Law and regulation of force majeure in Hungary

Yes, Sections 6:3, 6:146, 6:174, and 6:179-180. §§ of the Hungarian Civil Code specifically regulate force majeure events. However, the term “force majeure” is not defined in Hungarian Law. 

If performance is impossible, the contract will be frustrated. If none of the parties bear liability for triggering the cause of the impossibility, no damages will be payable. If a party does bear this liability, it may need to reimburse the other party for damages, unless it is able to prove that the damage occurred as a consequence of unforeseen circumstances beyond its control, and that there was no reasonable cause to take action to prevent or mitigate the damage.

If performance is not rendered completely impossible as a result of the force majeure event, then contract will not be frustrated. However, if  the force majeure event directly results in a delay to or defective performance, the defaulting party can exempt itself from liability for damages if it proves that such delay or default stems from the force majeure event. This, however, does not affect the parties’ obligation to cure defective performance, even if it was as a result of the force majeure event.

In general, parties are free to regulate force majeure clauses in their contracts. 

General principles set out in the Hungarian Civil Code must be taken into account (e.g. the principles of good faith and fairness, the principle of reasonable conduct, and the prohibition on abuse of rights). 

Yes, generally speaking, in order to be exempt from liability for breach of contract, a party relying on force majeure shall prove that (i) the force majeure event had a direct effect on its performance of the obligations under the contract; (ii) the force majeure event was unforeseeable at the time of the conclusion of the contract; and (iii) the party could not have been expected to have prevented the consequences of the force majeure event.

No. 

If the force majeure clause does not differ from those that are generally regarded as being “commercial practice”, then the clause can be included as-is in T&Cs. If, however, the force majeure clause differs significantly from clauses used generally in commercial practice, then additional terms will apply in accordance with the relevant EU Directive.

“The Service Provider shall be exempt from liability for delay in performance or non-performance, if it was impossible for the Service Provider to perform in accordance with the contractual provisions due to an event unforeseeable at the time of the conclusion of the contract which the Service Provider could not have prevented (“vis maior”), in particular earthquake, flooding, lightning, windstorm, other natural disasters. For the sake of interpretation of this point, the parties consider as vis maior in particular the following events: disaster, war, riot, revolution, revolt, civil war, nationwide or otherwise large strike, subsequent change of law, export or import ban, economic embargo, quarantine. The vis maior event shall be in direct connection with the business and services undertaken in the contract by the Service Provider. If the term of the vis maior exceeds 30 days, the Customer is entitled to withdraw from the contract by way of written notice addressed to the Service Provider.” 

“The Service Provider shall be exempt from liability for delay in performance or non-performance, if it was impossible for the Service Provider to perform in accordance with the contractual provisions due to an event unforeseeable at the time of the conclusion of the contract which the Service Provider could not have prevented (“vis maior”), in particular earthquake, flooding, lightning, windstorm, other natural disasters. For the sake of interpretation of this point, the parties consider as vis maior in particular the following events: disaster, war, riot, revolution, revolt, civil war, nationwide or otherwise large strike, subsequent change of law, export or import ban, economic embargo, pandemic situation, or quarantine. The vis maior event shall be in direct connection with the business and services undertaken in the contract by the Service Provider. If the term of the vis maior exceeds 30 days, the Customer is entitled to withdraw from the contract by way of written notice addressed to the Service Provider.”

To exclude the Coronavirus from vis maior events: 

“1. Neither party shall be liable for non-conformity or default which occurred due to an event out of the reasonable control of the party (vis maior), provided that the concerned party notifies the other party of such event within a reasonable time. Such event shall be in particular: war, revolution, terrorism, natural disaster, unforeseeable political events and government measures. 

2. Taking into consideration that the parties are aware of the restrictive measures applicable due to the epidemic situation developed in connection with the outbreak of the COVID-19 virus, the Parties expressly agree that such restrictive measures shall not qualify as vis maior events under the provisions of this contract, thus, the Service Provider shall not refer to such restrictive measures as a reason for non-performance of this contract and shall commence performance of this contract. Nonetheless, considering that the epidemic situation developed in connection with the outbreak of the COVID-19 virus is gradually and constantly escalating, the Parties agree that if any unavoidable external circumstances not known for the Parties at the time of the conclusion of this contract arises, the Parties shall reconsider the situation and undertake to conduct negotiations in this respect. Should any such circumstance hindering the performance of the contract arise, the Parties shall notify in writing each other, and provide evidence of the occurrence of such circumstance.” 

There are no alternative remedies in Hungarian law. 

Generally speaking and as detailed in Question 2 above, if the performance of the contract becomes impossible, the party can refer to impossibility (force majeure or legal impossibility  e.g. a government restriction), in which case the party becoming aware of the impossibility shall notify the other party without undue delay. The courts will evaluate the effect of the force majeure event on the performance of the contract on a case-by-case basis. When evaluating the force majeure event, the courts will likely consider whether (i) the alleged force majeure event had a direct effect on the performance of the party relying on it; (ii) such event was unforeseeable at the time of the conclusion of the contract; and (iii) it could be reasonably expected that the party prevent the consequences of the force majeure event.

If the performance of the contract does not become impossible but contractual performance is also not possible, i.e., there is non-conformity or delay in performance, the party can still refer to the force majeure event to exempt itself from the liability for damages. Here again, however, the party shall demonstrate that (i) the alleged force majeure event had a direct effect on the performance of the party relying on it; (ii) such event was unforeseeable at the time of the conclusion of the contract; and (iii) it could be reasonably expected for the party to prevent the consequences of the force majeure event.