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Material compensation for delay in civil proceedings from 1 January 2022

By ratifying the European Convention on Human Rights in 1992, Hungary has committed itself to ensure the right to a fair trial within a reasonable time and to guarantee the right to an effective remedy for any violation of this right. In its judgment in Gazsó v. Hungary, the European Court of Human Rights called on Hungary to establish a domestic remedy capable to handle the structural deficiencies identified in the judgment. As a result, at the end of June 2021, a new Act on the Enforcement of Material Compensation for Delay in Civil Proceedings was published in the Hungarian Official Gazette, which will enter into force on 1 January 2022. The Act establishes a new legal remedy for compensation for fundamental rights violations, called ‘material compensation’ which is different from the general compensation (in Hungarian: “kártalanítás”), indemnification or non-pecuniary compensation (in Hungarian: “sérelemdíj”).

The Act defines the time periods which may be regarded as reasonable and which must necessarily be sufficient to enable the court to carry out the procedural actions necessary for a reasoned decision in the case in question. Exceeding those time limits is what the legislature objectively regards as a breach of a fundamental right in relation to judicial proceedings. The Act declares a period of five years (60 months) to be sufficient for the conclusion of civil proceedings as a general rule. In specific cases requiring a rapid decision (e.g. labour disputes), a shorter objective period has been established for the entire judicial procedure.

Only the party of the court procedure is entitled to material compensation, i.e. other persons involved in the proceedings (e.g. interveners) are not entitled to claim such compensation. The Act defines the grounds of exclusion from the right to claim material compensation. Such grounds include, for example, if the party has already received a so-called ‘fair compensation’ in proceedings before the European Court of Human Rights for violation of the fundamental right to have the proceedings completed within a reasonable time.

A claim for material compensation may be brought in a civil non-contentious procedure before a court. The General Court of Debrecen and the General Court of Pécs will have jurisdiction and exclusive competence to hear the proceedings. In order to ensure the efficient and expeditious conduct of the non-contentious proceedings, the Act defines a maximum time limit of 15 days for the court's general obligation to take action and a time limit of 30 days for the written submission of the counterclaim. The court must issue a decision on the merits of the proceedings within 3 months from the receipt of the counterclaim.

A separate government decree will determine the amount of the material compensation for delay in civil proceedings and the rules for calculating the amount to be paid.