Claims and Statutes of Limitations in Hungary

Statutes of Limitations can play a significant role when a party seeks enforcement of claims.  The more time that passes, the more difficult it can be to prove a claim. Documents get lost and who said or did what becomes less clear. For claims with no Statutes of Limitations set by law, the courts must determine the claim within the general Statutes of Limitations.

What is a Statute of Limitation?

A Statute of Limitation is the maximum length of time a claim can be enforced through a court ruling. If the Statute of Limitation runs out, the claim may still exist, but is no longer enforceable by the court. In such cases, a claimant may still demand fulfillment of services or compensation out of court – for example by written request – and the services may be met and cannot be reclaimed but fulfillment is strictly voluntary.

Do courts examine the Statutes of Limitation in every case?

Generally a court will not check whether or not a statute has expired unless explicitly ordered to do so by a party to the case.

How long is the Statute of Limitation?

Claims expire after five years. The Statute of Limitation commences upon the due date of the claim. Pursuant to the new Civil Code, parties may deviate from the five year Statute of Limitation in their agreements by shortening or extending the statute. However, any agreement excluding Statutes of Limitation shall be null and void. An Act may prescribe specific Statutes of Limitations for individual claims (for example they may impose a one year limit on transport and trucking agreements). Ownership claims are perpetual and cannot be subject to Statutes of Limitation.

Statute of Limitation Interruptions

With the entry into force of the new Civil Code, the most significant modification of the Statute of Limitation rules has been introduced by changing the rules regarding the interruption of Statutes of Limitation. The period of limitation can be interrupted under special circumstances. The period of limitation commences from the date the cause of the interruption no longer exists. According to previous legislation, a written notice of the obligee was sufficient to interrupt the Statute of Limitation. However, the new Civil Code now only allows interruptions to occur upon commencement and duration of court proceedings (and a legally binding resolution). This new rule applies to claims arising after the entry into force of the new Civil Code (i.e. claims arising after 15.03.2014).

The Statute of Limitation may also be interrupted:

  •  if the debt is acknowledged by the obligor;
  •  if the obligation is modified by agreement, and also upon settlement;
  •  if an action was brought against the obligor to enforce the claim, and the court has adopted a final and binding decision in conclusion of the proceedings; or
  •  if the claim was announced in the course of a bankruptcy proceeding.

Suspension of Statute of Limitation

If the obligee is unable to enforce a claim for an admissible reason, it may turn to the courts to enforce its claim once possible, even if the Statute of Limitation has already expired. This exception, however, is subject to a strict deadline of one year or three months, depending on the original length of the Statute of Limitation. Pursuant to the new Civil Code, this extended deadline cannot be suspended but only interrupted, which results in the recommencement of the one year or three months period „extension period“.

 Should you wish to learn more about Statute of Limitation, our law firm would be pleased to provide you with more comprehensive  information.