{"id":31368,"date":"2023-11-06T15:13:47","date_gmt":"2023-11-06T15:13:47","guid":{"rendered":"https:\/\/constructionpapers.hu\/?p=31368"},"modified":"2023-12-01T13:24:33","modified_gmt":"2023-12-01T13:24:33","slug":"new-act-on-public-works-projects-takes-effect-dispute-resolution-radically-changed-by-act-on-public-works-projects","status":"publish","type":"post","link":"https:\/\/constructionpapers.hu\/en\/construction\/new-act-on-public-works-projects-takes-effect-dispute-resolution-radically-changed-by-act-on-public-works-projects\/","title":{"rendered":"New Act on Public Works Projects Takes Effect – Dispute Resolution Radically Changed by Act on Public Works Projects"},"content":{"rendered":"

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Hungary\u2019s Act LXIX of 2023 on Public Works Projects (hereinafter: \u201cAct\u201d) was published in Magyar K\u00f6zl\u00f6ny<\/em>, the official government gazette, and will take effect on 8 November 2023. The Act creates a new and unified framework for public works projects. Many rules that apply to various elements throughout the entire lifecycle of public works projects, from pre-design to completion and operation, have been revised.<\/p>\n

This article deals with Section 54, which reforms dispute resolution and legal recourse procedures, and which appears to make the involvement of the Certificate of Performance Expert Board (hereinafter: \u201cCPEB\u201d) mandatory before a lawsuit can be filed.<\/p>\n

Scope of the Act<\/strong><\/p>\n

The Act applies to public works projects with a value equal to or higher than the national public procurement threshold, and to entities that participate in the preparations for, and completion of, such projects. A construction project qualifies as a public works project if its design and completion is funded from the central budget and\/or from indirect EU funds to the extent of more than 50% of its estimated value, regardless of whether it serves a public purpose.<\/p>\n

The Act applies to public works projects where the public procurement procedure concerning the construction phase starts after the Act takes effect, i.e. 8 November 2023.<\/p>\n

Dispute resolution and legal recourse \u2013 a greater role for the CPEB?<\/strong><\/p>\n

In disputes associated with the performance of architectural\/engineering design contracts and construction contracts concerning public works, the opinion of the CPEB will have to be obtained as a first step. The primary objective of such an opinion is to facilitate an amicable resolution of the dispute between the parties.<\/p>\n

If the parties are unable to reach a settlement and one of them intends to seek legal recourse against the CPEB\u2019s opinion, it may do so by filing a lawsuit within six months after receiving the opinion but no later than within thirty days after the completion of the relevant technical handover procedure [Section 54 (3) of the Act]. However, the Act does not state clearly whether such lawsuits qualify as what are known under Act XXXIV of 2013 (hereinafter: CPEB Act) as lawsuits based on CPEB opinions.<\/p>\n

In another new development, the Court of Budapest will have exclusive jurisdiction in cases that are covered by the Act and have a net value of more than HUF 200 million in dispute. Every dispute will be adjudicated by a panel of three professional judges, where one of the judges will have to have an engineering or equivalent degree. However, Section 54(8) of the Act expressly states with regard to such cases that the provisions in Section 5\/A of the CPEB Act (i.e. the rules on lawsuits based on CPEB opinions) \u201cmust be applied with the deviations specified in this Section\u201d.<\/p>\n

Designers\u2019 liability<\/strong><\/p>\n

The Section quoted above also has implications for designers\u2019 liability. If a court procedure is underway with regard to the activities of a designer, a developer will be able to request the suspension of the designer\u2019s license from the Chamber of Hungarian Architects. If the designer\u2019s liability for damage is established in a final and binding judgment, the Chamber will suspend or revoke the designer\u2019s license in the light of the value of the damage.<\/p>\n

Issues that require legislative or regulatory clarification<\/strong><\/p>\n

The Act states that the opinion of the CPBE must be obtained in the case of all \u201cdisputes associated with the performance\u201d of public works contracts. However, it should be noted that the CBPE Act currently does not necessarily bestow adequate powers on the CPBE for this purpose. In procedures conducted under the CPBE Act, opinions may be issued in matters included in the following exhaustive list:<\/p>\n