E-note 2 – The actors of enforcement

Enforcement measures are implemented by the judicial officers.

In civil cases, court judgments relating to a debt are enforced by independent judicial officers. They are appointed to the district courts by the Minister of Justice, and their jurisdictions are demarcated. A judicial officer’s jurisdiction corresponds to the jurisdiction of the district court. Independent judicial officers ensure that debts are effectively recovered and that the rights of the debtor are respected.

Independent judicial officers

Independent judicial officers are not remunerated by the state, but directly by the creditor.

The activities of a judicial officer include:

  • enforcing court judgments on the basis of an enforcement certificate (végrehajtási lap) issued by the court;
  • implementing a measure containing an enforcement clause appended by the court;
  • enforcing a court decision ordering or prohibiting enforcement, in particular on the basis of a transfer order (átutalási végzés – a specific procedure for recovering debts), or an attachment of earnings order to recover maintenance (közvetlen bírósági felhívás).

A judicial officer’s jurisdiction is either identical to the court’s, or it is dependent on the location of the property.

In order to be appointed as a judicial officer, a person must:

  • be a Hungarian national;
  • have a clean criminal record;
  • be at least 24 years old;
  • enjoy full civil rights;
  • have successfully completed the professional exam;
  • have completed two year’s training as an assistant judicial officer (végrehajtó-helyettes);
  • have a specialist post-graduate diploma;

Judicial officers act in accordance with a strict professional code of conduct, and they are professionally accountable.

In order to carry on the profession of a judicial officer, it is necessary to have a law degree (three years of study) or an equivalent diploma.

The judicial officers’ profession is regulated by Law LIII of 1994 on the role of judicial officers and judicial enforcement (Vht.). Their fees are regulated by Decree 14/1994 (IX.8) IM.

1. The role of judicial officers

Under Law L.III of 1994, when enforcing a debt, a judicial officer may implement the following measures:

  • attach earnings or other benefits;
  • garnish a third party debt;
  • distrain against goods;
  • attach immovable property.

When implementing special enforcement measures, a judicial officer has the power to:

  • enforce an affirmative obligation;
  • implement temporary protective measures (e.g. a freezing order);
  • sell off property given as security;
  • enforce a foreign judgment;
  • confiscate assets.

Service of documents

Under Article 31/C (1) of the Vht. Law, the party applying for the enforcement measure may request that the order be served by a judicial officer on payment of the costs of service.

Service can be effected by an independent judicial officer, an assistant independent judicial officer (végrehajtó-helyettes) or by a student-judicial officer authorised to serve documents.

The application for service must be made to the judicial officer. As regards special applications for service, in exceptional cases these may be made to a judicial officer other than the one who has territorial jurisdiction where the applicant is in possession of information that could successfully lead to service of the papers in the latter’s jurisdiction.

If the judicial officer is not competent to execute the request, s/he will inform the applicant of the judicial officer who is competent to effect service by reference to the address of the person identified in the court order or the places of service indicated by the addressee.

The application is made using a form approved by the Hungarian National Chamber of Judicial Officers (hereafter the Chamber).

The application can also be filed directly at the office of the judicial officer or sent there by post.

If the application is sent by post, the judicial officer has three working days in which to examine it. The judicial officer will identify any items missing from the incomplete application, or the reasons for refusing to execute the request.

If the postal application does not contain proof of payment of the costs of service, the judicial officer will enter this in the margin of the document; this application will then require no further action.

The judicial officer does not just place the order to be served in an envelope, but actually hands it to the addressee. Within 15 days inclusive from receipt of the application, the judicial officer will effect service on the ground. The judicial officer may access the building or location where service is to be effected. However, the judicial officer may not gain access by force where this is denied.

The judicial officer will serve the document after checking the identity of the addressee. If the judicial officer cannot hand the document to the addressee (e.g. the addressee refuses to take the document), the document will be deemed to have been served if the judicial officer leaves it at the addressee’s lodgings or place of residence in the presence of the addressee after giving the information set out in point 1. The document will also be deemed to have been served if the addressee refuses to acknowledge it. If the addressee is a legal entity, then under Section 14 the document may be served on a representative (e.g. the employee of an organisation who acknowledges receipt of documents by affixing the organisation’s stamp or by signing for them).

Section 16(1) If the addressee is an individual, under the provisions of Section 14, service of a legal document may be effected by handing it to a substitute, for example a next of kin, another relative living with the recipient, the recipient’s landlord, where the landlord is an individual, or the person with whom the addressee is lodging.

Section 26(1) If the addressee is at the address referred to in the court order, but when the judicial officer visits the premises s/he cannot find the addressee or a substitute, the judicial officer will leave a calling card in the letter box of the addressee stating that s/he had attended the premises for the purpose of serving court papers. The card will also inform the recipient where, at what time and with what type of document the recipient may obtain the court papers (the calling card).

If the addressee does not have a closed letter box or if the box cannot be identified, the judicial officer will affix the calling card to the front door of the building (and if that is not practicable, to the wall).

In addition to the calling card and after taking all necessary steps at the premises, the judicial officer will send the document by post.

The document must be retained so that the addressee can be served on the date and at the place referred to in the calling card.

If the time limit in the calling card expires without the document being served, the judicial officer must attend the premises again within ten days from the date that time limit expires in order to effect service.

Section 35(1) The applicant, the court which made the order, or the notary, if appropriate, must be informed that service has been effected and provided with the information contained in the certificate of service, or where the matter relates to the service of a court order, in the statement of service. If the applicant so wishes, this report can be sent electronically.

(2) Where service cannot be effected, a report will be drawn up. This report, together with the court order, will be sent to the applicant. Where simple service (egyszeru kézbesítés) cannot be effected, and the application also contains a request for special service (különleges kézbesítés), the report must be sent to the applicant with information relating to how the special service was attempted.

If the applicant has not identified the place where the document should be served in the application, or if the applicant has identified such a place, but has also asked the judicial officer to search for the addressee, the judicial officer will carry out that search.

Enforcement

Enforcement is a non-contentious civil procedure by which the obligations contained in court orders, legislation and other defined instruments are enforced with the help of coercive state measures.

For the purposes of authorising enforcement, there is no need in principal for a formal court order, as the courts generally order enforcement by issuing a certificate of enforcement (see E-note 1). In certain special cases, enforcement is authorised by an order, for example in relation to a protective measure.

In principle, enforcement is ordered by the court of first instance which heard the case. If enforcement is not pursuant to a court order, but another instrument, such as a notarial instrument, enforcement will be ordered by the court in the jurisdiction where the debtor has an address or residence, or in default the local court where the assets in question are located.

The local court with jurisdiction for the debtor’s address, his/her place of residence, or in default the place where the assets are located is competent to enforce a foreign judgment. In Budapest, this is the Buda central district court.

Enforcement of these measures is carried out by judicial officers. They may be challenged by anyone. Judicial officers wield the authority of the state, and they perform tasks that are in the public interest.

Enforcement measures concern:

  • Sums deposited in a bank account: however, in the case of individuals, the law requires that a minimum sum be left for the debtor;
  • movable goods: however, it is not permitted to seize basic necessities which the law exempts from seizure, for example, clothing, furniture required by occupants who are in the place where the seizure is taking place by virtue of the debtor, the debtor’s medication, etc.
  • immovable property regardless of its nature, use, any charges registered against it, or any entries appearing in the land registry (however, a property which is deemed not to belong to the debtor as a result of insolvency proceedings is exempt from seizure);
  • the debtor’s income, retirement pension or other income (but the rule on basic necessities exempt from seizure also applies to these), shares or liabilities owed by third parties, etc.

Where the court orders enforcement through an enforcement certificate, the procedures for redress are for the certificate of enforcement to be withdrawn or the enforcement clause to be set aside, if the court considers that consent to the enforcement should not have been granted.

The debtor may apply for the enforcement certificate to be withdrawn or the enforcement clause to be set aside. The court may grant a withdrawal of its own motion. The application must be made to the court which ordered the enforcement.

The court’s authorisation to make an attachment of earnings (közvetlen bírósági letiltás)

The court responsible for drawing up the enforcement certificate can authorise an attachment of earnings, instead of an enforcement certificate, where recovery is only effected against the debtor’s earnings.

When an attachment of earnings is made, the court orders the debtor’s employer or the body or person who regularly or periodically pays benefits, salaries or remuneration for work or other sums to the debtor (hereafter the employer) to deduct from the earnings the amount appearing in the order and to pay it immediately to the creditor, notwithstanding the fact that the attachment of earnings has not yet acquired the force of res judicata.

The court will notify the employer and the parties that an attachment of earnings has been authorised. Any appeal against the decision authorising the deduction and payment of the debtor’s earnings to the creditor does not have suspensory effect.

Section 26 A debt can only be recovered by way of an attachment of earnings in the following cases:

  • a) where the applicant for enforcement applies for this remedy;
  • b) where the enforcement measure relates to maintenance or other periodical payments and the attachable part of the earnings covers the amount claimed.

Section 27 A debt must be recovered in the first instance by way of an attachment of earnings in the following cases:

  • a) where the principal debt due to the party applying for the enforcement measure (the principal application) does not exceed the minimal amount for a retirement pension calculated in accordance with the contributions made and determined by social security legislation (hereafter old-age pension), or
  • b) where, the court finds that an attachment of earnings is justified having regard to the matters set out in Section 7.

Enforcement of a positive obligation (e.g. return of a child, return of a speific chattel, surrender of a flat that is occupied without entitlement)

Where the enforcement measure is aimed at an affirmative obligation on the part of the respondent or an obligation to behave in a certain way, or to accept or desist from certain conduct, the court will order the respondent to do so voluntarily within a time limit set by the court.

The judicial officer will send the enforcement order to the applicant containing a reminder that, after the voluntary enforcement order has expired, the applicant must notify the judicial officer as to whether or not the respondent’s obligations have been complied with. If the applicant declares that the respondent has not voluntarily complied with those obligations, the judicial officer will verify this, going on site if necessary. If the obligation has not been complied with, the judicial officer will refer the matter back to the court which made the order. Attached to this application will be the report drawn up by the judicial officer at the time of the on-site inspection along with the applicant’s declaration in relation to the respondent’s failure to comply.

Auctions

Judicial officers are responsible for holding public auctions of movable and immovable property. A judicial officer may only conduct an auction of immovable property where recovery could not be effected from an attachment of earnings or by garnishing a third party debt (i.e. with the financial institution(s) holding the debtor’s account) and distraining against goods was not successful because the goods seized did not cover the debt.

At the request of the parties, the judicial officer can conduct the sale of the property other than by public auction, i.e. by consent. In this case, the judicial officer will sell the property to the person designated by the parties. The property can be sold by consent at any time before the start of the auction. It is possible to hold an e-auction or one where the people are physically present. In order to hold an e-auction, the auctioneer must be registered with a judicial officer of his/her choice. Registration costs HUF 6000.

Protective measures

Enforcement can only take place where the court issues an enforcement order. This order may only be issued if the decision to enforce concerns an affirmative obligation or an obligation to desist from doing something, it has the force of res judicata, or if it is provisionally enforceable, the time limit for voluntary enforcement has expired. If these three cumulative conditions are not met, the enforcement order cannot be issued, and consequently enforcement cannot be implemented. However, in order to protect the creditor’s rights, it is possible to order protective measures.

Thus if an enforcement order cannot be issued, but the applicant can show that recovery is at risk if it is postponed, the court, on an application from the creditor, can authorise the following protective measures:

  • preserving pecuniary claims
  • distraining against good

After being authorised to proceed with obtaining the preventative measure, the judicial officer will immediately invite the creditor to put up the funds for the preventative measure as soon as possible. Upon receipt of the funds, the judicial officer will implement the preventative measure.

Under this procedure, the court can order the seizure of a specific movable asset or the preservation of pecuniary claims. If the court orders the preservation of pecuniary claims, the judicial officer will notify the debtor of this order at the places of enforcement whilst requiring the debtor to pay the sum there and then directly to the judicial officer. If the debtor does not comply, the judicial officer can seize any asset belonging to the debtor. For the purposes of seizing immovable property, the judicial officer will attend the land registry offices without delay in order to register the fact that the measure has been authorised in the register created for that purpose.

The preventative measure will continue to take effect for as long as final enforcement has not been ordered, provided the court has not set aside the preventative measure.

2. Determining fees and judicial officers’ remuneration

Fees are set by Regulation 14/1994 (IX.8.) IM on determining judicial officers’ fees.

A judicial officer is entitled to be remunerated and to have any charges reimbursed for implementing the enforcement measures and for expenses incurred. Furthermore, if the enforcement is successful, the judicial officer is entitled to a commission.

The remuneration and reimbursement of expenses are paid up front by the applicant, and these sums will be charged to the debtor.

Remuneration is proportionate to the value of the task:

If the value does not exceed HUF 100 000 = HUF 4000

3% of the fraction that exceeds HUF 100 000

Between HUF 1 000 000 and HUF 5 000 000 = HUF 31 000

2% of the fraction that exceeds HUF 1,000,000

Between HUF 5 000 000 and HUF 10 000 000 = HUF 111 000 and 1% of the fraction that exceeds HUF 5 000 000

Above HUF 10 000 000, HUF 161 000 and 0.5% of the fraction that exceeds HUF 10 000 000

Remuneration must be proportionate to the time devoted to the enforcement measure

If enforcement relates to an affirmative obligation or an obligation to behave in a certain way or to tolerate something, or a negative obligation (hereafter: an obligation to adopt a certain course of conduct), the judicial officer’s fees must be calculated in accordance with the time devoted to implementing the measure.

Where a judicial officer has to recover a sum of money in connection with an obligation to adopt a certain course of conduct or in lieu of that obligation, the judicial officer’s remuneration will be HUF 4000 per hour or part thereof.

Section 11/A. The fees for service are HUF 6000.

As regards travel expenses, a judicial officer is entitled to HUF 1500 where the measure is enforced in his/her territorial jurisdiction; if enforcement takes place outside that jurisdiction the figures goes up to HUF 2000.

Section 13. As regards disbursements, i.e. ancillary expenses, the judicial officer will be reimbursed for:

  • a) transportation costs, where movable property is seized,
  • b) expenses connected with opening and closing the premises where enforcement takes place,
  • c) remuneration for the witness who is present when the measure is implemented,
  • d) other costs incurred as part of the enforcement (translator, postal charges, etc.).

Commission (behajtási jutalék)

Section 18. Where the measure is implemented in full or in part, the judicial officer is entitled to a commission.

Section 19(1) When recovering a pecuniary debt, the commission depends on the sum recovered against the total stated in the enforcement order and it is calculated as follows:

10% if the debt exceeds HUF 5 000 000

HUF 500 000 plus 8 % above HUF 5 000 000 if the debt is between HUF 5 000 000 and 10 000 000

HUF 900 000 plus 5% of the sum exceeding HUF 10 000 000 if the debt is above HUF 10 000 000

3. Judicial officers’ liability

If the general rules governing the profession are not applied or are applied badly, the parties to the enforcement may suffer harm. In addition to this harm, the interests and rights of third parties may be harmed. Section 217 of the Law on enforcement provides that, if the judicial officer breaches or does not apply the law, it is possible to seek legal redress. This redress may be sought before the court which ordered the enforcement.

At the National Chamber of Judicial Officers, the National Board of Control hears complaints filed against judicial officers. It is also open to the public once a week by appointment.

After hearing the complaint, the National Board of Control may decide to transfer the matter to the Chamber’s President who can commence disciplinary proceedings along with the Minister for Justice and the President of the district court. The disciplinary proceedings are conducted by the disciplinary tribunals for judicial officers, but the complaint must be lodged with the President of the district court with territorial jurisdiction.

The following disciplinary penalties may be imposed: a warning, a letter of reprimand, temporary suspension of duties, expulsion from a post within the Chamber, a financial penalty and permanent expulsion.

Judicial officers must take out insurance to cover any loss or harm.

The court with jurisdiction to hear enforcement matters

The work of judges in relation to enforcement proceedings relates to issuing the enforcement order and the legal remedies pertaining thereto.

Essentially, the courts’ jurisdiction covers:

  • staying enforcement proceedings,
  • restrictions on enforcement,
  • suspension of enforcement,
  • settling preliminary objections, imposing fines,
  • identifying which rights of the debtor or the creditor can be inherited,
  • setting the terms of the respondent’s affirmative obligation.

The courts are also competent to rule on disputes over enforcement measures found in the Civil Procedure Code.

The powers relating to the methods of enforcement are exercised by a judge sitting in court; at first instance the judge is assisted by registrar in the areas laid down in Sections 260-261 of the law on methods of enforcement (Vht.), and by administrators on enforcement and legal issues.