Law and regulation of Covid-19 loan moratoriums in Hungary

Yes.

Not applicable.

Government Decree 47/2020 on immediate actions necessary to take to mitigate the impacts of the Coronavirus worldwide pandemic on national economy.

From 19 March 2020 until 31 December 2020.

Yes, extension is possible subject to Government’s decision.

Mandatory but each borrower can opt out.

The moratorium applies to loans and guarantees given to any Hungarian borrowers, regardless of loan amount. 

The moratorium applies to all capital repayment, interest payment and fee payment obligations for corporate and residential loans, and financial leasing agreements. 

The moratorium also extends to overdrafts.

All Hungarian and non-Hungarian lenders subject to the supervision of the Hungarian Financial Authority are affected,, i.e. financial institutions doing business either through their subsidiary or branch office incorporated in Hungary or cross-border in business-like fashion, but this supervision does not capture international financial institutions such as the European Investment Bank and the European Bank for Reconstruction and Development.

The Relevant Act does not provide provisions on international private law, so the general rules of international private law apply.

If the consumer loan agreement is lawfully governed by foreign law, such a choice of foreign law may not, however, have the result of depriving the consumer of the protection afforded to him by mandatory consumer protecting provisions of the country where the consumer has his habitual residence (Art. 6 para. 2 Rome I Regulation). The exclusion of the lender's right to terminate the consumer loan due to a significant deterioration of the financial circumstances of the consumer or the value of a security is such a mandatory provision and therefore also applies to loans to Hungarian consumers lawfully governed by foreign law. 

The statutory payment moratorium is non-mandatory as the borrower may continue its payments and the parties may agree otherwise, so Art. 6 para. 2 Rome I Regulation does most likely not apply. On the other hand, although this is not clear yet, the Relevant Act in its entirety could be considered an overriding mandatory provision in the meaning of Art. 9 Rome I Regulation as it pursuits public interests. If this is true, a foreign court may apply the provisions of the Hungarian statutory payment moratorium also to a loan agreement with a Hungarian consumer that is lawfully governed by such foreign law (Art. 9 para. 3 Rome I Regulation). 

Of course, if in each case the chosen law is more favourable to the consumer, the consumer may also choose to exercise the rights afforded to him or her under the chosen law.

Loans given until midnight 18 March 2020 can benefit from the moratorium.

The moratorium applies to all principal, interest and fees.

Yes.

Yes.

Yes.