Judgment — ECLI:EU:C:2024:1016
Date: 2024-12-12
Language of the case: Hungarian
Court formation: Fourth Chamber
Subject matter: Free movement of capital;Fundamental rights;Charter of Fundamental Rights
Procedure: Reference for a preliminary ruling
Origin: Hungary

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Translation C-419/23 – 1 
Case C-419/23 
Request for a preliminary ruling 
Date lodged: 
6 July 2023 
Referring court: 
Győri Törvényszék (Hungary) 
Date of the decision to refer: 
21 June 2023 
Applicant: 
CN 
Defendant: 
Nemzeti Földügyi Központ 
  
Győri Törvényszék (Győr High Court, Hungary) 
In proceedings concerning a dispute relating to transactions in land between CN 
([…] Sternenfels, Germany […]), as applicant, and the Nemzeti Földügyi Központ 
(National Land Centre, Hungary) […] Budapest, […]), as defendant, represented 
by […], and GW ([…] Szőce, Hungary […]), as intervener in support of the 
claims of the defendant (‘the Intervener’), the Győr High Court […] issues the 
following 
Decision 
The referring court […] refers the following question to the Court of Justice of the 
European Union for a preliminary ruling under Article 267 of the Treaty on the 
Functioning of the European Union: 
Must Article 63 of the Treaty on the Functioning of the European Union and 
Article 17 of the Charter of Fundamental Rights of the European Union be 
EN 
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interpreted as meaning that they do not preclude legislation of a Member State 
that, on reinstatement of a usufruct right, ordered following proceedings for 
failure to fulfil obligations – subsequent to the deletion of a usufruct right whose 
registration was unlawful but final –, does not provide for a mandatory 
examination of whether the usufruct right was registered lawfully? 
[…] [matters of national procedural law] 
Grounds: 
1. Facts 
On 30 December 2001, Readiness Kft., which owned arable land in registered plot 
0380/1 in the Kőszeg (Hungary) area, concluded an agreement with the Intervener 
under which a usufruct right was created over that property in favour of the 
Intervener. 
The Intervener’s usufruct right over that property was registered in the land 
register on 29 January 2002. The registration decision was not contested in either 
administrative or judicial proceedings. 
The applicant’s document of title to that property was registered on 18 May 2012. 
By decision […] of 27 July 2015, the Vas Megyei Kormányhivatal Szombathelyi 
Járási Hivatal (Szombathelyi District Registry, part of the Vas Region 
Administrative Department, Hungary) deleted the Intervener’s usufruct right, in 
accordance with Paragraph 108(1) of mező-és erdőgazdasági földek forgalmáról 
szóló 2013. évi CXXII. törvénnyel összefüggő egyes rendelkezésekről és átmeneti 
szabályokról szóló 2013. évi CCXII. törvény (Law No CCXII of 2013 laying 
down various provisions and transitional measures concerning Law No CXXII of 
2013 on transactions in agricultural and forestry land, ‘the 2013 Law on 
transitional measures’) and Paragraph 94(1) and (3) of ingatlan-nyilvántartásról 
szóló 1997. évi CXLI. törvény (Law No CXLI of 1997 on the land register). 
In its judgment in Case C-235/17, the Court held that, by adopting 
Paragraph 108(1) of the 2013 Law on transitional measures and thereby cancelling 
by operation of law the rights of usufruct over agricultural and forestry land 
located in Hungary and which were held directly or indirectly by nationals of 
other Member States, Hungary failed to fulfil its obligations under Article 63 
TFEU interpreted in conjunction with Article 17 of the Charter of Fundamental 
Rights of the European Union (‘the Charter’). 
The Intervener then requested the defendant to declare that he could apply for 
reinstatement of his usufruct right, under Paragraph 108/B(1), which had been in 
force since 1 January 2022, of the 2013 Law on transitional measures. 
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By decision […] of 30 November 2022, the defendant ordered reinstatement in the 
register of the Intervener’s deleted usufruct right over the property owned by the 
applicant. In its decision, the defendant stated that the applicant was not 
considered to be in good faith within the meaning of Paragraph 108/F(7) of the 
2013 Law on transitional measures because her property right already existed 
when the usufruct right was deleted. 
In her application, the applicant is seeking deletion of the reinstatement of the 
usufruct right in the land register, on the grounds that the right in question was 
registered unlawfully since, from 1 January 2002, by virtue of Paragraph 11(1) of 
termőföldről szóló 1994. évi LV. törvény (Law No LV of 1994 on productive 
land, ‘the 1994 Law on productive land’) its registration was no longer permitted. 
The defendant and the Intervener have applied that the application be dismissed, 
claiming that there was no legal obstacle to the reinstatement decision because, in 
relation to reinstatement decisions, the 2013 Law on transitional measures does 
not require examination of whether registration of the usufruct right was lawful. 
2. European Union law 
Article 63(1) TFEU 
‘Within the framework of the provisions set out in this Chapter, all restrictions on 
the movement of capital between Member States and between Member States and 
third countries shall be prohibited.’ 
Article 17(1) of the Charter 
‘Everyone has the right to own, use, dispose of and bequeath his or her lawfully 
acquired possessions. No one may be deprived of his or her possessions, except in 
the public interest and in the cases and under the conditions provided for by law, 
subject to fair compensation being paid in good time for their loss. The use of 
property may be regulated by law in so far as is necessary for the general interest.’ 
3. National legislation 
Paragraph 108/B(1) of the 2013 Law on transitional measures 
‘Any natural or legal person whose usufruct right has been deleted from the land 
register by virtue of the provisions of Paragraph 108(1) hereof in force on 30 April 
2014 (‘the holder of a deleted usufruct’), or a successor in title to that person, may 
apply under this subsection to have the deleted usufruct right reinstated in the land 
register and for any compensation to which that person is entitled under this 
subsection.’ 
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Paragraph 108/F(6) of the 2013 Law on transitional measures 
‘A declaration should be made that the deleted usufruct right may be reinstated 
where: 
(a) any of the persons referred to in subparagraph (7) is not considered to be in 
good faith; and 
(b) there is no legal obstacle within the meaning of subparagraph (8).’ 
Paragraph 108/F(7) of the 2013 Law on transitional measures 
‘The following persons shall, between the parties, be considered not to be in good 
faith in relation to the property in question: 
(a) the owner, if that person’s property right already existed when the usufruct 
right was deleted; 
(b) the owner, where that person’s property right arose, either under a contract 
concluded after 6 March 2018 or before that date if it was submitted to the 
competent authorities after that date in a procedure compliant with the Law 
on transactions in land, including the registration procedure, or by a 
disposition on death occurring after 6 March 2018; 
(c) the owner, where that person’s property right arose after 6 March 2018 in 
any manner other than by contract or inheritance; 
(d) the owner, if that person, despite being considered to be in good faith in 
accordance with point (b) or (c), created a usufruct over the property after 
6 March 2018; 
(e) the usufructuary, where that person’s right was created by a contract or 
disposition on death subsequent to 6 March 2018 or where, in a transaction 
transferring a property right after that date, the transferor reserved a usufruct 
right; 
(f) the owner, where that person acquired the property right by inheritance from 
one of the owners referred to in points (a) to (d).’ 
Paragraph 108/F(8) of the 2013 Law on transitional measures 
‘The fact that the property in question has been expropriated or that the property 
right over it has been transferred by a sale and purchase agreement in lieu of 
expropriation shall be regarded as a legal obstacle to reinstatement.’ 
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4. Reasons for the reference for a preliminary ruling: 
4.1 Precedents: judgments of the Court 
In its judgment in Cases C-52/16 and C-113/16 (‘SEGRO’), the Court held that 
Article 63 TFEU must be interpreted as precluding national legislation, such as 
that at issue in the main proceedings [in those cases], under which rights of 
usufruct which have previously been created over agricultural land and the holders 
of which do not have the status of close relation of the owner of that land are 
extinguished by operation of law and are, consequently, deleted from the property 
registers. 
In the grounds of the SEGRO judgment, the Court stated that ‘first of all, it should 
be noted that, as has been stated in paragraphs 6 and 7 above and is apparent from 
the referring court’s explanations relating to national law, after the legislative 
amendments made in 1991 and 1994 for the purpose of preventing natural persons 
not possessing Hungarian nationality and legal persons from acquiring agricultural 
land, any person remained free, on the other hand, to acquire a right of usufruct 
over such land. According to those explanations, it was only from 1 January 2002 
that the 1994 Law was amended so as also to preclude a right of usufruct over 
agricultural land from being created by contract in favour of those natural and 
legal persons’ (paragraph 109). 
‘Thus, as is indeed explicitly clear from the particulars supplied by the Hungarian 
Government that are set out in paragraphs 16 and 30 above, it is not in dispute that 
the usufructs at issue in the main proceedings were created before 1 January 2002, 
that is to say, at a time when the creation of such usufructs was not prohibited by 
the national legislation in force. Nor is it in dispute that those usufructs were 
entered in the property registers by the competent public authorities’ 
(paragraph 110). 
‘According to the Hungarian Government, the continuance of situations of that 
kind was contrary to public policy and it was therefore incumbent upon the State 
to remedy them. It states that the Hungarian legislature, instead of having recourse 
to the most classical approach, consisting in declaring, following a judicial 
examination on a case-by-case basis, that the contracts at issue were void, decided 
to remedy by force of law the deficiencies of the legal rule previously laid down 
or, indeed, the absence of any relevant rule of law’ (paragraph 112). 
‘In order to comply with the principle of proportionality, a measure pursuing such 
a specific objective of combating wholly artificial arrangements should enable the 
national court to carry out a case-by-case examination, having regard to the 
particular features of each case and taking objective elements as a basis, in order 
to assess the abusive or fraudulent conduct of the persons concerned (see, to that 
effect, judgment of 17 September 2009, Glaxo Wellcome, C-182/08, 
EU:C:2009:559, paragraph 99)’ (paragraph 117). 
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‘Thus, other measures less restrictive of the free movement of capital such as 
penalties or specific actions for a declaration of invalidity before the national 
courts in order to combat any circumventions of the applicable national legislation 
that are established could, provided that they comply with the other requirements 
arising from EU law, be prescribed for the purpose of combating those abusive 
practices’ (paragraph 122). 
In its judgment in Case C-235/17, the Court held that ‘in addition, it should be 
borne in mind that the fundamental rights guaranteed by the Charter are applicable 
in all situations governed by EU law and that they must, therefore, be complied 
with inter alia where national legislation falls within the scope of EU law (see, in 
particular, judgments of 26 February 2013, Åkerberg Fransson, C-617/10, 
EU:C:2013:105, paragraphs 19 to 21, and of 21 December 2016, AGET Iraklis, 
C-201/15, EU:C:2016:972, paragraph 62)’ (paragraph 63). 
‘That is inter alia the case where national legislation is such as to obstruct one or 
more of the fundamental freedoms guaranteed by the FEU Treaty and the Member 
State concerned relies on grounds envisaged in Article 65 TFEU, or on overriding 
reasons in the public interest that are recognised by EU law, in order to justify 
such an obstacle. In such a situation, the national legislation concerned can, 
according to settled case-law, fall within the exceptions thereby provided for only 
if it complies with the fundamental rights the observance of which is ensured by 
the Court (see, to that effect, judgments of 18 June 1991, ERT, C-260/89, 
EU:C:1991:254, paragraph 43; of 27 April 2006, Commission v Germany, 
C-441/02, EU:C:2006:253, paragraph 108 and the case-law cited; and of 
21 December 2016, AGET Iraklis, C-201/15, EU:C:2016:972, paragraph 63)’ 
(paragraph 64). 
‘In that regard, as has already been held by the Court, the use by a Member State 
of the exceptions provided for by EU law in order to justify an obstacle to a 
fundamental freedom guaranteed by the Treaty must be regarded as 
“implementing Union law” within the meaning of Article 51(1) of the Charter 
(judgment of 21 December 2016, AGET Iraklis, C-201/15, EU:C:2016:972, 
paragraph 64 and the case-law cited)’ (paragraph 65). 
‘In this case, as has been stated in paragraphs 58 and 62 above, the contested 
provision constitutes a restriction of the free movement of capital and Hungary 
relies on the existence of overriding reasons in the public interest and of the 
grounds envisaged in Article 65 TFEU in order to justify that restriction. That 
being so, the compatibility of the contested provision with EU law must be 
examined in the light both of the exceptions thus provided for by the Treaty and 
the Court’s case-law, on the one hand, and of the fundamental rights guaranteed 
by the Charter, on the other hand (see, to that effect, judgment of 21 December 
2016, AGET Iraklis, C-201/15, EU:C:2016:972, paragraphs 65, 102 and 103), one 
of which is the right to property safeguarded by Article 17 of the Charter, which 
the Commission claims has been infringed in this case’ (paragraph 66). 
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On the basis of those considerations, in its judgment in Case C-235/17 the Court 
held in relation to Paragraph 108(1) of the 2013 Law on transitional measures that 
Hungary had also failed to fulfil its obligations under Article 17 of the Charter. 
4.2 The Hungarian law in force at the time the usufruct right was registered 
Since 1 January 2002, by virtue of the 1994 Law on productive land, no rights of 
usufruct over agricultural land could be created in favour of foreign persons. 
Earlier case-law had also interpreted Paragraph 11(1) of the 1994 Law on 
productive land, holding that, from 1 January 2002, that Law meant that a right of 
usufruct could not be registered in favour of foreign persons over agricultural land 
(judgments of principle EBH2004.1173 and EBH2005.1277). 
In the case that gave rise to judgment of principle EBH2005.1277, the contract 
creating the usufruct had been concluded in 2001, but the usufruct was not 
registered in the land register until 2002. The court held that such a registration of 
the usufruct right was unlawful. 
According to the factual background of this case, the contract creating the usufruct 
was concluded on 30 December 2001 but the right was not registered until 2002. 
Registration of the usufruct right was, therefore, unlawful. The registration 
decision nevertheless became final because it was not contested. 
In paragraph 109 of SEGRO and paragraph 10 of the judgment in Case C-235/17, 
the Court is referring to the legislative provision as amended with effect from 
1 January 2002. 
4.3 The Hungarian legislation in force at the time the usufruct right was 
reinstated 
Subsection 20/F, in force from 1 January 2022, of the 2013 Law on transitional 
measures, is entitled: ‘Specific provisions to implement the judgment of the Court 
of Justice of the European Union delivered in Case C-235/17, European 
Commission v Hungary, on the extinguishment by operation of law of usufruct 
rights over agricultural land’. 
Accordingly, in order to implement the Court’s judgment in Case C-235/17, the 
Hungarian legislature enacted a series of legislative provisions that came into 
force on 1 January 2022. That purpose is also referred to in the preamble of the 
Law, according to which ‘the judgment of the Court of Justice of the European 
Union delivered in Case C-235/17 ordered the restoration of usufruct rights 
cancelled by Law No CXXII of 2013 on transactions in agricultural and forestry 
land. In order to implement that judgment – after consultation with the European 
Commission – the law is required to regulate the ensuing process, which 
comprises two phases and involves three administrative procedures: (a) an 
administrative procedure for reinstatement of the usufruct right in the register, 
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which entails, first, examining whether the right can be reinstated and, secondly, 
in the event of a decision in the affirmative, the reinstatement of that right in the 
land register; (b) an administrative procedure to determine the compensation, in 
which the appropriate compensation to be paid by the State to the usufructuary 
would be determined.’ 
According to Paragraph 108/F(6) of the 2013 Law on transitional measures, a 
declaration must be made that the deleted usufruct right may be reinstated where 
the owner or usufructuary is not considered to be in good faith in accordance with 
Paragraph 108/F(7). 
Under Paragraph 108/F(7) of the 2013 Law on transitional measures a 
usufructuary is treated as being in bad faith (that is to say, in terms of the 
legislation, is not treated as being in good faith) in one scenario: where that 
person’s usufruct right was created by contract or by a provision on death 
subsequent to 6 March 2018 or where the transferor reserved a usufruct right in a 
transaction transferring a property right after that date; (6 March 2018 was the 
date on which the Court handed down its judgment in SEGRO). 
The other five scenarios in Paragraph 108/F(7) of the 2013 Law on transitional 
measures relate to bad faith on the part of the owner. 
Accordingly, a situation in which the usufruct right was registered at a time when 
the provisions of the Hungarian legislation no longer permitted that registration is 
not contemplated as an instance of bad faith under Paragraph 108/F(7) of the 2013 
Law on transitional measures. The legislature did not take the view that such a 
circumstance should be considered in relation either to the owner or the 
usufructuary for the purposes of the reinstatement of the deleted usufruct right, 
even though paragraphs 112, 117 and 122 of SEGRO prescribed a procedure in the 
Member State in order to examine in each case whether or not the usufruct rights 
had been registered lawfully. 
4.4. Issues relating to an uncontested registration decision that has become 
final 
It is beyond doubt that the Intervener’s usufruct right was registered at a time 
when the legislation did not so permit. 
The competent authority nevertheless registered the Intervener’s usufruct right in 
the land register. It is clear that the registration was not contested either by the 
owner or the usufructuary. 
In its judgment in Case C-177/20, Grossmania, the Court addressed the 
relationship between, on the one hand, the principle of legal certainty – embodied 
in the finality of administrative decisions – and, on the other, the principle of 
effectiveness and the duty of sincere cooperation. 
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In that judgment the Court held in essence that ‘particular circumstances may be 
capable, by virtue of the principles of effectiveness and sincere cooperation 
arising from Article 4(3) TEU, of requiring a national administrative body to 
review an administrative decision that has become final. In that context, it is 
necessary to take account of the particular features of the situations and interests 
at issue in order to strike a balance between the requirement for legal certainty and 
the requirement for legality under EU law (see, to that effect, judgment of 
20 December 2017, Incyte, C-492/16, EU:C:2017:995, paragraph 48 and the case-
law cited)’ (paragraph 54). 
Referring to the judgment in Case C-235/17, the Court held that the Hungarian 
legislation infringed Article 17(1) of the Charter since ‘by definition, it deprives 
the persons concerned – in a compulsory, complete and definitive manner – of 
those rights of usufruct, without it being justified on the ground that it is in the 
public interest; nor were any arrangements in place whereby fair compensation is 
paid in good time’ (paragraph 56). 
‘It follows that, if it were to be confirmed that Hungarian law does not make it 
possible, in an action brought against the rejection of a request for reinstatement 
of rights of usufruct, to contest the measure deleting those rights, which has since 
become final, that impossibility cannot reasonably be justified by the requirement 
for legal certainty and therefore ought to be rejected by that court as being 
contrary to the principle of effectiveness and the principle of sincere cooperation 
arising from Article 4(3) TEU’ (paragraph 62). 
It can be inferred from the judgment in Case C-177/20 that the principle of legal 
certainty, embodied in the finality of an administrative decision, may conflict with 
the principle of effectiveness and the duty of sincere cooperation. Where that 
occurs, the finality of the administrative decision must not prevent a Member 
State court from taking all the measures necessary to guarantee the effectiveness 
of EU law. 
In the present case, however, EU law is embodied in the principle, flowing from 
SEGRO and from the judgment in Case C-235/17, that usufruct rights may only be 
deleted if the national legislature has enabled the national courts to examine in 
each case whether or not the usufruct right was registered lawfully. 
In this case, the national court would have to conclude from that examination that 
the usufruct right was not registered lawfully; Paragraph 108/F(7) of the 2013 
Law on transitional measures, however, precludes the national court from 
reaching that conclusion. 
4.5 Infringement of Article 63 TFEU and Article 17(1) of the Charter 
As regards the free movement of capital, the referring court notes, first, that the 
applicant lives in Germany and the judicial review proceedings concern the 
lawfulness of reinstatement of a usufruct right over a property belonging to the 
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applicant in Hungary (in that context the referring court also mentions 
paragraph 54 of the judgment in Case C-235/17). 
According to point II.A of Annex I to Council Directive 88/361/EEC of 24 June 
1988 for the implementation of Article 67 of the Treaty, the nomenclature of 
capital movements includes investments in real estate on national territory by non-
residents. 
As a result of deletion of the Intervener’s usufruct right, the applicant had 
complete enjoyment of full ownership until the usufruct right at issue was 
reinstated. Real property encumbered by a usufruct right has an appreciably lower 
market value than other, unencumbered, property. The applicant could therefore 
expect that the market value of her property would increase following deletion of 
the unlawfully registered usufruct right and that she would be able to manage her 
agricultural land herself free of any usufruct or to conclude a lease for its 
cultivation. 
It is important to emphasise that the agreement creating the usufruct right was not 
concluded between the applicant and the Intervener. This is therefore not a 
situation in which the applicant is seeking to release her property from a usufruct 
right notwithstanding conduct in bad faith on her part. The applicant acquired the 
property encumbered with the usufruct right from its former owner, Readiness 
Kft. 
As a result, when an unlawfully registered usufruct right was reinstated, the 
national legislation at issue in these proceedings deprived the applicant of full 
ownership without requiring any examination of whether the usufruct right had 
been registered lawfully. 
The national legislation unequivocally runs counter to the free movement of 
capital. 
The fundamental rights guaranteed by the Charter are applicable in all situations 
governed by EU law and must, therefore, be complied with where national 
legislation falls within the scope of EU law (judgment in Case C-235/17, 
paragraph 63). That is inter alia the case where national legislation is such as to 
obstruct one or more of the fundamental freedoms guaranteed by the Treaty 
(judgment in Case C-235/17, paragraph 64). 
Since the national legislation at issue in these judicial review proceedings is such 
as to obstruct exercise of the fundamental freedom guaranteed by Article 63 
TFEU, Article 17(1) of the Charter must also apply. 
Application of the Charter is also justified by the fact that the national legislature 
did not, by means of Paragraph 108/F(6) and (7) of the 2013 Law on transitional 
measures, comply in a satisfactory manner with SEGRO and the judgment in Case 
C-235/17, because it did not regard the fact that registration of the usufruct right 
was unlawful as a circumstance that had to be considered in relation to 
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reinstatement of the right (SEGRO, paragraphs 112, 117 and 122). Accordingly, 
when implementing the judgment in Case C-235/17, the national legislature 
disregarded the EU law embodied in those judgments of the Court. 
Under Article 17(1) of the Charter, everyone has the right to own, use, dispose of 
and bequeath his or her lawfully acquired possessions. Once the unlawfully 
registered and then deleted usufruct right was reinstated, the applicant could 
neither enjoy or use her property without obstruction nor dispose of it without 
restriction. Paragraph 5:147(1) of polgári törvénykönyvről szóló 2013. évi V. 
törvény (Law No V of 2013 establishing the Civil Code) provides that the usufruct 
right entitles the usufructuary to possess, exploit and collect revenue from a thing 
owned by a third party. Reinstatement of the usufruct right would deprive the 
applicant of those rights. 
4.6 Assessment of bad faith 
In the light of the foregoing, the bad faith scenarios regulated in 
Paragraph 108/F(7) of the 2013 Law on transitional measures need in any event to 
be supplemented, as regards the holder of the deleted usufruct, at least by an 
examination of whether registration of the usufruct right was permitted by the 
legal provisions in force at the time it was registered. 
Examination of that circumstance would be an objective criterion for assessing 
whether or not there was bad faith on the part of the usufructuary. 
All the scenarios under Paragraph 108/F(7) of the 2013 Law on transitional 
measures are also based on objective facts. For that reason too, in relation to the 
usufructuary, the referring court finds it imperative that it should examine the 
objective fact consisting of when the deleted usufruct right was registered, that is 
to say, whether the registration took place while the legal provisions in force 
permitted it or expressly prohibited it. 
[…] [matters of national procedural law] 
Győr, 21 June 2023 
[…] [signatures]