In this article, we briefly address the conditions under which a US commercial judgement is recognized and may be enforced in Hungary.
Legal Background
Pursuant to Act no LIII of 1994 on Judicial Enforcement ("Enforcement Act"), a foreign judgement or arbitral award may be enforced in Hungary based on a Hungarian act, international treaty or reciprocity.
There is currently no international treaty between Hungary and the US that would govern the enforcement of a US commercial judgement in Hungary; neither is there any reciprocity between the countries in this regard. (At the moment, reciprocity exists between Hungary and the US only with respect to the enforcement of judgements concerning the payment of alimony and the placement of a child.)
In addition to the Enforcement Act, Decree no 13 of 1979 on Private International Law ("Decree") contains some additional important rules on the enforceability of foreign judgements in Hungary.
According to the Decree, a foreign judgement may not be recognized and, as a consequence, enforced in Hungary if Hungarian courts have exclusive jurisdiction over the matter in dispute. As a rule, Hungarian court do not have exclusive jurisdiction over general commercial matters.
Pursuant to the Decree, a foreign judgement must be recognized in Hungary if
- the jurisdiction of the foreign court or authority in
question is found legitimate under the rules of jurisdiction
of Hungarian law;
- the decision is construed as definitive by the law of the
country in which it was made;
- reciprocity exists between Hungary and the country of the
court or authority in question;
- none of the grounds for denial of recognition
apply.
Under Hungarian law, according to the Decree, an official foreign decision may not be recognized, if
- recognition would be contrary to Hungarian public
policy;
- the party losing the case did not attend the proceeding
either in person or by proxy because the summons, statement
of claim or other document that initiated the proceeding was
not served at such party's domicile or residence
properly or in a timely fashion in order to allow him
adequate time to prepare for defence;
- it was based on the findings of a procedure that
seriously violates the basic principles of Hungarian
law;
- the prerequisites for litigation for the same right and
from the same factual basis between the same parties appeared
before a Hungarian court or other Hungarian authority before
the foreign proceeding was initiated (lis
pendens);
- a Hungarian court or authority has already resolved a
case by a definitive decision concerning the same right from
the same factual basis between the same parties.
Pursuant to the Decree, reciprocity required in (iii) above is not a precondition for recognition in case of
(i) foreign judgements concerning the personal status of an individual, and
(ii) foreign commercial judgements provided that the jurisdiction of the foreign court was stipulated by the parties in a written agreement between them and said stipulation of jurisdiction is not contrary to Hungarian law.
If the conditions required for the recognition of a foreign commercial judgement are met, the judgement may be enforced in Hungary in accordance with Hungarian enforcement laws.
Conclusions on Enforceability of US commercial judgements in Hungary
To sum up, a US commercial judgement is enforceable in Hungary if
- the jurisdiction of the US court is legitimate under
Hungarian law;
- the US judgement is final and binding (i.e.
definitive);
- the jurisdiction of US courts is stipulated in a written
agreement between the parties; and
- no ground for denial of recognition applies as per
clauses a)-e) above.
Costs Associated with Enforcement and Enforcement Procedure
The main costs payable in connection with enforcement are as follows.
- Duty: 1% of the value of the case and a maximum of HUF
150,000 (approx. USD 960);
- Bailiff's fees: if, for example, the amount at
issue exceeds HUF 10 million (about USD 64,000), the
bailiff's fee will be HUF 161,000 (about USD 1,025)
plus 0,5% of the amount above HUF 10 million. In addition, if
the enforcement proves to be successful (whether partially or
entirely), the bailiff is entitled to receive commission
(e.g. if the amount collected exceeds HUF 10 million, the
amount of commission is HUF 900,000 (about USD 5,740) plus 5%
of the amount above HUF 10 million;
- Out-of-pocket expenses incurred by the bailiff;
- Translation fees; and
- Attorney's fees.
Pursuant to the Enforcement Act, when all documents necessary for enforcement have been submitted to the competent Hungarian court, the court makes its final decision on the so-called certificate of enforceability that is attached to the foreign judgement and which proves that the foreign judgement is enforceable under Hungarian law in the same way as a Hungarian judgement. Once the certificate of enforceability is final and binding (i.e. definitive), the court issues an enforcement sheet based on which actual enforcement may take place.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.