Putting a human face on Hungarian Civil Procedure

It is not often that international media outlets cite mundane rules of civil court procedure in support of their general narrative about a country’s political landscape. Hungary’s new Civil Procedure Code, passed into law in 2016 and entered into force in 2018, can claim this dubious achievement: in its 31 August 2019 edition, The Economist noted that the legislation "gave courts powers to reject civil filings more easily " to illustrate a report on the government’s tightening control over the country.

Even if The Economist’s characterisation is disputable, the remark is a testament to the severity of legislative changes introduced by the new law, and the forceful opposition thereto. A recent amendment (in effect since January 2021), however, attempts to address the criticism, essentially trying to put a human face on Hungarian Civil Procedure.

The 2016 Code replaced its close to 70 years old predecessor, the old Code of Civil Procedure from 1952, which, true to its socialist origins, had always retained a certain minimalistic approach to civil litigation. It had been designed for the conditions of a centrally planned economy, where business disputes had not been at the forefront of attention. The need for a general overhaul, better reflecting the realities of globalised capitalism, had become more and more obvious over the years. As many believe, however, the 2016 Code went a few steps too far.

With the minimalistic approach gone, efficiency and professional responsibility became the name of the game. Critics argued, however, that with its complex regulations overflowed with technical details, the 2016 Code in reality has often hindered the effective resolution of disputes. It introduced ambiguous provisions and rules whose impractical nature quickly became obvious in real-life application, often slowing the process down, and blurring the parties’ and the court’s roles and responsibilities. This resulted in a cacophony of ad-hoc decisions and general judicial guidelines (with dubious constitutional legitimacy) regarding even the most fundamental procedural questions.

Most of the critiques were directed against the incredibly technical and equivocal rules of filing a statement of claim, the rigidity of the newly introduced “preparatory stage”, and the confusions surrounding the "digitalisation" of the procedure. These concerns, which, as we have seen, were voiced even by The Economist, have been addressed in the 2021 Amendment.

Reclaiming claims

One of the biggest shortcomings of the 2016 legislation was the very strict, yet somehow still too vague formal requirements on the form and contents of the statements of claim and defence.

The 2016 Code required the statement of claim to include the petition for relief in the form of a request for a specific "judgement order". This essentially meant that the petition had to be phrased so specifically as to enable the court to simply lift the request into its future verdict. For example, if the claimant only petitioned the court to oblige the defendant to cease disturbing the owner’s peaceful enjoyment of an apartment as described in the statement of claim but did not specify in the petition what exactly the court should order the defendant to do or not to do, this could be grounds for immediate refusal. As this formulation of the law resulted in a large number of refusals well beyond the legislators’ original intentions, the 2021 Amendment did away with the strict requirement, reinstating the 1952 Civil Procedure’s formulation of only asking the claimant to make a definite request for the decision of the court.

In addition to the pressures of having to read the court’s mind with regard to the petition, the 2016 Code also forced the claimant to carry out completely unnecessary "investigative work" about the defendant. Under the original requirement of the 2016 Code, “all known identification data” of the defendant had to be provided, making the obligation’s scope rather uncertain: the 2021 Amendment makes it clear that it is now sufficient to indicate the defendant’s name and address.

The original rules of the 2016 Code also required the claimant to expressly designate the rules of law on which it relied for making even the smallest of procedural statements (eg specifying the rule of law according to which a legal counsel having a power of attorney is authorised to represent the party). The 2021 Amendment again refined the wording to only require such precision where it is made necessary by the circumstances of the case. Otherwise, in these matters the court is entitled (and obliged) to rely on the facts presented in the statement of claim, the attached power of attorney, and the contents of public registers.

Courts, moreover, often went beyond even the strict requirements posed by the 2016 Code. A worrying pattern emerged where courts conducted a “prima facie” examination of the merits of the case directly after receiving the statement of claim, dismissing it if they found that the claimant's legal reasoning was unconvincing, the claim inconsistent, or the factual allegations too "little" or "irrelevant". In effect, this was dismissal for "failure to state a claim", known in some jurisdictions – but without statutory basis and without providing an opportunity to either party to comment on the issue. The 2021 Amendment clarifies that courts shall not examine – even prima facie – aspects of the statement of claim which concern the merits of the case or apprise whether the evidence and requests to take evidence sufficiently support the claim without giving an opportunity to the parties to discuss this issue during the preparatory stage of the procedure.

In line with the easing of the administrative burden regarding statements of claim, submitting statements of defence has also become easier: Statements challenging and refuting the submissions in the statement of claim can be performed more freely, with simple reference to the fact or law that is being disputed. The defendant is no longer required to present each and every rebuttal providing a full factual and legal analysis. This simplifies the procedure by not forcing the parties to react in full to the other party’s every passing reference, allowing them instead to focus on the disputed aspects of the case.

Preparatory stage - making effectivity compatible with reality

The 2016 Code introduced a preparatory stage to the civil procedure, basically to define the legal and factual framework of the dispute for the following trial. The legislators’ goal was to enable the parties to refine their claims and defences at an early stage of the litigation, while simultaneously creating a hard cut-off point beyond which amending this framework was not allowed. The limitations imposed by the 2016 Code could, however, lead to unjust results. The 2021 Amendment’s most important modifications concern this stage of the litigation, aiming to rectify some of the inefficiencies.

A change of systemic importance concerns the modification of the claim or defence following this cut-off point. Under the 2016 Code, any new fact or new legal argument (even without amending the principal legal basis of the claim or the defence) qualified as a modification of the claim or the defence, which was not allowed unless in exceptional circumstances. This raised the spectre of legal counsel incurring professional liability by failing to present every possible legal argument in support of the case already in the preparatory stage of the procedure. The amendment now limits this rule to substantive modifications (like changing the cause of action), basically allowing for the variation or addition of legal arguments during the trial stage. Provided all relevant facts are presented and the principal legal basis of the case is gotten right in the preparatory stage, counsel are now free to amend the argumentation during trial, especially in light of the evidence that is coming to light.

Another oft-criticised rule of the 2016 Code concerned the parties’ right to file briefs in the preparatory stage, which – beyond the submissions expressly regulated by the statute – was only allowed upon the permission of the court. The aim of this provision was to concentrate the parties’ written arguments at a certain juncture of the procedure, but in practice it led to absurd situations. After all, how can a party obtain the permission of the court to file a submission without first filing a submission asking for the court’s permission? The 2021 Amendment breaks this circular logic by allowing the parties to file substantive motions (eg the modification of the statement of claim or defence) without asking for permission first.

The window for filing counterclaims or set-off claims by the defendant has also been broadened. Although the general deadline remains 45 days as of the receipt of the statement of claim, the 2021 Amendment allows the defendant to bring a counterclaim or set-off claim later during the preparatory stage if she makes it plausible that through no fault of her own she has become aware of the ground for the counterclaim or set-off claim after the deadline.

Digitalisation should work for the process, not the other way around

One of the most highly anticipated reforms of the 2016 Code was the introduction of the electronic delivery system (now obligatory if the parties are represented by legal counsel), which replaced the outdated paper-based communication between the parties and the court. In practice, however, the strict wording of the 2016 Code – demanding all submissions to be filed via electronic means – created rather absurd situations. The rules, strictly speaking, prohibited parties from filing motions or evidence in person at the hearing, even while this would have served the general goal of speeding up the procedure. The 2021 Amendment finally rectifies this situation, clarifying that documents can indeed be filed and delivered at the hearing, ensuring quicker turnaround and faster litigation.

The 2021 Amendment relies heavily on the real-life experiences gathered over two years of practice of the new Civil Procedure, trying to bring into balance the integrity of the judicial system with more practical considerations. In our view, most of the modifications introduced by the 2021 Amendment are successful in this exercise, and facilitate the efficient enforcement of rights. As always is the case when it comes to fine-tuning a new system, the proof of the pudding will of course be in the eating.