Hungary International Trade in Legal Services

Is there legislation governing the legal sector

Act XI of 1998 on Attorneys at Law.

Under what title do lawyers practise?

Ügyvéd  translated by “Attorney-at- law” in the English version of the Act.

How does an individual lawyer obtain a "licence" to practise law? How often must this be renewed?

In order to practise as a lawyer in Hungary, an individual must be a member of the bar association and have taken an oath (Section 13 (1) of the Act).  Section 13 (3) provides for the conditions to be admitted as a member of the bar:“The bar association must, upon request, admit as an attorney anyone who: a) is a national of any State that is a party to the Agreement on the European Economic Area; b) has a law school degree; c) has taken the Hungarian bar examination; d) who has been engaged in legal practice for at least one year as an attorney, articled clerk or assistant attorney; e) is a member of the Hungarian Attorney’s Insurance and Assistance Association or has other liability insurance that is accepted by the bar association; f) has office space suitable for conducting a full-time legal practice in an area in which the bar association operates; g) is not excluded for any of the reasons specified in Subsection (4).  Lawyers must take an oath (Section 16).

Does this entitle the holder to practise throughout the country? If the law license only permits one to practice on a sub-national level, please explain the jurisdictional limits

There are jurisdictional limits for lawyers within Hungary. They correspond to the jurisdiction of the different Hungarian bar associations. This is explained in Section 19 of the Act (Territorial Scope of Membership in the Bar Association) which mentions that: (1) An attorney may be a member of a bar association in Hungary, and he may maintain offices and branch offices in the territory of this bar association.(2) If an attorney would like to relocate his office in the area of another bar association, he must request re-registration at the other bar association. The attorney shall remain a member of the previous bar association until such registration takes place. Section 15 shall be applied to the evaluation of the request for re-registration. Section 102 (2) provides more detailed information on those limits. It states that “the operational areas of the regional bar associations shall be the same as the jurisdictions of the Budapest Metropolitan Court and the county courts”.

Are there certain activities that are "reserved" to those who are licensed to practise law in the jurisdiction?

The activities of attorneys are stated in Section 5 of the Act (Legal practice) which states that: (1) An attorney represents his client, provides the defense in criminal cases, provides legal counsel, prepares contracts, petitions and other documents, holds valuables deposited with him. (2) Unless otherwise stipulated by law, only attorneys are entitled to regularly provide the services listed in Subsection (1) in return for consideration (3) attorneys may provide the following services in addition to those specified in Subsection (1): tax consultancy, social security consultancy, financial and other business consultancy, real estate agency, patent agency, activities authorized by legal regulation (with the exception of local government bylaw), mediator activities in mediation proceedings regulated in specific other legislation, and in criminal cases, converting the instrument of constitution of a company - that he has prepared - and the additional appendices of the company’s application for registration (notification of amendments) into electronic format; arbitration in public procurement procedures as governed in specific other legislation, and counseling services related to public procurement procedures, provision of corporate headquarters (headquarters services).

According to Section 13(3)(a) of Act XI, Hungarian nationality or nationality from an EEA member state is required. 

There is no mention in the Act of the different forms a lawyer may work in. However, Chapter VII on law firms mentions that “the attorney who causes the damage bears unlimited liability with his own assets” (Article 69 (3) of the Act) which suggests that limited liability legal entities are not possible for lawyers.

What other ethical or regulatory requirements must a licensed lawyer comply with? 

Additional requirements are found in the Rules and Regulations of the Hungarian Bar Association.

Do law firms need to receive a "license" (or permission/approval) to practice law?

There is no licence for law firms but a lawyer's place of practice must be registered in the regional bar association's register of law firms (Section 68 of the Act). Foreign law firms must also register with the local bar association (Section 12 e).

Which authority issues licences? Are there different authorities for individuals and firms? 

The Hungarian Bar Association (http://www.magyarugyvedikamara.hu/tart/index/130/1)

Is the jurisdiction a member of the WTO?

Hungary joined the WTO on 1 January 1995.

Has it made any commitments under GATS in legal services?

Hungary has signed up to the European Union's GATS commitment of modes 1-3 in home country and international law. It however requires that “Commercial presence should take the form of representative office”.

Is the jurisdiction party to bilateral agreements which offer special treatment to businesses or individuals from particular countries?

As a member of the European Union, Hungary extends special treatment to individuals and businesses from other EEA states (EU plus Norway, Iceland and Liechenstein. Hungary is also party to the EU's many bilateral agreements with other countries and free trade areas ( a full list of these can be found at http://www.wto.org/english/tratop_e/region_e/rta_participation_map_e.htm?country_selected=none&sense=s

The EU has comprehensive provisions covering the free movement of lawyers from EEA countries (EU plus Norway, Iceland and Liechenstein) and Switzerland. These include the Establishment Directive for Lawyers (98/5/EC), the Lawyers' Services Directive (77/249/EC), the Framework Services Directive (2006/123/EC) and the Professional Qualifications Directive (2005/36/EC). Collectively these directives permit EEA lawyers to provide services freely cross border within the EEA, to estblish and provide legal services in host as well as home country and international law and to requalify as a host country lawyer. There are limitations on the applicability of the Establishment Directive to EEA and Swiss lawyers holding specific legal titles and EEA (or Swiss) nationality. Provisions covering trade in services are included in the EU's Free Trade Agreements (FTAs) with South Africa, Mexico, Chile, Colombia, Peru, Central America and Korea. Of these, only the agreement with Korea covers legal services explicitly and on the EU side offers no concessions beyond those offered to other members of the WTO. The other agreements simply contain a commitment from both sides to 'progressive liberalisation' of trade in services. Negotiations for future FTAs which might include provisions on legal services are ongoing with: Mercosur, Gulf Cooperation Council, Canada, India, Morocco, Ukraine, Moldova, Georgia, Armenia, Singapore, Malaysia, Vietnam.

Are foreign lawyers from different jurisdictions treated differently as a result of any such agreements?

Lawyers from the EU, EFTA or Switzerland are covered by the various EU directives covering legal services (The Lawyers' Establishment Directive 98/5/EC, the Lawyers Services Directive 77/249/EC). The result of these directives is that any EU, EFTA or Swiss lawyer can provide legal assistance in Finnish as well as foreign and international law and can requalify as a Finnish asianajaja.  Foreign lawyers from outside these countries are more restricted in their scope of practice.

There are around 15-20 foreign law firms established in Hungary, including UK, US, German, Italian, Austrian and French firms.

Temporary practice is mentioned under the Chapter of the Attorneys Act concerning services provided by 'EC jurists'. Section 89/J (1) mentions that: [a]ny European Community jurist who practices law on an occasional basis, without being admitted into the register, shall be required to notify the Hungarian Bar Association in writing of his intention to take up the activities in advance, before his first assignment. By way of derogation from the provisions of the Act on the General Provisions Relating to the Taking Up and Pursuit of the Business of Service Activities, where services are provided on an occasional basis over a period of one year, the notification shall be renewed without delay. See also Act on the General Provisions Relating to the Taking Up and Pursuit of the Business of Service Activities. Foreign lawyers may act as foreign legal counsel or register as foreign lawyers with the bar.

Hungary is one of the 25 countries in Europe that has signed the Schengen agreement. This allows a non-EEA national to obtain a visa to enter one or more of the Schengen countries for business or tourism purposes on a single visit of up to 90 days, or to make multiple entries to the Schengen area on any number of occasions over a 180 day period, provided none of these is for longer than 90 days.  A number of non-EEA countries are exempt from visa requirements.

Under Hungary's WTO commmitments, foreign lawyers from outside the EEA may provide services under the title of “Foreign Legal Counsel”.  The scope of practice is given by Section 92 (1) of the Attorneys Act which states: A foreign legal counsel may provide legal advice concerning the law in the country in which he is a registered attorney, international law, and legal practice in connection with these”. A foreign legal counsel may only pursue those activities and is not a member of the bar association (Section 92 (2) and (3))

An EEA lawyer must register with the Bar, practise under his home title, comply with the Hungarian lawyers' code of conduct and maintain adequate professional indemnity insurance.

A foreign legal counsel must be a member of the Hungarian Attorney’s Insurance and Assistance Association or have other liability insurance that is accepted by the bar association. He/she must also have concluded a collaboration contract with a Hungarian attorney or law firm or a foreign law firm established in Hungary. They must also have proved that they are authorized to practice law abroad, have proved that they have a good reputation in the country in which they are a registered attorney and that they are not the subject of criminal or disciplinary proceedings, practice law in a Hungarian law firm or in a common firm with a Hungarian attorney. All those conditions are set forth in Section 91 of the Act. An EEA lawyer must hold EEA nationality and an EEA legal qualification.

European Union/EFTA and Swiss lawyers may all appear in court provided they do so in association with a local lawyer. Other nationals are not permitted to appear in court.

Can foreign lawyers requalify as local lawyers?

Can a foreign law firm obtain a licence to open an office?

There is no separate licensing arrangement for law firms but all foreign lawyers providing legal services in Hungary must be registered as foreign legal consultants.

Even if a foreign law firm does not require a legal licence must they register in some form in order to set up an office? (e.g. with a ministry of company affairs etc)

No

No

No

There are no restrictions on the ownership share of EEA lawyers in a Hungarian law firm.

There is no prohibition on employment of a Hungarian lawyer by an EEA lawyer or law firm.

Section 92 (5) of the Attorneys Act states that: “A Hungarian attorney may join a foreign law firm as a co-owner (partner) without authorization from the bar association”.

Section 89/M (1) of the Attorneys Act states that European Community jurists are authorized to function as assistant attorneys. Since assistant attorneys can only practice as employees, it means that EC jurists may be employed in Hungary. Foreign legal counsels may only work as employees of a local or foreign law firm according to Section 90 of the Act "A foreign legal counsel is any person who is engaged in the legal activities specified in Subsection (1) of Section 92 on the basis of a collaboration contract concluded with a Hungarian attorney or law firm. A foreign legal counsel may conduct his activities on the basis of an agency provided to an attorney or law firm with which he has concluded a collaboration contract. If the collaboration contract so provides, the foreign legal counsel may accept agencies in his own right within the realm of his activities".

Other useful sources or comments or links

Magyar Ügyvédi Kamara (Hungarian Bar Association): http://www.magyarugyvedikamara.hu/