COVID Measures and the End of the State Emergency

COVID Measures and the End of the State Emergency

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The Hungarian government introduced a state of emergency in March and took several extraordinary measures to mitigate the economic consequences of the coronavirus crisis. These measures heavily affected the Hungarian economy and legal system. Since the Hungarian government revoked the state of emergency, it is time to summarize the relevant legal background.

Healthcare emergency

Act No. LVIII of 2020 introduces fundamental changes to the legal framework applicable to the measures aimed at the protection against epidemics. In compliance with its authorities set forth in the Constitution, at the time of the outbreak of Covid-19 in Hungary, the government declared a state of danger for a period of fifteen days. In the framework of the state of danger, the government was entitled to adopt, without the involvement of the Parliament, extraordinary measures. Following the fifteen days' period expired, the Parliament declared the extension of the state of danger, thus entitling the government to continue exercising extraordinary powers in order to address the effects of the pandemic beyond the fifteen days' deadline.

Act No. LVIII of 2020 introduced the concept of healthcare emergency, that was formerly unknown to the Hungarian legal system. Healthcare emergency may be declared by the government upon the recommendation of the national chief medical officer, provided that an epidemic emergency situation occurs. The concept of epidemic emergency includes diseases that are characterised by WHO as pandemics, or unexpected cases where the capacities of the healthcare system is overloaded. The duration of the healthcare emergency is six months. However, if the government deems it reasonable, the government may extend the duration of emergency for an unlimited period.

Based on the above, the government may, within its own discretion, declare and maintain a healthcare emergency without any parliamentarian approval or control. In case a healthcare emergency is declared, the government is entitled to take a wide range of extraordinary measures in order to terminate the state of emergency. Among others, the government may limit or prohibit domestic and international personal and goods traffic, the visiting of various institutions, may introduce social distancing provisions and special rules applicable to education activities, and may introduce exemptions and facilitating measures in connection with public procurement procedures. In addition to the measures specified in detail in Act No. LVIII of 2020, the government may be granted additional decision making powers by way of other acts adopted by the Parliament. Thus, it cannot be excluded that the powers of the government will be further strengthened in the future in case a healthcare emergency situation occurs, e.g. amid a potential second wave of Covid-19.

How financings are affected

The Hungarian government introduced one of its most significant measure in March, when a moratorium has been introduced for all retail and corporate financings. Under the moratorium, capital, interest and fee payment obligations for all loan, credit and financial leasing agreements have been suspended in both the retail and corporate sectors. Despite the end of the state of emergency, the moratorium will continue until 31 December 2019.

Along with the moratorium, the annual percentage rate of unsecured consumer loans concluded from 19 March onwards has been limited. The annual percentage rate of such loans shall be the maximum base rate of the central bank plus 5 per cent. The limitation to the annual percentage rate also remains applicable until 31 December.

Avoiding physical contact

On order to reduce the number of physical contacts, the government decided to amend the rules applicable to contactless payments. Thus, in case of contactless card payments, the limit for strong customer authentication (i.e. PIN entry) is raised from HUF 5,000 (approx. EUR 14) to HUF 15,000 (approx. EUR 42). This increased limit remains applicable until the end of the year.

Relief under lease agreements

Since the pandemic had an enormous negative impact on several industries, the government decided to provide them with relief.  The government prohibited lessors to terminate lease agreements concluded with tenants, who are providing touristic, catering, leisure, gamble, film industry, performing artist, event planning and sport services. This restriction is applicable until 30 June.  Also, rental fees could not be increased by landlords regardless their contractual rights to do so, but this restriction has been removed with the revocation of the state of emergency.

Procedures concerning insolvent debtors

Enforcement actions, like auctions, onsite enforcement procedures, evictions etc., were halted during the pandemic period. After 1 July, such procedures can be initiated and/or will be continued.

Under the measures, liquidation procedures may be initiated only if (i) the debtor did not perform it's payment obligations 75 days after the ordinary deadline (i.e. the deadline set forth by the lender in its payment notification), and (ii) the debt is equal to or above HUF 400,000 (approx. EUR 1,100; the general rule: HUF 200,000, approx. EUR 550). These extraordinary rules remain applicable until the end of the year.

Civil and administrative litigations

Since the courts opened their doors, the question arises: what happens to the court cases which stopped or were guided to paper-base?

The temporary rules addresses the above question and the answers distinguish on the basis whether a certain procedural action did or did not happen until 1 June 2020.

For instance, if the court has gathered all the statements necessary to close the initial / prepatory phase of civil litigations, this phase may be closed without a hearing. Otherwise – i.e. in case the parties did not submit all their statements until 1 June – the courts schedule hearings. The court may hold hearings in substantially pending cases, both in case of civil and administrative litigations.

What happens to litigations on the brinks of closure? If the court has warned the parties about adjourning the case until 1 June and the parties made their respective statements, the court renders its judgment without a hearing.

Regarding remedy and judicial review procedures in civil litigations, courts do not hold hearings if the parties were warned so until 1 June. The parties however, may request the court to schedule a hearing.

The temporary rules still contain that in case justified by epidemiological measures, hearings may take place by audiovisuals (e.g. Skype). The rule also remained that the court may exclude the public from a hearing in case it is necessary to fulfil epidemiological measures.

We can already see that the courts opened their doors and have started to schedule hearings again. We can also see that courts have implemented their own safety rules concerning e.g. keeping distance, using hand sanitizers or how long can someone wait on the court's corridors prior to or in between hearings.

Data Protection

During the state of emergency, the personal data of people infected or likely to be contaminated with coronavirus had a primary importance to the state agencies for the sake of tracking the virus and preventing further infections. In the course of data processing activities, those agencies must have complied with the effective data protection laws. However, during state of emergency the administrative deadline in connection with the request of the rights of data subjects were suspended in such cases when the purpose of the data processing was the prevention, understanding, detection and the prevention of the further spread of the coronavirus. If the data controller has not informed the data subject concerned on the fact of the suspension, it must perform this obligation now, without delay. With regards to these requests, the administrative deadline has commenced on 18 June 2020.

The police had a significant role in the prevention of the spread of the coronavirus. Accordingly, the Government delegated epidemiological tasks (e.g. monitoring the compliance with the rules of epidemiological surveillance, separation, registration of the person concerned) in Government Decree 291/2020. (VI.17.) to the police, which necessarily imply personal data processing activities. For the sake of the effective performance of the epidemiological tasks, based on the request of the police, people exposed to epidemics and people with whom he/she had been in contact with, must transfer his/her personal and health data, telephone number and email address of the person the police is concerned about.

By Gergely Szaloki, Local Partner, Virag Palguta, Associate, Alexandra Bognar, Attorney at Law, Daniel Varga, Attorney at Law, and Dorottya Gindl, Attorney at Law, Schoenherr