HUNGARY Trends and Developments Contributed by: István Varga and Viktor Előd Cserép, PROVARIS Varga & Partners
Looking Back on Developments Over Recent Years: The Overhaul of the Law of Procedure in 2018 New codes of procedure entered into force in Hungary as of 1 January 2018, including a new Code of Civil Procedure, a new Code of Admin- istrative Procedure and a new Arbitration Act. The new Code of Civil Procedure took a rather formalistic approach, imposing several new form requirements and duties on parties and their legal representatives. Litigation proceedings are now formally divided into two phases: a prepara- tory (procedure entry) and a substantive phase. Factual statements and evidentiary motions are largely limited to the preparatory phase, with only limited opportunities to reshape these in the substantive phase in exceptional circumstances. The new, rigid procedural system is in stark con- trast with the more laissez fair approach taken under the old Code of Civil Procedure, where the structure and timing of procedural steps, including submissions and hearings, were largely unregulated, resulting in relatively amor- phoustrials, the ultimate length of which was not always easy to estimate. The stringency of the new system, while providing a more structured procedural framework, also favours the further development and use of arbitration as an alter- native. In particular, the large number of formalis- tic dismissals of actions for non-compliance with filing-related requirements seems to have had a deterrent effect and to have contributed to the growth of the arbitration market. The Introduction of Common Law Elements Into Statutory Procedural Law: The “Limited Law of Precedent” An interesting new development is the codifica- tion of a so-called “limited law of precedent” as of 2020, which basically means the – limited – binding force of the decisions of the Kúria . The introduction of the “limited precedent system”
came hand in hand with possibility of appeal- ing against court decisions that derogate from earlier precedents. While citing earlier court decisions – whether anonymised decisions pub- lished on the website of the judiciary or various types of selected, edited decisions published in court reports – was standard practice, these were considered “persuasive precedents”, with stricto sensu no binding force. The codification of the obligation to follow earlier Kúria decisions (apart from certain exceptions) is an interest- ing crossover in a procedural system otherwise based on the codified civil law tradition. In line with the “limited” binding force of these decisions, as of 1 April 2020 lower courts are required to provide reasons in their judgments for derogating from precedents or denying motions seeking a derogation. This means that, in jus- tified cases, lower courts may derogate from Kúria decisions, but the reasons for doing so must be clearly stated. The significance of this lies not only in the limitation of divergent lines of case law to limited necessary scenarios, but also in providing effective recourse against diverg- ing decisions, a derogation being a ground for several ways of challenging (ensuing) decisions. Although the Code of Civil Procedure does not contain a list of situations in which Kúria prec- edents may be exceptionally disregarded, the ministerial note to the amendment enacting the new requirement mentions circumstances and information arising in the deliberation process which cast doubts on the applicability of the earlier precedent and as well as economic and political conditions that make the continuous application of the precedent impossible. Whether a derogation is justified may be chal- lenged by means of an appeal against a first instance judgment (to a second instance court) and a request for the revision of the final and
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