Hungary provides greater clarity on electronic document validity
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Partner
Hungary
As a partner and co-Head of Country of the Budapest office, I am heading the IP, Data Protection and TMT teams. <BR/><BR/>I advise on intellectual property, information technology and privacy and data protection matters for our national and international clients from various sectors including electronics, pharmaceuticals, retail and IT.
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Under Hungarian law, certain types of documents must be executed in ‘written form’ in order to be valid. When the eIDAS Regulation entered into force, the previous Hungarian E-Signature Act was repealed. This also meant that the provision according to which a document signed with an Advanced Electronic Signature (AES) was considered as having been executed in written form also ceased to apply. For years, it has been unclear whether an AES could fulfil this formal requirement or whether only a Qualified Electronic Signature (QES) is fit for such purpose.
Recently, a new act was passed which restores clarity on this topic. According to Act XLVI of 2023, documents furnished with an AES will be regarded as having been executed in written form. The act contains other provisions which provide businesses, especially in the financial services sector, with more flexible provisions permitting electronic documents to be executed in written form. The new rules will enter into force on 1 January 2024.
The new act also amends the Hungarian E-Administration Act by introducing the concept of an electronic private document. The latter is an electronic document authenticated with at least an AES and e-time stamp or with a document authentication service (Hungarian abbreviation: AVDH) provided by the Hungarian Government. According to the new rules, a legal statement that is made in an electronic private document shall be deemed to have been made in written form pursuant to the Hungarian Civil Code.
The electronic form of such electronic private document can, in particular, be textual, aural, visual or audiovisual. However, in the context of real estate, inheritance, family law and company law, private e-documents are only deemed written documents containing a legal statement if executed in textual form.
An electronic document signed with a Simple Electronic Signature (SES), i.e., which is neither an AES nor QES, will continue not to be considered a document executed written form. However, a significant exemption has been made for the financial services sector: Businesses overseen by the Hungarian National Bank, acting as a financial supervisory authority, can also rely on an SES, provided that the signatory was identified in an audited IT environment.
After 1 January 2024, it will be relatively easy for the financial services sector to produce textual electronic documents which are regarded as having been executed in written form without the need to implement EAS technology. As for other sectors, it is unclear whether there will be any significant changes in the near future as businesses might still consider AES implementation burdensome compared with other common solutions, which are usually only SES based.
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