The Hungarian parliament published the draft DSA Executive Act, which offers specific rules for online intermediary services with the aim of establishing the necessary national legal framework for the implementation of Regulation (EU) 2022/2065 on a Single Market for Digital Services (DSA). The Act sets down procedural safeguards that are essential for the application and enforcement of the DSA and touches upon issues such as the consequences for breaching the DSA, the appointment of the national digital services coordinator, and the definition of the coordinator’s powers and competencies.
Organisations covered by the legislation
The DSA Executive Act applies to intermediary service providers (ISP) established in Hungary, and those ISPs not established in the country who offer intermediary services in Hungary. The scope of the DSA Executive Act extends beyond the country-of-origin principle established by Article 56 of the DSA and declares its applicability for ISPs not established in Hungary provided that their services are available in Hungary. Thus, organisations established in another EU member state must adhere to Hungarian laws if they operate in the Hungarian market.
Obligations of ISPs regarding illegal content
If an order issued by relevant national judicial or administrative authorities pursuant to Article 9 of the DSA, or a notification submitted in a notice and action mechanism pursuant to Article 16 of the DSA flags certain content as illegal, the DSA Executive Act obliges ISPs to remove or disable access to such illegal content without delay as soon as an ISP is aware of its illegal nature. ISPs have no discretion in these cases. If the order or notification flags certain content as illegal, the ISP must take measures to remove or disable it. In practice, this could mean that the ISP receives a take-down order of a post or picture that is allowed under the ISP’s community guidelines and general terms and conditions but is deemed illegal by the competent national authority.
Digital Services Coordinator and the Online Platform Dispute Resolution Board
The Digital Services Coordinator appoints the National Media and Infocommunications Authority (Nemzeti Média és Hírközlési Hatóság, NMHH), which exercises the supervision and enforcement duties under Article 49(2) of the DSA and is responsible for designating and keeping records of trusted flaggers and vetted researchers pursuant to Articles 22 and 40 of the DSA. The DSA Executive Act establishes the NMHH with powers and competencies pursuant to Article 52 of the DSA. As an additional power, the NMHH may – as an interim measure – lay down conditions for the provision of the service, impose obligations or adopt undefined “other measures” for 90 days in order to avert the risk of serious and imminent harm to a wide range of users.
The DSA Executive Act designates the Online Platform Dispute Resolutions Board (Online Platform Vitarendező Tanács) as a newly established dispute settlement body under Article 21 of the DSA. This Board is a professionally independent body operated by the NMHH and is competent for out-of-court dispute resolution between the ISP and a recipient of its service. Any recipient of service may submit a request to the Board and initiate its procedure, provided that they attempted to resolve the issue directly with the ISP beforehand. The Board will endeavour to reach a settlement between the parties, and, if this is not possible, it may issue recommendations to the ISP or, if the request is justified, issue a binding decision provided that the ISP has accepted the decision as binding.
Enforcement and sanctions
In the event of a breach of the DSA or the DSA Executive Act, the NMHH may apply a legal sanction against an intermediary service provider established in Hungary. Such sanctions include:
- prohibiting the unlawful conduct and ordering the intermediary service provider to cease the unlawful conduct,
- requiring the publication of a notice or the decision on the home page of the ISP’s website in the manner and for the period specified in the decision,
- issuing an administrative fine of 5% or 6% of the ISP’s total worldwide annual turnover depending on the infringed provisions of the DSA, in line with Article 52(3)-(4) of the DSA.
ISPs established in Hungary are obligated to pay supervision fees every six months. The amount of the fee is maximum 0.35 % of the annual net turnover with the exact amount and the payment rules to be determined by the NMHH at a later stage. SMEs and ISPs with annual net turnovers lower than HUF 100 million (approximately EUR 265,000) are exempted from this obligation.
The DSA Executive Act becomes applicable on 17 February 2024.
The text of the DSA Executive Act is available here in Hungarian only.
The article was co-authored by Anna Horváth.
For more information on this draft act and the DSA and how it could affect your Hungary-based business, contact your CMS client partner or these CMS experts.