The European Union's top court has ruled that curbs imposed by right-wing Hungarian Prime Minister Viktor Orban's government on foreign-funded nongovernmental organizations (NGOs) go against EU legislation.
"Hungary's restrictions on the funding of civil organizations by persons established outside that member state do not comply with the Union's law," the Luxembourg-based European Court of Justice said in a statement on June 18.
The European Commission, the bloc's executive arm, had referred Hungary to the court after Budapest in 2017 passed a law requiring NGOs that receive more than 7.2 million Hungarian forints ($27,000) of foreign funding annually to register as such and make the distinction public.
The law, nominally meant to increase the transparency of NGO finances and combat money laundering, said NGOs must publish the names of donors or be subjected to sanctions.
Critics say the measure targeted Hungarian-born U.S. billionaire philanthropist George Soros, a harsh critic of Orban.
'Climate Of Mistrust'
Orban has accused NGOs funded by Soros of political meddling. Soros has rejected the campaign against him as "distortions and lies" meant to create a false external enemy to distract Hungarians.
Because it "establishes a difference in treatment between national and cross-border movements of capital," the legislation amounts to a restriction on the free movement of capital, the court said in its ruling, adding that it creates "a climate of mistrust towards the associations and foundations" targeted, and may dissuade donors.
The court rejected Hungary's arguments on transparency, holding that the restrictions apply indiscriminately and not only to organizations likely to have a significant influence on public debate.
"We have respected the decisions of the Court of the European Union until now, so we will respect them in the future as well," Gergely Gulas, Orban's chief of staff, told a weekly news conference on June 18.
The EU has also taken Hungary to court in the past after accusing the government of muzzling the media and academics.
In March, the parliament dominated by Orban's Fidesz party passed a law giving the government the right to rule indefinitely by decree to combat the coronavirus outbreak, a step that drew criticism from the Commission.
Hungarian lawmakers revoked the special powers on June 16, and Orban on June 18 formally gave up the power to rule by decree, after signing a decree ending the state of emergency.