Tuesday, July 29, 2014

Punishable comments on the internet

In its order No.IV/5/2013.the Constitutional Court stipulates that the liability of internet content providers or operators of forums is objective regarding the non-moderated  infringing comments. According to the judicial body, the intermediary internet service providers may be held liable when disclosing comments, regardless of whether they had monitoring obligation as to their content or not.
The legal determination of internet service providers´ liability has always raised questions of fundamental significance in the world of internet. This was faced in the case underlying the order of the Constitutional Court, where an internet content provider (hereinafter: ICP) initiating constitutional complaint had disclosed an opinion in its homepage concerning the advertising practice of one realtor company.
The article recorder that from several users complaints arrived about the contractual practice of the homepages operated by the realtor, which after examination the ICP found it to be unfair itself and declared the practices of the company as being based on deceit of consumers. At the same time, it called the attention of users to the importance of awareness of internet use and to read through carefully the terms of use. The opinion was commented and was communicated forward by several other internet portals too.
The realtor company had filed a petition against the ICP for the infringement of its personal rights. According to its opinion the content of the articles is false and along with the comments made thereto, infringes its right to the protection of good reputation.
According to the courts of first and second instance the article of the ICP is not unlawful, however, it provided platform for serious violating and degrading comments, hence it conducted the infringement of good reputation by  rumor. The court added that the fact that the comments were removed by the ICP without delay, has no significance when determining the infringement.
The ICP had pointed out that according to the effective legal regulations pertaining to the information society, it is in the present case deemed to be an intermediary service provider;therefore, it shall not be responsible for the contents of the comments,since the intermediaries are not obliged to moderate the blogs and the comments, or to monitor theircontent, such internet service providers provide exclusively storage and platform forplacing the content. Comments appear on the websiteby one click, without the assistance and supervisionof the intermediary.
The Association of Hungarian Content Providers (hereinafter: AHCP), who intervened to the case in the interest of the ICP to win the lawsuit and turned to the Constitutional Court, whilst it found injurious that according to the court decisions it is infringingthat someone is ensuring possibility on its homepage for the placement of comments without monitoring them, whereas it must count with the possibility that there may be an infringing comment among them. According to the constitutional complaint the court decisions infringe the freedom of express of opinion and the freedom of press. It held that it is a necessary and proportionate restriction of the freedom of press when the court qualifies the opinions infringing good reputation, unlawful; however, it is un-proportionate, if the person who has no influence on the content of such comment shall be held liable as well, since it provides exclusively the platform for disclosing the comment.
In the view of the AHCP, whereas being a fundamental right of communication,the aim of the right of expressing opinionis to ensure the discussion of „public matters”, „the possibility of self-expression in a social context”.These are the internet forums and comments, where users may express their thoughts and opinions. As per the AHCP, it is the significant element of the freedom of the expression of opinion that someone may disclose comment on the internet without prior moderation, hence if only previously moderated comments could appear, opinions would not meet and an important element of the clashes ofopinions would disappear. 
However, according to the Constitutional Court, the complaint was not justified.
At the beginning of its order it refers to the currently effective laws, pursuant to which the liability of internet service providers and intermediaries is different. While the internet service provider is responsible for the unlawful information made available, since it creates and publishes it by itself, on the other hand the intermediary - although as a general rule it is liable -, in the existenceof certain conditions may be exempted from the responsibility, according to the governing act it is obliged to monitor the information only forwarded and stored by it.
Furthermore, the Constitutional Court stipulates on conceptual basis that the Fundamental law ensures and protects free communication, regardless of its content of value or truth, thus the constitutional protection extends to all opinions no matter its content. It elaborates further that the freedom of press grants constitutional protection to the freedom of spreading information,opinion; does not protect the content of the opinion, but its forward to the public. Therefore, the determination of the liability of the operator of the internet page, without no doubt restricts the freedom of press extending as well to the internet communications.
It also points outthat there are two forms of comments: the moderated and non-moderated comments. The prior are preliminarily examined by the webpage operator and if it finds it unlawful or contrary to its own moderating principles,will not disclose it. The latter are not moderated by the operator, it is not in its duty either.
 Nonetheless, since mainly the person of the actual infringer „commenter” is unknown, the liability is on the operator of the webpage. The moderated comment, if it is infringing, triggers the same legal consequence as if it was not monitored previouslyor subsequently.The moderation of the comments does exempt from the liability or responsibility for unlawful communications. The liability for the unlawful comments (and the obligation for damages in certain case) is independent from moderating: it is based on the sole fact of the unlawful comment.
The Constitutional Court stipulates thereby in its order that it does not deem it justified to differentiate between the moderated and non-moderated comments. According to its opinion, if the internet providers undertaking moderating are liable for the illegal comments appearing on their page, then determining the infringement against the intermediary operators of the pages not undertaking moderating shall be proportionate as well. Question arises as to whether the modern form of expressing opinion will be limited in the light of the findings of the above order and whether the operation of non-moderated internet commenting in Hungary will be become questionable?
Should you have any questions, we are at your disposal. For more information about BWSP Gobert and Partners, feel free to look at our website: www.gobertpartners.com

Friday, July 11, 2014

Foreign currency debtors - The act puts more strain on the banks than expected

The bill which purpose is to help the foreign currency debtors was accepted on the 4th of July 2014, this can rewrite many consumer loan agreements, in this case it can put a much bigger strain on the financial institutions than expected. The accepted bill is waiting to be signed by the president and is then going to be published by Hungarian official journal.

The act (which was entered into force between the 1st of May 2014 and before this act came into effect) can effect consumer loan agreements, but also loan agreements which are based on HUF and financial leasing contracts. The companies will not be affected, since according to the credit institution law, they are not considered as consumers and oblige to final repayment. Furthermore those persons will not be affected who dedicated their real property to Hungarian National Asset Management Inc.

The aim of this act is to manage the situation of the debtor, to relieve the courts and to give the financial institutions the chance for voluntary compliance.

The act declares the credit gap in foreign exchange rate contracts as unfair and invalid. As well as the use of different buying and selling rates, therefore the official currency rate of Hungarian National Bank is going to be implemented. They presume furthermore the contractual cause which contains unilateral interest raising or charge raising or fee raising as unfair, which is normative in the case of loan and financial leasing contracts. The pending lawsuits and judicial execution procedures are going to be suspended. The contracted agreements are going to be upheld by the act, but to avoid the conditions which are declared as unfair, close deadlines are set to fulfill the obligations by the financial institutions.

(i)      The conversion of foreign currency loans have to be carried out  90 days after the bill comes into force, the plan of conversion to the Hungarian financial supervisory authority has to be carried out within 60 days.

(ii)    the general contract terms and conditions and unique contract terms and conditions which contain unilateral modification of contracts shall be revised within 30 days after the bill comes into force on top of this, a report has to be made to the Hungarian financial supervisory authority, and at the same time they shall declare whether in their opinion these are unfair or not. If the Hungarian financial supervisory authority announces this as fair, they can commence a civil procedure against the Hungarian state, they then have a chance to do so 30 days from the time the bill came into force in, in case of HUF currency loans they have a chance to do so between 90 and 120 days. As in the lawsuit there is no possibilities to complete the documents, the burden of proof encumber the financial institutions, this is a vital information for those who are submitting a claim, especially since the act defined the proceeding fee in 1 500 000 HUF.

The act obligates the financial institutions to cut the unfair conditions, under the control of the Hungarian financial supervisory authority.

Should you have any questions or if you enquire any further information, please do not hesitate to contact us. Our professionals are at your disposal.


Friday, July 4, 2014

The advertising tax is coming!

On the 17th of June 2014 the heavily disputed Act XXII of 2014 on Advertising Tax was announced, which introduces an entirely new type of tax in Hungary.

 Under the broad scope of the Act, advertisements that are “predominantly in Hungarian” will become taxable in the media and entertainment industry (television, radio), publications distributed in Hungary, out-of-home advertising (e.g. posters, billboards, bulletin billboards, aerial banner-towing) and on vehicles, real estate or the internet.

 Who is taxable?

 The list contained in the Act confirms that publishers, online advertisers, persons or other legal entities utilising vehicles, printed material or real estate for the purpose of advertising, as well as any “media content provider settled in Hungary” are taxable.

 The question on who constitutes a media content provider within the latter category has already raised a number of questions as, in this regard; the legislation is contrary to EU directives.

 According to the relevant media laws, any media service provider which provides media services on frequencies which belong to the state of Hungary will become taxable, regardless of the location of the company’s headquarters.

 The European Court of Justice has dealt with the question of territorial scope and jurisdiction on multiple occasions, for instance in the case of Commission vs. United Kingdom (Case C-222/94), where it was held that if any service provider is established in more than one Member State of the European Union, the Member State having jurisdiction over it is the Member State in which the service provider has the centre of its activities. The situation is different, however, where the media service provider is established in another Member State in order to circumvent the stricter rules of the main country in which it operates.

 Extraordinarily high tax rate

The Act introduces progressive taxation. Consequently, if the advertising revenue falls between HUF 500 million and HUF 5 billion the tax rate is 1 percent; where the amount of revenue is over HUF 20 billion the tax rate can reach 40 percent.

Tight deadline for payment

The Act comes into force 31 days after its promulgation and taxes shall be paid immediately thereafter. Accordingly, taxpayers are required to assess and declare this year’s advance taxes until 20 August 2014, and pay those taxes in two equal instalments until 20 August 2014 and20 November 2014, respectively.

 Accordingly, it is shown that as the law takes effect, questions regarding the interpretation of the Act are expected to affect a broad range of taxpayers. In particular, the geographical scope, the issue of jurisdiction and the purchase and lease agreements of properties used for advertising purposes are all issues which will undoubtedly be caught in the crossfire.

 If based on the above you are unsure whether you are subject to the advertisement tax and regulatory proceedings under the Act, or what you should pay attention to in terms of advertising as a lessee or owner of real estate or operator of a vehicle, please contact us and our experts will be entirely at your service!