What can we do for effectiveness of EU law?

In all areas of business, numerous provisions of EU law confer direct and indirect rights and obligations on businesses and enterprises of the Member States. The law of the European Union has become an integral and equal part of the national legal systems of the Member States. The authorities in each Member State – among them in Hungary – are primarily responsible for implementing EU law into national law and enforcing it correctly.

If an individual or business entity considers any measure or practice attributable to a Member State incompatible a provision or a principle of EU law or a national authority may not ensure the full effectiveness of Union law, they can lodge a written complaint to the European Commission.

The complaints and correspondence submitted will always be examined by the services and departments of the European Commission. Any complaint should be as complete and accurate as possible, particularly as regards the facts complained of in relation to the Member State in question and as far as possible the provisions of EU law which you consider to have been infringed by the Member State.

The Commission will not disclose the identity of the complainants unless they have given it their express permission to do so.

If the Commission that the complaint is well-founded and there may be an infringement of Union law which may require the opening of an infringement procedure, it addresses a letter of formal notice to the Member State concerned. In the light of the reply or the absence of a reply from the Member State, the Commission may decide to issue a reasoned opinion to the Member State and calling on the Member State to take the necessary measures to comply with Union law within a specified period.

If the Member State fails to comply with the reasoned opinion, the Commission may decide to bring the case before the Court of Justice of the European Union. At the close of the procedure, the Court of Justice will deliver a judgment stating whether there has been an infringement of Union law. After announcement of the judgement the Member State concerned has to take all necessary measures to comply with Union law as decided by the Court of Justice. If the Member State does still not comply, the Commission may again bring the matter before the Court of Justice seeking to have periodic penalty payments or a lump sum payment imposed on the Member State.

However, please note that the national authorities and courts in each Member State are primarily responsible for implementing European Union law into national law and ensuring that it is enforced correctly. Therefore, it is essential that the complainants seek redress from national administrative or judicial authorities.

A well-prepared, complete and accurate complaint is essential for being regarded as well-founded for initiation an infringement procedure against a Member State.

Do you have any further questions? We can help. Please contact us.

In all areas of business, numerous provisions of EU law confer direct and indirect rights and obligations on businesses and enterprises of the Member States. The law of the European Union has become an integral and equal part of the national legal systems of the Member States. The authorities in each Member State – among […]

Changing corporate laws

As of March 1, 2012 regulations of corporate law have been changed again by the legislator. We would like to briefly summarize the most remarkable corporate law changes for the companies’ decision makers:

  • – the attorney’s seat service supply for companies will not be possible anymore (further seat service cannot be provided, although the already provided services can be maintained);
  • – the simplified company registration will be probably de facto terminated because of the (i) increased procedural costs (ii) the elongated time of the administration procedure, (iii) and because of the strict, compulsory and objective penalty risk attached to the attorney we take the view that there is no further rational argument for the simplified company registration proceeding;
  • – mandatorily HUF 50.000 to 900.000 penalty has to be imposed if the 30 days deadline is overrun in the incorporation or in the process of registration the changes of the company (the possibility of submitting a request for excuse because of the omitted deadline is not excluded by the legislator yet);
  • – in case foreign companies are the members of the company concerned with the changes then their company extract needs to be submitted to the court along with the official translation (we trust that according to the regulations the company courts uniformly will not insist on the OFFI translations);
  • – in the first registration process when foreign persons are concerned in the procedure (both in incorporation and registering the changes regarding the company) the delivery agent (a mandated person with Hungarian address who takes the consignments over on behalf of the company) needs to be appointed until February 1, 2013 the latest (the member, manager or the member of the supervisory board cannot be appointed as delivery agent).
  • – at business share transfer if the company’s public debt exceeding HUF 15 million then an interim balance sheet needs to be prepared for the day of the transfer;
  • – in case the company transformation is resolved after March 1, 2012 if the equity of the companies is decreased, then all the companies’ creditors can claim for security for the overdue and undue demands (as a result the transformation might be drawn out);
  • – if the de-merger is resolved after March 1, 2012 the claims needs to be primarily enforced against the legal successor named in the de-merging agreement, however the other successors have universal responsibility for such claims at the time when the claim becomes overdue (quasi several surety ship instead of the in line successor responsibility);
  • – in respect of the interim dividend the amount indicated in the balance sheet or in the interim balance sheet can be accepted to 6 months;
  • – in case the shared capital is reduced at the same time of capital withdrawals (rearrangement of particular capital shares) then all the creditors of the company – and not only those with undue claims – may claim for security for their claims against the company;
  • – in case of Zrt. (private company limited by shares) every shareholder needs to be listed in the shareholders register.

As of March 1, 2012 regulations of corporate law have been changed again by the legislator. We would like to briefly summarize the most remarkable corporate law changes for the companies’ decision makers: – the attorney’s seat service supply for companies will not be possible anymore (further seat service cannot be provided, although the already […]

Szécsényi/Vágvölgyi: new publication

Eastlex, on of the leading CEE legal journal just published an article by László Szécsényi and Balázs Vágvölgyi on the final settlement of FX loans in Hungary. You can read the article (in German) here.

Eastlex, on of the leading CEE legal journal just published an article by László Szécsényi and Balázs Vágvölgyi on the final settlement of FX loans in Hungary. You can read the article (in German) here.

Compulsory energy performance certificate

From 1 January 2012, an energy performance certificate has to be obtained by the developer, the owner or the landlord when buildings are sold or let.
The certificate will remain valid for 10 years (although in certain cases new certificates will be required.) and it must be prepared by a duly authorised engineer or professional company.

The requirement of the energy performance certificate has been introduced in order to implement a relevant EU directive. According to the Government Regulation of 176/2008. (VI. 30.),  this requirement applies to certain buildings when – if it is a newly-built building – it starts to be used; if it is an existing building, it is bought or sold or is let for a term of more than one year; if it is a state-owned building with more than 1,000 m2 of usable floor space.

A certificate is not required when ownership is transferred before the occupancy permit (“használatba vételi engedély”) is granted, or when a co-owner acquires an ownership share.

The buildings affected by this requirement are buildings with 50 m2 or more of usable floor space.

Currently, there is a confusion around the implementation and especially the enforcement of this new requirement. According to the media communication of the Ministry of the Interior, a violation against the energy certificate requirement constitutes a general infringement of  Section 31 (1) a) of the Government Regulation 218/1999. (XII. 28.) and a penalty with a maximum amount of HUF 50.000,― can be imposed against the violator. On the other hand, the relevant EU-directive lays down that the penalties provided for must be effective, proportionate and dissuasive. The Hungarian government has the possibility of introducing more effective and dissuasive penalties until 9 January 2013 at the latest, therefore we expect that the maximum amount of the above fine will be increased in order to have a deterrent effect.

From 1 January 2012, an energy performance certificate has to be obtained by the developer, the owner or the landlord when buildings are sold or let. The certificate will remain valid for 10 years (although in certain cases new certificates will be required.) and it must be prepared by a duly authorised engineer or professional […]

New rules for payment order procedure

Pursuant to Act No. 50 of 2009 on the payment order procedure (fizetési meghagyásos eljárás), from the 1st of June 2010, it is a notarial power to enforce due pecuniary claims in payment order procedures. The goal with the new regulation was primarily to relieve the ordinary courts, since more than 400 thousand of these non-litigious procedures were conducted in front of the courts in every year.

According to the new regulation, if the amount of the claim does not exceed over one million forints the due pecuniary claims are to be enforced only through payment orders, provided that the obligor has a known place of domestic residence, a seat or a local representative, and the claim does not arise from employment or other similar relations.

The Chamber of Civil Law Notaries (MOKK) provides a computer system for the notaries to complete their new tasks. They pursue automatic data procession and certain conducts can be done automatically.

As natural persons we can lodge our request for issuing a warrant of payment orally or using the paper-based submission form, whereas the legal persons or natural persons acting through their legal counsel may do so only electronically. The electronically submitted applications are distributed automatically and equally between the notaries, the ones submitted orally or in a paper based form will belong to competence of the notary they were presented in front of. All notaries have the power to act nationwide.

As an important novelty, the deadlines have been reduced, as the aim was also to have quick and efficient proceedings. The documents received are recorded in the MOKK’s system in 3 working days at most. If there is no rejection or transmission of the request, and no need for completion or the requested documents are already completed, the notary will issue the warrant of payment in 15 days (or 3 days in case of electronically submitted request) calculated from the day the request was presented – without the opponent having been heard.

The defendant has 15 days (as of the delivery) to present his/ her opposition, and hence, the opposition presented in time will transform the non-litigious payment order procedure into a lawsuit before the court. On the other hand a payment order without being contradicted has the same effect as a final, legally binding judgment.

The client requesting the above non-litigious procedure has to pay a court fee for MOKK calculated a rate equal to the amount indicated in the pecuniary claim and with a rate of 3 or 1% depending on whether it is a main proceeding or a procedure for permitting postponement or payment in installations. A stamp fee does not have to be paid except when the case is brought to the court.

Anita Bartal
Do you have more questions? Please contact us.

Pursuant to Act No. 50 of 2009 on the payment order procedure (fizetési meghagyásos eljárás), from the 1st of June 2010, it is a notarial power to enforce due pecuniary claims in payment order procedures. The goal with the new regulation was primarily to relieve the ordinary courts, since more than 400 thousand of these non-litigious procedures were conducted in front of the courts in every year

EXPO REAL – Stand A1.022

Our firm will participate also in this year as exhibitor on EXPO REAL in Munich.

During EXPO REAL between 4th and 6th of October, 2010 you may find our colleagues in Hall A1 Stand 022.

If you would like to arrange a meeting with our lawyers in advance you may find our contact details here.

Our firm will participate also in this year as exhibitor on EXPO REAL in Munich. During EXPO REAL between 4th and 6th of October, 2010 you may find our colleagues in Hall A1 Stand 022. If you would like to arrange a meeting with our lawyers in advance you may find our contact details here.

REAL VIENNA – stand C0609

Our law firm will be represented also in this year as exhibitor on Real Vienna from 18th to 20th of May 2010.

Our colleagues would be pleased to greet you on our stand C0609. Please visit us.

Our law firm will be represented also in this year as exhibitor on Real Vienna from 18th to 20th of May 2010.

Our colleagues would be pleased to greet you on our stand C0609. Please visit us.

Significant changes in construction law

The main reason of the changes on the construction activity and construction contracts is to provide higher administrative control over construction projects which are financed by state sources. The new provision shall also apply for private projects.

The provisions of the new government decree are compulsory, this means that the parties may not deviate from it. The main goal of the decree is to control the payment of sub-contractors, the calculation of the contactor’s fee, the scope of the employer’s, designer’s, construction supervisor’s, contractor’s duties and set forth the mandatory elements (in details) of a construction and design agreement. As of October 1, 2009 agreements on construction works pursued as business activity have to be made in writing, while those falling under the scope of the Public Procurement Act have to be countersigned by an attorney or in-house council.

If the parties agreed that the contractor’s fee is a lump sum the contractor may not claim the consideration of the additional works (többletmunka). In this case the contractor may be remunerated only in respect of the extra works (pótmunka) if any. The decree set forth the definition of additional works (works contained in the construction documents but not considered in the contractor’s fee) and extra works (works not contained in the construction documents). The additional works may be invoiced only (i) in case the contractor’s fee is calculated based on the bill of quantities (i. e. itemised settlement of account) and (ii) the contractor certifies with the priced bill of quantities that the given additional work was not included in the budget.

In order to put an end to the debt chain in the construction industry, the payment in larger project will be controlled and made via an external third party (i.e. bank). It will involve the investor/employer, the contractor and the subcontractors to sign a special contract through an external party, such as a bank or other financial institution. The payment manager will handle on the one hand the funds provided by the employer and on the other hand the performance securities provided by the contractor. The engagement of a ‘safe hand’ is compulsory if (i) the investment falls under the scope of the Hungarian Procurement act and its value exceeds HUF 90 million or (ii) the value of the investment exceeds the European value threshold for public construction works (currently EUR 5.150.000,-). In the later case the value of the investment will be established based on the calculation method published in the regulation on construction fine (and not the amount specified in the general contractor’s agreement).

The provisions on the payment management agreement – inter alia – set forth that the (i) the completion protocol issued by the construction supervisor (műszaki ellenőr) and (ii) the payment to the general contractor(s) or subcontractor(s) of the amount specified in the invoice issued based on the completion protocol.

The employer must certify that the funds (in form of cash, credit, loan, etc.) covering the entire project are available at the entry into effect of the general contractor’s agreement. Until the date of commencement of the given work phase at the latest, the employer must (i) provide the consideration of the given phase, work part etc. is available on the payment manager’s account or (ii) must ensure that the funds covering the value of the given phase work part is under the exclusive control of the payment manager, in both cases The payment towards the contractor or subcontractors is conditioned to the approval of the completion protocol by the construction supervisor. Therefore, the employer does not have any control over the payments. The amount of the (partial) contractor’s fee may be covered by means of the following sources: (i) treasury bonds/bills issued by one a member state of the EU, (ii) securities, (iii) national or EU funds, (iv) loans or credits or (v) cash deposited on the escrow account of the payment manager.

The payment manager is entitled to retain from the amount payable to the general contractor the consideration due to the subcontractor if the general contractor failed to fulfil its payment obligation towards the subcontractors. Practically, the payment towards the general contractor is conditioned by the subcontractor’s confirmation of receipt. The fee of the payment management and all costs related to the payment management is payable by the employer.

If the involvement of a payment manager is compulsory, the subcontractors will be registered in an electronic registry forming a part of the construction diary (log book). The general contractor will enter the data on each subcontractor in the electronic registry. The payment manager will be entitled to retain the amounts due to the subcontractors from the payments towards the general contractor. If employer does not provide the payment manager with the required funds within the pre-agreed deadline, the contractor is entitled to suspend the works for 30 days. If the employer fails to certify that it has ensured the required funds during the time of the suspension the contractor may rescind the general contractor’s agreement.

The new regulation provides inter alia for or changes the compulsory content of the construction documents, construction diary, the design, contractor’s, subcontractor’s and payment management agreement. In addition, if the involvement of a payment manager is compulsory than the employer has to commission a construction supervisor as well. The changes also affect the hand over procedure.

 

 

Daniel Kellner

Do you have more questions? Please contact us.

The main reason of the changes on the construction activity and construction contracts is to provide higher administrative control over construction projects which are financed by state sources. The new provision shall also apply for private projects.

On the CEO’s discharge of liability

Not available in English.

Not available in English.

Amendments to the Condominium Act

As one of the most interesting changes of the Hungarian Condominium Act from a real estate developer’s aspect, the condominium representative (közös képviselő) may not act in the name and on behalf of the condominium during the various proceedings of the building authority. As a consequence, in the future the building authority shall notify each condominium member having a client status in the building/occupancy permit proceeding separately and thus the period opened for the appeal or waiver of the right to appeal will commence at different dates in case of each owner.

Due to the amendments the operation of the condominiums is placed under the judicial oversight proceedings of the Hungarian Prosecution Service. It is though questionable whether the Prosecution Service possesses the necessary manpower and financial background to deal with its new duty or – in lack of resources – such judicial oversight proceedings will remain an un-exercised right (same as the judicial oversight proceedings of the courts of the courts of registration).

In order to strengthen the transparency of the financial operation, condominiums with a yearly turnover exceeding HUF 10 million or having more than 50 apartments are obliged to appoint a certified public accountant to check the yearly financial report.

The amendments introduce the presumption of receipt: the condominium member being in arrears with the payment of common costs may not delay or avoid the payment by refusing to take over the payment notice. According to the new provisions on the eight business day reckoned from the second unsuccessful attempt to deliver the payment notice it will be deemed as delivered to the debtor even if the letter returns from the (postal) address of the member with the mark ‘did not look for it’. As a consequence the order of payment procedure may be commenced even if lack of delivery of the payment notice or the condominium representative may initiate the registration of the mortgage on the debtors’ individual condominium unit, provided that the registration is allowed by the bylaws of the condominium.

The Act on Condominiums as amended clarifies the rules on the alienation of the parts of a condominium jointly owned by the condominium members and altogether aims to align the provisions of the Act on Condominiums as to ensure the compatibility with the Act on the Land Registry.

Balázs Vágvölgyi
Do you have more questions? Please contact us.

As one of the most interesting changes of the Hungarian Condominium Act from a real estate developer’s aspect, the condominium representative (közös képviselő) may not act in the name and on behalf of the condominium during the various proceedings of the building authority. As a consequence, in the future the building authority shall notify each condominium member having a client status in the building/occupancy permit proceeding separately and thus the period opened for the appeal or waiver of the right to appeal will commence at different dates in case of each owner.