Building law and regulation in Hungary during Covid-19

The Hungarian Government has declared state of emergency on 11 March 2020. At the moment there is no specific construction related Government Decree in place. However, with the recent measure prohibiting foreign citizens to enter Hungary caused serious staffing issues for a number of construction companies, and the customs control significant delay in shipments to Hungary. Prior to the outbreak of COVID-19 the construction industry has employed foreign workers in the level of tens of thousands, so the prohibition to enter Hungary for many foreign citizens has direct effect on the construction industry.

Since the declaration of the state emergency a number of government decrees has been passed to mitigate the consequences of the coronavirus outbreak with economic measures. The measures which may have impact on the construction industry are as follows (i) grace period have been given on capital repayment and interest payment obligations on loans and financial leasing arrangements until the end of the year 2020 (ii) freeze on the amount of rents (iii) certain employment laws have been amended for more flexible working arrangements.

Not in general, only if the consequences of coronavirus epidemic have a direct impact on the construction works, and makes the execution thereof impossible for a reason that is not attributable to the contractor, which was not foreseeable and the contractor could not prevent or the prevention thereof cannot be expected from the contractor. The existence of force majeure shall be reviewed on a case by case basis. For contracts signed after the announcement of the state of emergency, the reference to force majeure is questionable, since the corona virus epidemic is a given. force majeure may be justified due to shortage of specific material or specific plant or machinery, unavailability of skilled employees, etc. In the event of justified Force Majeure, the contractor will be exempt from the breach of contract caused by Force Majeure. If the contractor's works are delayed due to force majeure the price and time consequences shall be detrimed on the basis of the underlying contract, no general legislation applies.

Yes, if due to Force Majeure (impossibility of performance occurs for a reason that is not attributable to any of the parties) the performance becomes impossible the contract terminates, the parties shall settle with the already performed services on the basis of the underlying contract.

The measures which have been implemented shall qualify as change of law. The exclusion of the impact of the change in law in construction contract have not yet been overruled in the current legislation. Consequently, the time and price impacts of the current legal measures shall be reviewed on the basis of the underlying contracts.

In Hungary curfew has not yet been ordered, however if the number of the infections will significantly increase, despite the already implemented measures, there is a fair chance that the curfew will be ordered, and only those businesses necessary to maintain the basic public functions may further operate. In such case the construction projects will necessarily stall, and the occurrence of force majeure will be obvious.