How to Enforce Your Claims in Hungary

Why many pecuniary claims are not directly enforceable

In Hungary, a bare contractual claim (e.g. “Company A owes Company B HUF X for services supplied”) is in itself usually not directly enforceable. Under the relevant legislation, only a limited category of documents may serve as a “title for enforcement”.

One such enforceable title is a properly drafted notarial deed which records the obligation, the amount, the debtor and creditor, payment date, etc.

Absent a notarial deed (or another recognized enforceable document), the creditor must take further steps to obtain an enforceable title — typically a court judgment or a notary-issued payment order that becomes final.

Using involuntary liquidation to obtain payment (even if claim isn’t directly enforceable)

Interestingly, Hungarian insolvency law provides a powerful leverage against companies — even for claims that are not yet enforceable in the sense above. Under certain conditions, a creditor may issue a proper payment notice, based on a valid contract, and if the debtor fails to pay or formally dispute the debt, initiate a liquidation (insolvency) procedure against the debtor company.

In practice, that threat is often enough: many debtors choose to pay the amount due quickly once they receive such notice in order to avoid liquidation, and only challenge the debt later — after the elimination of the exposure related to the insolvency procedure. To make this route viable, several conditions must be met:

• The claim must stem from a contractual relationship. General tort claims or other non-contractual obligations typically don’t qualify.
• The value of the debt must reach a certain threshold. While statutory thresholds can vary over time (currently HUF 1 million ie. approx. EUR 2,600).
• Formal requirements governing the payment notice (amount, currency, due date, legal basis, information about consequences of non-payment, etc.) must be strictly observed.

Because of the strict formalities and the risk that a flawed notice could invalidate the liquidation request, this route should always be handled by an experienced lawyer. In practice creditors more often use this tool for larger claims or, alternatively, to secure a more advantageous negotiating position in more complex legal disputes.

Note that this route does not involve a substantive judicial assessment of the claim; it allows for obtaining a better bargaining position purely on a formal basis, due to the debtor’s failure to respond appropriately to the initial invoice (which subtantiates the presumption of insolvency). Where, however, the debtor is in a genuine insolvency situation, this type of pressure, naturally, cannot achieve any meaningful result.

When and why to go to court (or arbitration) to get an enforceable claim

If there is no notarial deed, and liquidation is unfeasible or undesirable, the creditor must typically bring a claim before a court — or, if the parties agreed, before an arbitration tribunal.

It is also possible, under certain circumstances, that a foreign court (or tribunal) will have jurisdiction. In such cases, one must carefully check whether enforcement in Hungary will be possible.

Once the creditor obtains a final judgment (or an arbitral award) in its favour, that judgment or award can provide the “title” necessary for enforcement.

Importantly: even foreign judgments or arbitral awards can be enforced in Hungary. The country is a signatory to the New York Convention (on recognition and enforcement of foreign arbitral awards), and for EU-member-state judgments the rules under Brussels I Regulation (or similar international agreements) typically apply.

Thus, whether the claim is domestic or international, the enforceability depends largely on obtaining a final, enforceable decision or award recognized under Hungarian law.

There is only very limited possibility to obtain a suspension of the enforcement of a final judgment even if the debtor pursues an extraordinary remedy before the highest judicial forums, such as the Supreme Court (the “Kúria”) or the Constitutional Court.

From enforceable decision to actual recovery: how enforcement works in Hungary

Once you have an enforceable title — e.g. a court judgment, arbitral award (once recognized), or notarial deed with enforcement clause — the next step is enforcement.

• Certification of enforceability: the competent court (or notary public, where applicable) issues the formal “enforcement order”.
• Hand-over to a bailiff: enforcement is carried out by an independent court bailiff, who has the exclusive mandate and state power to enforce judgments and enforceable documents.
• Coercive tools: the bailiff can take a variety of enforcement actions: freezing or garnishing bank accounts or wages, seizing movable property (e.g. vehicles), placing liens and foreclosing real estate, or — if necessary — auctioning seized assets.
• Initiation of enforcement: The creditor must request enforcement; the court or notary issues the enforcement document if the enforceable title is final, the obligation is due and the deadline has passed.
• Advance payment of enforcement costs: The creditor must pay the bailiff’s fees and any procedural costs upfront. Legally, these costs are to be borne by the debtor in the end — but the creditor must finance the enforcement.
• Cost estimation: While the precise calculations are intricate and partially conditional, as a rough rule of thumb many practitioners use approximately 5% of the claim amount as a benchmark for potential enforcement costs. (Note: this is an informal guideline — actual costs may deviate.)

Risks, costs and why pre-enforcement assessment is essential

While the framework above may give hope to a creditor, in practice the process can be long, costly and fraught with uncertainty. Some of the key risks and drawbacks:

• Enforcement can take several months
• The upfront costs (bailiff costs, court or notary fees, legal representation, asset tracing) can be substantial, and must be paid by the creditor initially.
• If the debtor has little or no attachable assets — e.g. no real estate, no bank accounts, nothing valuable — enforcement may prove ineffective, or the bailiff may return “empty-handed”.
• The debtor may challenge the enforceability (e.g. claim the document is defective), or there may be procedural errors (e.g. in the enforcement request) that delay or derail the process.
• In case of liquidation/insolvency procedures, all creditors must file within a statutory window; there is no guarantee of full satisfaction, and unsecured creditors often recover only a fraction.

Given these risks, it is generally wise — before initiating a court case or enforcement — to carry out a preliminary assessment of whether enforcement is realistically feasible and which direction seems the most effective. This may include:

• Investigating the debtor’s asset base (real estate registry, corporate registry, public records, known bank account or income sources)
• Evaluating the size of the claim relative to enforcement costs
• Considering whether a simpler procedure (e.g. a payment notice + liquidation threat) is more cost-efficient
• Assessing whether the claim could be based on a notarial deed from the outset

Conclusion

Enforcing claims in Hungary often resembles a strategic game more than a mechanical process. While the statutory and procedural framework — including the monopoly of independent bailiffs, the structure of the enforcement order, and the available coercive tools — gives a solid basis, success depends heavily on careful planning.

For many creditors, the best results come not from immediately suing, but from a carefully staged approach: start with a formal payment notice (in the right form), push for voluntary settlement (or liquidation threat), and only if that fails move to court or arbitration — followed by enforcement.

Because of the frequent interplay of strict formal requirements, procedural technicalities and practical enforcement difficulties, the involvement of experienced legal counsel is not merely advisable — it is often decisive.