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New Procedural Rules for the 21st Century

New Procedural Rules for the 21st Century

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The Hungarian Parliament has recently adopted three new procedural laws: Act CXXX of 2016 on the Code of Civil Procedure (“CCP”), Act I of 2017 on the Code of Administrative Litigation (“CAL”), and Act CL of 2016 on Administrative Proceedings, which will all enter into effect on January 1, 2018. These new procedural laws come on the heels of the recodification of many substantive laws such as the Civil Code and the Criminal Code. This article aims to give a brief overview of these new procedural laws.

The New Code of Civil Procedure

The legislative goals behind the adoption of the CCP were the modernization and “professionalization” of litigation. To this end, the CCP introduces mandatory legal representation except in a few cases tried before local courts, where litigants without legal representation will be aided by the use of standard forms and templates, as well as the more active role of the judge.

The CCP also aims to promote the timely resolution of disputes, in particular by preventing the parties from unduly delaying the proceedings. In order to accomplish this latter goal, the CCP introduces a “split” litigation structure inspired by Roman law, where civil proceedings were conducted in two parts (“in iure” and “apud iudicem” proceedings).

Similarly, Hungarian civil proceedings will also be divided into two stages under the CCP. In the first phase, the parties must present their case and pleas and the evidence and motions for evidence-taking in order to set the framework for the lawsuit. Statements made during the first phase can only be changed in the second phase under exceptional circumstances. Evidentiary proceedings – related exclusively to the facts as represented during the first phase – take place in the second phase. In general, this split litigation structure places greater responsibility on counsel and leaves little room for mistakes, an approach which is carried all the way through to appeal proceedings.

The CCP contains new rules on the use of illegally-obtained evidence: as a general rule, such evidence cannot be taken into account, but it may nevertheless be used by the court under certain exceptional circumstances. The CCP also regulates the exceptional circumstances (“evidentiary emergency”) under which the burden of proof is reversed.

The CCP now regulates a new form of collective claims, using an opt-in system, where the court rules on one so-called “representative claim” by a private person. The condition for this is that all claimants must enter into a so-called “collective claim agreement” in which they must regulate the legal relationship between the parties. This type of collective claim can be used in consumer protection cases and certain labor and environmental disputes.

The New Code of Administrative Litigation

The CAL also brings some notable changes. In fact, the CAL’s existence as a separate law is in itself an innovation, since at present, the rules of administrative litigation are incorporated into the currently-effective Code of Civil Procedure. The CAL’s stated goal is to provide an “unbroken” system of judicial protection, where full review of administrative decisions by the courts is possible in all cases. The CAL also foresees a situation where an administrative authority has infringed the law by failing to perform certain actions, rather than by adopting an unlawful decision. 

The CAL aims to increase the timeliness of administrative proceedings and litigation. It does so, inter alia, by giving courts broader powers to modify administrative decisions (rather than just referring the case back to the administrative authority).

Rules concerning redress mechanisms against administrative decisions have also undergone a change. At present, most administrative decisions can be appealed to a superior administrative body, and the review of this appeal decision may be requested from courts. Under the CAL and the coming Administrative Proceedings Act, the judicial review is intended to become the main form of remedy (second instance judicial proceedings are also possible against some judgments regarding questions of law), with a diminished role accorded to administrative appeal.

With the recodification of the most important substantive laws, procedural laws and the ongoing effort to promote electronic administration and litigation, the legal landscape in Hungary has undergone significant changes in the past few years, which the legislator claims will help the country respond to the needs of the 21st century.

By Peter Voros, Partner, Andreko Kinstellar Ugyvedi Iroda, Budapest

This Article was originally published in Issue 4.8 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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