In a judgment issued on Thursday 18 June, the Court of Justice of the European Union ruled that Hungarian legislation on the funding of civil society organisations introduces discriminatory and unjustified restrictions on the organisations in question and on the people providing them with financial support (Case C-78/18).
In 2017, Hungary adopted a transparency law for civil society organisations in Hungary that receive donations from abroad. The organisations have to register as “organisations in receipt of support from abroad” when the annual amount donated exceeds a threshold (7.2 million Hungarian forints, or 24,000 euros). When they register, the NGOs are required to identify donors who provide support of more than HUF 500,000 (approximately €1,400) and the exact amount of the support received. This information is published on a publicly available electronic platform. The organisations involved must indicate on their websites and in their publications that they have been classified as an “organisation in receipt of support from abroad”.
Following referral from the European Commission, the Court investigated whether the law complies with the principle of the free movement of capital (Article 63(1) TFEU) and the European Charter of Fundamental Rights, (see EUROPE 11921/24). The Court began by rejecting Hungary’s objection that the Commission’s action was inadmissible, on the grounds that its rights of defence had been respected.
The Court endorsed the Opinion given by the Advocate General (see EUROPE 12403/24), and stated that the Hungarian law constitutes a restrictive measure of a discriminatory nature in that it establishes a difference in treatment between domestic and cross-border movements of capital and only targets associations or foundations that receive financial support from other Member States or third countries. In addition, public disclosure of donor information is likely to deter them from providing aid.
Consequently, the obligations and penalties included in Hungary’s Transparency Law constitute a restriction on the free movement of capital.
The European Court acknowledges that, in order to protect public life from undesirable influences, the transparency of the funding of associations may be regarded as an overriding reason in the general interest, especially if that funding comes from third countries. However, Hungary has not demonstrated why the alleged objective of increasing the transparency of the funding of associations warrants the measures in place applying indiscriminately to any financial support above a certain threshold from abroad and to all of the organisations that fall within the scope of the Hungarian law.
Furthermore, Hungary has not proved that there is a genuine, present and sufficiently serious threat to justify measures to guarantee public order and security. On the contrary, Hungarian law is based on the assumption that all foreign funding of civil society organisations is inherently suspect.
With regard to compliance of the Hungarian law with the Charter, the Court is of the opinion that the provisions limit the right to freedom of association (Article 12), the right to respect for private and family life (Article 7) and the right to protection of personal data (Article 8). Hungary has not provided any evidence to justify these limitations on public interest grounds.
The Commission was satisfied with the judgment and noted that a strong and independent civil society is important for maintaining the Rule of law. The Hungarian authorities will now be required to comply with the judgment.
According to Amnesty International's Hungarian office, the purpose of the law was not to combat money laundering, but to silence critical voices in Hungary. It is vital that the Hungarian Constitutional Court resumes work soon to repeal this law “as soon as possible”, said its director, Dávid Vig.
On behalf of the NGO Liberties, Linda Ravo stated that the legal action must be complemented by “brave political sanctions” against national governments that infringe the EU’s rules and values.
To read the Court’s judgment, go to: https://bit.ly/30R49xr (Original version in French by Mathieu Bion)