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Anita Horváth appointed co-head of the Europe energy group

We are delighted to announce the appointment of partner Anita Horváth as co-head of the Europe energy group. Serving alongside fellow co-head, Arek Krasnodębski, she will focus on further developing our transactional work within the energy sector.

Anita is among the premier lawyers advising on complex domestic and cross-border M&A, joint ventures and private equity transactions in Hungary and the region, due to her excellent international reputation, clients increasingly call on her to lead multijurisdictional transactions. In addition to her regional appointment, Anita has also recently been named co-head of our Corporate and M&A practice in Hungary, alongside Rob Irving.

We congratulate Anita on her appointment, and wish her continued success in her new roles.

About Dentons

Dentons is the world’s largest law firm, delivering quality and value to clients around the globe. Dentons is a leader on the Acritas Global Elite Brand Index, a BTI Client Service 30 Award winner and recognised by prominent business and legal publications for its innovations in client service, including founding Nextlaw Enterprise, Dentons’ wholly owned subsidiary of innovation, advisory and technology operating units. Dentons’ polycentric approach, commitment to inclusion and diversity and world-class talent challenge the status quo to advance client interests in the communities in which we live and work.

Judicial Experts in Construction Law Legal Disputes in Hungary

One of the most important fields of law in the practice of our Legal Partnership is Construction Law. According to our experience, one of the most relevant questions in the legal disputes of Construction Law is legal proof, and forensic experts play a very important role in the proving procedure.

The expert is nominated by the judge from the list of forensic experts in the legal procedure. However, even before submitting the statement of claim there is a possibility to ask for the nomination of the forensic expert from the notary public who will also appoint him from the list of forensic experts. This kind of delegation is usually asked if for some reason the building contractor cannot continue the construction, finish it or another building contractor continues it, in these cases the notary public appoints a forensic expert to determine the responsibility of the building contractor or their defective performance.

The expert report of the forensic expert appointed by the notary public should be taken into consideration as if the forensic expert’s appointed by the court. Of course, the parties can delegate private experts but primarily their expert report is taken into consideration as the certain party’s declaration, so the power of proof of these private experts is weaker than the experts’ appointed by courts and notary publics. However, the new Code of Civil procedure came into force on 01 January 2018 in Hungary attributes more power to the so called private expert report, as long as during the preparation of the report, the party hiring the private expert and the expert kept the warranty rules which respect the interests of the other party. These rules ensure the right to inform the other party and also ensure the other party to make comments. With regard to the fact that very short time has passed since the entry into force and there is no judicial practice regarding the private experts, but presumably the experts appointed by courts and notary publics will keep their primacy regarding their force of proof.

Dr. Tamás BALÁZS
Attorney at law
Managing Partner

Advisory Excellence PHOTO

Dispute Resolution in Construction Law Matters in Hungary

In Hungary basically we can differentiate three different forms of settling legal disputes in connection with construction and design contracts. These possible claim enforcements are as follows: out of court dispute settlements (reconciliation between the parties in front of Dispute Adjudication Boards /DAB/, or via payment order procedure), in front of an ordinary state court via civil lawsuit, or in front of Hungarian or international arbitration courts.

From the above mentioned opportunities the possibility of claim enforcement in front of ordinary courts is open in all cases, whereas the contract is signed upon Hungarian law. Currently in Hungary there is one Arbitration Court attached to the Hungarian Chamber of Commerce. In so far as the contracting parties would like to use this or the international arbitration court in the settling of their dispute based upon a contract signed, according to Hungarian law, in a way that they put down this intention of theirs either in the contract or at latest in a written agreement at the development of their legal dispute. One of the greatest advantages of the Arbitration Court functioning beside the Hungarian Chamber of Commerce is that each of the parties can delegate an arbitrator from the list of arbitrators to the board of arbitrators and the two delegated arbitrators will choose the third member of the board of arbitrators who is also the President. An additional advantage is that the procedure of the arbitration court is quicker than the procedure of the ordinary state court, as cases usually finish within a few months in front of these arbitration courts, whereas in front of state courts – where the procedure is in two instances – in certain cases the procedure can last for years and sometimes the revision of the Supreme Court may be requested. In case of the constraint of the arbitration court according to Hungarian law, there is a possibility of the procedure in front of ordinary state courts, only the statement of invalidation of the verdict of the arbitration court can be required, as long as the verdict of the arbitration court.

In Hungary most of the construction lawsuits can last up to several years in front of ordinary courts, as long as the parties receive the final and definitive sentence. With regard to this fact in certain nominated cases (where the occurrence of the completion or its certification is disputable, or the completion is not disputable but payment has not been carried out, or there is a dispute in connection with the financial guarantees – mortgage, bank guarantee etc. – ensuring employer payment) there is an opportunity to turn to the Completion Validation Expert Organization attached to the Hungarian Chamber of Commerce since 2013, which can issue an expert opinion within 60 days upon request. As long as any of the parties do not agree with the expert report, there is a possibility to turn to court within 60 days following receipt of the expert report, and the court should have an accelerated procedure taken into consideration the report of the Completion Validation Expert Organization in a way as it would have been made by a forensic expert delegated by the court. These legal procedures last definitely shorter than other legal procedures in construction cases.

There is an opportunity to settle disputes out of court. It can be an agreement between the contracting parties, a written agreement, but in case of the consent of the contracting parties, even third parties, organizations dealing with out of court legal disputes or persons can be involved. In the latter case for instance a mediator can facilitate the settlement between the parties, or the conciliatory body beside the Hungarian Chamber of Commerce, but the decision of the latter can only be mandatory for the parties if they assumed it in writing at the beginning of the procedure to subject themselves to the decision of the conciliatory body. In connection with out of court dispute procedure it should be mentioned that as far as the parties accepted the application of one of the FIDIC-contract samples as they are to proceed according to the dispute settling rules included in it. In this regard we are only referring to the role of Dispute Adjudication Board.

An order for payment in front of a notary public has a special temporary character between out of court and litigation dispute. Except for certain cases, this procedure shall start in cases where the claim does not exceed HUF 3,000,000 (EUR 9,800). This procedure cannot be started if the amount of the claim is over HUF 30,000,000 (approx. EUR 98,000). You can initiate this procedure electronically in which the formal but not the substantive checking of the claim, the notary public releases a payment notice for the person indicated as the debtor in order to accomplish his payment obligation within 15 days, or if he does not agree with the claim to initiate a protest within 15 days at the notary public. In the case of the protest of the debtor, the creditor can initiate a civil law suit within 15 days in front of the competent court, thus the out of court procedure will be transferred to court procedure.

Dr. Tamás BALÁZS
Attorney at law
Managing Partner

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Contracts which became impossible in Hungarian construction

In construction industry contracts cannot be performed according to the intentions of the parties in each case. It means that the parties cannot fulfil their duties. In the practice of our Legal Partnership we usually meet cases in which the performance of the contracts became impossible or one of the parties referred to it. We can talk about the impossibility of the performance if the reason of the impossibility has been originated after the conclusion of the contract. According to Hungarian law and Hungarian judicial practice, the impossibility of performance can be physical impossibility, legal impossibility or impossibility of the interests. The latter type of impossibility of performance is accepted only in very special cases by Hungarian courts.

If performance has become impossible for a reason attributable to one of the parties, the other party shall be relieved from the obligation of contractual performance and may demand damages for the loss caused by non-performance of an obligation. If performance has become impossible for a reason attributable to both parties, the contract shall be terminated and the parties may demand damages from each other in the proportion of their interaction. According to the general rule of the Hungarian Civil Code, if performance has become impossible for a reason that cannot be attributed to either of the parties, the monetary value of the services provided before the time when the contract was terminated shall be compensated. It is important to know that the last general rules cannot be applied in case of contracts for professional services.

In case of contracts for professional services special rules shall be applied and in this case also other circumstances shall be respected in connection with the application of the legal consequences of impossibility of contractual performance. According to these special rules, if performance has become impossible for a reason that cannot be attributed to either party and the cause of impossibility has occurred within the control of the contractor, he shall not be entitled to demand remuneration. If the cause of impossibility has occurred within the control of customer, the contractor shall be entitled to remuneration, but the customer shall be entitled to deduct the amount that the contractor had saved or could, without great difficulty, have earned elsewhere in the time gained. If the cause of impossibility has occurred within or beyond the control of both parties, the contractor shall be entitled to a proportionate amount of the remuneration for the work done and for his expenses.

According to our experience, if we meet an impossibility of performance in a construction contract which cannot be attributed to either of the parties, we have to consider circumspectly within which party’s control the impossibility of performance has occurred. Finally, I would like to remark that the category “within the control of the party” and legal consequences of the impossibility of performance were known and applied also by Roman Law.

Dr. Tamás BALÁZS
Attorney at law
Managing Partner