Hungary’s NGO-law and the ECJ ruling: What next?

, by Ferenc Gaál

Hungary's NGO-law and the ECJ ruling: What next?
Protests against the ‘NGO law’ in Budapest, 2017 Transparency.hu

Hungary’s so-called ‘NGO law’ is a violation of several EU principles, the European Court of Justice (ECJ) ruled last Thursday. In a decision that caused little surprise among observers, the EU’s highest court backed up its Advocate General, pointing out that the restrictions imposed by the law are in breach of three articles of the EU’s Charter of Fundamental Rights as well as Article 63 of the Maastricht Treaty.

Limiting civic space under the guise of transparency

The piece of legislation, officially named Law on the Transparency of Organisations which receive Support from Abroad, or Transparency Law, was passed in June 2017. Supposedly designed to increase transparency and fight money-laundering and terrorism financing, it imposed strict regulations on foreign-funded Civil Society Organisations (CSOs): any organisation or association receiving more than 24,000€ a year from abroad is obliged to declare itself as a “foreign-supported organisation” in all its publications and its online presence.

Heavy criticism and protests

Opposition figures and Hungarian CSOs have been campaigning against the law since a first draft was tabled, denouncing it as yet another step to limit civic freedoms and silence dissenting voices. Citizens took to the streets by the thousands, and many have likened it to the methods of Russian president Vladimir Putin, who cracked down on civil society with a similar piece of legislation in 2012.

The regulation raised eyebrows in the international community, too. Three UN Special rapporteurs, the European Parliament and the Parliamentary Assembly of the Council of Europe voiced concerns over the draft, with the latter specifically pointing out similarities to the Russian law. While the two are not identical, there are striking parallels, such as exemptions for religious organisations and a lack of differentiation between government and private sources of funding.

Hungarian Prime Minister Viktor Orbán and Russian President Vladimir Putin at the Kremlin in 2014

Orbán’s crusade against ‘liberal imperialism’ – and George Soros

One private source in particular has long been at the center of debate in Hungary: investor George Soros who, via his Open Society Foundations (OSF) has donated billions to CSOs globally. In the government’s communication, he has been turned into the embodiment of everything FIDESZ is fighting, from immigration to ‘liberal imperialism’.

The ‘NGO-law’ is seen by critics as a means to single out organisations who receive funding from OSF, thus publicly stigmatizing these groups and making it more difficult for them to get financial support. In an interview with German public broadcaster ARD, Dávid Víg, Director of Amnesty Hungary, specifies that this affects both financial and operational aspects of civil society work: “We had workshops we couldn’t hold. We had classes at schools that had to be cancelled due to the stigmatisation.” Further to public stigma, the law was also condemned for violating a series of fundamental rights. In a legal analysis, the European Center for Non-Profit Law (ECNL) in cooperation with other human rights groups found that the law violates the right to privacy and data protection and the freedom of association, and severely restricts the free movement of capital, among other issues.

ECJ ruling confirms critics abroad and in Hungary

The ECJ’s ruling has now confirmed these claims, adding to the list the violation of the right to respect for private and family life. Along the lines of campaigners’ criticism, the court found that “the law in question constitutes a restrictive measure of a discriminatory nature” while creating “a climate of distrust with regard to those associations and foundations“ that it “singles out”.

Specifically, the court identified an undue restriction of free cross-border movement of capital. This has a European dimension, as it could discourage natural and legal persons from other Member States from exercising this right.

The alleged aim of transparency is also evaluated in the court ruling. Though the ECJ acknowledges that ensuring it may be considered an overriding reason in the public interest, it found that the government did not prove that it used appropriate means: “the provisions of the Transparency Law could not be justified by any of the objectives of general interest which Hungary relied upon."

A glimmer of hope for civil society?

CSOs in Hungary of course welcomed the ECJ’s decision. Many of them, including Amnesty International, the Hungarian Helsinki Committee and the Hungarian Civil Liberties Union celebrated a victory for civil society and appealed to the government to “comply with the ruling and repeal the law.” According to Patrick Gaspar, president of the OSF, this would “mark a welcome step towards restoring both the rule of law and pluralism in public life”.

However, the Orbán administrations’ troubled relations with the EU as well as its civil rights record give reason for scepticism – as do FIDESZ’s first responses to the ECJ ruling.

FIDESZ’s reactions: selective perception and conspiracy theories

The ruling party showed little remorse in face of its second legal defeat this year. Prime Minister Viktor Orbán even admitted that news of the decision had put him “in a good mood”, not without referencing a possible obscure conspiracy of liberal and leftist global powers that might be connected to it. Minister of Justice Judit Varga was keen to point out the government’s continued commitment to transparency, the legality of which she claimed the ECJ had just confirmed. Other members of government acknowledged that the ECJ found the law to be a discriminatory measure and said Hungary would respect the ruling, but also stated that its underlying message confirmed FIDESZ’s intentions to strive for transparency.

Miklós Ligeti, Head of Legal affairs at Transparency International Hungary, sees the government’s reaction as an attempt to frame the ECJ ruling as mere criticism of the method employed to reach the regulation’s alleged aim, transparency. “They decline that the ECJ ruling declares this piece of legislation as unlawful because it runs contrary to numerous fundamental freedoms and legal principles of the European Union”, Ligeti says. He adds that the government tries to substantiate the ’NGO-law’ by falsely stressing the premise that Hungarian civil society organisations act in non-transparent ways – a claim that he rejects as wrong.

What steps will the government take?

In light of the different interpretations the question remains how the government will respond. Requirements from the EU side are clear – the decision is legally binding, meaning Hungary must revoke the law or amend it to fit EU regulations. Hungarian CSOs will in the meantime be able to use the ruling before national courts to ask for disapplication of the NGO laws, as the ECNL lays out.

A key player to watch will be the Hungarian Constitutional Court. It started reviewing the NGO-law in 2017 but put the process on hold when the ECJ case began. Now it could, theoretically, rule in support the ECJ’s ruling – something that observers see as unlikely, given FIDESZ’S judicial reforms of the past years, which have drawn criticism, too. Equally unlikely is the success of a draft law submitted by the opposition Hungarian Socialist Party, MSZP, which aims to roll back the measures taken based on the NGO law.

If the government fails to comply with the ruling, however, that could mean a second case, possibly leading to a fine. It would also stir up further controversy about rule of law in the country, just as the EU is discussing linking future funds to this indicator – a proposal that has been called unfair by Hungary and fellow V4 member Poland. It thus seems likely that the government will formally abide by the law, even though the specific way of implementation remains to be seen.

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