Key facts of the case:
Failure of a Member State to fulfil obligations — Admissibility — Article 63 TFEU — Free movement of capital — Existence of a restriction — Burden of proof — Indirect discrimination linked to the origin of the capital — Article 12 of the Charter of Fundamental Rights of the European Union — Right to freedom of association — National rules imposing on associations receiving financial support sent from other Member States or from third countries legally binding obligations of registration, declaration and publication which can be enforced — Article 7 of the Charter of Fundamental Rights — Right to respect for private life — Article 8(1) of the Charter of Fundamental Rights — Right to the protection of personal data — National rules imposing the disclosure of information on persons providing financial support to associations and of the amount of that support — Justification — Overriding reason in the public interest — Transparency of the financing of associations — Article 65 TFEU — Public policy — Public security — Fight against money laundering, financing of terrorism and organised crime — Article 52(1) of the Charter of Fundamental Rights.
Outcome of the case:
For the reasons set out, I propose that the Court of Justice, allowing the Commission’s action, should:
74) In his Opinion in Commission v Hungary (right of usufruct over agricultural land), ( 24 ) Advocate General Saugmandsgaard Øe noted that, for the first time, the Commission was seeking from the Court a declaration that a Member State — also Hungary — had failed to fulfil the obligations imposed by the Charter. ( 25 )
75) That new complaint did not raise any issues of admissibility, for, as Advocate General Saugmandsgaard Øe observed, the obligations in respect of which the Commission may make a complaint of non-fulfilment to the Court under Article 258 TFEU include respect for the rights guaranteed by the Charter. ( 26 )
76) The thorny question then (as now) was the fact that, according to the Commission, the Court was required to rule on an alleged infringement of the Charter independently of, and separately from, an infringement of the freedom of movement, also alleged to have been committed by Hungary in those proceedings.
77) In response to that argument, the Advocate General maintained that the Court could not examine the possible infringement of the Charter ‘independently of the question of the infringement of freedoms of movement.’ ( 27 ) That was how the Court interpreted the issue in SEGRO and Horváth, ( 28 ) when it ruled on a case in which there was ‘a complete overlap between the right to property and the free movement of capital.’ ( 29 )
78) However, in its judgment of 21 May 2019, ( 30 ) the Court preferred to examine in turn the infringement of Article 63 TFEU and the infringement of Article 17 of the Charter.
79) Having established both infringements — that of Article 63 TFEU and that of Article 17 of the Charter — the Court went on to determine whether each one was justified.
80) The Court was undoubtedly seeking to link the fundamental freedoms safeguarded by the Treaties and the fundamental rights laid down in the Charter, but there is a certain risk of overlap in their analysis as Advocate General Saugmandsgaard Øe pointed out. ( 39 )
81) Although that overlap would probably not have excessive practical consequences, I believe that it is possible to link the freedoms laid down in the Treaties and the rights laid down in the Charter in a way which enables the integration of both in a single set of review criteria.
82) In accordance with the Court’s traditional approach, when assessing whether there has been an infringement of the freedoms protected by the Treaties, the fundamental rights only come into play in so far as the Member States have obstructed or restricted those freedoms relying on reasons or grounds accepted by EU law. ( 40 )
83) Therefore, the rule is that the Court ‘has no power to examine the compatibility with the Charter of national legislation lying outside the scope of European Union law.’ ( 41 ) That is the criterion enabling the rights laid down in the Charter to be relied on against such legislation.
84) It might be possible to superimpose another approach, which is more focused on the applicability of the Charter, on that traditional approach when the Court interprets the freedoms laid down in the Treaties, of which the fundamental rights safeguarded by the Charter form an essential part.
85) As stated above, the Court ‘has no power to examine the compatibility with the Charter of national legislation lying outside the scope of European Union law.’ ( 42 ) When interpreting EU law (in so far as is relevant for the present purposes, Article 63 TFEU), it is undeniable that the effects of the Charter must be taken into account.
86) EU law as a whole, including both primary and secondary law, has been imbued with the content of the fundamental rights enshrined in the Charter, whose legal value is the same as that of the Treaties (Article 6(1) TEU). Furthermore, that occurred in a radical manner as befits a Union based on the values of respect for human dignity, freedom and human rights (Article 2 TEU) which places the individual at the heart of its activities (preamble to the Charter).
87) The entry into force of the Charter constituted the final transition from the previous legislative system to another which revolves around the figure of the citizen, that is to say an actor who holds rights which afford him a legal framework in which he can live autonomously and have the freedom to pursue the attainment of his own goals.
88) Therefore, in particular, the traditional freedoms protected by the Treaties can no longer be interpreted independently of the Charter, and the rights laid down therein must be treated as an integral part of the substance of those freedoms. In that connection, the Union safeguards those freedoms in a legislative context defined by the fundamental freedoms laid down in the Charter.
89) Accordingly, if the compatibility of national legislation with any of those traditional freedoms is called into question, the Charter will be applicable both where the Member States seek to rely on one of the exceptions which the Treaties lay down in that regard and in any other situation in which the fundamental rights are affected. In other words, those rights do not come into play by way of Article 65 TFEU but instead do so directly and primarily by way of Article 63 TFEU.
90) That approach may not seem very far removed from that taken where the applicability of the Charter is linked to the application of a justification expressly allowed by the Treaties. However, I believe that the approaches differ in terms of their conceptual basis and their consequences.
91) The integration of the fundamental rights into the content of the freedoms safeguarded by the Treaties (required, as stated, following the entry into force of the Charter) means that the rights laid down in the Charter must be respected not only by national legislation which seeks to rely on EU law to limit those freedoms but also by legislation which, while not seeking to rely on EU law, contravenes or restricts those freedoms. Otherwise, the paradox would arise whereby Member States would have to respect the fundamental rights only where they were seeking to justify a restriction of the protected freedoms but not where they restrict those freedoms without recourse to any justification.
92) On that basis, the subject matter of any of the freedoms safeguarded by the Treaties must be considered to have been redefined by the integration of the rights laid down in the Charter into their definition.
94) Restrictions of the fundamental freedoms permissible under the Treaties before the entry into force of the Charter had to comply with the requirements of necessity, appropriateness and proportionality, on which there is extensive case-law.
95) Now that the Charter has entered into force, it is necessary to determine when the examination of a hypothetical infringement of the free movement of capital must be carried out in line with that traditional technique (assessment of necessity, appropriateness and proportionality) and when it must be carried out in the light of the fundamental freedoms, that is, using more stringent review criteria.
96) In my view, if national legislation is called into question on the grounds of infringement of Article 63 TFEU without express reference to a possible breach of the Charter (in other words, if the complaint relates to the mere restriction of the free movement of capital as such, without associating that restriction with the breach of a particular fundamental right), the judicial test must be that always used by the Court for this task: the traditional test.
102) At the heart of the Commission’s complaint is the treatment which Law No LXXVI of 2017 affords to civil society organisations in receipt of funding from abroad. That treatment, through its features and its consequences, breaches the freedom of association (Article 12 of the Charter) and, collaterally, breaches the rights to respect for private life and the protection of personal data (Articles 7 and 8 of the Charter, respectively).
103) In view of the nature of the action, the contested legislation is, at first sight, liable to infringe Article 63 TFEU. If its rules were to constitute an unjustified restriction of the free movement of capital, they would be incompatible with that provision and could, at the same time, breach the rights recognised in the Charter.
115) Those conditions are, I repeat, liable to restrict the free movement of capital in view of the reasons set out below.
117) Article 12 of the Charter confers on everyone ‘freedom of association at all levels, in particular in political, trade union and civic matters’.
125) Law No LXXVI of 2017 provides additionally for the possible compulsory dissolution of associations and foundations which do not fulfil the duties to notify and make public any gifts received, which constitutes the highest level of interference in their lives. ( 54 ) Even though that is applied as part of a scale of penalties, following a court decision, it is nonetheless an interference with the right guaranteed by Article 12 of the Charter.
130) The Hungarian Government attempts to argue that those data are not personal (and are, therefore, outside the scope of Article 8 of the Charter) by relying on two judgments of the Court:
133) The judgment in Volker und Markus Schecke and Eifert held that publication on a website of the names and municipalities of residence of the beneficiaries of certain government aid and the amount of that aid ‘constitutes an interference with their private life within the meaning of Article 7 of the Charter’‘because the information becomes available to third parties’. ( 65 ) In my opinion, what is applicable to aid received by a person must also apply to the aid through which that person contributes to supporting an association.
136) The publication of those data interferes not only with the rights safeguarded by Articles 7 and 8 of the Charter but also with the freedom of association, because its deterrent effect may have an impact on the financial position of civil society organisations and, therefore, on their ability to pursue their activities. ( 66 )
137 Can the interference which I have just examined be justified under Article 52(1) of the Charter? It should be recalled that, pursuant to that provision, ‘any limitation on the exercise of the rights and freedoms recognised by this Charter must be provided for by law and respect the essence of those rights and freedoms. Subject to the principle of proportionality, limitations may be made only if they are necessary and genuinely meet objectives of general interest recognised by the Union or the need to protect the rights and freedoms of others.’
166) On the other hand, it seems to me that it would be impossible to replace the obligation to register and publish the names of individuals who make donations to associations of their choice with an alternative measure, given that it intrudes radically into the sphere of the privacy safeguarded by the Charter.
169) In so far as the obligations of registration and publication are not intrinsically capable of substitution by other, equivalent obligations, the system of penalties laid down is incompatible with the Charter. Accordingly, removal of the penalty of dissolution would not be sufficient to make good a system which, as long as it permits the imposition of penalties for the non-fulfilment of conditions incompatible with the Charter, cannot itself be rectified.
170) I consider, therefore, that Law No LXXVI of 2017 unduly restricts the free movement of capital guaranteed by Article 63 TFEU, in that it includes provisions which amount to unjustified interference with the fundamental rights protected by Articles 7, 8 and 12 of the Charter.
172) For the reasons set out, I propose that the Court of Justice, allowing the Commission’s action, should: