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Hungary must treat foreign and national education institutions equally, says Advocate General Kokott

10 March 2020

On 5th March 2020 the Court of Justice of the European Union (CJEU) published Advocate General Kokott´s opinion  in the case on the 2017 Hungarian Law on Higher Education and argued that Hungary must treat comparable foreign and national institutions equally.

In 2017, the Hungarian Parliament had introduced new requirements as regards foreign higher education institutions:  the need for bilateral agreements between Hungary and a non-the European Economic Area (EEA) country of origin of the foreign higher education institution, the need to provide higher education services also in the country of origin as well as additional requirements for the registration and authorisation of higher education services in Hungary.

This new regulatory framework for foreign universities touching in reality mainly upon the internationally well-recognized Central European University, was severely criticized by several international institutions, including the Venice Commission of the Council of Europe. The Venice Commission analysed the Hungarian law in the light of European and international fundamental rights standards and the rule of law principle and concluded in its analysis that “introducing more stringent rules without very strong reasons, coupled with strict deadlines and severe legal consequences, to foreign universities which are already established in Hungary and have been lawfully operating there for many years, appears highly problematic from the standpoint of rule of law and fundamental rights principles and guarantees.”

Simultaneously, the European Commission decided to start an infringement procedure against Hungary as regards the compatibility of the Higher Education Law as amended on 4 April 2017 with EU law. The Commission in its submission to the CJEU maintained that the Hungarian law as amended is not compatible with the fundamental internal market freedoms, notably the freedom to provide services (Article 56 TFEU and Article 16 of Directive 2006/123/EC on services in the internal market) and the freedom of establishment (Article 49 TFEU and Articles 9, 10, 13, 14 of Directive 2006/123/EC), but also not compatible with the right of academic freedom, the right to education and the freedom to conduct a business as provided by the Charter of Fundamental Rights of the European Union (Articles 13, 14, 16 respectively), as well as not compatible with the Union's legal obligations under international trade law (the General Agreement on Trade in Services – GATS – in the framework of the World Trade Organisation, WTO).

The Advocate General now expressed the view that the requirement of an international treaty with the State of origin is incompatible with the national treatment rule (the rule that foreign and domestic service providers must be treated equally) under the General Agreement on Trade in Services (GATS). That agreement was concluded within the framework of the World Trade Organisation (WTO) and approved by the EU and therefore is part of EU law. In addition, she argued that the requirement of an international treaty with the State of origin is contrary to the Charter of Fundamental Rights of the European Union. That requirement constitutes a disproportionate restriction on the freedom to found and to operate educational establishments and on academic freedom. The Fundamental Rights of the European Union are binding on Hungary in the area of higher education, where, as here, international law obligations of the Union are to be put into effect.

Furthermore, the requirement of genuine teaching activity in the State of Origin, which applies to all foreign higher education institutions, in the opinion of Advocate General Kokott is an infringement, because of the fact that it is discriminatory and disproportionate, of freedom of establishment, the Service Directive, the Charter of Fundamental Rights (the freedom to found and to operate educational establishments and academic freedom) and the national treatment rule of the GATS. Freedom of establishment includes, in particular, the right of an economic operator to pursue his activity exclusively in another Member State. It is expected that the CJEU will follow the argumentation of the Advocate General.

Provided by the PA Team