The European Commission sent a letter of formal notice in October 2014 and a reasoned opinionin June 2015 requesting the Hungarian authorities to bring their rules into line with EU law. As the Commission has not been notified of any measures taken to remedy the situation, Hungary is now being referred to the Court of Justice of the EU.
In December 2013, the Hungarian parliament approved a law which terminated certain so-called "usufruct rights" - contracts giving the right to use a property and to profit from it - held by investors in Hungary. It deprived both foreign and domestic investors of their acquired rights and of the value of their investments without providing them with compensation. The original contracts were subject to a 20-year transitional period, which meant that such contracts were expected to end on 1 January 2033. The new law shortened this period to four and a half months, resulting in the investors' contracts being terminated, without compensation, on 1 May 2014.
The Commission maintains that, among other things, the very short period between the publication of the legislation and its date of application was not sufficient to give investors the opportunity to adapt to the new legal environment.As a result, the law deprived existing investors of their acquired rights and the value of their investments in a way that did not ensure legal certainty and the respect of the right to property, as enshrined in the EU Charter of Fundamental Rights.The Commission is of the opinion that this violates the principles of free movement of capital and freedom of establishment. The Commission takes note of the fact that a Hungarian court has also referred the matter to the Court for a preliminary ruling (cases C-52/16and C-113/16).
More information:
- On the key decisions of the June infringements package, please refer to the full MEMO/16/2097.
- General information on infringements proceedings in the areas of EU financial services.
- Information on the infringement procedures.
