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Although the value of the Hungarian legal tender (the Krone) rapidly and boundlessly deteriorated during the years 1919—1923, in the absence of a stipulation of payment in actual foreign currency our Courts consistently adhered to the text of the Law and took as guide the rate obtaining on the day of maturity.
The introduction and stabilisation of the new Hunga- rian currency (the Pengoe) has for almost a decade deprived this question of its significance.
However, the temporary closing of banks and the restriction upon dealings in foreign exchanges instituted in
Í931 changed the practice of the Courts hitherto followed, in that, chiefly under the influence of Decision No. 768, the rate prevailing on the day of payment has been taken as a basis for the conversion in commercial matters and in cases of Bills of Exchange. also.
Quite recently, when the tables were again turned, and the currencies, in which, on account of their stability, debts had been expressed (Pound Sterling, Dollar etc.), suffered considerable depreciation's of their par values, we meet in the decisions of the Courts more and more frequently with the reasoning that defaulting debtors must re-establish the status quo and make full compensation in effecting payment at the higher rate quoted on the day of maturity.
, This wavering of the practice followed by the Courts is by ho means due to a legal insecurity, but rather to a recognition of the fundamental truth that creditors should in any circumstances recover the values credited by them without any loss on the exchange.
Dr. ifi. Nagy Dezső Barrister at law.
The Hungárián Law of Insolvency.
The first systematic Hungarian Bankruptcy Act was enacted in 1840, whereás the law, at present in force, was embodied in the Act XVII of 1881. When preparing it, the German Bankruptcy Bill published in 1873 had been taken as á model, and the construction of our Bankruptcy Act, in respèct both of substantive law and the law of procedure, was based upon the dispositions of the German Bankruptcy Act.
The Hungarian Bankruptcy Act has not changed essen- tially since 1881. No serious objection can be raised to its legal structure, in the first place to its dispositions touching upon substantive law. The position, however, is different
as regards its dispositions relating to procedure and organisation, especially if the practical results that can be attained through bankruptcy are considered; Ever since the Act had bëën in force it has become more and more manifest, as it has in other countries, that bankruptcy proceedings are in general a means of liquidating properties bristling with economic deficiencies, and therefore offering"
to creditors but scanty possibilities of material benefit. The figures of Hungarian bankruptcy statistics also tend to prove, that in the event of bankruptcy, nonprivileged credi- tors can as a rule hardly expect any satisfaction of their claims. This economically unsatisfactory situation resulted, as in other countries, in bankruptcy being regarded with greater misgivings than by debtors by one other category only, by that of creditors,. and threats with bankruptcy, originally a weapon in the hands of creditors, have in the course of time turned in favour of debtors and come to support the latter's chances of a settlement by âgreement;
This trend of evolution entailed,- in Hungary also, such légal institutions ás afford the possibility of avoiding bankruptcy gradually sO sùp'ërsede thè latter, in the field of legislation ás well as in fhât of the application of law.
This tendency, which is identical with that prevailing ià.
the domain of internafíOiiál láw of insolvency, is in fact little else but a formulation of the principe that to attain adequate economic results must be the paramount considera- tion wh'ëiî settling iâsôlvericié's. Although the lègàl maxims of insolvency preceding bankruptcy Be, from the, point of view of their legal structure, somewhat loosely knitted if compared with thë rigid , éóristfuétidtí óf bankruptcy- proceedings, this vëry élásficity qualifies them for., the attainment of more favourable economic results.1) When examining, the legal régulations regarding insolvency preceding bankruptcy wë mieét with rulés referring to the possibilities Of composition On Ofïe hand, and to the possibilities of liquidation on fhe other.
In Hungary thë Government we're empowered by Act V of 1916 to regulate by Orders in Council the problem of compulsory composition,2) and théy ávailed themselves
') As regards a more detailed disquisition of this question see the author's book „Neue ,Wege des InsolvenzTechtes", published in 1930 by Moritz Perles in Vienna,
'-') „Compulsory composition" means in Hungarian law the legal procedure resulting in a Deed of Arrangement. This procedure as a rule, takes precedence of bankruptcy proceedings. The latter however- takes place if the former fails.
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repeatedly of this opportunity. The legal institution of compulsory composition had for the first time been put into effect by the Order in Council No. 4.070/M. E. ex 1915, whereas at present Order in Council No. 1.410/M. E. ex 1926. is in force, certain stipulations of which had again and again been modified since its issue.8) Out of this material we shall in the sequel endeavour to give a brief summary ot those rules which possess a special character, and contain regulations differing from similar rules obtaining in foreign countries.4)
One of the characteristic features of this later Hunga- rian legislation is that on the one 'hand it endeavours to promote the conclusion of as far as possible informal private arrangements between creditors and debtors, and
•on the other that in the transaction of such arrangements it secures the creditors' autonomous organisation institu- tionally an important sphere of power. In the cases of compulsory compositions of merchants and tradesmen we meet with a special procedure of private arrangement, provided for, within the framework of normal procedure, by the Order in Council relating to compulsory composi- tions. According to this procedure, if merchant and trades- men debtors are involved, the Law Court, after opening the procedings for a compulsory composition, transmits the papers to the National Association for the Protec- tion of Creditors, a body created for the purpose
3) Legal literature on the question of compulsory composition is rather plentiful. Preceding the creation of compulsory composition, :and in connection with its preparation, Dr. James Schreyer developed
valuable literary activities. In connection with the preparation of the first Order in Council relating to compulsory composition and with the comments compulsory composition the activities of Professor Dr.
-Arthur Meszleny must in the first place be mentioned, and in con- nection with the further codification of the material as well as with elaboration of the comments those of Professor Dr. Alexander Cor- nelius Tury and of the judge in the Supreme Court and lecturer at
•the University, Dr. Kamill Sdndorffi. From amongst the jurists engaged in actual work connected with the protection of creditors' interests we mention the publications of Dr. Imre Weiszberger, legal adviser to the National Assocation ior the Protection of Creditors, and of the
author of the present essay.
4) As regards the sources published in foreign languages of this new legal material dealing with insolvency we may refer, in addition to the author's book in German, mentioned in (1), to a book by Dr.
Charles Gsiky and Dr. Joseph Sommer containing the German translation of the Order in Council No. 1. 410/M. E. ex 1926, and also
•to the proposals submitted by Dr. Arthur Meszleny to the Congress for the Protection of .Creditors (Kongress fur Glaubigerschutz) -arranged in 1930 by the Creditoren-Verein, Vienna.
of transacting business of this nature, in order that it should attempt to bring about a private arrangement.
f Although the Association, in view of the importance of its work, is under Government control and is being directly controlled by a ministerial commissioner, it is neither a public office nor a government institution, but an organisa- tion protecting the interests of creditors who are members of one of the Chambers of Commerce and Industry or of other bodies representing economic interests. Societies protecting the respective interests of creditors belonging to various branches of industry (textile, colonial goods, iron, paper, leather, glass etc) act as sub-departments of the mother-association. Through this construction the Associa- tion ensures its cooperation in the settlement of insolven- cies to a far greater extent than hitherto (bankruptcy committee, creditors' committee etc.). The National Asso- ciation examines the debtor's assets and liabilities, and conducts the proceedings aiming at an arran- gement. Offers are accepted, as by the Courts, on the basis of a two-third, majority of creditors. Arrangements thus arrived at require sanction by the Courts if they are to be
* legally valid. In the case of debtors who are neither merchants nor tradesmen the proceedings of compulsory composition are, in Hungary also, conducted by the Law Court. In connection with the agricultural crisis the intro- duction of special proceedings concerning agricultural inte-
e rests and aiming at the conclusion of private arrangements is being considered.
In order to protect the interests of creditors the National Association continues its activities even after an arrangement had been made, and controls the management of the debtor's business until the claims of all creditors are satisfied. The deed of assignment for the benefit of creditors is based upon the rules of the Orders in Council Nos 6.340/M. E. ex 1927 and 850/M. E. ex 1931, and affords the possibility for the debtor's property to be realised in the shape of a commercial transaction, without having recourse to complicated and costly bankruptcy proceedings.
The statistical figures of the National Association show that creditors participating in the proportional distribution received, even during the critical period of the last years, an average quota in the neighbourhood of 15%, the settlement being terminated as a rule within a short space of time.
* The characteristic feature of Hungarian insolvency law viz. that it rendered possible an economical settlement of insolvencies through the creation of adequate measures of r
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organisation and procedure, and that it also provided for suitable institutions, makes itself favourably felt in yet another sphere : in that of insolvencies of financial institutes.
The Central Corporation of Banking Companies which, by virtue of Law XXXVII. of 1920, in addition to looking after the financial interests of the State, is engaged in a systema- tic control of a considerable part of the financial institutes of the country and thus renders valuable services in the field of preventive credit-protection, is also given wide powers regarding assistance to financial institutes. It is no
doubt due to the clear-sighted policy of this reputable institution that during the serious crisis of recent years we meet with a very much smaller number of collapses of financial institutes than in amy of the neighbouring countries.
The Orders in Council Nos 919 and 921/M. E. ex 1917 and subsequent Orders modifying them contain clauses trans- ferring upon the Central Corporation of Banking Companies the office of a liquidator in all instances of voluntary and compulsory liquidation of financial institutes, and thereby render it possible, in this field also, to realise and to distribute the debtors' properties without recurring to bankruptcy proceedings.
Problems of criminal law bearing upqn insolvencies were settled separately from the law of insolvency, ori- ginally by Law V of 1878, pur Penal Code. Recently this legal material had been superseded by a uniform law- based upon modern priciples, the Law IX of 1932 relating to offences violating creditors' interests.
Whereas our Bankruptcy Act at present in force still pursues the course pointed out by German legislation,
recent developments in the field of the law of insolvency show in many respects an approach to the English situation.
This tendency did not manifest itself in the imitation of law-books, but the recognition of the practical needs of life
led to the actual situation which is in many ways reminis- cent of English conditions.
From amongst the phenomena revealing similar traits -we mention the following:
a) The overwhelming practical importance of agree- ment as against bankruptcy that is gaining ground. In the course of latter years insolvencies settled through bank- ruptcy constituted about 1^—20% of those terminated by agreement.
b) The development of liquidation by agreement based
upon the consideration that as against the destruction of values in the case of bankruptcy deed of assignment for the benefit of creditors is an adequate means for the attainment of more favourable economic results.
c) A special situation to promote the liquidation of companies limited by shares without applying bankruptcy proceedings which, at least in its tendency, resembles to a certain degree the winding-up of companies as regulated by the English Company Law. According to the Hungarian legal instrument — the Order in Council No 5.836/M. E.
ex 1926 — bankruptcy proceedings can only be opened against a company limited by shares if the Central Cor- poration of Banking Companies refuses to undertake to transact a liquidation.
Dr. György Ernő,
Director of the National Association for the Protection of Creditors.
La législation hongroise en matière 4 e marque de fabrique et de concurrence
déloyale.
C'est la loi II de 1890 qui réglementa la première, par la voie du législatif, le droit des marques de fabrique en Hongrie; jusqu'alors, on appliqua les règles du décret autrichien de 1857. Quand même les lois des deux pays ne cessèrent d'être identiques en la matière. Et cela pour la simple raison que les marques de fabrique faisaient partie des affaires qui, selon les dispositions de la loi XII de 1867, réglementant les rapports constitutionnels entre la Hongrie et l'Autriche, durent être administrées „en commun". Aussi les deux gouvernements soumirent ils des projets de loi identiques aux législatifs respectifs qui furent adoptés par ceux-ci sans aucune modification.
La loi est basée sur le système d'enregistrement par dos- siers. Tous ceux qui veulent exploiter une valable marque de fabrique d'une manière exclusive, sont tenus de la faire enregistrer. C'est la Chambre de commerce et d'industrie locale auprès de laquelle l'enregistrement a lieu. Aucune enquête préalable n'est exercée. Cependant, l'enregistrement est refusé à la marque déclarée lorsqu'elle est atteinte d'un empêchement d'enregistrement indiqué par la loi. Comme tels furent énumérés par le législateur: le portrait du roi ou des membres de la famille royale, les armoiries, les marques libres, celles qui se heurtent à la moralité ou à
