The Court of Justice of the European Union (CJEU) has ruled that the restrictions imposed by Hungary on the financing of civil organisations from abroad are not compatible with EU law as they infringe the principle of free movement of capital and a number of fundamental rights.
Hungary adopted the law in 2017 claiming it was necessary to ensure transparency amongst civil organisations which receive donations from abroad. NGOs are required to register with the Hungarian authorities as ‘organisations in receipt of support from abroad’ when the amount of donations they received in a given year reached a threshold. When registering, NGOs also have to indicate the name of donors whose support reaches or exceeds 500,000 Hungarian forints (1,500 euros) and the exact amount of the support. That information is later published on a free, publicly accessible e-platform.
Critics have long claimed that the law has served as a tool to stigmatise and silence independent voices.
Advocate General Manuel Campos Sánchez-Bordona said that these conditions apply solely in the case of donations coming from abroad, as a result of which they are much more likely to affect nationals of other member states than Hungarians.
Mr Sánchez-Bordona is of the opinion that the conditions amount to a restriction of the principle of free movement of capital, both with regard to the organisations affected, which may have to cope with financing difficulties and whose exercise of the right to freedom of association may be limited, and their foreign donors, who may be dissuaded from making donations on account of the possible stigmatising effect of the publication of the details of those transactions, because they express an ideological affinity that might be compromising in the Hungarian national context.
While such a law might be justified if it aimed at protecting of public policy and the fight against money laundering and terrorist financing, the government is not legitimate in imposing, ex ante, such obligations on all civil organisations.
“There is no final decision yet,” Péter Krekó, director of the think tank Political Capital, tells Emerging Europe. “If the law will be abolished, it will be a huge blow for the government and a symbolic victory for the NGOs.”
“The Hungarian government should respond to criticism with arguments and dialogue, not by stigmatising and silencing dissenters,” reads a statement from Amnesty International Hungary. “The fact that the Lex NGO is considered to be in breach of EU law also by the Advocate General strengthens our hope that the law, targeting organisations daring to criticise the government, will fall before the Luxembourg court as well, and the judgment will result in the Lex NGO having to be repealed.”
Mr Krekó now expects verbal attacks against NGOs to intensify.
“If [the Hungarian ruling party] Fidesz has to leave the EPP [European Peoples’ Party], I think they will go even more uninhibited in their attacks,” he says. “This decision, if made, will be important but we should not forget that Hungary is a country where the rule of law has deteriorated a lot and illiberal practices do not always respect legal barriers.”
Fidesz was temporarily suspended from the EPP last year, although the party’s MEPs remain part of the EPP group within the European Parliament. Some analysts believe that Fidesz may jump before it is pushed, with the Fidesz leadership currently exploring the possibility of joining Poland’s ruling Law and Justice party in the European Conservatives and Reformists (ECR) group.