Recognition and Enforcement of Foreign Titles in Hungary

Before enforcement proceedings, company data and annual financial statements are typically reviewed, as they are accessible online free of charge. A small fee may apply if the situation calls for historical or authenticated current company data, or English company extracts. In the case the debtor is an individual, the data to be acquired is determined on a case-by-case basis.

During enforcement proceedings, independent bailiffs take action to locate and assess the debtor’s enforceable assets. They obtain the necessary information from various registries or by submitting requests to authorities, banks, or other organizations.

Recognition and enforcement rules differ depending on whether the foreign judgment was made in an EU Member State or in a third country.

Hungary is part of the EU; therefore, Regulation (EU) No. 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“Brussels Ibis”) applies in cases where the foreign judgment was made within the EU. If a final and non-appealable judgment is obtained in the courts of any EU Member State with respect to civil and commercial matters, the courts of Hungary will recognize it and deem it enforceable upon the request of the interested party, provided that the request is submitted in the prescribed manner and accompanied by the required attachments. This process occurs without a re-trial or re-examination of the merits of the case.

In the case of a non-EU judgment, foreign court judgments are enforceable in Hungary according to the provisions of an international treaty, taking into account the principle of reciprocity.

In the absence of an international treaty, Act XXVIII of 2017 on Private International Law (“Act on Private International Law”) applies. In such cases, judgments are not automatically recognized despite no special recognition procedure being required; it must be examined whether the decision meets the conditions for recognition. The rules for such examinations are set out in Act LII of 1994 on Judicial Enforcement (“Enforcement Act”), the details of which are explained below. A foreign judgment may be enforced domestically only if it has been declared enforceable by a domestic court in a separate procedure and issued with a certificate of enforcement.

To have a judgment recognized under the Brussels Ibis Regulation, the judgment must be final and non-appealable, i.e., it must be enforceable in the country where it was originally issued. As the Brussels Ibis Regulation applies only to civil and commercial matters, judgments made in areas such as family law, insolvency, arbitration, or public law are excluded.

These judgments are recognized and deemed enforceable in Hungary upon the request of the interested party, provided that the request is submitted in the prescribed manner and accompanied by the required attachments (e.g., the certificate specified under the Brussels Ibis Regulation, issued in the Member State where the judgment to be enforced in Hungary was delivered). Recognition occurs without a re-trial or re-examination of the merits of the case.

It is important to note, however, that recognizing courts are permitted to examine the substance of the judgment to a limited extent.

For the recognition of a foreign (non-EU) judgment, the Act on Private International Law applies stricter conditions than the Brussels Ibis Regulation. Firstly, a foreign (non-EU) judgment can be recognized only if it meets the following three conditions:

• The jurisdiction of the foreign court was well-founded under the Act on Private International Law;
• The judgment has acquired the force of res judicata or an equivalent legal effect under the law of the state in which it was issued; and
• None of the grounds for refusal set out in the Act on Private International Law apply.

Additionally, special conditions apply to decisions in property matters (reciprocity must be examined) and decisions in family law and personal status matters (special jurisdiction requirements).

No special procedure is required for the recognition of a foreign (non-EU) judgment; it is examined by the court in whose proceedings it is raised. However, the interested party may request, in a separate procedure, that the court establish that the foreign judgment is recognizable in Hungary. Recognizing courts are permitted to examine the substance of the judgment only to a limited extent.

In the case of judgments from a country with which Hungary has an international treaty, different requirements may apply as specified in such a treaty.

The timeline depends on the proceedings in which the recognition of a foreign award is requested. When the issue arises, the court of first instance typically renders a decision within a few months.

As a general principle, the recognition of a foreign judgment does not typically require separate proceedings. However, if such proceedings are initiated, a stamp duty ranging from HUF 5,000 to HUF 250,000 (approximately EUR 12 to EUR 607) applies. Additionally, the translation of documents may be required, which could result in further costs.

The recognition of an EU court judgement can be challenged if

• such recognition is manifestly contrary to public policy in Hungary;
• it was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him so to do;
• it is irreconcilable with an earlier judgment given in a dispute between the same parties in Hungary;
• it is irreconcilable with an earlier judgment given in another Member State of the EU or in a third state involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in Hungary; or
• the judgement conflicts with the provisions of Brussels Ibis dealing with jurisdiction in matters relating to insurance, jurisdiction over consumer contracts and exclusive jurisdiction..

In connection with the first item, it is important to note that it is not possible to express a precise and definitive view on the exact scope of Hungarian public policy at any particular time.

Pursuant to the Act on the Private International Law, the recognition of a foreign (non-EU) judgement can be challenged if:

• its recognition would be contrary to Hungarian public policy,
• the person against whom the decision has been passed did not appear in person or through an authorised representative, because the summons and the statement of claim or other document on the basis of which the proceedings were instituted were not served to him at his place of residence or habitual residence in sufficient time and in such a way as to enable him to arrange for his defence,
• proceedings between the same parties in respect of the same cause of action and the same cause of action have been instituted before a Hungarian court prior to the institution of the foreign proceedings,
• a Hungarian court has previously given a final decision on the merits between the same parties on the same cause of action and the same law arising from the same factual basis, or
• a court of a foreign State other than the State of the court rendering the decision has previously given a final decision on the substance of the matter between the same parties on the same cause of action and the same law arising from the same cause of action which fulfils the conditions for recognition in Hungary.

There is no limit for having a foreign judgement recognized, therefore the general limitation period shall be considered on claims arising from the foreign judgment. Under Hungarian law, the general length of the limitation period is five years, however the limitation period for the enforcement of a foreign court judgement will need to be assessed on the basis of the laws under which the judgement was issued. This means that if the judgement is not enforceable under the laws it was issued under due to the passing of the limitation period, it will not be enforceable in Hungary either.

If there are separate proceedings on recognition (which is not necessary), legal costs can be claimed in it.

Judicial enforcement proceedings can be initiated, during which the bailiff will treat the judgment in a manner similar to domestic judgments and take the necessary steps to enforce it as appropriate.

A creditor may initiate insolvency proceedings against a Hungarian debtor company based on an undisputed claim arising from an agreement, without the need for a foreign judgment.

Insolvency proceedings may also be initiated based on the non-performance of a binding court decision. Since foreign judgments are treated the same as domestic judgments after recognition, a creditor may initiate insolvency proceedings based on a foreign judgment once it has been recognized in separate proceedings in Hungary. The creditor may also apply for recognition within the proceedings for the declaration of insolvency.

Alternatively, a creditor may choose to seek the judicial enforcement of a foreign judgment in Hungary and apply for the declaration of the debtor’s insolvency if judicial enforcement proves unsuccessful.

Hungary recognizes foreign arbitration awards under the provisions of the 1958 New York Convention on the recognition and enforcement of foreign arbitral awards (“New York Convention”). For an arbitration award to be recognized, it must be final and enforceable in the jurisdiction where it was issued.

Pursuant to the New York Convention, the rules of procedure of Hungary apply in regards to the recognition and enforcement of the arbitral award. The authentic document referred to in Article IV of the New York Convention shall be a certified copy of the decision of the permanent arbitral tribunal, a notarised copy of the decision of the ad hoc arbitral tribunal and a notarised copy of the arbitration agreement.

The party applying for enforcement must attach to the application for enforcement the foreign judgement and if necessary, at the request of the court, its Hungarian translation.