The Hungarian State won a lawsuit of great importance against Budaörs

Property Investment Forum 2017

Despite the malicious endeavors of the opposing parties’ media regarding the legal importance of the present case, according to the final and binding decision of the Metropolitan Regional Court, Budaörs’s claim was fully rejected, moreover, the Court found that the budget acted in accordance with the law by introducing a solidarity contribution. Dr. Lovas András from Sárhegyi and Partners Law Firm, who is representing the Hungarian State, emphasized that they are looking forward the process before the Curia.

It is memorable that in June 2017 the opposing parties’ media flooded the Hungarian press with the news of the victory of one of the richest town over the Hungarian State before the Metropolitan Court of Budapest. Based on the decision of the first instance, the Hungarian State should have pay back the solidarity contribution of HUF 765 million to Budaörs.

Independent mayor Tamás Wittinghof, former member of the SZDSZ party, was satisfied with the decision because otherwise Budaörs should have pay in all HUF 2.1 billion to the state budget in 2017. All over the country, under the Budget Act, the state budget calculated with HUF 26,5 billion in 2017 and with HUF 39 billion for 2018.

The importance of the civil lawsuit must be highlighted from another aspect as well. Since the new Hungarian Civil Code entered into force in 2014 with its new liability clause, it was the very first time that the issue of liability for damages caused by legislation arose.

The decision of the first instance had serious mistakes

Following the appeal of the Hungarian State, the Metropolitan Regional Court has delivered the final and binding judgment in this significant case. Dr. Lovas András from Sárhegyi and Partners Law Firm, who is representing the Hungarian State said: Metropolitan Regional Court, in its verbally promulgated final and binding decision, fully rejected the claim of Budaörs and modified the decision of the court of first instance. According to the final decision, the legal costs should also be paid by Budaörs. The court of second instance highlighted that the decision of the first instance had serious procedural and substantive mistakes, thus the respondent’s appeal was well grounded.

The court of second instance decided on the issue of liability for damages caused by legislation and also declared that the previous judge misinterpreted the Budget Act. In the first instance, the concept of the so called legislator’s functional immunity underlined by the Hungarian State’s legal representatives was rejected, despite the remarkable judicial practice developed in the era of the previous Civil Code.

At the end, the Hungarian State won the case, as Budaörs was not able to prove that the state’s legislation was unlawful, confirming by this the secondary argument of the state’s representatives. The unlawful act in connection with the solidarity contribution legislation might only be successfully proved by an annulment decision of the Court of Constitution. However, there is no such decision.

Finally, Budaörs announced that they will initiate the review by the Curia against the decision. Dr. Lovas András added that they are looking forward the Curia’s procedure connecting to the issue of functional immunity.

Decision with a precedent value

Subsequent to the final and binding decision, the Ministry of National Economy issued an announcement: the Metropolitan Regional Court, by acknowledging the full legality of the budget’s act regarding the introduction of the solidarity contribution, created a precedent decision. Accordingly, the new regulation does not cause any damage to the municipalities.

In the last years, the tasks and the financing aspects of the Hungarian municipalities has been changed. In order to clarify the responsibilities and to increase the standards of the education, the Hungarian State has taken over the maintenance and operational tasks in connection with the schools. Under the auspices of the inter-municipal solidarity, by paying the solidarity contribution, local governments with a great income and economic capacity are supporting the aforementioned public service.

As it was also stated in the announcement: the present judicial decision declares without doubt that the principle of the solidarity contribution is in conformity with the restructured state and municipality tasks.