In 2017, Hungary put in place a law on “foreign financing” which forced NGOs to publicly declare foreign donations in the name of “civil organisations transparency”. Such organisations had to register officially with authorities as organisations receiving financial support from abroad if the donation(s) received were worth EUR 1,400 or more. In such cases, the exact amount of the donation and the identity of the donour has to be disclosed.

This information would then be published online and freely accessible to anyone while civil organisations would have to mention on the first page of their website and in all their publications that they are “an organisation receiving foreign funds”

The problem was that money coming from the EU was treated in a discriminatory manner if it did not flow directly to the Hungarian government, therefore research grants from the EU budget to independent academics and scientists would be labelled as “foreign financing” . But the rules on foreign-funded NGOs did not only concern the EU as a source of funds. It also concerned funds from elsewhere in the world. The most well-known case is the Open Society Foundation, which largely funded the Central European University (CEU) in Budapest.

23 organisations filed a motion to the Hungarian Constitutional court to determine if it was in line with the Hungarian constitution. The Constitutional Court referred the case to the European Union Court of Justice, asking it for a decision. At roughly the same time, the European Commission sued Hungary (‘infringement proceedings’). Still in parallel, the afore-mentioned 23 NGOs also filed a motion with another European court, the one in charge of human rights, whose jurisdiction goes beyond the EU member states. There has not yet been a ruling. 

The European Court of Justice has now ruled. In short, it has decided that the Hungarian legislation in question is incompatible with European law. 

The law is violating against the principle of the free flow of capital (article 63 of the Treaty on the functioning of the EU TFEU) as well as the right to privacy, i.e. articles 7, 8 and 12 of the European Charter of Rights.

The Court considered the law on transparency to be violating the abovementioned articles as it constituted a restrictive and discriminatory measure. The court found that the different treatment of donations from within Hungary and from other countries was arbitrary and therefore untenable. The Hungarian law on transparency violated European law by setting forth a presumption of suspicion on any civil organization receiving foreign donations, the European Court of Justice found.  It thus confirmed what human rights organisations like Amnesty International had always claimed, i.e. that the law was really intended to silence critics and civil society organisations.

The press communication on the case is available on the court’s website, in French.

More information here.