Class actions in Hungary

  1.  Do you have a specific procedure or procedures for bringing “opt-in” class actions?  If so, please outline such procedure(s) and their key features.
  2. Do you have a specific procedure or procedures for bringing “opt-out” class actions?  If so, please outline such procedure(s) and their key features.
  3. Are there specific rules on standing for bringing claims under these procedures (e.g., that claims can only be brought by consumer associations)?  If so, please summarise those rules.
  4. How frequently are class actions brought in your jurisdiction? Are there any pending changes to your class action rules that are likely to increase the number of claims filed?
  5. Are the procedures for class actions restricted only to certain causes of action/types of claim, e.g., competition claims?  If so, please describe these restrictions.
  6. What types of relief are available, i.e., damages and/or injunctive relief? 
  7. On what basis are damages calculated i.e., compensatory and/or some other basis?
  8. Are punitive or exemplary damages recoverable?
  9. Will domestic law need to be changed to comply with the Representative Action Directive?
  10. Are there special rules for settlement of class actions, e.g., requirement for court approval?
  11. Beyond the existing rules for taking jurisdiction in unitary claims, are there any additional rules on jurisdiction for your class action procedures?  Are there any territorial limitations to who may be members of the class?
  12.  Please describe the “certification” requirements for each of your jurisdiction’s class action procedures, e.g., how similar must the claims be?  Are there any other criteria to be met for the court to approve use of the procedure?
  13. Do you have specialist courts for these procedures?
  14. Are there any special rules for discovery/disclosure for class action procedures that are different to the rules for unitary actions?
  15. Are there any special rules for appeals in class action procedures that are different to the rules for unitary actions?
  16. Can arbitration clauses lawfully contain class action waivers?
  17. Are contingency fee agreements permissible?
  18. What are the rules on cost shifting, i.e., does the losing party ordinarily have to pay the winning party’s costs?  Are adverse costs awards capped?  If so, at what level(s)?
  19. Is litigation funding of class actions permissible?  If so, how prevalent is litigation funding?

1. Do you have a specific procedure or procedures for bringing “opt-in” class actions?  If so, please outline such procedure(s) and their key features.

There are two types of class action in Hungary: collective redress proceedings and public interest proceedings. Both are governed by the Act of CXXX of 2016 on the Code of Civil Procedure (“CCP”). 

Collective redress proceedings are an “opt-in” method, which means that any person seeking to enforce their right must consent to join the class as a claimant. Collective redress proceedings are regulated in a separate chapter of the CCP. However, except where otherwise specified, the general rules applicable to civil proceedings prevail.  

Collective redress proceedings are only allowed if the claim relates to: 

  1. the enforcement of claims arising from consumer contracts; 
  2. labour disputes;
  3. the enforcement of damages or claims arising from unforeseeable environmental pollution caused by human activities or negligence.  

Much preparation is needed for this type of proceedings. First, at least ten claimants must enter into a class action agreement setting out the terms and conditions for how the claim will be conducted during the proceedings. Second, at the same time as the statement of claim is submitted, a request for authorising the collective redress proceedings must be filed in court. The court has discretion over whether or not to grant the request.    

The request for authorising collective redress proceedings must include information on:

  1. the identity of all claimants;
  2. the representative claimant;
  3. the acting legal counsel;
  4. the law and facts connecting the claims (“representative rights” and “representative facts”);
  5. a tool or method proving that all the representative facts apply to the claimants as a whole and that all the claimants are entitled to the representative’s rights; and
  6. the class action agreement.  

If the application does not meet these criteria, the court may reject it. This is at the court’s discretion since it can reject the application if it finds that collective redress proceedings are not efficient for enforcing the claimants’ representative rights. Where the request is rejected, general civil proceedings must also be terminated, and the claimants have the right to restart the proceedings.  

If the court authorises the application, the designated claimant will be the representative claimant. 

The court’s judgment is legally binding for all claimants. 

2. Do you have a specific procedure or procedures for bringing “opt-out” class actions?  If so, please outline such procedure(s) and their key features.

Public interest proceedings are “opt-out” class actions, which can be initiated in cases of infringement of the public interest. The general provisions applicable in these kinds of proceedings are specified in the CCP. However, the specific infringements forming the basis of these proceedings are governed by other statutes. Public interest proceedings are not generally available in all civil or commercial matters, but only when it is specifically allowed by a certain statute. In these cases, the relevant statute designates who has standing to initiates such proceedings. For example, the Civil Code states that certain entities, such as the public prosecutor, may bring actions against companies for unfair general terms and conditions in consumer contracts. 
According to the CCP, any kind of award, even damages, can be awarded at the end of these proceedings, but specific statutes may regulate this question differently. For example, the Civil Code states that when a public interest procedure is started because of unfair general terms and conditions in consumer contracts, the award can only declare the term invalid. On the other hand, according to the Consumer Protection Act, when a public interest procedure is filed for a violation of consumer protection regulations, the award can state the liability. After the judgment on liability is served, the affected consumer can file a claim against the infringer for damages. 

The persons sharing the common public interest are not claimants to the disputes. Instead, the public prosecutor or an organisation representing the public interest acts as the claimant in lieu of the people subject to the infringed public interest. The persons sharing the common interest must be defined by the facts and circumstances, which enables the identification of the relevant group. If the interests of these class members are not identical, the proceedings must be terminated ex officio. 
The persons sharing the common interest may exclude themselves from the scope of the court’s judgement by notifying the defendant that they retain their right to bring an individual action against it. 

Intervention is not possible in these actions. 

3. Are there specific rules on standing for bringing claims under these procedures (e.g., that claims can only be brought by consumer associations)?  If so, please summarise those rules.

At least ten claimants are required for forming a class in collective redress proceedings. However, only the designated claimant can exercise their rights during the proceedings. The main facts substantiating the claims must be the same for all claimants. In addition, legal representation is mandatory in these proceedings. 

In public interest proceedings, the persons sharing the common interest are not claimants to the proceedings. The only person or organisation who has standing to be a claimant is that which is specifically given such rights in the relevant statute. Generally, the public prosecutor, administrative bodies or consumer associations have such rights. Their legal standing is based on the statute regulating the specific matter such as the Act CLV of 1997 on Consumer Protection.

4. How frequently are class actions brought in your jurisdiction? Are there any pending changes to your class action rules that are likely to increase the number of claims filed?

Statistical data is not available in this regard. However, in our experience, class actions are very rare in Hungary. 
Collective redress proceedings (“opt-in class actions”) are rather new to the Hungarian legal system. This kind of procedure has only existed since January 2018, and did not have an equivalent prior to that. Perhaps it is because of this novel nature that so far these kind of proceedings have been extremely rare.

Public interest proceedings (“opt-out class actions”), are a bit less rare, but the bodies who have standing to initiate such proceedings do not exercise this power frequently. 

5. Are the procedures for class actions restricted only to certain causes of action/types of claim, e.g., competition claims?  If so, please describe these restrictions.

Collective redress proceedings are only allowed if the claim concerns: 

  1. the enforcement of claims arising from consumer contracts; 
  2. labour disputes;
  3. the enforcement of damages or claims arising from unforeseeable environmental pollution caused by human activities or negligence.

Public interest proceedings may be initiated in various areas of the law. Specific statues governing specific subject matter allow public interest proceedings to be initiated in such matters. If they are, the persons permitted to act as claimants in such proceedings are also listed. For example, public interest proceedings may be initiated in cases where unfair conditions in consumer contracts are disputed. In these cases, the claimant to the proceedings may be the public prosecutor, an administrative body, consumer association or the chamber of commerce.

6. What types of relief are available, i.e., damages and/or injunctive relief? 

The relief available depends on the type of claim in question. In general, both damages and injunctive relief are available in class actions proceedings. 

7. On what basis are damages calculated i.e., compensatory and/or some other basis?

Procedural rules governing these kinds of proceedings do not regulate how damages are to be calculated, this is regulated by the statute governing the merits of the claim. 

Under Hungarian law however, damages are almost always calculated on a compensatory basis. 

The general rule prescribed by the Civil Code is the following: 

  1. the depreciation in value of the property of the aggrieved party; 
  2. any foreseeable pecuniary advantages lost; and 
  3. the costs necessary for the mitigation or elimination of the financial losses sustained. 

The Civil Code has some subsidiary rules for cases when the exact amount of the loss cannot be determined, and in such cases the court has the power to estimate the amount of damages to be awarded. But, this is still a compensatory calculation in nature, and not punitive or exemplary. 

8. Are punitive or exemplary damages recoverable?

There are no punitive or exemplary damages under Hungarian law.

9. Will domestic law need to be changed to comply with the Representative Action Directive?

Yes. Hungarian law will need to be changed in order to comply with the Representative Action Directive (“Directive”). The Directive allows qualified entities to initiate proceedings to protect the collective interests of consumers. Such organisation does not yet exist in Hungary. As mentioned above, certain entities are entitled to bring public interest proceedings in certain matters, but no organisation has a general power to bring such proceedings in all matters related to consumer protection. Thus, the implementation of the directive will require the legislator to expand the scope in which public interest proceedings (or representative actions) may be brought, and a qualified entity will have to be designated or created to exercise these powers. The Directive also regulates certain issues currently unregulated in Hungary, such as the financing of qualified entities, the expediency of the procedure, and penalties. 

10. Are there special rules for settlement of class actions, e.g., requirement for court approval?

In class action agreements, claimants may indicate that a court settlement is prohibited, or they may give explicit authorisation for settling the claim only under certain strict conditions. According to these conditions, a minimum amount or prior approval of the class members are required for a settlement. 

Since there are no other specific regulations for settling a claim in class action proceedings, the general rules of the CCP shall apply. If the settlement agreement complies with the relevant legislation, the court will approve it through a ruling. Otherwise, it will reject the request for approval and continue the proceedings. A court-approved settlement has the same effect as a judgement.

11. Beyond the existing rules for taking jurisdiction in unitary claims, are there any additional rules on jurisdiction for your class action procedures?  Are there any territorial limitations to who may be members of the class?

There are no additional or special rules for jurisdiction or territorial limitations regarding class action proceedings. 

12. Please describe the “certification” requirements for each of your jurisdiction’s class action procedures, e.g., how similar must the claims be?  Are there any other criteria to be met for the court to approve use of the procedure?

The request for authorising the collective redress proceedings must include information on;

  1. the identity of all claimants;
  2. the representative claimant; 
  3. the acting legal counsel;
  4. the law and facts connecting the claims (“representative rights” and “representative facts”);
  5. a tool or method proving that all the representative facts apply to the claimants as a whole and that all the claimants are entitled to the representative’s rights; and
  6. the class action agreement.

13. Do you have specialist courts for these procedures?

No. Specialist courts do not exist in Hungary. On first instance, if the value of the claim is not more than HUF 30 million the district court is competent to proceed. However, if the value exceeds HUF 30 million the dispute falls under the competence of the county courts.

14. Are there any special rules for discovery/disclosure for class action procedures that are different to the rules for unitary actions?

According to the general rule, the court may order the opposing party to present certain documents in his possession at the request of the other party. However, there is one specific rule for the scope of discovery/disclosure in class action procedures. The defendant or the intervener cannot ask for disclosure of the class action agreement and shall not have access to it. 

15. Are there any special rules for appeals in class action procedures that are different to the rules for unitary actions?

If the court rejected the action of one or several claimants because of failure to verify their connection to the representative facts or rights, the designated claimant shall be entitled to appeal exclusively in respect of the affected class members. Since there are no other specific regulations for appeal in class action proceedings, the general rules of the CCP shall apply.

The appeal shall be submitted to the first instance court in writing within 15 days following the delivery of the first instance decision. In general, the appeal has a suspensory effect on the enforcement of the decision.

16. Can arbitration clauses lawfully contain class action waivers?

This matter is not explicitly regulated in Hungarian law, but most matters that are typically subject of class actions are not arbitrable under Hungarian law. 

According to the Hungarian Arbitration Act, labour disputes and disputes arising out of a consumer contract are not arbitrable. 

Claims arising from unforeseeable environmental pollution caused by humans are technically arbitrable. Although these claims are not contractual, it is theoretically possible for the parties to agree to arbitrate the claim, which would simultaneously exclude their participation in class actions. This is however a rather unlikely scenario. 

17. Are contingency fee agreements permissible?

Contingency fee agreements are permissible. In class action proceedings, the general terms and conditions of the contingency fee may be included in the retainer agreement between the class members and the legal counsel of the case. 

18. What are the rules on cost shifting, i.e., does the losing party ordinarily have to pay the winning party’s costs?  Are adverse costs awards capped?  If so, at what level(s)?

In general, the losing party bears the winning party’s costs. The adverse costs are not capped. However, the court decides on the amount based on the costs charged and supported by the party. If the claimed costs are deemed to be unreasonable, the court can lower the amount in its judgment. 

19. Is litigation funding of class actions permissible?  If so, how prevalent is litigation funding?

Third-party funding is not regulated in Hungary, but is allowed through the general contractual regulations of the Civil Code. However, litigation funding is not common in Hungary.  

See the Overview of the Representative Actions Directive >>

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