Hungarian Legal Reform for the Private Sector
Hungary is in the midst of a fundamental transformation toward a market economy. Although Hungary has long been in the forefront of efforts to reform socialism itself, after 1989 the goals of reform moved from market socialism toward capitalism, as the old Communist regime lost power and the idea of widespread private ownership gained acceptance. The legal framework – the "rules of the game – is now being geared toward encouraging, protecting, and rewarding entrepreneurs in the private sector.
This Article describes the evolving legal framework in Hungary in several areas: constitutional, real property, intellectual property, company, foreign investment, contract, bankruptcy, and antimonopoly law. These areas of law serve to define: (1) property rights; (2) the means to exchange these rights; and (3) the rules for competitive market behavior. Together they form the bedrock of a legal system for a market economy. This Article then addresses the capacity of Hungary's current legal institutions to implement the new legal reforms. As in the other countries of Central and Eastern Europe (CEE), defining real property rights and creating the conditions for free and fair competition are perhaps the most contentious and confused areas in the current legal landscape, largely because they tread so heavily on existing vested interests. Other areas of law, including intellectual property, company, foreign investment, and contract law, are less problematic.