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Commission accuses Hungary of transgressions

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Published 18 April 2013

The European Commission accused Hungary of nonconformity with EU legislation and breaches of the rule of law during a plenary debate in the European Parliament yesterday (17 April) in Strasbourg. The country’s Prime Minister Viktor Orbán paid a visit to the parliament the previous day.

 

The debate of MEPs over whether recent changes to the Hungarian Constitution were compatible with EU law were marked by sharp political divisions, with the European Peoples’ Party (EPP) providing support to Orbán, leader of Fidesz, a sister party to the centre-right group.

The leader of the liberal ALDE group Guy Verhofstadt called for steps under Article 7 of the EU treaty which authorises sanctions, including suspending voting rights, against a member state found to be in breach of EU values. "If the Commission is not going to do it, we in the Parliament should have the courage to do so," he said.

Commission Vice-President Viviane Reding, who is responsible for justice and fundamental rights, presented a much-awaited position of the EU executive over the constitutional changes approved by the Hungarian Parliament on 11 March.

Reding said the way the constitutional changes were made gives the impression that the government is willing to use a two-thirds parliamentary majority to overrule the Constitutional Court. This may endanger the fundamental principle of checks and balances in a democracy, she said.

Citizens to be taxed when Commission fines Hungary

Reding said that a clause, introduced by the constitutional changes, would allow Hungary to introduce an ad-hoc tax on Hungarian citizens should the country be fined for breach of EU law.

Hungary is already under two infringement procedures and it might likely be fined.

“Is it really sensible to make citizens pay for a tax whenever the state would fail to be in compliance with EU law?” Reding said. She said that in practice citizens would be penalised twice: once for not having had their rights under EU law upheld, and a second time for having to pay for it.

“This could undermine the authority of the Court of Justice and could constitute a violation of the duty of sincere cooperation in Article 4 (3) of the Treaty on the European Union on the part of Hungary,” the vice-president said.

Orbán has defended the changes in the constitution, saying they are necessary to complete the work of eradicating the legacy of communism from Hungary.

In a commentary contributed to EurActiv, Hungarian European Affairs Minister Enikő Győri writes that her country has “a spotless track record” of complying with all rulings of both the European Court of Justice and the Hungarian Constitutional Court. She cited as examples the amendments made to the media law and the status of the judiciary.

Arbitrary transfer of court cases

But Reding also voiced concerns over a constitutional change which would empower an administrative office to transfer cases from one court to another.

“If applied to a case concerning EU law, it could raise issues of incompatibility with the EU obligation to provide for remedies sufficient to ensure effective legal protection and to the right to a fair trial as foreseen by the Charter of Fundamental Rights,” Reding said.

“Everyone has the right to a pre-established and reviewable determination of which judge will hear his or her case,” she said.

Publication of political advertisement

The third amendment to the Hungarian constitution to which Reding referred concerns provides restrictions on the publication of political advertisements during election campaigns, including elections to the European Parliament.

According to this provision, political advertisements could only be published on "public media services".

“It should be noted that the audience share of private media where the restriction would apply represents almost 80% in Hungary,” Reding said.

She added that this list was “by no means exhaustive” and referred to the two infringement cases launched last year by the EU executive. The first concerns the early retirement of magistrates, and the second the violation of the independence of the data protection authority.

“The Commission can assure this House that it will continue to call for the legislation to be made compatible with EU law and the rule of law to be respected,” Reding told the MEPs.

Positions: 

Lucinda Creighton, the Irish minister for European affairs, said on behalf of member states that there have been no discussions in the Council on the situation in Hungary and pointed out that it is for the European Commission, as guardian of the treaties, to check whether national laws are compatible with EU ones.

Frank Engel, a Luxembourg member of the EPP group, said:  "The Hungarian government has good arguments to support the claim that it is doing good, and the opposition also has good arguments to the contrary. This is another sterile debate." He added: "We cannot question decisions purely because they were carried by a two-thirds majority."

Hannes Swoboda, the Austrian leader of the S&D group, spoke in strong terms against the constitutional changes aimed in his words at restrict rights and penalising citizens. He also criticised the resurgence of anti-Semitism in Hungary.

Rebecca Harms, the German co-chair of the Green group, said: "We are not just meddling in domestic issues because the rule of law and civil rights are at the heart of the European project. If these remain empty words, we are giving up on the essence of the EU project."

Lajos Bokros, a Hungarian member of the ECR group, said: “Orbán keeps saying that the west is in decay and he turns to the authoritarian east instead. He is constructing himself an authoritarian regime”.

Next steps: 
  • June: The European parliament will vote a resolution on "the situation of Fundamental Rights in Hungary: standards and practices".
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COMMENTS

  • Just a small thing: PM Viktor Orbán was not present during the debate - he went to the funeral of Margaret Thatcher.

    He was in Strassbourg the previous day for an EPP meeting.

    EU Hemicycle: updates on EU affairs ► http://bit.ly/WdES9I

    By :
    Zoltan MASSAY-KOSUBEK
    - Posted on :
    18/04/2013
  • I am more than a little surprised by the accusation that citizens will be taxed to pay fines levied on a government, as if this were a serious breach of something. How do Governments pay for their costs? If there are reserves to use, that is money taxed in the past and payments out of reserves are replaced with money raised by taxes. If assets are sold to pay the fine, the income from the asset sale will not go to pay for other government costs which now will have to be paid out of taxes. It is a ponzy scheme to say otherwise. Perhaps someone can indicate what a government would be able to do legally that would not result in increased taxes (either directly or indirectly depending on how you care to look at the accounting) in the event of a fine?

    By :
    Brian
    - Posted on :
    18/04/2013
  • If the impartiality of Judges is not in question then it does not matter which Judge heard a case. And the Hungarian argument that the reassignment of cases is needed for efficiency, stands. If judges are not impartial then the entire process is political and therefore flawed.

    By :
    Zoltan
    - Posted on :
    18/04/2013
  • 1. Taxes on citizens - for Brian

    The background is as follows: one of the economic basis of the governement's policy was the so-called one rate tax which means that the income tax is composed only of one rate (16%).

    The controversial element of this law is that it has been written into the constitution which might cause problems since in the future whatever new government (e.g. the same after a re-election) without a 2/3 majority cannot modify the tax-policies.

    However, tax policy is one of the major tool a government can use to implement its policy into practice.

    So, fining the people can be interpreted in that framework. In the future, a government without 2/3 majority can introduce new taxes without modifying the constitution.

    But it might be contrary to EU law, according to the COM analysis.

    2. Impartiality of judges for Zoltán

    The reassigment of cases has nothing to do with the impartiality of judges (Judges are forunately impartial in Hungary) but to the right to a fair trial.

    It is a basic principle of different legal systems, that everyone has a right to its own judges and nobody can be deprived from his or her judges. The selection of the judges shall be laid down in a clear, fair and transparent manner, regulated by the law (competence of judges).

    Nevertheless, if the forum of a trial depended on the discretional decision of a person, it might jeopardize the predictability and transparency of the whole judicial system.

    I remain at your disposal.

    EU Hemicycle: updates on EU affairs ► http://bit.ly/WdES9I

    By :
    Zoltan MASSAY-KOSUBEK
    - Posted on :
    18/04/2013
  • Dear Zoltan. I tried hard but cannot find anything in the Fundamental Law that makes the flat rate 16% tax mandatory, fixed and unchangable. What tax matters I can find stipulates a mandatory balanced budget approach to government financing that is designed to prevent the budget fiasco that resulted in so much recent upset in the E.U. and in Hungary. It also attempts to apply the E.U. Maastricht Criteria (how successfully is a matter of opinion).

    It is not a legal principle anywhere that I know of that allows parties before a court to choose the Judge. This would violate judicial neutrality and promote corruption and favouritism. Judges are assigned to cases by Court Administrators who are often Chief Justices and sometimes committees of judges and sometimes bureaucratic functionaries. Disclaimer: I am a lawyer trained in North America who has worked there and also advised governments around the world. You demonstrate why taking someone's opinion, such as that you just laid out, is dangerous without further authority. Likely what you refer to is the Anglo Saxon legal custom of trial by jury which can be chosen in many jurisdictions.

    By :
    Brian
    - Posted on :
    18/04/2013
  • OH dear!! Another ex-Socialist country gets a failing grade on the EU 'report card"!!

    By :
    david tarbuck
    - Posted on :
    18/04/2013
  • Dear Brian,

    Due to the structure of the Hungarian Constitution, it contains references to so-calle cardinal or organic laws which can be modified by 2/3 majority. The cardinal law CXCIV from 2011 about the economic stability of Hungary contains this reference: http://net.jogtar.hu/jr/gen/hjegy_doc.cgi?docid=A1100194.TV
    However, in the light of IMF loan talks, it might be subject to changes.

    As regards the right to a fair procedure, maybe I was not clear enough: the law should stipulate a clear and predictable procedure concerning the competences of different law courts. In this framework, the right to a judge does not mean that the parties can choose a judge but if a judge as designed to a specific case by law, the interested parties cannot be dperived from that judge based on the decision of an administrative body. This was what I meant.

    You can see my recently published opinion here where my contribution cover two essential elements of the delicate situation: the need for facts and arguments (1) and the dangers of the Article 7 procedure (2):

    EU Law and Rule of Law on the Balance: Justice for Hungary?► http://bit.ly/14GkyTc

    By :
    Zoltán MASSAY-KOSUBEK
    - Posted on :
    21/04/2013
  • Dear Zoltan Massay-Kosubek
    I have checked the full text of both the Fundamental Law of Hungary and Hungary Law CXCIV from 2011 and cannot find a section in either stating that the so-called one rate tax has been written into the constitution. I realise many say that this is what has happened, but nowhere does anyone mention what provisions say that. I have looked and can find only controls on the ability of the Government to borrow when the new debt likely will result in debt to equity exceeding 50%. You gave me a reference to Hungary Law CXCIV from 2011 without being more specific. Perhaps you can be more specific.

    There is no fundamental principal that a party's case cannot be moved to a new judge when there are issues that support the change, such as the need to ensure no undue delay (judges do become tied up in lengthy cases and thus cannot proceed with other cases on a timely basis). It is usual that once a judge is siezed with jurisdication over a case, that judge should continue to preside in the absence of compelling reasons why not. The Fundamental Law details when such compelling considerations can justify a change.

    By :
    Brian
    - Posted on :
    21/04/2013
  • Dear Brian,

    I appeciate very much your comment and I am very glad to answer your question.

    Before doing so, just have a look at the government's official website here:
    http://www.kormany.hu/hu/hirek/ketharmados-torvenyben-rogzitettek-az-egykulcsos-szja-t

    If they are saying that the one rate tax is under 2/3 protection than you can be sure that it is.

    But you are right, lawyers always need the exact legal text to make interpretations. If I am not mistaken, paragraph 1 of article 36 of the Law CXCIV from 2011 contains the exact legal answer to your question:

    "36. § (1) A természetes személy munkaviszonyból, munkaviszonnyal egy tekintet alá eső jogviszonyból, munkavégzésre irányuló egyéb jogviszonyból származó jövedelme (a továbbiakban együtt: munkával megszerzett jövedelem) után, annak alapul vételével teljesítendő olyan fizetési kötelezettséget, amely a központi költségvetés - ide nem értve a társadalombiztosítás pénzügyi alapjait és az elkülönített állami pénzalapokat - bevételét képezi, a jövedelem összegétől függetlenül, a jövedelem azonos arányában egységesen kell megállapítani."

    I have been worked for Hungarian national courts for more than 2 years at the beginning of my professional career so I have some understanding about the needs of the judges. Each court had different systems to sign individual cases to individual judges within the framework of the law. But once it happened than the 'clients' had right totheir judge as ssential part of the fair process. But it is important to have legal basis for that and an adminsitrative decision might be the very excemption. In this case I am afraid that the administrative decision might be over the justified border. But since this is a also a professional question I would rely on the professional opinion of judges...

    I remain at your disposal.

    EU Hemicycle: updates on EU affairs ► http://bit.ly/WdES9I

    By :
    Zoltán MASSAY-KOSUBEK
    - Posted on :
    21/04/2013
  • Dear Zoltán MASSAY-KOSUBEK

    Your original comment about the supposed one rate tax system seemed to say that the one rate 16% tax rate was written into the Fundamental Law. I now understand that you believe it is contained in a Cardinal Act requiring a 2/3 majority vote to amend. Paragraph 1 of article 36 of the Law CXCIV from 2011 does seem to require that all employment income (not including business income or other types of income) should be taxed in all cases at the same rate but does not set that rate at 16% or any other fixed rate.

    The issue respecting judges is not what you describe. The wording of the section in the Fundamental Law about this issue states:

    "To give effect to the fundamental right to a court decision taken within a reasonable time and to balance the workload across courts, the President of the National Office for the Judiciary may appoint, in the way defined by cardinal Act, a court other than a court of general competence but with the same powers to hear particular cases defined by cardinal Act."

    This constitutional power is about courts, not about judges and allows assignment of certain defined cases outside courts of general jurisdiction to other equivalent courts that may exist according to rules set out in a Cardinal Act. Any such decision is, of course, subject to review by the Constitutional Court to ensure it complies with the section I have quoted, so a challenge to any such decision can be successful if there is not enough evidence of a need to ensure a fundamental right to get a decision within a reasonable time, or to balance cases across courts.

    By :
    Brian
    - Posted on :
    21/04/2013
Background: 

Following general election held in April 2010, Hungary's Prime Minister Viktor Orbán said that voters had carried out a "revolution" by giving his party Fidesz two thirds of the seats in parliament to rebuild Hungary after a near financial collapse. Fidesz is affiliated to the centre-right European People's Party (EPP), the largest political group in the European Parliament.

A new Hungarian constitution was passed in April 2011 without much debate. It was severely criticised by civil liberties groups and the Socialist and Liberal European political families, for being contrary to EU norms and values and for strengthening the Fidesz one-party rule.

However, the EU commissioner responsible for institutional relations, Maroš Šefčovič, who is affiliated to the centre-left Party of European Socialists (PES), said in July 2011 that the new Hungarian constitution does not raise issues of compatibility with European Union law. 

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