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Sarhegyi and Partners Successful for Hungarian State Against Hungarian Town

Sarhegyi and Partners Successful for Hungarian State Against Hungarian Town


The Sarhegyi and Partners law firm has successfully represented the Hungarian State on appeal to the Metropolitan Regional Court against claims brought against it by the Hungarian town of Budaors involving challenges to aspects of the country's Budget Act. In addition to the immediate dispute, the case represents the first time that the issue of liability for damages caused by legislation was considered since the new Hungarian Civil Code entered into force in 2014.

According to Sarhegyi and Partners, following the appeal of the court of first instance's decision by the Hungarian State, "the Metropolitan Regional Court, in its verbally-promulgated final and binding decision, fully rejected the claim of Budaors and modified the decision of the court of first instance. According to the final decision, the legal costs should also be paid by Budaors. The court of second instance highlighted that the decision of the first instance had serious procedural and substantive mistakes, thus the respondent’s appeal was well grounded. The court of second instance decided on the issue of liability for damages caused by legislation and also declared that the previous judge misinterpreted the Budget Act. In the first instance, the concept of the so-called legislator’s functional immunity underlined by the Hungarian State’s legal representatives was rejected, despite the remarkable judicial practice developed in the era of the previous Civil Code. At the end, the Hungarian State won the case, as Budaors was not able to prove that the state’s legislation was unlawful, confirming by this the secondary argument of the state's representatives. The unlawful act in connection with the ... legislation [may] only be successfully proved by an annulment decision of the Court of Constitution. However, there is no such decision."

Budaors has announced that it will initiate a review of the decision by the country's Supreme Court. 

The Sarhegyi and Partners team was led by Andras Lovas.

Hungary Knowledge Partner

Established in 1957, Wolf Theiss is one of the leading European law firms in Central, Eastern and South-Eastern Europe with a focus on international business law. With 300 lawyers in 13 offices located in Albania, Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia and Ukraine, Wolf Theiss represents local and international industrial, trade and service companies, as well as banks and insurance companies. Combining law and business, Wolf Theiss develops comprehensive and constructive solutions on the basis of legal, fiscal and business know-how.

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