Recodification of the Hungarian Civil Law

European Review of Private Law, 5/2007. page 702-722

5.3       Transfer of Rights

The current code contains no rule for the transfer of rights. Property in a broad sense may be divided into three groups: things (both movable and immovable), rights and claims. These groups are handled differently: things are regulated in property law, while rights and claims are the subject of the law of obligations. This differentiation is also present if one compares the transferability of these groups.

Section 94 (1) of the Civil Code states that ‘[a]ll things are capable of being subject to ownership that can be taken into possession’. Legal literature concludes from this provision that things in this sense are those objects, which can be taken into possession. The definition of things is important because ownership can only exist over things. Ownership can be transferred either byway of a sales contract (Section 365 (1)) or – in case of gratuitous transfer – byway of a gift contract (Section 579 (1)). The transferability of things can only exceptionally be limited or excluded.

Besides things, rights and claims represent financial value as well, it is, there­fore, crucial that these are transferable as well. As under the current Hungarian regime rights and claims are not things, therefore they cannot be subject to a sales contract. The rules of assignment (Sections 328-331) make the transfer of claims possible. Due to the fact that claims represent a personal bond between the debtor and the creditor, the transferability of claims is more frequently limited and excluded than the transferability of things. Personal claims and rights (e.g. right to alimony) are not transferable. Legal literature qualifies rights as personal if a transfer would signifi­cantly modify its content. Pactum de non cedendo, i.e. the agreement of the assignor and the debtor, which prohibits the assignment arising from their agreement is regarded as having effect vis-à-vis third parties, which leads to the unassignability of such claims.

The current code lacks a rule that would provide for the transferability of rights (e.g. the transfer of a call option, rights arising from participation in a company etc.). This does not mean that no rights can be transferred under Hungarian law, but rights can only be transferred in case of a statutory provision. (The civil code itself empowers the lessee under certain conditions to sublease the leased property, IP/IT legislation also makes the transfer of certain rights possible etc.)

The Private Law Bill of 1928 regulated assignment as the transfer of claims, but the last section stated that the rules applicable to the transfer of claims are also applicable to the transfer of rights. This is the approach e.g. of the BGB as well. The current Code rejected this approach in 1959 without providing any reason for the change. The intention of the Conception was from the very beginning to solve this problem, but the way of proceeding was highly debated. ‘The Conception foresees the solution of the problems arising in practice not by way of extending the definition of things, but (…) among the rules applicable to the transfer [of ownership]’.

Theoretically at least four solutions exist: (i) the Code could amend the def­inition of things so that it would cover rights and claims alike; (ii) the Code may contain a rule on the transferability of rights among the rules of the sales agreement, and examine each right regulated by the Code and state whether that specific right can or cannot be transferred; (iii) the Code could implement the structure of the Dutch civil code, which would mean that the current definition of ‘thing’ does not need to be amended, but then a new Book shall be drafted, which would contain -among others – the rules applicable to the transfer of rights; or (iv) the rules of assignment can be extended to rights as well. During the codification of the published draft, the task was further detailed: one of the tasks was that the rules should make the limitation and exclusion of the transferability of claims exception, the second task was to provide for the transferability of rights and the third task was to create rules that would enable the transfer of contractual positions as such.

The draft code fulfils the first task with the rule regulating pactum de non cedendo. Section 5:167 states that the assignment is effective vis-à-vis third parties regardless of a clause in the original contract that excludes the assignability of the claims arising from the contract. The validity of such assignment does not affect the liability of the assignor for the breach of the pactum de non cedendo. The second task was only partially solved as the draft of the new code only handles the transferability of the so-called Gestaltungsrechte, i.e. rights which empower someone to unilaterally create, amend or terminate a legal relationship. During the revision of the draft it is necessary to include a provision stating that unless the civil code or other laws pro­vide differently, all rights – just like claims – are transferable. The third task, i.e. the transferability of contractual positions, was not accomplished at all. Under the current regime one party may only transfer his contractual position if the law so provides, as it is the situation in case of credit agreements and insurance contracts. The new civil code shall contain rules stating that if all three parties – following the terminology of the UNIDROIT Principles the assignor, the assignee and the other party – agree, the assignor can transfer all the rights and obligations arising from his contractual position to the assignee, who steps in the shoes of the assignor.

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