1 Sources of International Civil Procedure
International civil procedural law encompasses three fields: jurisdiction, recognition and enforcement, as well as judicial cooperation. In Hungary, these rules are included in the apil. Nonetheless, as with choice of law, or even more so, EU law has largely superseded national provisions.
The most important EU law instrument is the Brussels i Regulation, which governs jurisdiction, as well as recognition and enforcement, in civil and commercial matters. The Brussels i Regulation’s jurisdictional rules apply, with some exceptions, only when the defendant is domiciled in the EU. On the other hand, its rules on recognition and enforcement apply to the judicial decisions of sister member states, irrespective of the identity of the defendant. The Brussels ii Regulation governs matters related to the dissolution of the marital bond and cases related to parental responsibility, as well as international child abduction. It is applicable in civil matters relating to divorce, legal separation, and marriage annulment, and the attribution, exercise, delegation, restriction, and termination of parental responsibility. The Insolvency Regulation, the Maintenance Regulation, and the Succession Regulation deal with both the choice-of-law and international civil procedural aspects of insolvency proceedings, maintenance matters, and succession, respectively.
2 State Immunity
The doctrine that pil applies to private law matters raises questions in matters concerning states, which enjoy immunity under international law. The immunity of sovereign states is a classical question of pil and may appear in all three areas (choice of law, jurisdiction, and recognition and enforcement). Nonetheless, the practical significance of the issue has been seriously reduced, as states usually do not directly engage in international business transactions, but hide behind legal entities, such as corporations and sovereign funds.
The starting point of state immunity in pil is the principle of ‘par in parem non habet jurisdictionem’: equals have no jurisdiction over each other. As states are equal under public international law, no state can exercise power
The notion of state immunity emerges in the apil in the fields of jurisdiction and recognition and enforcement. Sections 82–87 deal with the international civil procedural aspects of state immunity. These provisions were modeled after the United Nations Convention on Jurisdictional Immunities of States and Their Property signed on December 2, 2004 and are based on the principle of relative immunity. They cover the state, its public authorities, and persons acting on behalf of the state (Section 82).
As regards jurisdiction, the apil provides that a state may be sued only before its own courts (Section 83) and sets out numerous exceptions to this principle (Section 84). A state has no immunity to foreign jurisdiction if it has expressly waived it and if the action was launched by it. This also extends to connected counterclaims. Furthermore, as a general principle, states have no immunity in private law matters, such as civil contracts, employment contracts, claims for damages, in rem rights in real estate, membership, shares and interests in a legal person, succession matters, intellectual property disputes, insolvency proceedings, and arbitration. Diplomatic representatives enjoy immunity unless the immunity was waived (Section 86).
The principle of relative immunity also applies to the enforcement of foreign judicial decisions. Enforcement against the property of a foreign state can be carried out only if the asset is used outside of the state’s non-commercial activities or the state expressly consented to this or separated it for the satisfaction of the claim (Section 85(3) of the apil). The non-commercial activities include assets by diplomatic missions, assets serving a military function, the property of central banks and other financial authorities, property that belongs to the cultural heritage or archives, and property displayed in a scientific, cultural, or historical exhibition (Section 85(4)).
3
The apil’s rules of jurisdiction apply only if the matter is not governed by an EU pil instrument.
The jurisdictional rules of the Brussels i Regulation apply, apart from some exceptions,1 solely relating to matters where the defendant is domiciled in the EU. According to Article 4(1) of the Brussels i Regulation, ‘persons domiciled in a Member State shall, whatever their nationality, be sued in the courts of that Member State’. Article 5 provides that EU domiciliaries may be sued in a Member State different from that of their domiciles only on the basis of the rules set out in the Regulation. Article 5(2) explicitly stresses that national exorbitant rules of jurisdiction, as set out in Annex i to the Regulation, shall not be applied against EU domiciliaries.
The above rule is frequently criticized for being unfriendly towards non-EU defendants. In particular, the application of exorbitant jurisdictional rules, such as Section 97 of the apil which confers jurisdiction on Hungarian courts in cases where the defendant has assets in Hungary, is excluded by the Regulation, but this applies, obviously, only as regards defendants coming under the scope of the Regulation ratione personae; as a consequence, national exorbitant rules on jurisdiction remain applicable to non-EU defendants, since the lawsuits against them remain governed by national jurisdictional rules.
What is more, Article 4(2) of the Brussels i Regulation provides that national exorbitant bases of jurisdiction should be made available also to those EU domiciliaries who are not nationals of the Member State concerned: ‘[p]ersons who are not nationals of the Member State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that Member State’.
Finally, under the Brussels i Regulation, non-EU defendants are not merely denied the protection that is afforded to their EU fellow-sufferers, but they are even deprived of a shield that once protected them. The rules on recognition and enforcement, contrary to those on jurisdiction, apply irrespective of the identity of the defendant; that is, here it is irrelevant whether the defendant in the main proceedings was or was not domiciled in the EU. With this rule non-EU defendants lost one of their defenses. Earlier, they could effectively argue before the courts of the country of recognition and enforcement that the courts in the main proceeding had no jurisdiction in an international sense. Nevertheless, today the recognition and enforcement of Member State
The Brussels ii Regulation follows a similar approach concerning divorce, legal separation, and marriage annulment, but not regarding parental responsibility; in Article 6, as regards matrimonial matters, it provides that the jurisdictional bases included in the Regulation are exclusive for EU nationals and persons having their habitual residence in the EU; accordingly, national rules remain applicable against non-EU defendants.
The Insolvency Regulation applies if the debtor’s center of main interests is in the EU. This follows from Article 3(2) of the Regulation, which provides that where the center of the debtor’s main interests is in a Member State, the courts of other Member States can open only territorial insolvency proceedings.
The Maintenance Regulation and the Succession Regulation have universal application.
3.1 Hungarian Rules of Jurisdiction
The apil establishes a set of jurisdictional rules that have general application (Sections 88–91). These rules define those cases where Hungarian courts have exclusive jurisdiction, where their jurisdiction is excluded (the inverse of exclusive jurisdiction), some parallel grounds of jurisdiction, jurisdiction based on appearance, and jurisdiction over interim measures. The apil establishes no rule of general jurisdiction applicable in all matters.
The apil establishes separate special regimes on pecuniary matters (Sections 92–100) and family law and personal status matters (Sections 101–108). As Hungary does not take part in the enhanced cooperation concerning the Matrimonial Property Regulation and the Regulation on the Property Consequences of Registered Partnerships, the rules of jurisdiction in these matters are established by the apil.
The apil’s rules of jurisdiction are generally modeled after EU pil, most notably the Brussels i Regulation. However, there are some important differences, most notably Section 97 of the apil, which confers jurisdiction on Hungarian courts in cases where the defendant has assets in Hungary. As the apil’s explanatory memorandum explains, unless there is a compelling policy consideration justifying a divergence, the apil follows the approach of the EU jurisdiction rules. This implies that, where appropriate, Hungarian courts may take the cjeu’s case law into consideration also when interpreting the Hungarian rules of jurisdiction.
3.1.1
Given that the rules on exclusive jurisdiction included in Article 24 of the Brussels i Regulation apply irrespective of the domicile of the parties (they have universal effect), the scope of national jurisdictional rules is limited to cases excluded from the scope of the Brussels i Regulation.
Section 88 of the apil provides that Hungarian courts alone have jurisdiction over in rem rights in and the leasing of immovable property located in Hungary, probate proceedings if the deceased was a Hungarian citizen and the estate is located in Hungary, proceedings for the annulment of documents issued in Hungary, matters concerning entries in Hungarian public registers, and enforcement proceedings carried out in Hungary.
If Hungarian courts have exclusive jurisdiction, the courts of no other state have power to entertain the case. Hungarian rules of jurisdiction are, of course, addressed to the Hungarian judiciary and authorities and are not binding on foreign courts. The practical significance of exclusive jurisdiction in relation to foreign courts lies primarily in the rules on recognition and enforcement. Although foreign courts are not obliged to comply with the Hungarian rules of jurisdiction, Hungary refuses to recognize and enforce judgments that do not comply with these rules.2 Furthermore, the jurisdiction of a foreign court cannot be stipulated if Hungarian courts have exclusive jurisdiction.3
Section 89 of the apil lists those cases where the jurisdiction of the Hungarian courts is excluded. These provisions mirror the rules of exclusive jurisdiction with the exception of Section 89(d) (foreign industrial property rights) and Section 89(e) (company law disputes concerning entities seated abroad).
Section 90 of the apil provides for jurisdiction in the case of joinder of parties and counterclaims. Several defendants may be sued jointly before a Hungarian court if at least one of the defendants has his place of living, seat, or central administration in Hungary and there is a close connection between the claims. Jurisdiction over the principal obligor extends to the secondary obligor and, hence, they may be sued jointly if the place of living, seat, or central administration of the principal obligor is in Hungary. Jurisdiction over a claim also extends to the adjudication of the counterclaim.
Section 91 of the apil deals with jurisdiction based on appearance. It provides that the Hungarian court has jurisdiction if the plaintiff makes submissions on the merits without objecting to jurisdiction. The apil however
The Hungarian court has jurisdiction to adopt provisional measures even in cases where it otherwise has no jurisdiction, provided the measure concerns a person or property located in Hungary.5 If the foreign court that has jurisdiction delivers a decision on the merits of the case that is recognizable in Hungary, the provisional measure loses its effect. The purpose of this provision is to manage situations where immediate action is necessary to protect a person or property located in Hungary and the court having jurisdiction is not able to take such action. Provisional measures concerning pecuniary matters can be adopted only if the decision of the foreign court that has jurisdiction over the merits of the case is recognizable in Hungary.
3.1.2 Jurisdictional Rules in Pecuniary Matters
The term ‘pecuniary matter’ (in Hungarian: ‘vagyonjogi ügy’) embraces cases where the claim is based on the party’s pecuniary rights, or its value can be expressed in monetary terms.6
3.1.2.1 Parallel Bases of Jurisdiction
As noted above, the apil does not establish a general jurisdiction, but contains rules of general jurisdiction as to pecuniary matters. According to Section 92, anyone who has his place of living, seat, or central administration7 in Hungary may be sued there in pecuniary matters, unless the jurisdiction of the Hungarian court is excluded (actor sequitur forum rei).
Sections 93–98 of the apil set out various rules of parallel jurisdiction, Section 99 deals with choice-of-court agreements, and Section 100 with insolvency proceedings.
A good number of the rules of parallel jurisdiction are in accordance with EU pil, most notably the Brussesl i Regulation. The jurisdictional rules on contracts (Section 93 of the apil) are in line with Article 7(1) of the Brussels i
According to Article 95 of the apil, Hungarian courts have jurisdiction over matters that have as their object a right in rem in movable property located in Hungary.
Section 97 of the apil contains an exorbitant basis of jurisdiction, which allocates jurisdiction on the basis of the presence of assets.
The Brussels i Regulation rules out the application of this provision with respect to defendants domiciled in the EU. Nonetheless, Section 97 remains applicable outside the scope of the Brussels i Regulation, most notably against non-EU defendants. Hungarian courts have jurisdiction if the defendant has assets in Hungary. Receivables may serve as a basis of Hungarian jurisdiction if the debtor is domiciled in Hungary or if the claim is secured by collateral located in Hungary.
Succession matters are nearly exhaustively regulated by the Succession Regulation, which has universal application. This leaves a very limited practical role to national rules of jurisdiction, which, in essence, have a role to play
In Hungary, succession law is applied in two types of procedures. Probate procedures are carried out by notaries and are aimed at the drawing up of an inventory of the estate and handing it over to the heirs. If there is no dispute between the heirs or if there is a single heir, the estate is transferred by the notary with final effect. In the event of a dispute, the estate may be transferred with only provisional effect. In these cases, the parties may bring actions before the court. Accordingly, the notary’s probate procedure is a simplified one and usually closes the succession matter if there is no dispute between the parties.
According to Section 98 of the apil, the Hungarian notary has jurisdiction to carry out the probate procedure if the deceased was a Hungarian citizen at the time of his death or if the estate (or part of it) is located in Hungary. In contrast, Hungarian courts have jurisdiction in succession proceedings if the deceased was a Hungarian citizen at the time of his death.
3.1.2.2 Prorogation of Jurisdiction
Section 99 of the apil deals with choice-of-court agreements. This provision is modeled on Article 25 of the Brussels i Regulation and has limited practical significance. It applies only if the case falls outside of the scope of the pertinent provisions of the Brussels i Regulation. While the Regulation’s jurisdictional rules, in principle, apply only if the defendant is domiciled in the EU, Article 25 of the Regulation applies irrespective of domicile. This implies that Section 99 has relevance in two cases: first, if the matter does not come under the scope of the Brussels i Regulation, for instance, by reason of Article 1(2) of the Regulation; second, Section 99 applies also where the parties stipulate the jurisdiction of the courts of a non-EU country. If an action is launched before a Hungarian court, the latter has to decide whether the choice-of-court agreement excludes the jurisdiction of the Hungarian courts. Notably, Article 25 of the Brussels i Regulation applies only if the parties agree ‘that a court or the courts of a Member State are to have jurisdiction’.
3.1.2.3 Insolvency Proceedings
The Insolvency Regulation applies if the debtor’s center of main interests is in the EU. This follows from Article 3(2) of the Regulation, which provides that where the center of the debtor’s main interests is located in a Member State, the courts of other Member States can open only territorial insolvency proceedings. However, if the debtor has its center of main interests outside
Although Section 100 of the apil is not stated to be a rule of exclusive or excluded jurisdiction, in insolvency matters there is no possibility for prorogation of jurisdiction (Section 99) and appearance does not establish jurisdiction (Section 91).
According to Section 67 of the apil, Hungarian law governs the legal effects of insolvency proceedings launched in Hungary, with the exception of immovable property, a ship, or an aircraft and security subject to public registration.
3.1.3 Jurisdictional Rules in Family Law and Personal Status Matters
The Brussels ii Regulation establishes rules of jurisdiction as to divorce, marriage annulment, and legal separation, as well as parental responsibility, but leaves room for national jurisdictional rules in three areas. First, it is uncertain whether the Regulation covers disputes related to the existence and non-existence of marriage. Second, under Article 6 of the Regulation, in matters related to the dissolution of the marital bond, the Regulation’s jurisdictional rules are exclusively applicable only if the defendant is habitually resident in or a citizen of a Member State. In other words: in proceedings against a person who is neither habitually resident in the EU nor a citizen of a Member State, the Brussels ii Regulation’s rules of jurisdiction apply, but they do not exclude the application of national rules. Third, Article 6 of the Brussels ii Regulation with regard to matrimonial matters and Article 14 with regard to parental responsibility provide that where no Member State has jurisdiction under the Regulation, ‘jurisdiction shall be determined, in each Member State, by the laws of that State’.
As regards disputes concerning the existence and non-existence of marriage, Hungarian courts have jurisdiction if either party is a Hungarian citizen or the defendant is domiciled in Hungary. In addition, the Hungarian legislator has made use of the opportunity offered by Articles 6 and 14 of the Brussels ii Regulation: in matrimonial matters to lay down that the Hungarian court has jurisdiction if one of the spouses is a Hungarian citizen; in parental
Hungary does not take part in the enhanced cooperation concering the Matrimonial Property Regulation. Hence, the jurisdictional rules in this regard are established by the apil.
Section 102 of the apil sets out six parallel grounds of jurisdiction in relation to the personal and property relations of the spouses. Hungarian courts have jurisdiction if the defendant has his/her habitual residence in Hungary; if the last common habitual residence of the spouses was in Hungary, provided that one of the spouses still has habitual residence here; if both spouses are Hungarian citizens; if the property concerned is situated in Hungary; if the dispute emerges in connection with proceedings concerning the matrimonial bond and the latter comes under Hungarian jurisdiction; the dispute emerges in connection with proceedings concerning succession law and the latter comes under Hungarian jurisdiction.
According to Section 103 of the apil, the Hungarian court has jurisdiction over legal disputes concerning same-sex registered partnerships if either the registered partnership was established in Hungary or at least one of the registered partners is a Hungarian citizen.
According to Section 104 of the apil, jurisdiction over lineage disputes can be based on the citizenship or domicile of the child or the domicile of the defendant or at least one of the defendants. According to Section 105, Hungarian courts have jurisdiction over the authorization and termination of an adoption if the child or the adoptive person is a Hungarian citizen or is habitually resident in Hungary or if the adoptive person (in case of joint adoption by the spouses, at least one of them) is a Hungarian citizen or has his habitual residence in Hungary. Section 107 provides that the Hungarian court has jurisdiction over proceedings concerning guardianship over adults and other protective measures if the person concerned is a Hungarian citizen or has his habitual residence in Hungary.
Section 108 of the apil establishes two grounds of jurisdiction with respect to proceedings for a declaration of death or the establishment of the fact of death: Hungarian courts have jurisdiction, first, if the last habitual residence of the missing person was in Hungary and, second, if he or she was a citizen of Hungary and the declaration of death or the establishment of the fact of death is justified by a domestic legal interest.
3.2
3.2.1 Brussels i Regulation
Hungarian courts have been applying the Brussels i Regulation in a large number of cases.10 Some of these were referred to the cjeu: C-519/12 Hochtief,11 in C-94/14 Flight Refund Ltd v Deutsche Lufthansa ag12 and in C‑102/15 Gazdasági Versenyhivatal v Siemens Aktiengesellschaft Österreich.
3.2.1.1 Scope
The Brussels i Regulation applies, in principle, to civil and commercial matters.
In Case Gfv.ix.30.186/2010,13 the Supreme Court applied the Brussels i Regulation to an administrative authority’s termination of a sponsorship contract (which it was a party to), as the authority had not acted in its capacity as a public authority.
In Case Kf.37137/2019/6,14 the Supreme Court applied the cjeu’s ruling in C‑102/15 Gazdasági Versenyhivatal v Siemens Aktiengesellschaft Österreich. According to the Hungarian Competition Act (hca),15 the appeal to the court does not suspend the obligation to pay the competition fine, but if the court quashes the fine it must be repaid with interest. In this case, the Hungarian Competition Office (hco) refunded a fine with interest because its decision was quashed. Nonetheless, the hco submitted an extraordinary appeal to the Supreme Court, which overturned the judgment of the lower court and reinstated the hco’s decision. Therefore, the defendant paid the fine again, but refused to refund the interest it had earlier received from the hco, as the hca contained no provision on that. Given the regulatory gap in the hca, the hco sued the defendant before the civil court with reference to the Civil Code’s rules on unjust enrichment and claimed that Hungarian courts had jurisdiction under the Brussels i Regulation. Nonetheless, the cjeu held that ‘[a]n action for recovery of sums not due on the ground of unjust enrichment […] which has its origin in the repayment of a fine imposed in competition law
This proposition was confirmed by the Supreme Court also in Case Kf.37339/2019/8.17
3.2.1.2 Special Jurisdiction
The establishment of jurisdiction may involve a vicious circle. The circumstance included in the rule of jurisdiction (the jurisdictional ground) can, at times, be established only after the merits of the case have been examined, while the court can investigate the merits only if it has jurisdiction. Hence, at this stage, courts inquire whether the plaintiff’s claim, based on the circumstances alleged by him, comes under one of the heads of jurisdiction. Here, the court does not examine whether the plaintiff’s allegations are true but carries out a hypothetical analysis; can jurisdiction be established if one assumes that the plaintiff’s allegations are true? Accordingly, the relevant question is whether the plaintiff’s allegations satisfy the conditions of the given head of jurisdiction. If the court went beyond the allegations stated in the plaintiff’s statement of claim, it would engage in a premature substantive analysis.
In Case Pfv.i.20.164/2019,18 the Supreme Court held that Article 7(1) of the Brussels i Regulation applies and establishes jurisdiction if, after looking into the parties’ statements, the court has no well-grounded suspicion about the existence of a contractual relationship. In other words, when deciding on jurisdiction, the court has to proceed from the statements of the parties. Everything that is beyond those and raises questions concerning the existence and validity of the contract goes beyond the application of the rules of jurisdiction and is part of the substantive analysis.
The Brussels i Regulation establishes several grounds of parallel jurisdiction. From these, Hungarian courts have developed a significant amount of case law concerning Article 7(1) (contractual matters) and Article 7(2) (non-contractual matters) of the Regulation. Article 7(1) points to the place of performance of the contract. In the case of a sale of goods, this is the place of delivery. In the case of the provision of services, this is the place where the services were provided or should have been provided. If a contract qualifies as neither a sale of goods nor a provision of services, the contract has no single
In Case Gfv.ix.30.187/2011,19 the Supreme Court interpreted Article 7(1) and (2) of the Brussels i Regulation in the context of precontracts. The Court was not explicit and justified the jurisdiction of the Hungarian courts under Article 7(1) with reference to various circumstances. Nonetheless, its reasoning suggests that the place of performance of the precontract is identical to the place of performance of the final contract the precontract targets, though it also noted that it was not proved that the final contract was supposed to be concluded outside of Hungary. The Court also referred to Article 7(2) of the Brussels i Regulation. In this regard, the damages were defined in part as expenses and in part as loss of profit. The Court noted that the loss of profit occurred in Hungary, as did some of the expenses; hence, the damage also established the jurisdiction of the Hungarian courts.
In Case 16.Gf.40.303/2009/5,20 the High Court of Appeal of Budapest encountered a difficult question of characterization concerning Article 7(1) and (2) of the Brussels i Regulation. According to the then-effective rules of company law, the person who acquired controlling influence over a company had to report this to the company registrar. The failure to report entailed the controlling shareholder’s subsidiary liability.21 This raised a question of characterization: was this subsidiary liability contractual or non-contractual? The controlling shareholder’s liability was not fault-based, which suggested that it did not rest on a delictual basis. The High Court of Appeal of Budapest held that the subsidiary liability attached to the failure to report the acquisition of direct control is a form of piercing the corporate veil and does not come under the notion of delictual or quasi-delictual liability. Hence, it comes not under Article 7(2) but under Article 7(1) of the Brussels i Regulation. Given that the basis of the plaintiff’s claim was a loan contract and the place of performance of the contractual obligation in question was Hungary, Hungarian courts had jurisdiction.
Case Gf.20003/2015/1022 arose out of a contractual dispute concerning the transfer of shares in limited liability companies. The seat of one of the
In this case, the parties concluded a share transfer agreement concerning limited liability companies. In Hungarian law, business shares are not negotiable instruments (contrary to shares in stock corporations). The High Court of Appeal of Győr conceived the agreement as a sales contract and defined the place where the goods were to be delivered as the country where the acquisition of the business shares was to be registered. As the transfer of the shares in a company seated in Hungary has to be registered in Hungary, the place of performance was considered to be Hungary and Hungarian courts had jurisdiction under Article 7(1) of the Brussels i Regulation.
In Case 7.G.20.255/2018/92, the plaintiff claimed compensation for cartel damage by reliance on a decision of the European Commission. The latter established that the competition law violation covered the whole European Economic Area (eea). The Balassagyarmat Regional Court found that this implied that the harmful event occurred in Hungary, and so Hungarian courts had jurisdiction under Article 7(2) of the Brussels i Regulation. The Court established that the plaintiff had purchased the product concerned by the cartel, paid the price, and traded in his used car in Hungary.
In Case 20.Gf.40.050/2020/36-ii,24 in the context of a claim for competition damages, the High Court of Appeal of Budapest, referring to the cjeu’s case law,25 held that the place of the harmful event was the relevant market concerned by the violation, that is, the place where the distorted prices were applied and where the victim claimed to have suffered damage, even though the plaintiff had sued a cartelist undertaking it had no contractual relationship with. The Court stressed that as the violation covered the whole eea and Hungary was part of this, the harmful event occurred in Hungary and, thus, Hungarian courts had jurisdiction.26
In Case Gf.30410/2013/3,28 the defendant wanted to set off its claim for compensation for the legal costs it was awarded in proceedings in the Czech Republic against the same plaintiff concerning the same subject-matter. The Hungarian court recognized the Czech decision on legal costs. The plaintiff argued that the Hungarian court had no jurisdiction over the set-off. The High Court of Appeal of Szeged established its jurisdiction on the basis of Article 8(3) of the Brussels i Regulation. Although this provision refers to ‘counter-claim[s] arising from the same contract or facts on which the original claim was based’ and confers jurisdiction on ‘the court in which the original claim is pending’, the High Court of Appeal of Szeged held that Article 8(3), as ‘from greater to smaller’ also covers set-off claims (argumentum a maiore ad minus). It has to be noted that the facts of the case suggest that the Czech and Hungarian proceedings concerned the same subject-matter: the plaintiff first tried to enforce its claim in the Czech Republic, where it subsequently withdrew the claim, and then submitted it to the Hungarian court. Hence, the Czech court terminated the procedure and awarded legal costs to the defendant.
3.2.1.3 Consumer Contracts
The Brussels i Regulation establishes protective rules of jurisdiction concerning certain contracts that involve a weaker party (insurance, consumer, and employment contracts). The protection in the case of consumer contract consists of the consumer’s right to sue in his country of domicile. The cases that arose before Hungarian courts centered mainly around the definition of ‘consumer’ and the ensuing question whether the protective rules of jurisdiction
In Case Gf.20062/2015/8,29 the High Court of Appeal of Győr interpreted the concept of consumer contract. It held, in the context of a choice-of-court provision in the creditor’s standard terms, that a loan contract does not qualify as a consumer contract if its purpose is to build structures on the plots owned by the debtor and its family, including a complex of 18 apartments and a restaurant, which, at the end, became the property of companies.
In Case P.21044/2015/16, the Szeged Regional Court dealt with the definition of consumer contract. It held that the party’s characteristics and the purpose of the contract must be inspected in this regard. In this case, it established that in relation to the loan contract the plaintiff had adopted the status of his ex-spouse because she was creditworthy due to her job and income, and the purpose of the contract was clearly connected to the planned self-employment activity. Thus, the contract could not be regarded as being concluded outside of the debtor’s trade or profession. This was not affected by the circumstance that the agreement fell partly outside of his economic and professional activity; in such a case, the agreement does not qualify as a consumer contract.
3.2.1.4 Exclusive Jurisdiction
Article 24 of the Brussels i Regulation establishes grounds of exclusive jurisdiction.
In Case Gf.i.30.343/2013,30 the High Court of Appeal of Szeged held that domain name registration is covered by Article 24(4) of the Brussels i Regulation. The Court considered that the registration of a domain name is similar to that of a trademark, and as Article 24(4) of the Brussels i Regulation refers to ‘proceedings concerned with the registration or validity of patents, trademarks, designs, or other similar rights required to be deposited or registered’, Hungarian courts have exclusive jurisdiction over domain names registered in Hungary (that is, .hu).
In Case 9.Pkf.25.572/2020/2,31 the High Court of Appeal of Budapest highlighted that the exclusive jurisdiction established by Article 24(2) of the Brussels i Regulation concerning immovable property extends solely to in rem claims (and tenancy). Hence, this head of jurisdiction does not cover claims under the law of obligations. The term ‘rights in rem’ has an autonomous EU-law meaning and must be interpreted narrowly. Its key element is the erga
3.2.1.5 Choice-of-Court Agreements
In Case Gf.vii.30.228/2013/4,32 the parties entered into a distribution contract which, by way of reference to the supplier’s standard terms, contained a choice-of-court clause. After a dispute arose, the parties settled this via a memorandum which provided that the supplier would buy back the merchandise as to which the distributor had objections. The Supreme Court held that the choice-of-court agreement covering the distribution contract did not extend to the memorandum, as the latter was not simply the consequence of the distribution contract but created a new contractual obligation (the supplier promised to buy the products it had sold before). Accordingly, the court ignored the stipulation of the jurisdiction of German courts and established that the Hungarian court had jurisdiction, as the place of performance was in Hungary.
Hungarian courts, under Hungarian pil rules, tend to take a restrictive approach to choice-of-court agreements. According to Section 62/F(1) of the old apil, the counterpart of Article 25 of the Brussels i Regulation, ‘[i]n case of pecuniary matters, the parties may stipulate that the courts of a particular state or a particular court has jurisdiction to settle their dispute or their disputes arising from a particular legal relationship’. In the case reported as bh 2004.153, the contract stipulated the exclusive jurisdiction of ‘the Brussels courts’ (‘any legal dispute connected to the contract and/or related to its interpretation, performance, termination or cancellation comes under exclusive Brussels jurisdiction or before the Brussels courts’). The High Court of Appeal of Budapest held that this stipulation was not legally enforceable as it was not in conformity with Section 62/F(1) of the then-effective old apil, which enabled the parties to choose either the courts of a particular state or a particular court, and the choice of the Brussels courts came under neither of these
It is hoped that Hungarian courts will not follow this approach concerning the Brussels i Regulation, although the statutory language of the two instruments is similar: according to Article 25 of the Brussels i Regulation, the parties may agree ‘that a [specific] court or the courts of a Member State are to have jurisdiction’.
An indication of this can be observed in Case Gfv.30382/2018/8.33 Here, the parties stipulated the Szolnok Local Court. However, the plaintiff submitted a claim that, because of its value, came under the subject-matter competence of the Szolnok Regional Court. Hungarian law distinguishes between international jurisdiction, subject matter competence, and venue. The parties may agree to international jurisdiction and venue (domestic territorial jurisdiction) but have no autonomy as to subject-matter competence. High-value claims come under the original (subject-matter) competence of regional courts, and while the parties may choose from the courts located in various parts of the country that have subject-matter competence, the law does not allow them, for instance, to choose a local court in a matter that, due to the value involved, comes under the competence of regional courts. In this sense, the court’s power to entertain a case is to be established along three co-ordinates, and party autonomy prevails with respect to international jurisdiction and venue (territorial competence), but not subject-matter competence.
In this case, the Supreme Court emphasized that the Brussels i Regulation deals solely with the question of jurisdiction (in the international sense). To establish jurisdiction, it is necessary and sufficient if it can be established without doubt which country’s court or courts the parties chose. The parties’ agreement need not extend to the determination of a specific court that has subject-matter and territorial competence (venue), since this is an issue coming under the given Member State’s domestic law.34 The Supreme Court found that when the parties stipulated the Szolnok Local Court, they agreed that the case should be entertained by a Hungarian court located in Szolnok. The agreement cannot be construed narrowly as referring solely to matters coming under the subject-matter competence of the Szolnok Local Court, with the exclusion of matters that come under the subject-matter competence of the
The Supreme Court also noted that the application of Article 25 of the Brussels i Regulation implies the requirement of specificity (that is, the court chosen by the parties should be determinable without doubt) and the parties’ agreement did meet this requirement.36
In Case 10.Gpkf.44.048/2020/2,37 the High Court of Appeal of Budapest established that, given that by means of prorogation of jurisdiction the parties derogate from their rights and the choice may not be equally advantageous for them, the formal requirements set out in Article 25 of the Brussels i Regulation have to be construed rigorously and restrictively. In this case, the choice-of-court clause was part of the defendant’s standard terms. However, the framework agreement concluded by the parties did not refer to these. The Court established that the requirement of writing would be met if the framework agreement referred to the standard terms or the parties had signed them separately. The agreement is ‘evidenced in writing’, as provided in Article 25(1)(a) of the Brussels i Regulation, if one of the parties sends the other a unilateral written confirmatory document and the other party does not object to that within a reasonable time. It does not amount to a confirmation that, after the conclusion of the framework agreement, in connection with the individual orders the defendant sent its standard terms to the plaintiff, because there was no prior agreement the sending of the standard terms could have confirmed.
3.2.1.6 Parallel Proceedings
The Brussels i Regulation establishes two sets of rules for parallel proceedings. The rules on lis pendens apply if the two matters are, in essence, identical and provide for a mandatory stay. If proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, the court first seised has priority to decide on its jurisdiction, and if it establishes its jurisdiction the other court or courts have to decline theirs. Where there is a choice-of-court agreement, it is not the court first seised but the chosen one that has priority.38 The rules on related actions require a less intenstive link between the two proceedings and provide for a discretionary stay. Two actions are related if ‘they are so closely connected that it is expedient
In Case 14.Gpkf.43.405/2012/2,40 parallel proceedings were pending in Hungary and France. These emerged from a railway accident in Hungary. They concerned different claims and partly different parties (the proceedings in France dealt with damage to the railroad cars, and the action in Hungary with damage to the railroad), so lis pendens could not be established. Nonetheless, the two actions did have some overlapping issues, such as who was liable for the accident and responsible for the damage. The High Court of Appeal of Budapest refused to stay the proceedings. However, it based its decision not on Article 30 of the Brussels i Regulation but on the pertinent national rules of civil procedure, which had a narrower scope. According to the latter, if there was no lis pendens, the court could stay the proceedings only if the decision in the case before it depended on a preliminary question that was subject to other, parallel proceedings. The Court did not inquire whether the two actions were so closely connected that it was expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings.
3.2.1.7 Relation with Other Instruments
According to Article 71 of the Brussels i Regulation, the latter does not affect the international treaties which the Member States are parties to, and which govern jurisdiction or recognition and enforcement.
In Case Gpkf.iv.40.160/2014/2,41 the High Court of Appeal of Pécs, based on Article 71 of the Brussels i Regulation, applied the jurisdictional rules of Article 31(1) of the cmr instead of those of the Regulation. The same approach was followed by the High Court of Appeal of Budapest in Case Gf.40035/2014/7.
3.2.2 Insolvency Regulation
In Case 12.Fpkf.44.199/2012/3,42 the High Court of Appeal of Budapest examined the territorial scope of the Insolvency Regulation and held that it did not apply to enterprises domiciled outside of the EU. Unfortunately, the Court’s reasoning conflates the seat and the center of main interests. Although Article 3 of the Insolvency Regulation contains the presumption that the place of the
The principal procedure of C-527/10 Erste gave rise to various issues of interpretation.43 Case Gfv.xi.30.516/2008/44 emerged in an earlier stage of the proceedings. At this stage, the creditor argued that Hungarian courts had jurisdiction to launch a secondary territorial procedure, because the debtor allegedly had an establishment in Hungary. The Supreme Court set out three important principles as regards the notion of establishment and the application of Article 3(2) of the Insolvency Regulation. First, the burden of proof of the existence of an establishment rests on the creditor. If he or she cannot prove that the debtor has an establishment in Hungary, no insolvency proceedings may be opened and pending insolvency proceedings have to be terminated. In this case the creditor failed to meet this burden. Second, the debtor was not established in Hungary merely by acquiring shares in a company seated in Hungary or by opening and maintaining a bank account there. These circumstances are not sufficient to confirm the existence of an establishment. Finally, the Supreme Court noted that the Insolvency Regulation does not require, as an additional pre-requisite, that the establishment exist also at the time the request for the secondary territorial procedure is submitted.
3.2.3 Brussels ii Regulation
Hungarian courts have developed a significant amount of case law in parental responsibility matters under the Brussels ii Regulation.45
3.2.3.1 Scope
Under Hungarian law, a significant number of family law issues related to children, such as certain issues related to the exercise of access rights, are handled by the Guardianship and Child Protection Office (‘gyámhivatal’).
In Case Pfv.ii.20.622/2009,46 the Supreme Court established that, as the competences concerning access rights are split between the court and the Guardianship and Child Protection Office, the latter must be regarded as a ‘court’ from the perspective of the Brussels ii Regulation.
In Case Kfv.ii.39.412/2007/12,47 the plaintiff claimed compensation for the travel costs incurred when exercising his visiting rights in the timeframe set out by the court, because the other parent had failed to inform him that she had moved with the child to Germany and, hence, they could no longer be reached at the earlier address. The Supreme Court held that the claim of reimbursement for the failed visit came within the scope of the Brussels ii Regulation. The Court, referring to Articles 1(1)(b) and 2(a) of the Brussels ii Regulation, pointed out that the Regulation also applied to the exercise of the right of access, and the claim for reimbursement for the failed visit was part of the exercise of the plaintiff’s rights of access.
Hungarian courts have been reluctant to apply the Brussels ii Regulation to matters having a significant non-EU element.
In Case Pfv.ii.21.847/2014,48 the Supreme Court had to decide whether the Brussels ii Regulation applied to a matter with a significant non-EU element. The plaintiff was a Hungarian and the defendant a French citizen. The plaintiff requested the court to dissolve their marriage concluded in Paris, to place their child born in Tokyo (a French-Hungarian dual citizen) with her, and to award maintenance. Before the opening of the Hungarian proceedings, the defendant launched divorce proceedings in Bora Bora (French Polynesia), where the parties allegedly lived at the time the proceedings were launched. While the case centered around the consequences of the Polynesian proceedings in terms of lis pendens, the Supreme Court also examined the applicability of the Brussels ii Regulation’s jurisdictional rules and established, in a summary manner, that they did not apply, since French Polynesia did not come under
As noted above, the reluctance to apply an EU pil instrument to a matter with a significant non-EU element is not novel in Hungarian case law. In Case G.20348/2013/83, the Győr Regional Court indicated that the Rome i Regulation did not apply in a case where one of the contracting parties was Austrian but the other one was from the Cayman Islands, although Article 2 of the Rome i Regulation provides for universal application.
3.2.3.2 Jurisdictional and Related Procedural Issues in Parental Responsibility Matters
In parental responsibility matters, the general ground for jurisdiction is the child’s habitual residence. In Hungarian judicial practice, habitual residence, as one of the central concepts of the Brussels ii Regulation’s jurisdictional rules, is treated as a fact-intensive issue and is analyzed on a case-by-case basis. Courts interpret this concept uniformly in the various legal instruments (Brussels ii Regulation, Hague conventions, and domestic law). As to the child’s habitual residence, courts do not attribute primary relevance to the length of the stay, but instead take into consideration the parents’ decision and common will.49
In Case Pfv.ii.20.123/2015,50 the Supreme Court established that if the parties move with the child to another country for a long period of time, though without the intention to settle, sell their movables in Hungary, and rent out their real estate for an indefinite duration, the child’s habitual residence changes.
In Case Pfv.ii.20.910/2011,51 the Supreme Court held that the child’s place of habitual residence does not shift to Hungary if the parents consider their employment here as provisional and maintain their habitual residence in the other country.
In Case Pfv.ii.21.710/2013,52 the Supreme Court examined the reasons for denying validity to a choice-of-court agreement as set out in Article 12(3) of the 2003 Brussels ii Regulation. It noted that during the first instance proceedings (where the court rejected the parties’ motion) the child’s interests would
In Case Pfv.ii.20.622/2009,53 the Supreme Court interpreted Article 8(1) of the Brussels ii Regulation in an idiosyncratic manner. Article 8(1) provides that if the child moves lawfully to another Member State, the courts of the previous habitual residence retain jurisdiction ‘during a three-month period following the move for the purpose of modifying a judgment on access rights issued in that Member State before the child moved’, provided the holder of access rights remains in this country. While the statutory language of Article 8(1) suggests that the starting date of the three-month period is the day of the actual move, as obiter dicta the Supreme Court indicated, in a case where the Hungarian court authorized the child’s move from Hungary to Italy (i.e., the change of the habitual residence), that the three-month period starts running from the date of the judgment authorizing the move.
Article 11(2) of the 2003 Brussels ii Regulation requires the court to ensure ‘that the child is given the opportunity to be heard during the proceedings unless this appears inappropriate having regard to his or her age or degree of maturity’. In the 2019 Brussels ii Regulation, the child’s right to express his views in return proceedings is included in Article 26. The Supreme Court has consistently held that the court does not have to hear the child via a psychologist but may hear him directly and assesses whether the child’s declarations should be taken into consideration, having regard to his age and degree of maturity.54
In Case Pfv.ii.20.769/2013,55 the Supreme Court rejected the plaintiff’s allegation of jurisdiction based on appearance, because the defendant objected to the jurisdiction of the Hungarian courts in his very first submission after the delivery of the statement of claim and several times thereafter.
In Case Pfv.ii.22.073/2009,56 the Supreme Court established that the defendant had implicitly accepted the jurisdiction of the Hungarian courts by virtue
In Case Pfv. ii. 20.936/2019,57 the Supreme Court interpreted Article 15 of the 2003 Brussels ii Regulation, which authorizes the court to transfer the case to a court of another Member State if the latter is better placed to hear the case. According to the Supreme Court, Article 15 sets out three conjunctive conditions: the paramount interests of the child, a close link to the other Member State, and that the other court is better placed to entertain the case.58 The close link to the other Member State is defined in detail in Article 15(3) of the Regulation, but the other two considerations come under the court’s discretion and have to be assessed in light of the purposes of the Regulation.59 A court is better placed if the transfer of the cases could have real and specific added value. The rules of procedure of the other court may be taken into account, but not its substantive law.60 The Supreme Court affirmed the lower court’s decision that in this case the transfer of the case to the courts of the child’s habitual residence was justified, as the German court was better placed to explore the child’s circumstances, such as the place of living, school, and out-of-school activities, and had better access to the pertinent evidence (witnesses, deeds).61 The Supreme Court also stressed that the assessment is based exclusively on the interests of the child, and the interests of the parents play no role here.62
Hungarian courts have consistently held that the Brussels ii Regulation narrows down the possibility of refusing to return the child. According to Article
3.2.4 Maintenance Regulation
In Case Pfv.ii.21.658/2018/16,66 the Supreme Court established jurisdiction, under Article 5 of the Maintenance Regulation, on account of the defendant’s appearance before the Hungarian court. The defendant had appeared before the court and, thus, tacitly accepted its jurisdiction, when, in his response to the statement of claim, he had asked the court to reject the plaintiff’s claim and made submissions on the merits without objecting to the court’s jurisdiction.
3.3 Procedural Issues
Hungarian courts must decide on their jurisdiction (and lack of it) ex officio. However, if the jurisdiction of the Hungarian courts is not excluded, the defendant can establish it by entering an appearance and making a submission on the merits. Hence, the decision on jurisdiction is dependent on the declarations and motions (objection to jurisdiction) of the defendant.
According to Section 170(2) of the Code of Civil Procedure, the plaintiff’s statement of claim has to present the facts that establish the court’s jurisdiction.
The court rejects the claims as procedurally inadmissible, without further notice and without summoning the defendant (that is, without opening the
If the claim was not rejected as procedurally inadmissible and the civil proceedings were opened, the court will terminate them ex officio if it lacks jurisdiction. At this stage, the defendant has already been summoned and called to react to the statement of claim, and in the response to the statement of claim he or she has the chance either to object to the jurisdiction of the Hungarian courts or to make a submission on the merits without objecting to jurisdiction, and thus establishing jurisdiction by appearance. At this stage, the court can inquire into all bases of jurisdiction: the ones that cannot be overridden by entering an appearance and those that can.68
3.4 International Service
In intra-EU matters, international service (both inbound and outbound) is carried out under the Service Regulation. Hungary has concluded numerous international treaties on judicial assistance, which contain provisions on international service and are applied outside of the scope of the Regulation.
If neither the Service Regulation nor an international treaty applies, requests for international service are fulfilled on the basis of reciprocity or individual ministerial decision. The request is declined if to fulfill it violates Hungarian public policy.69
3.5 Rules of Evidence
In intra-EU matters, the international taking of evidence (both inbound and outbound) is carried out under the Taking-of-Evidence Regulation. Hungary has concluded numerous international treaties on judicial assistance, which contain provisions on the international taking of evidence and are applied outside of the scope of the Regulation.
If neither the Taking-of-Evidence Regulation nor an international treaty applies, requests for the international taking of evidence are fulfilled on the basis of reciprocity or individual ministerial decision. The request is declined if to fulfill it violates Hungarian public policy.70
4
Hungarian law’s provisions on recognition and the declaration of enforceability (hereafter briefly referred to as ‘enforcement’) are mainly included in the apil. Certain procedural rules are to be found in the Enforcement Act. These rules are applicable to recognition and enforcement matters that are not covered by EU pil or an international treaty. The recognition and enforcement of sister-member-state judgments in civil and commercial matters is governed by the Brussels i Regulation, in divorce (legal separation, marriage annulment) and parental responsibility matters by the Brussels ii Regulation, in maintenance and succession matters by the Maintenance and the Succession Regulations. The Insolvency Regulation covers decisions delivered in the context of bankruptcy proceedings by sister-state courts. In practical terms, judgments of Member State courts are, for the most part, covered by EU legislation. Hence, the purview of Hungarian rules is mainly restricted to the recognition and enforcement of non-EU judgments, supplemented with matters excluded from the scope of the foregoing EU-law instruments.
4.1 Recognition and Enforcement under the apil
Recognition of a foreign judicial decision requires no special procedure: if the conditions for recognition are met, the judgment is automatically recognized by virtue of the law and has the same legal effects as Hungarian judgments. The question of recognition is examined by the court or authority in whose proceedings the question of recognition arises, unless otherwise provided by the law. Recognition may be used as a defense (shield) by the defendant in proceedings. In practice, the question of automatic recognition also arises in the case of public registers (e.g., registration of marriage or divorce, registration of transfer of title).71 On the other hand, a foreign judgment may be enforced in Hungary only if the Hungarian court has declared it enforceable in a separate procedure (exequatur).72
The apil’s rules on recognition and enforcement differ substantially from their EU counterparts, given that judgments from outside of the EU enjoy a lower level of trust than the judicial decisions of sister member states.
Sections 109–112 of the apil contain the general rules of recognition and enforcement, which are applicable to all types of cases. Sections 113–115 of the
The recognition and enforcement of a foreign judicial decision have three general preconditions (Section 109(1)(a)-(c) of the apil): the foreign court’s jurisdiction was well-grounded in the light of the Hungarian rules (mirror-image principle); the judicial decision has become final (res judicata), and there is no ground for refusal. Section 122(5) of the apil excludes révision au fond: the foreign decision may not be reviewed as to its substance.
The jurisdiction of the foreign court is essentially adjudicated upon on the basis of the mirror-image principle. Pursuant to Section 109(2) of the apil, the jurisdiction of the foreign court is well-founded if the court has acted on the basis of a ground of jurisdiction set out in the apil. In family and personal status matters, Hungarian citizens with multiple citizenship could be disadvantaged in cases where the foreign court establishes jurisdiction based on foreign nationality, whereas under Hungarian rules the ground of jurisdiction is the person’s Hungarian nationality. In light of this, Article 109(3) of the apil provides that, when assessing the jurisdiction of the foreign court, the other citizenship of the Hungarian citizen also has to be taken into account.
The apil establishes indirect grounds of jurisdiction. Some EU pil instruments (such as the Succession Regulation) contain jurisdictional rules of universal application or (like the Brussels ii Regulation) leave merely a complementary role to national rules. At the same time, these instruments do not deal with the recognition and enforcement of decisions of courts of third countries, the recognition of which is governed by the apil. For these cases the apil sets out indirect grounds of jurisdiction, which are to be considered only in the context of recognition in order to judge whether the jurisdiction of the foreign court was well established. Indirect rules of jurisdiction do not establish the jurisdiction of the Hungarian courts but are used as a yardstick to ascertain if the jurisdiction of the foreign court was well established. The establishment of the jurisdiction of foreign (non-EU) courts cannot be tested under the EU rules, as non-EU courts do not enjoy the same trust as the judiciaries of sister member states.
There are also cases where the apil establishes both direct and indirect grounds of jurisdiction. In these cases, the reason for establishing indirect grounds of jurisdiction is not the absence of direct rules, but the fact that the legislator intended to establish indirect grounds of jurisdiction more broadly or more narrowly than the direct ones.
According to Section 115 of the apil, in succession matters the jurisdiction of the foreign court is deemed to be well-founded if it was based on the habitual residence or the citizenship of the decased at the time of death.
As regards the existence, validity, and termination of registered partnerships, the apil provides a wider set of indirect grounds of jurisdiction than of direct ones (Section 117).
Section 119 of the apil sets out indirect rules of jurisdiction concerning maintenance matters. The jurisdiction of the foreign court is well-founded if it is based on either the defendant’s or the maintenance creditor’s habitual residence, or if it is ancillary to proceedings concerning personal status, parental responsibility, or guardianship, provided that that foreign court’s jurisdiction was well-founded as to the latter.
Section 120 of the apil deals with adoption, and provides that for the recognition of a foreign decision authorizing the adoption of a child with Hungarian citizenship the adoption must be approved by the Hungarian guardianship authority. This requirement does not apply if the child has multiple citizenships and his habitual residence at the time of the decision was in the state of the other citizenship. This provision aims to prevent limping family statuses, where a child has different family statuses in the countries he or she is a citizen of. Nonetheless, the decision of the foreign court must be recognized if recognition is requested by the adopted person who has come of age according to Hungarian law and who has Hungarian citizenship.
In order to be recognized and enforceable, the foreign judicial decision must be final and conclusive (res judicata). This is a major difference from the EU pil instruments, which, in principle, accord the same status to the foreign judgment in the country of destination that it enjoys in the country of origin. If a judgment is not final but enforceable in the country of origin, these legal effects have to be recognized and enforced in the rest of the Member States. On
The grounds of refusal set out in the apil include the grounds listed in Article 45(1)(a)-(d) of the Brussels i Regulation (violation of public policy, violation of the right of defense, irreconciliability with a Hungarian final judicial decision, irreconciliability with an earlier final judicial decision of the court of another state). Section 109(4)(c) of the apil establishes a ground of refusal based on lis pendens that has no counterpart in the Brussels i Regulation: if Hungarian court proceedings were instituted before the launch of the foreign proceedings, the ensuing foreign judgment will not be recognizable in Hungary.
In general, the apil does not require reciprocity for the recognition and enforcement of foreign judgments. Nonetheless, in pecuniary matters reciprocity is a requirement, except for cases where the jurisdiction of the Hungarian courts is excluded and where the jurisdiction of the foreign court was based on the parties’ agreement.73 As a corollary, reciprocity is not a prerequisite of recognition and enforcement in family law and personal status matters.
In the application of the apil, reciprocity is understood as ‘administrative’ reciprocity, which exists when the authorities of the two states formally establish the existence of reciprocity. Therefore, the mere fact that the recognition and enforcement of Hungarian decisions would be ensured under the law of a country or that the courts of a country regularly recognize and enforce Hungarian judgments does not suffice in this regard.
Of course, reciprocity is not required where an international treaty provides otherwise. It is important to emphasize that an international treaty extinguishes the requirement of reciprocity only if it establishes enforceability using clear and unambiguous language.74
As noted above, reciprocity is not a prerequitite of recognition if the jurisdiction of the Hungarian courts is excluded and if the jurisdiction of the foreign court was based on the parties’ agreement. It has to be stressed that only choice-of-court agreements are capable of removing the requirement of reciprocity, whereas jurisdiction based on appearance is not sufficient in this regard.
4.2
There are fundamental differences between the apil and EU pil instruments as regards recognition and enforcement. On the one hand, under the apil, if an international treaty does not provide otherwise, reciprocity is a precondition of recognition in pecuniary matters, except for cases where the jurisdiction of the Hungarian courts is excluded or where the jurisdiction of the foreign court was based on the parties’ agreement. On the other hand, reciprocity plays no role in EU pil instruments. Furthermore, under the apil a foreign judicial decision can be recognized only if the foreign court’s jurisdiction was well-founded in the light of the jurisdictional grounds used by the apil. On the other hand, as a general principle, EU pil instruments, though with some exceptions, prohibit the court of recognition from reviewing the jurisdiction of the court that delivered the judgment. The Insolvency Regulation departs from this principle. In Article 19(1) it provides for the recognition of the judicial decisions of the court that has jurisdiction: ‘[a]ny judgment opening insolvency proceedings handed down by a court of a Member State which has jurisdiction pursuant to Article 3 shall be recognised in all other Member States from the moment that it becomes effective in the State of the opening of proceedings’.
4.2.1 Brussels i Regulation
In Case K.27480/2015/26, the Administrative and Labor Court of Nyíregyháza, in a matter involving the judicial review of an administrative decision taken in a tax matter, established that the recognition of another Member State’s judgment under the Brussels i Regulation does not imply that the facts established in the foreign judgment bind the Hungarian court.
In Case Pfv.21258/2018/3, the Supreme Court underscored, in the context of the 2001 Brussels i Regulation, that in the first stage of proceedings for a declaration of enforceability the court may examine only the fulfilment of the formal requirements and may not examine the legal and factual elements of the case.
In Case Pfv.xi.21.581/2008/11,75 the applicant sought the enforcement of an Austrian judgment delivered against a Hungarian defendant. The civil proceedings were carried out in German and the court refused to translate the relevant documents (calls, forms, correspondence) into Hungarian, even though the defendant expressly requested that they be translated, because he did not speak German. The Supreme Court found that the enforcement of the judgment violated Hungarian public policy, as the Austrian civil proceedings were
In Case P.20071/2014/11, the Budapest Regional Court dealt with Article 45(1)(b) of the Brussels i Regulation. It established that, at the recognition and enforcement stage, the court may not inquire whether the service of the document instituting the proceedings complied with the applicable rules. Thus, the debtor could not abuse its rights and evade enforcement if there was merely a formal error of service that did not hinder him in exercising his right of defense. If the defendant’s right of defense was impaired during the service of the document instituting the proceedings, he was expected to exhaust the legal remedies available to him. If he failed to do so, the error of service did not entail the refusal of recognition. According to the Budapest Regional Court, at the recognition and enforcement stage it is not necessary to examine whether the service complied with the rules; the mere fact that an error has occurred is not susceptible of triggering the refusal of recognition. The court held that at the recognition stage it may be examined only whether the service of the document occurred ‘in sufficient time and in such a way’ as not to impair the defendant’s right of defense. In the case of an error of service, the primary question is whether the error was grave enough to deprive the defendant of the ability to defend himself. In this case, the court answered the question in the negative.
In Case Pfv.i.20.122/2015,76 the Supreme Court held that Article 45(1)(b) of the Brussels i Regulation cannot be applied if the debtor admitted that he received the payment order, which was forwarded to him by the judgment creditor’s Italian legal representative, and directed his appeal to this legal representative and not to the court, notwithstanding the information conveyed to him. According to the Supreme Court, in this case the relevant point was that the debtor received the payment order of the court of Pisa and had 50 days to object to it but failed to do so. A formal procedural error that does not impair the right of defense is not sufficient to serve as a ground for refusal.
In Case Pfv.20128/2016/9,77 the plaintiff sued the Hungarian court and claimed damages because he could not have a Hungarian judgment enforced in
4.2.2 Insolvency Regulation
In Case 12.Gf.40.010/2008/2,78 the High Court of Appeal of Budapest held that the lex concursus governs insolvency proceedings’ effects on pending civil actions, but only where the latter were launched after the opening of the insolvency proceedings. If the individual civil action was launched before the opening of the insolvency proceedings, it is not the lex concursus but the lex fori that determines the impact of that opening. While Article 7(2)(f) of the Insolvency Regulation subjects the effects of the insolvency proceedings on proceedings brought by individual creditors’ to ‘[t]he law of the State of the opening of proceedings’, it excludes the effects of insolvency proceedings on ‘pending lawsuits’ from the ambit of the lex concursus.
The above approach was confirmed by the High Court of Appeal of Budapest in Case Gf.40100/2013/8.
Case Gfv.vii.30.236/201279 arose in the follow-up proceedings to Case C-527/10 Erste. Austrian law, as the law of the main proceedings, provided that all civil actions had to be launched in the context of the insolvency proceedings. This provision, by way of a procedural bar and not an issue of jurisdiction, blocked the enforcement of the creditor’s security rights (bond) in Hungary. The question of interpretation was how Article 8 of the Insolvency Regulation affected the application of this rule. According to Article 7 of the Insolvency Regulation, the effects of the insolvency proceedings are, in principle, governed by the law of the Member State within the territory of which such proceedings
4.2.3 Brussels ii Regulation
In Case Pfv.ii.21.380/2010,80 the Supreme Court established that the recognition and enforcement of a judgment on parental responsibility delivered in another Member State cannot be refused merely because the enforcement of a Hungarian judgment concerning the child’s abduction is pending.
In Case Pfv.ii.21.068/2013,81 the Supreme Court held that the recognition and enforcement of a judgment delivered in another Member State cannot be rejected if the chance to hear the child was ensured, even though this did not work out because the party concerned obstructed it. In this case the Belgian court established that, while the date of the hearing was carefully selected, the party did not ensure the child’s appearance before the court and tried to justify this with a doctor’s certificate two weeks thereafter. The Supreme Court held that it was at the Belgian court’s discretion to decide whether to accept the certificate and appoint a new date or reject this, if it considered this appropriate to obviate the protraction of the procedure and to serve the best interests of the child. The Belgian court chose the second option.
In this case the Supreme Court also interpreted the concept of public policy as a ground for refusal of recognition and enforcement. It established that it is obviously not counter to Hungarian public policy if the foreign proceedings are based on rules different from the Hungarian ones. Public policy is to be construed narrowly and used exceptionally. Recognition and enforcement can be refused only if the foreign judgment would obviously run counter to Hungarian public policy, that is, if the decision entailed domestic legal consequences that would intolerably infringe the domestic sense of justice. It is
In Case Pfv.ii.21.594/2014,82 the defendant requested the Hungarian court to reject the recognition and enforcement of an Italian judgment because he had not been able to present his case. However, the Supreme Court established that he had had the opportunity to take part in the proceedings. Hence, there was no reason to apply Article 39(1)(b) of the Brussels ii Regulation, which provides that the recognition and enforcement of the judgment must be rejected ‘where it was given in default of appearance if the person in default was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable that person to arrange for his or her defence unless it is determined that such person has accepted the decision unequivocally’. The Court held that the requirement that the document instituting the proceedings has to be served in sufficient time and in an appropriate way implies that the defendant has to have a real chance to appear in person and to hire a local attorney, that is, to defend himself. Accordingly, the primary purpose of the requirement of sufficient time is not to ensure that the defendant learns the date of the trial in time, but to make sure that the defendant has sufficient time to defend himself before the decision ending the proceedings is adopted. The requirement of appropriate way implies that during this time the defendant has the opportunity to defend himself in the proceedings, either personally or through an attorney, and eventually to request a new date for the trial and a personal hearing. The refusal of recognition and enforcement is an exceptional rule, which can be used only if the defendant is not afforded sufficient time between the service of the document instituting the proceedings and the decision ending them to take the necessary measures (e.g., to hire an attorney or to submit a defense as to the merits). In this case, this time was seven months. The Supreme Court noted that the defendant did not take the Italian proceedings seriously. It ignored the call concerning mandatory legal representation and hired no legal representative, thus excluding himself from the chance to protect his legal interests.
4.2.4 Maintenance Regulation
Hungarian law’s provision that limits the payment of maintenance to six months’ arrears raised questions of interpretation in the context of recognition and enforcement under the Maintenance Regulation. According to Hungarian law, the maintenance creditor may claim maintenance retrospectively for the
In Case Pfv.i.21.308/2017/3,84 the maintenance judgment was issued by a French court, and under French law the limitation period was five years. However, in Hungary, the first and second instance courts held that enforcement was governed by local law and, as enforcement was sought in Hungary, the above six-month limitation period applied. The Supreme Court confirmed that, in case of enforcement in Hungary, the limitation period was to be determined by Hungarian law. However, the Court remanded the case because the lower-level courts established the time of the request for enforcement erroneously. While the first and second instance courts considered the request for enforcement submitted to the Hungarian court as relevant, the Supreme Court held that the creditor may claim maintenance as from the time he submitted his request to the French central authority and for the preceding six-months period.
Unfortunately, the Supreme Court’s decision seems to be at odds with Article 21 of the Maintenance Regulation. Although Article 21(1) provides that refusal and suspension of enforcement are governed by the law of the Member State where enforcement is sought, Article 21(2) makes clear that enforcement cannot be refused if the claim is not time-barred under either the law of the country of origin or the country of enforcement. Enforcement may be refused ‘if the right to enforce the decision of the court of origin is extinguished by the effect of prescription or the limitation of action, either under the law of the Member State of origin or under the law of the Member State of enforcement, whichever provides for the longer limitation period’. In the above case, the limitation period set by French law (country of origin) was five years, while under Hungarian law it was six months (with an objective term of three years). Given that French law provided for a longer limitation period, it should have been applied. Although Section 14 of the Hungarian Act on Court Enforcement (Act liii of 1994) reproduces the above provision of the Civil Code and specifies the application of the six-month time limit in enforcement proceedings, the fact remains that this is a term of prescription, which, as such, comes under Article 21(2) of the Maintenance Regulation. The concepts of the Maintenance Regulation, in principle, have to be interpreted autonomously, so the characterization under Hungarian law should be of no relevance here.
Article 18(1), Article 21(2), and Articles 24 and 25 of the Brussels i Regulation.
Section 109(1)(a) of the apil.
Section 99(2) of the apil.
Sections 100(3), 104(2), 105(2), 106(2), 107(3), and 108(2) of the apil.
Section 70 of the apil.
Section 7(1)(18) of the Civil Code.
Section 92 of the apil refers solely to the seat, but Section 90 makes it clear that the term ’seat’ embraces both the seat and the place of central administration.
See, e.g., ecj, Case 21–76, Mines de potasse d’Alsace (1976) eu:c:1976:166.
Sections 101 and 106 of the apil.
For an overview of the Hungarian case-law on the jurisdictional rules of the Brussels I Regulation, see Cs.I. Nagy, “Application of EU Private International Law in Hungary,” in Cs.I. Nagy (ed.), Cross-border litigation in Central-Europe: EU private international law before national courts (Kluwer Law International, The Hague, 2022), 116–123.
Case Gf.40560/2011/6 (High Court of Appeal of Budapest).
Case Pkk.v.24.731/2016 (Supreme Court), reported as eh 2016.07.P8.
Reported as eh 2010.2237.
Appealed from Case K.700587/2018/9 (Budapest-Capital Regional Court).
Act lvii of 1996 on the prohibition of unfair market conduct and restriction of competition (in Hungarian: ‘1996. évi lvii. törvény a tisztességtelen piaci magatartás és versenykorlátozás tilalmáról szóló’).
Para. 32.
Appealed from Case K.700486/2018/19 (Budapest-Capital Regional Court).
Reported as bh 2020.3.78.
Reported as eh 2011.2416 and bh + 2013.1.33, appealed from Case Pf.21552/2010/3 (High Court of Appeal of Budapest), appealed from Case G.41503/2006 (Budapest-Capital Regional Court).
Appealed from Case 12.G.40.835/2008/12 (Budapest-Capital Regional Court).
Section 292(3) of Act cxliv of 1997 on economic companies (in Hungarian: ‘1997. évi cxliv. törvény – a gazdasági társaságokról’).
Appealed from Case G.20348/2013/83 (High Court of Appeal of Győr).
‘[T]he Treaties shall apply to the Channel Islands and the Isle of Man only to the extent necessary to ensure the implementation of the arrangements for those islands set out in the Treaty concerning the accession of new Member States to the European Economic Community and to the European Atomic Energy Community signed on 22 January 1972’.
Appealed from Case 7.G.20.255/2018/92 (Balassagyarmat Regional Court).
Paras 55–57. See ecj, Case C-27/17, ab ‘flyLAL-Lithunian Airlines’ v Starptautiskā lidosta ‘Rīga’ vas and ‘Air Baltic Corporation’ as (2018) eu:c:2018:533; ecj, Case C-352/13, Cartel Damage Claims (cdc) Hydrogen Peroxide sa v Evonik Degussa GmbH and Others (2015) eu:c:2015:335; ecj, Case C-451/18, Tibor-Trans v daf trucks (2019) eu:c:2019:635.
Paras 58–59.
Appealed from Case P.24487/2012/47 (Budapest-Capital Regional Court).
Appealed from Case G.40009/2013/15 (Gyula Regional Court).
Appealed from Case G.20918/2011/115 (Győr Regional Court).
Reported as íh 2014.58, appealed from Case 7.G.40.061/2013/6 (Szeged Regional Court).
Reported as íh 2020.116.
Appealed from Case 14.Gf.40.512/2012/2 (High Court of Appeal of Budapest), appealed from Case 8.G.40.554/2010/34 (Budapest-Capital Regional Court), tried on remand as Case G.42072/2014/17 (Budapest-Capital Regional Court).
Appealed from Case Gf.30270/2017/10 (High Court of Appeal of Szeged), appealed from Case G.21439/2014/63 (Szolnok Regional Court).
Para. 39.
Para. 41.
Para. 42.
íh 2021.19.
Articles 29 & 31 of the Brussels i Regulation.
Articles 30 of the Brussels i Regulation.
Appealed from Case 25.G.42.229/2009/38 (Budapest-Capital Regional Court).
Reported as ebd 2015.12.G3, appealed from Case 4.G.40.017/2014/8 (Zalaegerszeg Regional Court).
Reported as íh 2013.81.
The request for a preliminary ruling was first submitted to the High Court of Appeal of Budapest, which refused to refer the case to the cjeu. Its order, at this stage, was affirmed by the Supreme Court. See Case Gf.ix.30.324/2009, reported as bh 2010.6.158 and eh 2009.2054.
Reported as bh 2010.6.156 and eh 2009.1970, appealed from Case F12.Fpkf.43.856/2008/2 (High Court of Appeal of Budapest), reported as íh 2008.122.
For an overview of the Hungarian case-law on the jurisdictional rules of the Brussels II Regulation, see Cs.I. Nagy, “Application of EU Private International Law in Hungary,” in Cs.I. Nagy (ed.), Cross-border litigation in Central-Europe: EU private international law before national courts (Kluwer Law International, The Hague, 2022), 137–141.
Reported as bh 2009.10.298 and eh 2009.1961.
Appealed from Case K.21134/2007/8 (Nyíregyháza Regional Court).
Reported as bh + 2016.1.26.
See Case reported as bh 2014/180.
Reported as bh + 2015.11.465.
Reported as eh 2011.2318.
Reported as bh + 2014.8.352.
Reported as bh 2009.10.298 and eh 2009.1961.
Case Pfv.21601/2009/5 (Supreme Court), reported as bh 2010.5.123; Case Pfv.ii.20.461/2013 (Supreme Court), reported as bh 2014.3.80; Case Pfv.ii.20.461/2013 (Supreme Court), reported as bh 2014.3.80.
Reported as bh 2013.12.344.
Reported as eh 2010.2141.
Reported as bh 2020.2.43.
Para. 20.
Paras 21 and 26.
Para. 28.
Paras 29–35.
Para. 36.
Para. 27. Appealed from Case 50.Pkf.635.636/2016/2 (Budapest-Capital Regional Court), appealed from Case 2.Pk.500.132/2016/11 (Pest Central District Court).
Appealed from Case 50.Pkf.630.055/2018/2 (Budapest-Capital Regional Court), appealed from Case 28.Pk.500.270/2017/27 (Pest Central District Court).
Para. 56. Appealed from Case 50.Pkf.631.543/2018/4 (Budapest-Capital Regional Court), appealed from Case 26.Pk.500.277/2017/12 (Pest Central District Court).
Reported as bh 2020.4.108.
Section 176(1)(a) of the Code of Civil Procedure.
Section 240(1)(a)-(c) of the Code of Civil Procedure.
Section 72 of the apil.
Section 72 of the apil.
Section 122(1) of the apil.
Section 123 of the apil.
Section 113 of the apil.
Case Pfv.viii.23.958/1997 (Supreme Court), reported as bh 2000.212.
Case 42.Pkfv.632.342/2008/2 (Budapest-Capital Regional Court).
Reported as bh + 2015.12.519.
Appealed from Case Pf.21115/2014/6 (High Court of Appeal of Budapest), appealed from Case P.20071/2014/11 (Budapest Regional Court).
Reported as íh 2008.79.
Reported as eh 2013.2.G.4.
Reported as bh 2011.6.167.
Reported as bh 2014.8.248.
Reported as bh + 2015.5.211.
Section 4:208 of the Civil Code.
Reported as bh 2018.4.120.