Wednesday 18 January 2012

What legal action is the Commission taking against Hungary?

The Commission has announced that it will be taking legal action against Hungary, but only so much can be done under EU law. While people point out that:

"Viktor Orbán's regime combines the extreme centralisation of economic assets (including the expropriation of the private pension funds, of several public foundations and the forthcoming centralisation of the municipal government's assets) and the monopolisation of power in a single party that intends to dominate every aspect of social and private life, turning citizens into subjects. The improvised nature of many of the new laws creates a wide margin for arbitrary decisions that increase dependence and insecurity.

In addition to a frontal attack on civil liberties, the government has redistributed economic assets (particularly through the tax system and investment allocations) in favour of interest groups close to Fidesz and a restricted layer of the well-to-do. This group zealously defends the party's power and executes its guidelines.

At the same time – through the unilateral rewriting of the labour code, the restriction of union action and collective bargaining rights, the radical dismantling of social welfare nets and independent social care institutions – the government exposed the most vulnerable social groups (the poor, the unemployed, Roma, pensioners, sick and handicapped) to the unfolding economic crisis. Life is precarious for those who live on wages and have no reserves or additional revenue."

...the Commission doesn't have the jurisdiction (and neither does the European Court of Justice) to take Orban's government to task over all these issues. The Commission has decided to focus on the areas of the independence of the judiciary, the independence of the central bank, and the independence of Hungary's data protection authorities: probably because the EU legal case is strongest here. Let's look at some of the reasons behind the legal action:

"1) Independence of the national central bank

"The Commission has identified several breaches of primary law, notably breaches of Article 130 TFEU stipulating full independence of the central bank and of Article 127(4) TFEU requiring consultation with the ECB "on any draft legislative provision in its field of competence".

•Article 130 TFEU states that: “neither the ECB, nor national central bodies, from bank … shall seek or take instructions from Community institutions or any government of a Member State or from any other body”.

•Article 127(4) TFEU stipulates that "the ECB shall be consulted […] on any draft legislative provision in its field of competence"

Moreover, 14.2 of the Statute of the European System of Central Banks and of the ECB as well as Article 4 of Council decision (98/415/EC) on timely consultation of the ECB were not respected. On a number of elements, the Commission has invited the Hungarian authorities to provide clarification.

The infringements identified in the letter of formal notice concern both the MNB law ('Magyar Nemzeti Bank') but also the new constitution.

Under the MNB law, the Minister can participate directly in the meetings of the Monetary Council, offering to the government the possibility to influence the MNB from the inside. Similarly, the agenda of MNB meetings needs to be sent to the government in advance, thus impeding its capacity to hold confidential discussions. Also, changes in the remuneration scheme for the Governor are made again immediately applicable to the incumbent, while they should apply only as of a new term to avoid using salaries to put pressure on the MNB. Finally, the Governor and the members of the Monetary Council have to take an oath (of fidelity to the country and its interests) whose text is problematic given that the Governor of the MNB is also a member of the General Council of the ECB.

The Commission has doubts on the rules of dismissal for the Governor and the members of the Monetary Council which are prone to political interference (even the Parliament can propose to dismiss a member of the Monetary Council) and possible misuse. Also the frequent changes of the institutional framework of the MNB raise doubts, for instance via the increase in the number of Monetary Council members together with the possibility of increasing the number of deputy governors without due consideration of the MNB’s needs.

Moreover, a constitutional provision regulates the possible merger of the MNB with the financial supervisory authority. While the merger is not a problem as such, the MNB Governor would become a simple deputy chairman of the new structure, which would structurally encroach on his independence.

2) Independence of the judiciary

The infringement case affecting the judiciary focuses on the new retirement age for judges and prosecutors and relates to Hungary's decision to lower the mandatory retirement age for judges, prosecutors and public notaries from 70 years to the general pensionable age (62 years) as of 1 January 2012.

EU rules on equal treatment in employment (Directive 2000/78/EC) prohibit discrimination at the workplace on grounds of age. Under the case-law of the Court of Justice of the EU, an objective and proportionate justification is needed if a government decides to reduce the retirement age for one group of people and not for others. This principle was affirmed when the Court ruled on 13 September 2011 that prohibiting airline pilots from working after the age of 60 constitutes discrimination on grounds of age.

In Hungary's case, the Commission has not found any objective justification for treating judges and prosecutors differently than other groups, notably at a time when retirement ages across Europe are being progressively increased and not lowered. The situation is even more legally questionable because the government has already communicated to the Commission that it intends to raise the general retirement age to 65.

As regards the independence of the judiciary, the Commission is also asking Hungary for more information regarding new legislation on the organisation of the courts. Under the law, the president of a new National Judicial Office concentrates powers concerning the operational management of the courts, human resources, budget and allocation of cases. There is no longer collegial decision-making of the operational management of the courts or other appropriate safeguards. One person alone now makes all important decision on the judiciary, including as regards the appointment of judges. In addition, the mandate of the former president of the Supreme Court, who was elected for six years in June 2009, was prematurely terminated at the end of 2011. In contrast, other former judges of the Supreme Court continue their mandate as judges of the new Curia, which has replaced the Supreme Court. The Commission expects detailed answers of the Hungarian authorities to be able to decide whether further infringement proceedings are needed.

3) Independence of the data protection supervisory authority

The case on the data protection supervisor relates to Hungary's recent decision to create a new National Agency for Data Protection, replacing the current Data Protection Commissioner's Office as of 1 January 2012. As a result, the six-year term of the Data Protection Commissioner currently in office, who was appointed in 2008, will be prematurely put to an end. There are no interim measures until the term of the current Commissioner's term ends in 2014.The new rules also create the possibility that the prime minister and president could dismiss the new supervisor on arbitrary grounds.

The independence of data protection supervisors is guaranteed under Article 16 of the Treaty on the Functioning of the EU and Article 8 of the Charter of Fundamental Rights. In addition, EU rules on data protection (Directive 95/46/EC) require Member States to establish a supervisory body to monitor the application of the Directive acting in complete independence. This has been confirmed by the Court of Justice. In its ruling in a case concerning Germany (C-518/07 of 3 March 2010), the Court underlined that data protection supervisory authorities have to remain free from any external influence, including the direct or indirect influence of the state. The mere risk of political influence through state scrutiny is sufficient to hinder the independent performance of the supervisory authority's tasks, the Court ruled."

The outcry over what is going on in Hungary has been very political - in the sense that it's been about the high politics of rights and what makes a fair democracy - and rightly so. The Commission's response reveals the nature of the EU's power when it comes to protecting these key rights: as an organisation of sovereign Member States, the EU can only act where the Member States have contravened EU law. The EU treaties don't define a specific governing structure that Member States have to have, such as a presidential or parliamentary system or how their judiciary is organised (though it does set human rights and democratic tests for candidates to pass before they join), so the points of EU law can be quite narrow. This is especially obvious when it comes to the Commission's action over the judiciary laws - the action focuses on the unfair dismissal of serving judges, rather than the general separation of powers between the judiciary and the executive. The press release references these wider questions and demands answers, but whether or not there will be further legal action depends on whether or not the measures breach EU law.

The Commission (and the EU) is therefore not well placed to become a crusader for liberal democracy in its Member States, so there's a limit to what we can expect. The EU can, however, remove Hungary's EU voting rights via Article 7 TEU as a last resort, but this would require a super-majority. The Commission should investigate the changes to the electoral system and judiciary with an eye to using Article 7 if Hungary refuses to reverse any abuses. While the EU and the Commission's power might be limited (and we need to bear this in mind when Hungary claims it has changed its judicial rules in line with EU requirements), we should demand that all Member States live up to minimum democratic standards if they want to stay in the EU.

Today the European Parliament will be debating the Hungarian situation.

1 comment:

  1. Well, that's what we get with an intergovernmental "union". It's like a bad parody of the Articles of Confederation, but that only survived for about 10 years. Give us a governing structure based on the rule of law principles instead, and we will flourish!