Hungarian legislative Christmas tradition: Hungary’s year-end legislative changes again arrived like a last-minute gift under the tree, reshaping the financial contours of litigation. Two developments stand out in the field of litigation: a clarified framework for reimbursing attorney fees and a revamped, tiered regime for litigation stamp duties (illeték). Both reflect global trends toward enhanced predictability and market-aligned costs in dispute resolution, and both may significantly influence how parties weigh their options before heading to court. The Government’s official reasoning highlights a desire to ease access to justice for those in weaker financial positions—a persistent concern since the 2016 Code of Civil Procedure (CPC) was criticized for making it harder to assert claims and initially causing a notable drop in new filings. While it remains to be seen whether these reforms will level the playing field, they certainly offer a more transparent financial landscape that may shift strategic decision-making and could bring more revenue into state coffers.

Attorney Fees: Greater Predictability and Pathways to Funding

For years, Hungarian attorneys have pushed for a fee structure that more faithfully reflects the market value of their work. Even after the Hungarian Supreme Court (Kúria) clarified earlier this year that the prevailing party should be able to recover its attorney fees in full without reductions, lower courts often reduced these amounts arbitrarily. This unpredictability meant that litigants—even successful ones—had to factor in the real possibility of bearing significant unrecovered costs. Such uncertainty discouraged some would-be claimants, especially those unwilling or unable to bear such unrecoverable costs.

Regulation 17/2024 (XII.9.) IM, effective February 2025, directly tackles this problem. Courts must now provide detailed justifications for any fee reductions, which can only be made if the fees are unnecessary or disproportionate. By tightening the criteria and imposing a reasoning requirement, the new rules allow parties to better forecast their actual financial exposure before initiating litigation. This predictability aligns with global trends where clarity in cost recovery is seen as essential for informed decision-making.

A particularly significant byproduct of this enhanced certainty is the potential emergence of third-party litigation funding. Funders, who finance claims in exchange for a portion of the proceeds, are drawn to jurisdictions where outcomes and costs can be reliably projected. With fees more likely to be recovered in full and arbitrary cuts curbed, external investors may be more inclined to back claims. This could be a game-changer for individuals and smaller businesses that previously lacked the capital to pursue valid claims, thus offering at least a partial answer to concerns about unequal access to the courts.  Furthermore, big market players may be more inclined to pursue their claims too, knowing that their chances of cost recovery have significantly increased.

Stamp Duties: A Tiered System Without a Cap

The second reform focuses on litigation stamp duties (illeték), radically altering the cost equation for bringing claims to court. Previously, large disputes benefited from a fee system with a low cap, giving claimants a clear cost advantage.

Now, Hungary adopts a tiered structure that directly correlates stamp duties with the value of the claim—and crucially, it removes the upper limit. As the claim amount rises, so do the duties, reflecting the complexity, stakes, and resource intensity that large cases demand. This shift eliminates the artificially low price tag high-value claimants once enjoyed.

While these changes don’t necessarily deter litigation, they do mean that larger claims will now carry proportionately larger costs. This should reduce one key financial incentive that previously made litigation more attractive than alternatives like arbitration. Instead of relying on minimized costs as a decisive factor, parties choosing a forum may now consider other strategic aspects—such as procedural flexibility, confidentiality, enforcement options, or the expertise of decision-makers—when deciding how best to resolve their disputes.

Conclusion

By tightening the criteria for reducing attorney fees and introducing a tiered, uncapped stamp duty system, Hungary’s new reforms offer greater transparency and cost-reflectiveness in litigation. The Government asserts that these measures will help those with fewer financial resources approach the courts more confidently—a response to the lingering effects of the CPC’s stricter procedural requirements and the initial drop in case filings it triggered.

Whether these reforms will genuinely “level the playing field” remains uncertain. They will likely bring more revenue into the state budget and push litigants to base their strategic choices on factors beyond just low upfront fees. If third-party funding gains traction, it could broaden access to justice, though that development may depend on how consistently courts apply the new rules and whether actual practice lives up to the reforms’ promises.

In the meantime, parties contemplating litigation in Hungary now have clearer parameters for calculating risks and costs. At the very least, these end-of-year surprises mark another step toward a dispute resolution environment where cost predictability guides strategic decision-making.

By Petra Pataki

The New Rules at a Glance:

Attorney Fees: Courts must provide detailed reasoning if they reduce fees. Reductions are only allowed when fees are unnecessary or disproportionate. Clearer standards aim to reflect market realities better and allow fuller cost recovery for the prevailing party. Stamp Duties: The previous capped model has been replaced by a tiered fee structure. Larger claims now face proportionately higher duties with no maximum limit. This removes the advantage that large disputes once had in controlling their initial litigation costs.