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European Commission launches further legal action against Hungary over civic space restrictions

18 February 2021

Věra Jourová - Vice President of the Commission for Values and Transparency. Source - EP/Riccardo PAREGGIANI

The European Commission has today announced it is triggering an infringement procedure against Hungary, for failing to comply with a European Court of Justice ruling that its so-called ‘Transparency Law’ violates European fundamental rights.

Enacted in 2017, Hungary’s Transparency Law introduced ‘discriminatory and unjustified restrictions on foreign donations to CSOs’, according to the ECJ ruling of June 2020. For a detailed summary of the law, its implications on civic space, and the ECJ judgement, please see this article by the European Centre for Non-Profit Law (ECNL).

Despite this ruling, the Hungarian government is yet to repeal the law, instead continuing to crack down on the operating environment for Hungarian CSOs in a manner that the ECJ has found to be in violation of European fundamental rights; including on freedom of association and protection of personal data.

In September 2020 (after the ECJ ruling), Tempus Public Foundation, the national agency responsible for management of the EU’s Erasmus+ funding, began requesting that CSO applicants submit declarations stating they conform with the Transparency Law as an obligatory precondition of funding. Several impacted organisations protested this measure, but to no avail. Moreover, CSOs that receive donations from abroad (above approximately €20,000) are obliged to declare themselves as an ‘organisation supported from abroad’ on all public documents and publications. Not only are these requirements burdensome and restrictive, but they also seek to stigmatise legitimate civil society organisations and undermine their credibility.

With the Commission having formally triggered an infringement procedure, Hungary now has two months to respond to the Commission’s letter, or be liable to financial sanctions from the European courts.

A statement from the Commission reads:

“The Commission is sending a letter of formal notice to Hungary for failing to comply with the ruling of the Court of Justice of the European Union (CJEU) in Case C-78/18 Commission v Hungary. This is an infringement procedure based on Article 260 (2) TFEU, meaning the Commission can refer the matter back to the Court and ask for financial sanctions, after giving the Member State the opportunity to explain itself.

In its ruling of 18th June 2020, the Court found the Hungarian law on NGO’s (“Transparency Act”) to be in breach of EU rules on the free movement of capital (Article 63 TFEU) and the fundamental rights to protection of personal data and freedom of association, protected by the EU Charter of Fundamental Rights. In particular, the Court highlighted that the right to freedom of association constitutes one of the essential bases of a democratic and pluralist society and includes the rights of civil society organisations to seek, secure and utilise resources. The Court concluded that the Hungarian legislation threatens the role of civil society as an independent actor in democratic societies, undermining their right to freedom of association, creating a climate of distrust towards them as well as limiting the privacy of donors. Judgements of the European Court of Justice are immediately binding on the Member State concerned.

The Commission considers that Hungary has not taken the necessary steps to comply with the judgement, despite repeated calls from the Commission to do so as a matter of urgency. In particular, Hungary has not repealed the Transparency Act, which was found contrary to EU law. As a result, the Commission is asking Hungary today by letter of formal notice to take and implement all required measures to remedy the situation. Hungary has two months to reply to the concerns raised by the Commission. Otherwise, the Commission may decide to refer the case back to the Court of Justice of the EU with proposed financial sanctions.”

PA warmly welcomes this action by the Commission, and will continue to closely follow the actions of the Hungarian government in relation to the protection of civic space.

Philanthropy Advocacy and the European Centre for Non-Profit Law (ECNL) have drafted a guide for non-profit organisations on how to use EU law to protect civic space: you can find the document here.