Common law on the horizon? Entry into force of the new law reforming litigation – Commentary

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introduction
Case law in the Hungarian legal system

Theoretical and practical problems
The major novelties of the reform
Limited precedent system
Uniformity complaint
Reform assessment

introduction

While COVID-19 grabbed the headlines, a new law, which entered into force on April 1, 2020 and fundamentally reforming the role of judicial law in Hungary, has received less attention.

This article examines why this landmark bill was passed, to what extent it means the adoption of common law, and what its potential impact will be on litigation in Hungary.

The radically different approaches of continental law and common law systems regarding case law can be demonstrated by:

  • the principle of praetor ius facere potest, ius dicere non potest, derived from Roman law, according to which the judge can apply the law, but cannot make the law; and
  • The adage of Oliver Wendell Holmes, that “prophecies of what the tribunal will actually do, and nothing more pretentious, is what I mean by law”.(1)

The law was adopted by Parliament in December 2019 and entered into force on April 1, 2020. It marks an important stage in the development of Hungarian law (which belongs to the Romano-Germanic legal family), since it is from a change from the above principle that the law is made by the legislature, towards the common law, where the existence of case law is widely accepted.

Case law in the Hungarian legal system

Until now, case law has not been officially present in the Hungarian legal system, as the Basic Law does not list decisions of higher courts among the sources of law.(2) However, lower courts tend to rely on Supreme Court rulings as the reasons for their decisions.

However, according to the Basic Law, the main function of the Supreme Court is not to make the law, but to ensure that it is uniformly applied. To achieve this objective, the legislator authorizes the court to:

  • make uniformity decisions that are binding on the courts;
  • publish decisions that will significantly affect society or have a significant impact on the public interest as “decisions of principle” from which lower courts could not override (the so-called “EBH” and “EBD”);
  • establish case-law analysis working groups, which analyze final decisions and publish non-binding summary opinions under which the uniformity procedure can be established or initiate legislation before the legislature; and
  • issue departmental opinions, in which the judges appointed in each department interpret the legislation with a non-binding character.

In addition to fulfilling its legal obligation by publishing its final decisions in the Compendium of Judgments, the Supreme Court has issued non-binding guidelines without any legal authorization.

For example, in 2017, the Supreme Court issued general guidelines in the area of ​​civil and business law to interpret the new Code of Civil Procedure, which entered into force in 2018.(3)

Theoretical and practical problems

In practice, case law was present as a sort of “secondary law” to fill in the gaps in legal provisions by their content.

However, the majority of the Supreme Court’s instruments were not judicial decisions rendered in individual cases, but rather abstract directives of an administrative nature, which were difficult to reconcile with the traditional function of a tribunal.

The above practice, whereby higher courts issue general directives as quasi-legislators, has often been criticized by the Venice Commission. Thus, the Council of Europe aims to ensure the consistency of case law through judicial decisions rendered in individual cases.(4)

In addition, since 2012 published Supreme Court decisions in individual cases do not have the same binding force in Hungary. While the “decisions of principle” (called “EBD” and “EBH”), which were chosen by the judicial authorities in an administrative manner, were binding on the lower courts, other published judicial decisions could be subject to derogations. . In practice, this has created legal uncertainty.

The major novelties of the reform

The main concept of the effective reform from April 1, 2020 is that, instead of administrative activity, the uniform application of the law will be ensured by classic judicial decisions, and the published individual decisions of the Supreme Court will have a equal weight.

To this end:

  • the Supreme Court will not have the right to issue resolutions or general directives on its own initiative; he may only use the instruments provided for by law for the uniform application of the latter;
  • the administrative distinction between binding “policy decisions” and non-binding Supreme Court decisions will cease to exist;
  • a so-called “limited precedent system” will be introduced, according to which all published decisions of the Supreme Court will as a rule also be binding on lower courts; and
  • a new type of legal remedy, called a “uniformity complaint”, will be introduced.

Limited precedent system

The limited precedent system means lower courts must follow interpretations of Supreme Court decisions as their primary rule. In exceptional cases, a lower court wishing to derogate from a decision of the Supreme Court must justify the reasons in its judgment.

The decisions of the Supreme Court will not be a “source of law” in the classic sense, the judges being able to derogate from them in a discretionary manner; however, their role will be considerably strengthened as any derogations by lower courts must be duly justified.

Such deviations are likely to occur if:

  • the facts of the case before the lower court are different from those which served as the basis for a previous decision of the Supreme Court; Where
  • the previous Supreme Court ruling cannot stand due to socio-economic changes.

Uniformity complaint

Under the old system of appeals, a final decision of a court of second instance could be challenged before the Supreme Court by a request for judicial review. There was only one legal remedy against a judgment of the Supreme Court rendered in the framework of the judicial review procedure – namely, the constitutional complaint, whereby a review of the unconstitutional judgment could be requested before the Court. Constitutional Court.

The latest reform introduces the uniformity complaint as a new legal remedy, which can be used:

  • if a lower court deviates from a published decision of the Supreme Court; however, the Supreme Court takes a different view when authorizing or conducting judicial review proceedings; Where
  • if a lower court respects the previous judicial practice of the Supreme Court, but the Supreme Court itself deviates from its previously published decision without initiating the uniformity procedure.

A separate chamber of the Supreme Court (called the “uniformity council”) rules on the uniformity complaint. Its members include the President of the Supreme Court and other judges appointed by the President of the Court.

If the uniformity claim procedure is successful, the judgment rendered has the same effect as a decision rendered in a uniformity proceeding by the Supreme Court – namely, it is published in Hungarian Gazette, which means that in addition to binding the parties to the dispute, the judgment will force the courts to decide the same legal question in the future.

Reform assessment

The reform aims to make the legal situation clearer and more transparent than before and to strengthen legal certainty; therefore, its purpose cannot be disputed.

Critics of the reform stress that there is no guarantee that importing a well-established legal institution from a foreign legal system – namely, the precedent system of ordinary courts – will have a positive effect. in a country whose legal culture has developed differently for centuries.(5)

In view of the practical difficulties of the reform, it should be noted that the Supreme Court has around 40,000 published judgments. Since April 1, 2020, all these decisions have the same legal effect.

At first glance, this seems like a great opportunity for legal representatives to find the most appropriate Supreme Court decisions to support their client’s case. However, this huge legal database has not been properly organized; therefore, it will make litigation more difficult and delay proceedings in the short term.

Regarding the new extraordinary judicial remedy, the uniformity remedy, in addition to the fact that the President of the Supreme Court has relatively wide powers since he can choose the judges who rule on complaints, this extrajudicial remedy is likely to delay litigation.

It can be argued that the effectiveness of the reform will depend on how effectively an organization can control itself, because in the uniformity complaint process, Supreme Court justices must themselves review and control the decisions of their own. colleagues.

The objectives of the reform cannot be called into question; However, it remains to be seen whether the aforementioned novelties will enhance legal certainty in Hungary.

For more information on this, please contact Richard Schmidt at SMARTLEGAL Schmidt & Partners by phone (+36 1 490 09 49) or by email ([email protected]). The SMARTLEGAL Schmidt & Partners website can be accessed at smartlegal.hu.

End Notes

(1) OW Holmes Jr, “Path of the Law”, Harvard Law Journal, 1897.

(2) Article (T) (2) of the Basic Law:

Laws are laws, government decrees, prime minister’s decrees, ministerial decrees, decrees of the governor of the Hungarian National Bank, decrees of heads of independent regulatory bodies and decrees of local authorities. In addition, the decrees of the National Defense Council adopted during the state of national crisis and the decrees of the President of the Republic adopted during the state of emergency are also laws..

(3) These are the so called “CKOT guidelines”. A total of 255 guidelines were published on civil procedure between 2017 and 2020.

(4) CDL-AD (2010) 004, Report on the independence of the judiciary Part I: The independence of judges, paragraphs 70 and 71:

The practice of guidelines adopted by the Supreme Court or other supreme court and binding on lower courts that exist in some post-Soviet countries is problematic in this regard… “In a system of judicial independence, higher courts ensure consistency. of the case law in the territory of the country by their decisions in individual cases ”.

(5) Osztovits Andras, Törvénymódosítás a bírósági joggyakorlat egységesítése erdekében – jó irányba tett rossz lépés? Magyar jogging, 2020/2, 80.


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