Hungary
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
The equivalent of a freezing order under Hungarian law is the provisional measure. The provisional measure is intended to meet the applicant's immediate need for legal protection. The Court can order a:
(i) pledge of security for money claims; or
(ii) sequestration of specific assets either within the jurisdiction or worldwide where there is a risk of dissipation of assets before a judgment can be enforced.
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
Yes, so-called protective measures which are regulated by the Act on Judicial Enforcement. Protective measures are generally applicable in enforcement cases and would, for example, be the route to adding a restriction to a property.
3. Briefly what is the relevant legal test?
The Court has to consider whether making the order is likely to cause greater harm to the respondent than would be suffered by the applicant if the measure is not ordered.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
The Court will take action concerning an application for provisional measures if the statement of claim is considered admissible for initiation. The Court will act without delay and will make a decision no later than eight days after the application is filed. The Court may list a hearing to consider the application. The Court will allow the respondent to make representations. The Hungarian Civil Code does not allow proceedings without notice to the respondent.
5. Does the applicant have to provide any form of security or commit to compensation if its claim is ultimately unsuccessful and any freezing (or equivalent) order granted causes loss and damage to the respondent?
Typically, the applicant does not provide security, but the Court does have the power to order security where the respondent can prove this is justified in the circumstances of the case.
6. Can it be sought against third parties?
Provisional measures can only be sought against the respondent in Court proceedings. However, if the assets of the respondent subject to the provisional measure are held by a third party, such as a bank, the bank is obliged to release those assets pursuant to the Court order.
7. What assets are covered by a freezing (or equivalent) order?
Any tangible or intangible assets provided they are not perishable, whether within the jurisdiction (a domestic freezing order) or outside (a worldwide freezing order). The provisional measures can cover any type of assets which could be subject to judicial enforcement procedures.
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
Yes.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
The application for provisional measures could be sought at any stage, but typically the application is made after proceedings have been issued in the underlying/substantive claim.
As an exception, the application may be made before the commencement of the underlying proceedings if the applicant can prove presumptively that a delay in making the application would frustrate the purpose of the provisional measures.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
No.
12. What happens after a freezing (or equivalent) order is granted?
The provisional measures decision may be appealed and the Court has the power to reverse the ruling upon request.
The ruling on provisional measures is enforceable on a provisional basis. The deadline for performance will be communicated by the Court. It is usually a short deadline. If the party fails to comply within the deadline, enforcement proceedings may be brought against it.
13. Who pays the costs of the application for a freezing (or equivalent) order?
The Court will decide who pays the costs of the application at the end of the substantive proceedings.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
A third party, such as a bank, is entitled to notify the Court of any costs incurred in complying with the order. If the Court determines those costs were properly incurred, the unsuccessful party in the underlying litigation is obliged to reimburse the third party.
The third party will only be liable for non-compliance where it has been served with the order. It is the Court who will serve the third party with the Court order, rather than the parties.
15. What are the consequences of breach of a freezing (or equivalent) order?
If the provisional order is breached, the applicant may commence a judicial enforcement procedure. The Court may then impose a fine on the respondent. There may also be criminal liability in some circumstances.
16. Does a third party notified of (but not a party to) a freezing (or equivalent) order owe a duty of care to the applicant (meaning it can be liable to the applicant for non-compliance)?
No.
17. Can a freezing (or equivalent) order be enforced abroad?
Yes, within the Courts of Member States of the EU. Outside the EU, enforcement will be dependent on local law.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
Yes, provided the judgment originates from a Court of an EU Member State.
Contact
Dr Péter Sándor Partner Eversheds Sutherland Budapest, Hungary peter.sandor@eversheds-sutherland.hu www.eversheds-sutherland.com
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