Hungary
Implementation of the European Directive on representative actions
Which national regulations transpose the Directive into national law?
The EU Directive on representative actions (“Directive”) has been implemented in Hungary with Act LXI of 2022 on amending certain laws to ensure effective consumer protection. Its most prominent provision regarding the Directive is the amendment of Act CLV of 1997 on Consumer Protection (“Consumer Protection Act”).
Who is entitled to bring a representative action?
The consumer cannot directly bring or initiate a representative action. It may only be brought by an organisation qualified to do so under the Consumer Protection Act.
An organisation can be entitled to act on a case-by-case or general basis. For the latter case it can be qualified through a designation procedure, if it meets several criteria. For example, it must be established in Hungary, must have been active in the territory of consumer protection for at least 12 months, must be an independent and non-profit organisation.
The Consumer Protection Act entitles some public bodies to bring a representative action without any designation procedure. Such public bodies are the following:
- the Consumer Protection Authority,
- the prosecutor,
- the Hungarian National Bank,
- all central government administrative bodies, autonomous public administration bodies and independent regulatory bodies whose tasks include the protection of consumer rights based on the Directive or other legal provisions.
What can be the subject matter of a representative action?
The Consumer Protection Act defines the subject matter of the representative action in broad terms. It states that representative actions may be brought before the courts to enforce consumers’ civil claims. It can seek an injunction to stop the infringement, to remedy a specific damage and to compensate consumers in areas such as everyday shopping, financial services, travel and tourism, utilities, telecommunications and data protection.
Which individual consumers are represented in a representative action?
The personal scope of the proceeding is limited to a specific group of consumers which is defined in the judgement. These consumers do not have to make a specific declaration to be represented. In case of a successful claim however, they shall prove that they belong to the specific group to have their claims satisfied. The identification of the group of consumers concerned and the means of proof is also set out in the judgment.
Special rules apply if the consumer does not have a habitual residence in Hungary. In this case, the legal effect of the judgment will only extend to this consumer if he/she expressly declares this in relation to the representative action in question.
What will be the outcome of a representative action?
According to Hungarian law redress means the enforcement of civil claims on behalf of individual consumers who have suffered harm. The purpose of the action is to have the business remedy the consumers who have been harmed. If the lawsuit is successful, the court will ensure this through measures such as payment of damages, repair, replacement, price reduction, termination of the contract or reimbursement of the purchase price paid.
Are there particular rules for the disclosure of evidence?
No, the general rules of the Act CXXX of 2016 on the Code of Civil Procedure apply.
(It is important to note that some special rules are applicable in the proceeding as the rules on actions brought in the public interest shall be applied.)
Is third party funding possible?
Yes, it is possible, but it shall be ensured that the funding does not affect the proceedings in a way which is not align with the protection of the collective interests of the consumers. Furthermore, the funding third party shall have an economic interest in the initiation of the representative action for redress or in the outcome of the proceedings.
It is also an important rule that the representative action may not be brought against an undertaking which is a competitor of the funding organisation or against an undertaking with which it has a dependent relationship.
Conclusion
The new legislation may provide an effective protection for consumers as they do not have to actively participate in the proceeding. Furthermore, the subject matter of the representative action is defined in a general way so it can be applied for a wide range of cases. The availability of third-party funding may also increase the number of class actions brought against companies.
Contact
Péter Sándor
T: +36 1 394 31 21 E: peter.sandor@eversheds-sutherland.hu
Ildikó Szegedi
T: +36 1 394 31 21 E: szegedi@eversheds-sutherland.hu
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