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‘Compliance is the General Intention’

The vice president of the Hungarian Bar Association (MÜK), Dr. András Szecskay, seeks to assure investors and businesses that Hungary’s legal system is well founded and that compliance with EU law remains the general intention in an exclusive interview with the Budapest Business Journal.

As a high-ranking member of national bar association, Szecskay is well positioned to comment on the current dynamics of law and the legal profession in Hungary as Prime Minister Viktor Orbán’s Fidesz-led government settles in for a record third consecutive term. 

“Compared to the U.S. or U.K. common law traditions, the evolution and development of Hungarian law is quite different,” Szecskay told the BBJ. “In general, Hungarian law is built on a continental legal foundation, deriving originally from Roman law tradition, and in that respect is very similar to the legal systems in Germany, Switzerland and Austria. In the 20th century, Hungarian lawmakers copied and borrowed some legal solutions from lawmakers in those countries. Beyond that, I think that the biggest difficulty of Hungarian law for foreigners is the language.”   

More recently, the greatest changes taking place in Hungary’s legal system are the result of having joined the European Union in 2004. To suggest, however, that the Orbán-led government and the EU have not always seen eye to eye over the past eight years qualifies as serious understatement. Even without the often-simmering tension between the parties involved, achieving compliance with EU legislation is no easy task.

“While Hungary has some historical and traditional differences, foreign investors should not be afraid of facing situations under Hungarian law that would result in extreme or weird solutions,” Szecskay explained. “It is the intent of Hungary to comply as closely as possible with corresponding EU regulations. This may not be what the government and Prime Minister always communicate to the public for political considerations, but compliance is the general intention nonetheless.”

GDPR Burden

The need for compliance also holds true for the EU’s new General Data Protection Regulation (GDPR) legislation, which entered into effect on May 25.

“Every day you hear about GDPR. The legislation is a major burden on companies,” said Szecskay. “I’m sure it will take some time for the Data Protection Office [DPO] to deal with the new situation, but I’m also sure that they will be cautious enough not to impose the maximum fines on companies straight away. While enforcement will be more and more rigorous over time, the DPO will probably further distinguish between the different sizes of companies and their resources, degrees of reluctance to comply, as well as sufficient levels of diligence and effort to comply within a given time frame. But it’s a tough, very complex set of regulations. I’m not personally involved in this, but for those who are involved on a daily basis, including some of my partners, they are very busy.”   

As for homegrown legislation, recent changes to Hungary’s new Code of Civil Procedure, effective from January 1 of this year, are having an immediate, if mixed, impact.

“The Code has changed dramatically and imposes new requirements for the average practitioner,” Szecskay explained. “I understand that there was a clear intention in the preparation of the new law to accelerate the procedure and make things more efficient. I don’t know exactly how efficient and how accelerated things will be, but for the everyday practitioner there are so many changes. I’m not speaking here about big law firms where you can find lots of people who are familiar with and involved with such complexities on a daily basis, but about average practitioners who are not familiar with such things – for example, those in more rural areas who are mostly practicing on their own. An average driver cannot drive a Formula 1 race car. I was told recently that the courts have immediately rejected 95 out of 100 submitted claims because they do not satisfy the newly established requirements.”

Another new law, also introduced in January, opens bar registration to in-house counsels. “This is mainly good because all legal practitioners can belong to the same organization – the bar association – for registration purposes, for disciplinary purposes, for educational purposes and so forth. The bar is very busy in preparing and improving its internal regulations,” Szecskay said.

Straightforward

In terms of what to expect legislation-wise during the government’s third term, Szecskay feels “pretty comfortable” with Hungary’s Minister of Justice, László Trócsányi, who has called for the completion of efforts to set up a Supreme Public Administration Court – a body that its critics believe will lack impartiality.

“The Minister of Justice is straightforward, very knowledgeable, fully familiar with EU legislation and regulations, and a highly respected person, and I’m pleased that he chose to accept a second term,” Szecskay told the BBJ. “However, as we’ve often seen in the past, there have been initiatives [in Parliament] to amend existing legislation that are improvised. The Ministry of Justice is not the problem. What causes problems are politics and self-interest.”

Regarding the setup of the Public Administration Court, Szecskay believes it “makes sense” in terms of concentrating similar types of cases. “There should be, in theory, a professional team of judges who are deeply knowledgeable and experienced in the relevant field,” Szecskay explained. “The real concern is the selection of the judges. If people don’t feel comfortable with the selection of the judges, it’s because the court might, emotionally or otherwise, align itself closer to the government, as opposed to being completely independent.”

Regarding Hungary’s current investment climate, Szecskay sounds a positive note. “The Hungarian market is still very competitive. Regardless of the financial and economic results of the country, which change from year to year, Hungary is still a favored destination for investors, and I think the country can still very well attract foreign investment – the automotive and communications industries being two clear examples. There may be sectors which are less favored by the government – retail, banking and the like – but in general it’s still an attractive environment and that keeps most of the international firms here,” Szecskay concluded.

BIO BOX:

As well as being vice president of the Hungarian Bar Association (MÜK), Dr. András Szecskay is a practicing attorney at law and the managing partner of Szecskay Attorneys at Law (est. 1992). The Budapest-based firm describes itself as providing “client-focused and innovative solutions to a diverse multinational and local client base consisting of typically large and medium-sized businesses representing a full spectrum of industry, trade and services.”

Hungarian Bar Association (MÜK)

The association is a “public body and national organization of attorneys with an independent administrative apparatus and budget,” according to its website. The officers of the MÜK’s 25-member presidency include a president (currently Dr. László Réti), vice presidents, a secretary general and other secretaries, presidents of standing committees, disciplinary commissioners and a disciplinary high commissioner. According to “Act XI of 1998 on Lawyers and the Statutes of the Hungarian Bar Association”, the MÜK presidency is tasked with convening the plenary meeting, the association’s supreme decision-making body whenever necessary, but no less than once a year.