Artificial Intelligence Comparative Guide

• Published date: 26 July 2023
• Subject Matter: Technology, New Technology
• Law Firm: VJT & Partners
• Author: Mr Endre V'rady, Attila Menyh'rd and Kinga K'lm'n

1 Legal and enforcement framework

1.1 In broad terms, which legislative and regulatory provisions govern AI in your jurisdiction?

Hungary has no legislation that is specifically dedicated to AI. However, there are numerous Hungarian laws which deal with the use of algorithms or AI (explicitly or implicitly), such as the following:

• Data protection: As the data protection laws are technology neutral and AI operation, by definition, is based on data, these laws have a significant impact on AI.
• Copyright: This includes the rights that parties can claim on:
• • the components of AI (eg, databases or raw materials used to train AI models); and
  • elements generated with the help of AI (eg, software creations).
• Data economy: The legislative framework on national data assets regulates the use of public data (including in relation to the potential use of AI).
• E-administration: The legislative framework on e-administration contains explicit rules on electronic administration tasks and activities conducted with the help of AI.
• Contract law: Parties may agree on rights and obligations in relation to AI projects.
• Tort: Various forms of liability (eg, liability for hazardous activity, liability based on fault, product liability) could apply to AI by analogy; however, this has not yet been tested before the Hungarian courts.
• Other sectoral laws: As there is no dedicated AI legislation various sector-specific rules (eg, on pharmaceuticals, financial services, health services) may apply to AI depending on the sector in which it is used.

In line with the EU Digital Strategy, numerous proposals at the EU level - including the AI Act and the Data Act - will significantly change the Hungarian landscape once adopted.

1.2 How is established or 'background' law evolving to cover AI in your jurisdiction?

Hungary has neither established a dedicated legal framework for AI, nor any soft law in this regard. However, the National AI Strategy has set a framework for future national legislation in conformity with the applicable EU legislative instruments (see question 1.8).

1.3 Is there a general duty in your jurisdiction to take reasonable care (like the tort of negligence in the United Kingdom) when using AI?

There is a general duty in Hungary to take reasonable care in relation to all acts by any person; however, there are no specific requirements in relation to AI. Under the principle of the duty of care, one should generally act with the care that may generally be expected from a reasonable person in the relevant circumstances. This duty of care forms the basis of fault-based liability.

This principle equally applies to operators of AI technologies. For example, an operator of AI technologies may be liable if it has not adhered to its duty of care when choosing the right AI systems and/or monitoring/maintaining AI systems.

The principle of the general duty of care in the context of AI has not yet been tested before the Hungarian courts.

1.4 For robots and other mobile AI, is the general law (eg, in the United Kingdom, the torts of nuisance and 'escape' and (statutory) strict liability for animals) applicable by analogy in your jurisdiction?

Liability for robots and other mobile AI has not yet been tested before the Hungarian courts. Nevertheless, the general law may apply to mobile AI by analogy in Hungary, especially the following:

• Strict liability for hazardous activities: This may apply by analogy to mobile AI, meaning that an operator of mobile AI (as the party which is in control of the risks connected with the operation of mobile AI) may be liable. This means that an operator of mobile AI:
• • may be liable even in the absence of fault; and
  • may be exempted from liability only if it can prove that the damage occurred in the context of an unavoidable event that was beyond its control.
• Product liability: Hungary has implemented the EU Product Liability Directive, and as such a manufacturer of mobile AI products may be subject to product liability. This is also a form of strict (no-fault) liability. However, at a practical level, the application of product liability in this context is very challenging, for reasons such as the following:
• • Whereas product liability traditionally focuses on the point at which a product is put into circulation, AI products are continually evolving;
  • Given the interconnectivity of AI products/systems, it is difficult to capture what exactly constitutes a defect; and
  • The 'black-box' effect of AI makes it difficult for victims to prove the defect.

1.5 Do any special regimes apply in specific areas?

Hungary has no dedicated regime for AI; but various sector-specific laws (eg, data protection, consumer protection, competition, telecommunications) may apply, depending on the context.

In terms of liability, various forms of liability (eg, strict liability, fault-based liability, product liability) could apply to AI by analogy, depending on the context. However, this has not yet been tested before the Hungarian courts and no case law has as yet developed.

1.6 Do any bilateral or multilateral instruments have relevance in the AI context?

There are no bilateral or multilateral binding agreements with relevance in the AI context outside the European Union's AI legal framework.

1.7 Which bodies are responsible for enforcing the applicable laws and regulations? What powers do they have?

To date, there is no designated body that enforces AI-related rules or requirements in Hungary. Currently, enforcement operates on a sector-specific basis. The relevant bodies include:

• the domestic courts in case of civil, labour or criminal disputes;
• the consumer protection authorities and the Hungarian Competition Authority in cases involving consumer protection or unfair commercial practices involving AI;
• the Hungarian Competition Authority and the European Commission in the competition law sphere;
• the National Authority for Data Protection and Freedom of Information (DPA) for data protection cases;
• the Hungarian National Bank in the financial sector; and
• the Hungarian National Media and Info-communications Authority in terms of the application of the Digital Services Act and info-communications (AI could constitute part of the info-communications network).

If a question pertaining to the regulation of AI arises, the authority/court that administers that particular question will enforce that regulation subject to its general powers.

1.8 What is the general regulatory approach to AI in your jurisdiction?

In 2020, the Hungarian government published the country's AI Strategy 2020-2030, which sets out its regulatory approach towards AI.

The strategy confirms that the regulation of AI is necessary at the national level, in conformity with the applicable EU legislative instruments. Among the main areas for regulation, it highlights:

• the framework for regulating data assets;
• the creation of a comprehensive AI regulatory environment (including rules of registration, AI technology related legal entity, liability/responsibility and industry-specific rules) and
• the adoption of industry ethical standards.

From the authorities' side, thus far only the DPA has explicitly dealt with a case involving the use of AI. In that particular case, the DPA imposed a fine of HUF 250 million, which suggests that it has adopted a relatively strict regulatory approach when it comes to assessing the operation of AI in compliance with the data protection regulations.

Additionally, the Hungarian National Bank has deployed a regulatory sandbox for fintech companies in order to provide a safe harbour for testing and impact assessment.

2 AI market

2.1 Which AI applications have become most embedded in your jurisdiction?

Several initiatives are using AI or paving the way for its future use. The main technologies typically include:

• chatbot-based customer services;
• precision agriculture applications;
• predictive maintenance systems;
• fleet route optimisation programs;
• inventory forecasting; and
• medical diagnostics (in particular, cancer screening).

Surgical robots are also in operation in several hospitals.

There are frameworks in place that should help to underpin the future deployment of AI. Examples include:

• a test track for autonomous vehicles;
• an integrated health dataset; and
• a central identification service for public administrations.

Facial recognition systems and machine vision/image analysis solutions are also applied. In the logistics systems of some factories, AI continuously monitors order and stock levels, including shipments that are still in transit. These systems detect problems in the supply chain and suggest alternative routes or rescheduled deliveries. AI also controls the automated process of loading trucks to optimise the use of loading space. Workstations equipped with visual image processing supported by AI also support quality assurance tasks during production.

However, the...