Recent amendments to the Hungarian Sports Act

International Sports Federations

Under the definition of the Sports Act, International Sports Federations (ISFs) are essentially federations recognized formally by the IOC or are members in GAISF, or their status and activity is connected to the IOC or GAISF, meaning that the relevant set of rules is a bespoke regime for any international umbrella sports federation “in a classical sense”.

Upon amending the Sports Act in 2019, the Hungarian legislator recognized that ISFs, considering their special status governing certain sports, need a tailor-made legal and regulatory environment to ensure that their statutes, regulations and operational framework are not unduly affected or restricted. So, there is a separate chapter in the Sports Act, applicable exclusively to ISFs with the specific intention of efficiently facilitating their working practices. Under the Sports Act, ISFs enjoy special legal status and benefit from a bespoke tax regime. ISFs may be established by what is known as a ‘primary establishment’ (i.e. by first setting up in Hungary), or by legal succession (i.e. by relocating from another jurisdiction to Hungary) in accordance with the special provisions applicable to ISFs and the legal provisions applicable to civil organizations in general.

Since the introduction of the new legislative framework, the International Judo Federation (IJF) and the Fédération Internationale de Teqball (FITEQ) have relocated their registered seat from Switzerland to Hungary and now operate under Hungarian law.

My article on LawInSport provides some detailed insight on the rules applicable to ISFs.

Major international sporting events and sports diplomacy events

Hungary has hosted and organised and will host and organise several major international sporting events and sports diplomacy events such as the 2017 FINA world championship, the 2023 World Athletics Championship and the 2024 FIDE Chess Olympiad. To support the efficient hosting and organisation of sporting events at such scale, a new set of rules were adopted in 2020, resulting in the amendment of the Sports Act and the enactment of a new government decree. According to the government decree, major international sporting events and sports diplomacy events are events concerning Olympic sports and/or events the organisation of which is supported by a certain amount of state funds. The specific rules of the Sports Act and the government decree regulate, i.a. the bidding, hosting and organisation of such events, as well as the relevant competence of the ministry responsible and other stakeholders.

Re-regulation of anti-doping activities

As of 8 July 2021, the legal environment for anti-doping in Hungary has changed significantly. According to the new rules, which aim to comply with the principle of operational independence of national anti-doping organisations as required by WADA, the Hungarian National Anti-Doping Organisation (“HUNADO“) draws up the antidoping regulations (“HUNADO Regulations“) in accordance with the requirements set out in Government Decree No. 363/2021 (VI.21) on the Rules for Anti-Doping Activities (“Government Decree.”).

Accordingly, the Government Decree, unlike the previous relevant government decree which ceased to be in effect, no longer contains detailed rules concerning doping proceedings, and the anti-doping-related rules have also been removed from the Sports Act’s chapter on sports disciplinary liability. Second instance doping proceedings (except for decisions made concerning so-called “international athletes” and athletes competing at international sporting events) fall within the competence of the Doping Appeal Committee of the (Hungarian) Permanent Court of Arbitration for Sport, which is run by the Hungarian Olympic Committee (effective from 1 January 2021 already).

The HUNADO Regulations are uniformly binding on: (i) sports federations, the Hungarian Olympic Committee and other domestic sports public bodies, the (Hungarian) Permanent Court of Arbitration for Sport, sports clubs; (ii) athletes, sports professionals and other sports participants; and (iii) competitions organised within and outside the official competitions organized by sports federations.

In other respects, the Government Decree contains provisions on: (i) the legal status and requirements and powers of and relating to HUNADO; (ii) the operational requirements of doping commissions; and (iii) the measures and tasks concerning anti-doping activities.

Finally, it is interesting to note that WADA has recognized the Government Decree as fully compliant with the effective international anti-doping regulations of 2021.

New regulations on player agents

As of 1 September 2021, for the first time, the Sports Act sets out requirements on the activity of player agents and player agencies in certain sports, namely football, handball, basketball, water polo, ice hockey and volleyball (previously, the Sports Act did not contain any comprehensive provisions on player agents).

According to the new regulations of the Sports Act, player agents carry out intermediary activity for the purpose of concluding contracts between professional athletes and sports clubs (i.e. no player agent may be involved in the transfer of amateur athletes).

As per the Sports Act:

• The new requirements on the activity of player agents include the obligation to register, to pay a service fee and to comply with the applicable provisions of the Sports Act.
• The relevant sports federations are entrusted to supervise the activities of the player agents in a given sport (e.g. the Hungarian Football Federation supervises player agents in the football industry). For such purpose, the sports federations must issue their own regulations on player agents.
• Player agents are considered as sports professionals under the Sports Act (“sports professional” is a special status of persons involved in sports as defined in the Sports Act). Therefore, sports federations may take direct disciplinary action against player agents breaching their regulations.

Interestingly, under the new rules of the Sports Act, sports federations may also set up their own not for profit players agency company which may provide intermediary services for a commission (like a “normal” for profit player agent or agency). Furthermore, such non-profit players’ agency: (i) may be entitled to receive ‘reimbursement” from player agents who acted in certain transfers in the same sport which is regulated by the relevant sports federation; and (ii) must pay a certain part of the commission it earns from the transfers it is involved in and the reimbursement due to it as set out above to the legal representative or parent of the athlete concerned.

The conditions of the above reimbursement and payment obligations, as well as other details on the activities of players’ agents will be laid down in a government decree yet to be issued.