaging but in different countries.

Eastern Member States, who are affected by this phenomenon the most, have raised their voices that the EU shall act and punish dual quality accordingly. The voices of the Member States have been heard and the EU adopted legislation to fight the dual quality among the EU, that is going to enter into force on 28 May 2022.

The new legislation was also backed by research conducted by the Hungarian Authorities in early 2021. The scope of the research was cosmetic products that can be purchased both in Germany, Austria, Italy and in Hungary. The research found that at least 30% of the inspected products was of a lesser quality when it was sold in Hungary.

According to the new legislation implemented by Hungary in December 2021, if it is proven that a company applies dual quality, then the company in question can be fined up to 5% of their income, maximum HUF 500 million in case of multinationals (~ EUR 1,380,000). There are intentional loopholes left in the new act where companies can be exempted from the fine, if the difference of the product can be justified with circumstances that vary from place, time, season and local customs.

By Rita Parkanyi, Partner, KCG Partners Law Firm

Former Attorney-at-Law Peter Weidinger has been promoted to Partner at Act Ban & Karika Attorneys at Law, starting from January 1, 2022.

Weidinger focuses on contract law, labor law, corporate law, and the representation of clients in court and out-of-court proceedings.

He joined Act Ban & Karika in 2017 as a Junior Associate and was later promoted to Attorney-at-Law in 2020. He did a brief six-month stint with SCWP Schindhelm in 2020, before returning to Act Ban & Karika in 2021. Earlier, Weidinger was a Junior Associate with Kallay and Partner for almost two years, in 2015 and 2016.

“Peter’s promotion to the position of a Partner is an important milestone for us,” Managing Partner Gergely Ban commented. “His personality ensures that our clientele will receive the high-quality service, based on our international experience, which they used to receive from our law firm over the past years.”

“We are happy to welcome Peter as our new partner,” Managing Partner Marton Karika added. “We value his contribution to the success of our team. Above that, we can rely on him in the preparation of legal articles and publications and in business development because he excels in these areas too.”

On 14 December 2021 certain acts of agricultural subject were amended by the Hungarian Parliament, affecting inter alia the Act on Protection, Management of Wildlife and Hunting, the Forest Act, the Act on Transactions in Agricultural and Forestry Land (Land Transactions Act) and the Act on the Termination of the Undivided Joint Ownership on lands.

The majority of the new provisions entered into force on 1 January 2022, however, certain rules will only enter into force on 1 February 2023 simultaneously with the new Land Registry Act.

Based on the amendment to the Land Transactions Act, considering that in the case of land acquisition from a close relative, the party acquiring the ownership does not have to make the necessary declarations under the Land Transactions Act in his/her own name, it may be a circumvention of the legal provisions if a person transfers the land acquired to a close relative. It has been therefore clarified that in this case the undertakings made by the predecessor are transferred to the close relative.

In case of sale and purchase agreements and lease agreements of lands, the public notification and the approval procedure by the agricultural administration body has been re-regulated to eliminate the problems emerging on the basis of the feedback from the legal practitioners. As a result, in case of contracts subject to approval of the authority, where the right of first refusal or first lease may be exercised, the parties must submit the contract to the agricultural administration body, and not to the public notary. During the preliminary examination, the authority will identify contracts which are fundamentally defective and refuse to approve them. If no such refusal is made, the authority will take the necessary steps ex officio to the public notary to have the contracts published.

Furthermore, on the basis of the amendments, the agricultural administration body may also refuse to approve the lease agreement of lands if the value of the consideration is disproportionate. The amendment clarifies that the value of the rent shall be considered disproportionate if the land concerned does not possess any advantageous characteristics (e.g. its location or quality) which justify a derogation from the normal local rent. Furthermore, the rent of land must be paid by bank transfer or domestic postal order from 1 January 2022, except in certain cases. Any agreement to the contrary between the parties shall be null and void.

By Lidia Suveges, Attorney at law, KCG Partners Law Firm

Several modifications of the company rules in the Hungarian Civil Code entered into force with effect of 1 January 2022. One of the most important changes is that the rules on additional payment (in Hungarian: “potbefizetes”), which were applicable only for limited liability companies, have been transferred to the common rules of companies, resulting in that the possibility to require additional payment from the members is available also for general partnerships, limited partnerships and private limited companies.

According to the new rules on limited liability companies, one member might have more business shares, but even if a member has more business shares, it shall be considered as one member towards the company and the connected voting rights shall be calculated together.

The member’s obligation to provide contribution is also modified. If a member failed to provide the cash contribution in full, the company is still entitled to decide on dividend, however, it cannot be paid to a member who has not yet provided its cash contribution, but it must be settled against the cash contribution not yet provided. Furthermore, the member of the supervisory board might also be a legal person. In this case, the legal person shall designate a natural person who performs the duties.

By Eszter Ila-Horvath, Attorney at Law, KCG Partners Law Firm

Mark Twain famously said “Never put off till tomorrow what may be done day after tomorrow just as well.” Although procrastination usually does not have serious consequences, careful consideration is needed when enforcing IP rights. In its recent decision in case C‑186/18, the Court of Justice of the European Union (“CJEU”) concluded that an unjustified delay in enforcing IP rights may result in the loss of a large part of the claim due to time-limitation.

Main facts of the dispute

After a proceeding lasting more than 10 years, a Community plant variety right was granted in respect of a special variety of mandarin tree. Following the successful application, a company entrusted with the management of the new plant variety right sent a cease-and-desist letter to a Spanish farming company that cultivated the protected variety of mandarin tree without a licence. Almost four years later, another cease-and-desist letter was sent, and as this too failed the rightsholder initiated court proceedings against the farming company in Spain.

The rightsholder claimed that the infringement was continuous, since the trees in dispute were still cultivated at the time the lawsuit was initiated. Pursuant to Spanish law, in the case of an ongoing infringement, the prescription period is extended for as long as the infringement continues.

However, the respective EU regulation on Community plant variety rights sets out that the prescription period starts to run after the Community plant variety right has finally been granted, from the time the holder learns about the act and the identity of the infringer, and it does not set out exceptions for continuous infringements.

The question arose: can EU law be interpreted in line with national law in a way that allows longer prescription periods in case of continuous infringements?

Conclusion of the CJEU

In short, the CJEU’s answer is no. The time for the three-year prescription period to start to run in case of an infringement of Community plant variety rights is first determined by an objective event, namely when the Community plant variety right has finally been granted, and second, by a subjective event, namely when the holder of that right discovers the infringement and the party liable for it.

According to the CJEU, even infringers are entitled to the right of legal certainty. If rightsholders could bring an enforcement action any time with reference to continuous infringement, even if the statutory three-year prescription period lapsed, it would give rise to constant uncertainty for the infringer.

The CJEU also concluded that there is no such thing as continuous infringement of Community plant variety rights. Each act of infringement must be considered individually, irrespective of whether it is repeated, ongoing or part of a set of acts.

Therefore, claims for acts of infringement that happened three years after the initiation of the statutory limitation period are time barred.

Comment

This case should motivate all rightsholders not to wait too long to enforce Community plant variety rights.

However, the CJEU’s arguments against the existence of a continuous infringement, where the prescription period starts to run separately from each act of infringement, does not only apply to Community plant variety rights. In Hungary, for instance, recent court practice in copyright law reached the same conclusion: when the legislation sets out the individual acts of infringement, each act must be taken into account individually and repeated or even ongoing acts cannot result in the extension of the statutory prescription period.

It is therefore advisable not to delay enforcement actions regardless of which IP right is in question.

By Mark Kovacs, Attorney at Law, Schoenherr

At the beginning of November 2021, a bill was submitted to the Hungarian Parliament on the temporary provisions relating to the new Land Registry Act and on the amendment of certain acts of cultural subject and relating to the land registry, spatial planning (in Hungarian: “teruletrendezes”) and urban planning (in Hungarian: “telepulesrendezes”).

In the framework of the project called “E-Land Registry”, the electronization of the land registry will be implemented and in parallel with the technical development, it is also necessary to create the legal regulatory basis. The rules of the new Land Registry Act essential for the operation of the new electronic land registry will enter into force on 1 February 2023. The bill clarifies whether the provisions of the current or the new Land Registry Act shall be applicable for proceedings commenced under the force of the current Land Registry Act and still ongoing at the time of entering into force of the new Land Registry Act.

The amendments proposed by the bill to the Company Registry Act will ensure, as an important innovation, that if the direct consequence of the ruling on the merits of the court of registration is that a right or fact registered in the land registry changes, then the court orders it with its ruling, and it must be ensured with the help of the new IT system, that these changes are smoothly implemented in the land registry (e.g. transformation of a company).

The bill would also modify the Act on the Activities of Attorneys-at-law, since following the entering into force of the new Land Registry Act, only attorneys registered in the relevant public register of the bar and having the right to act in land registry cases can act in land registry proceedings. The bill determines as new disciplinary penalty of attorneys the prohibition from land registry cases which may be imposed for at least one and maximum five years.

In addition to the above, the aim of the bill is to strengthen the protection of public records, to clarify the legal interpretation of certain procedures and competency rules, and to clearly define the scope of data and documents to be registered in public records registers. The bill also provides for the establishment of a national minority municipality archive.

The third major subject of the bill is the amendment of act related to spatial planning, urban planning and the protection of cultural heritage. As a result, the enforcement of land protection requirements will strengthen in the procedures of the spatial planning authority procedures, and the provisions will facilitate the efficient preparation and effective application of new urban plans. In addition, with respect to the spreading of solar power plants, the bill also regulates the conditions of installation in order to protect high quality lands, gardens, vineyards and ecologically valuable areas.

By Lidia Suveges, Attorney at law, KCG Partners Law Firm

CMS has advised Germany’s Commerzbank on the sale of Hungarian subsidiary Commerzbank Zrt to Erste Bank Hungary. Bird & Bird reportedly advised Erste.

Closing is expected in the second half of 2022, pending regulatory approval by the Hungarian Central Bank and the Hungarian Competition Office, among others.

CMS’s team included Partners Andreas Kohler, Erika Papp, and Szabolcs Szendro, Senior Counsels Eszter Torok and Eszter Kalman, Senior Consultant Arpad Lantos, Senior Associates Dorottya Varga-Giesz, Judit Kresz, and Sandor Kovacs, and Associate Dora Altziebler.

Lakatos, Koves & Partners has advised Horizon Development on the sale of the commercial part of its Szervita Square Building to Union Investment. CMS advised the buyer.

According to LKT, the “Szervita Square Building is an exceptional technical and aesthetic quality downtown Budapest asset with a diverse tenant mix and over 95% commercial occupancy level. The office and retail areas are well separated from the top floor luxury residential units in all aspects, which made the asset suitable for investment for institutional investors.”

“The successful sale of the Szervita Square Building to a German core investor – re-entering the Hungarian property investment market with the current transaction – proves the international development competence and extremely high quality and sustainability standards of Horizon Development,” LKT Partner Attila Ungar commented.

The LKT team was led by Ungar and consisted of Lawyers Julia Varkonyi, Agnes Hegyi, Kata Molnar, Csenge Varadi, and Agnes Abraham.

The CMS team included Partners Jozsef Varady and Gabor Czike, Senior Counsel Andras Klupacs, and Senior Associate Zsofia Zsurzsa.

Noerr has advised industrial real estate company Panattoni on its acquisition of real estate plots in Hungary.

According to Noerr, the plots purchased by Panattoni are in Herceghalom, where the 75,500 square-meter Panattoni Park Budapest West will be built, and in Torokbalint, where City Logistics Budapest I is set to be constructed.

Noerr’s team included Partner Zoltan Nadasdy, Counsel Akos Mates-Lanyi, Senior Associate Szilvia Andriska, and Associate Eszter Hegedus.

Noerr could not provide additional information on the deal.

In order to respond quickly to the challenges caused by the pandemic in the workplaces, the Hungarian Government introduced temporary regulation on teleworking in 2020. Since these provisions are applicable only during the state of emergency, the modification of the Labour Code and the Act on Safety at Work are on agenda with the aim of clarifying the provisions on teleworking on a permanent basis. The proposed modification is in line with the rules on teleworking specified in the Government decrees currently in force.

The new statutory regulation will abolish the distinction between ‘telework’ and ‘home office’, since it will provide that the provisions on telework should uniformly apply if the employee works wholly or partly in a place other than the employer’s site. The parties must stipulate in the employment contract that the employee works within the framework of telework. Unless the parties agree otherwise, the employer’s right to give instructions will only cover the employer’s possibility to stipulate the employee’s tasks; and the employee will be allowed to work at the employer’s site for no more than one third of the working days. If the employee performs his work on an IT device, the employer will be obliged to inform the employee about the health and safety rules, and the employee should choose his place of work in accordance with the employer’s instructions. The employers may provide to the employees a tax-free lump sum compensation for the utility fees increased due to the teleworking.

By Eszter Ila-Horvath, Attorney at Law, KCG Partners Law Firm