Ahead of Hungary’s elections this year, many questions focus on political outcomes and their broader economic effects. For creditors and trading partners, however, the key issue is often more immediate: what is the practical state of play for ongoing business risk and debt recovery in Hungary?
Although the Hungarian Forint has strengthened in recent months, this does not necessarily mean that Hungarian companies are less prone to default. Domestic companies continue to operate with complex tax and regulatory burdens, and while the number of dissolved companies has declined from a high base in recent years, dissolution remains a final stage of distress.
Rather than waiting for insolvencies to occur, this article outlines what foreign creditors — EU-based and non-EU — should know about recovering debts from Hungarian debtors.
Amicable Engagement and Early Action
In most cases, creditors are advised to pursue amicable engagement first. For foreign creditors, however, early-stage debtor contact and verification in Hungary can be challenging without local support, due to language, service formalities, and procedural nuances. Effective documentation of communications and on-the-ground diligence are critical early steps that are often best handled through experienced local recovery professionals.
Where the debtor is open to negotiation, parties may also consider a settlement agreement. Hungary introduced a low-cost court confirmation process for mediated agreements in 2018, which can make such agreements directly enforceable, though Hungary is not a signatory to the Singapore Convention on Mediation.
Options for EU-Based Creditors
Creditors based in the EU have access to accelerated procedures that are not available to non-EU creditors.
Order for Payment (Fizetési Meghagyás — FMH)
Hungary’s order for payment procedure is a streamlined and widely used mechanism for enforcing monetary claims without immediate litigation. It is administered by civil law notaries through a central system, and an order has the same effect as a judgment once it becomes final.
- Compulsory for smaller claims: Monetary claims below HUF 3 million must generally be pursued via FMH, provided both parties have known addresses for service in Hungary.
- Optional for mid-range claims: Claims up to HUF 30 million may typically still be pursued via FMH at the claimant’s election.
- Not available for large or non-Hungary-served debtors: Claims above HUF 30 million, or where the debtor has no Hungarian address for service, cannot be the subject of an FMH procedure.
If the debtor does not object within the statutory timeframe (usually 15 calendar days after service), the order becomes final and enforceable. An objection converts the matter into ordinary litigation for the contested part, often requiring additional procedural steps.
European Payment Order (EPO)
EU-based creditors may also use the European Payment Order (EPO) scheme for cross-border cases within the EU. The EPO can provide another route toward enforceability if the debtor does not object within the required period, though language requirements apply and objections still typically convert the matter into ordinary litigation at the relevant Hungarian court.
Commercial Litigation and Insolvency Tools
EU creditors also have full access — on the same basis as domestic claimants — to local commercial litigation, arbitration, and winding-up petitions.
Limited Options for Non-EU Creditors
If the creditor is located outside the EU, the same streamlined mechanisms (eg EPO) are generally not available. In these cases, once amicable efforts fail, creditors must typically pursue:
- Commercial litigation before Hungarian courts, or
- Arbitration, if contractually agreed and provided for in the dispute resolution clause.
Commercial Litigation in Hungary
Civil litigation requires representation by a locally licensed lawyer and involves payment of statutory court fees. Under current rules, court fees are calculated based on the value of the claim and scaled under the new structure that came into effect in early 2025. The new scale removes certain caps on first-instance fees and generally increases the cost of high-value litigation.
Cases usually take about 12–18 months to reach a first-instance judgment, depending on complexity and appeals. Jurisdiction depends on the claim value, with district courts handling lower-value matters and regional courts hearing higher-value disputes.
Hungarian courts accept apostilled foreign documents without full legalisation, and such documents must still be translated into Hungarian for use in proceedings.
Interim Measures
Creditors worried about asset dissipation can apply to court for interim or security measures, such as injunctions or asset freezes, to secure enforceability while proceedings are ongoing.
Arbitration
The Permanent Arbitration Court attached to the Hungarian Chamber of Commerce and Industry (also known as the Hungarian Commercial Arbitration Court) is Hungary’s principal arbitration institution. It operates under recent arbitration rules and is a common choice for commercial disputes, particularly where a neutral seat or expedited process is desired.
Arbitration typically takes 6–18 months from commencement to award, depending on case complexity and tribunal size. Costs vary by institution and the fee arrangements agreed in the arbitration clause.
Enforcing Foreign Judgments and Awards
Enforcement in Hungary depends on the origin of the judgment or award.
EU Judgments
Under Brussels Ia, EU court judgments are recognised without the need for a separate declaration of enforceability and may be submitted directly for enforcement by the competent Hungarian enforcement court.
Non-EU Judgments
Judgments from outside the EU must undergo an exequatur process before enforcement. The Hungarian regional court reviews formal requirements — such as finality and jurisdiction compliance — without re-examining the merits of the case.
Foreign Arbitration Awards
Hungary has been a party to the New York Convention since the early 1960s, and foreign awards are typically enforceable provided procedural formalities are met, such as submission of the award and arbitration agreement (or certified copies).
Winding-Up Petitions
If the debtor is insolvent or in an unsustainable financial position, a winding-up (liquidation) petition may be considered. To proceed, creditors generally must demonstrate default and documented attempts at amicable recovery.
While the costs of insolvency applications and professional fees can be added to the registered claim, Hungary’s insolvency framework is not widely considered creditor-friendly in practice: sanctions for non-cooperation are limited, and recoveries often depend on the debtor’s remaining asset pool.
Next Steps
Effective recovery in Hungary requires not just knowledge of the available legal mechanisms but also practical navigation of local procedures, language, and documentation requirements. Early, structured action supported by local expertise can materially improve positioning for either amicable settlement or formal enforcement.
If you have Hungarian counterparties with outstanding receivables, our team can help clarify the optimal strategy based on your jurisdiction, claim size, and contractual terms.
For guidance on managing trade credit exposure or pursuing recovery in Hungary, please contact your usual Case Manager or email us at l.varnai@recoveryadvisers.com.
