EUROPEAN COMMISSION Brussels, 30.9.2020 SWD(2020) 316 final COMMISSION STAFF WORKING DOCUMENT 2020 Rule of Law Report



Country Chapter on the rule of law situation in Hungary Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS 2020 Rule of Law Report













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Abstract Over the past years, judicial independence in Hungary has been raised by EU institutions as a source of concern, including in the Article 7(1) TEU procedure initiated by the European Parliament. The call for strengthening judicial independence, made in the context of the European Semester, remains to be addressed. In particular, the independent National Judicial Council faces challenges in counter-balancing the powers of the President of the National Office for the Judiciary in charge of the management of the courts. Developments related to the Supreme Court (Kúria) also raise concerns, notably its decision to declare unlawful a request for preliminary ruling to the European Court of Justice. New rules allow for appointment to the Supreme Court of members of the Constitutional Court, elected by Parliament, outside the normal procedure, and lower the eligibility criteria for the Supreme Court President. As regards efficiency and quality, the justice system performs well in terms of the length of proceedings and has a high level of digitalisation. The institutional anti-corruption framework is shared among different bodies. Deficient independent control mechanisms and tight interconnections between politics and certain national businesses are conducive to corruption. When serious allegations arise, there is a systematic lack of determined action to investigate and prosecute corruption cases involving high-level officials or their immediate circle. This has been raised in the European Semester and by GRECO in view of the lack of commitment to comply with its recommendations. The verification of assets and interests declarations may be improved as regards systematic checks and independent oversight. Whilst the regulation of lobbying remains incomplete, corruption prevention policies have focused on integrity in state administration and law-enforcement agencies. The shrinking possibilities of civic oversight in the context of restrictions to media freedom, a hostile environment for civil society organisations and constant new challenges in the application of the transparency and access to public information rules further weaken the anti-corruption framework. The independence and effectiveness of the Media Council is at risk. Transparency of media ownership is not fully guaranteed. Media concentration via the creation of the Central European Press and Media Foundation (KESMA) conglomerate increased risks to media pluralism. Significant amounts of state advertising channelled to pro-government outlets have permitted the Government to exert indirect political influence over the media. Independent media outlets face systematic obstruction and intimidation, while a trend of economic take-over of such outlets raises additional concern. The transparency and quality of the legislative process is a source of concern as the use of public consultations and impact assessments has diminished. The new possibility for public authorities to challenge final court decisions in the Constitutional Court raises questions of legal certainty. The weakening of independent institutions and the increased pressure on civil society further affect checks and balances. The Court of Justice found that the legislation on the transparency of foreign-funded civil society organisations is incompatible with EU law. Legislative measures required to execute the judgment are under preparation.



I.Justice System The structure of the Hungarian court system has been shaped by constitutional changes and regular judicial reforms introduced since 2011. The most recent reform was adopted in December 2019. Hungary has a four-tier court system. 113 district courts operate at first instance, while 20 regional courts hear appeals against district court decisions and certain cases at first instance. Five regional appeal courts decide on appeals against decisions of the regional courts. The main role of the Supreme Court (Kúria) is to guarantee the uniform application of the law. The President of the National Office for the Judiciary (NOJ) is an organ, provided for by the Fundamental Law and elected by Parliament, tasked with the central administration of the courts. The National Judicial Council is an independent body, which, according to the Fundamental Law, supervises the NOJ President and participates in the administration of the courts. Judges are appointed by the President of the Republic following a recommendation of the NOJ President based on a ranking of candidates established by the local judicial councils (composed of judges elected by their peers). The NOJ President cannot deviate from this ranking without the prior consent of the National Judicial Council. The Constitutional Court is not part of the court system, and reviews the constitutionality of laws and judicial decisions. The prosecution service is an independent institution vested with powers to investigate and prosecute crime. The Hungarian Bar Association and the regional bar associations are self-governing public bodies representing the interests of the legal profession, laying down and enforcing professional standards, including through disciplinary measures. Independence The National Judicial Council faces difficulties in counter-balancing the powers of the President of the National Office for the Judiciary; the election of a new President of the National Office for the Judiciary may open the way for reinforced cooperation. The NOJ President is elected by Parliament and is entrusted with extensive powers relating to the administration of the court system. The NOJ President operates under the supervision of the National Judicial Council. However, the National Judicial Council is facing a series of structural limitations that prevent it from exercising effective oversight regarding the actions of the NOJ President. In particular, it has no right to be consulted on legislative proposals affecting the justice system. It has a limited role as regards judicial appointments, as well as the appointment of court presidents and other court managers. Furthermore, the National Judicial Council has limited resources and depends on the NOJ President for budgetary disbursements. The absence of effective control over the NOJ President increases the possibility of arbitrary decisions in the management of the judicial system. In particular, the National Judicial Council criticised the previous NOJ President for having breached the law when annulling the procedures for selecting court presidents and discretionarily appointing ad interim court presidents without the approval of the National Judicial Council. This situation led the National Judicial Council to formally request Parliament to remove the NOJ President. The competent parliamentary committee examined that request and, in June 2019, Parliament rejected it. The limited powers of the National Judicial Council and the need to reinforce them were underlined by the Council of Europe, the European Commission and stakeholders. On 9 July 2019, in the context of the European Semester, the Council addressed to Hungary a recommendation to ‘strengthen judicial independence’, noting that the National Judicial Council faces increasing difficulties in counter-balancing the powers of the NOJ President. No legislative steps have been taken since then to address these structural issues. The National Judicial Council welcomed the election of a new NOJ President in December 2019, which may open the way for a reinforced cooperation with the National Judicial Council, while balancing of powers can be achieved with legal certainty only through a legislative reinforcement of the Council’s powers. Perceived judicial independence is average among the general public and very low among companies, although the latest data show improvement. The level of independence of courts and judges is perceived as average (48% ‘fairly or very good’) by the general population , but very low (26% ‘fairly or very good’) by companies . However, in 2020 the negative trend observed for a number of years has turned, with both indicators improving. The Kúria has declared unlawful an order for preliminary reference to the European Court of Justice. Upon a motion by the Prosecutor General, the Kúria issued a judgment on 10 September 2019, in which it held a preliminary reference by a District Court judge to the Court of Justice to be unlawful, considering the questions irrelevant for the case at hand. The Kúria judgment was of a declaratory nature and did not annul the decision to refer the case to the Court of Justice. Nevertheless, in October 2019, the ad interim president of the Budapest Regional Court (Fővárosi Törvényszék), referring explicitly to the judgment of the Kúria, initiated disciplinary proceedings against the judge who issued the preliminary reference. In November 2019, the court president withdrew his motion. The fact that the Kúria can, in the context of an extraordinary judicial remedy, review the necessity of preliminary references could interfere with the possibility of national courts to refer questions of interpretation of Union law to the Court of Justice and that disciplinary proceedings could be initiated, could discourage individual judges from making requests for a preliminary ruling. Judges and lawyers are subject to negative narratives in the media. In several press statements made since January 2020, the Government and pro-government media outlets have criticised certain judicial decisions, including those releasing convicts on parole, awarding compensation to Roma children segregated in schools and to inmates complaining about their detention conditions. In February 2020, the Government announced its intention to organise a ‘national consultation’ on these justice-related issues. The bar association, the association of judges and other stakeholders expressed concerns over the Government’s narrative, arguing that it could undermine public trust and confidence in the justice system. Eventually, the consultation was abandoned. In September 2019, in the context of the execution of the European Court of Human Rights judgment Baka v. Hungary, the Committee of Ministers of the Council of Europe has voiced concerns over the ‘chilling effect’ on the freedom of expression of judges and court presidents. New special rules on judicial appointments to the Kúria have been introduced. The number of judicial posts in the Kúria is not set by statute, but is determined by the NOJ President. Under the normal procedure, judges are appointed to the Kúria by its President, following a call for applications, on the basis of an opinion of the Kúria’s competent department and of an assessment and ranking of candidates by the Kúria’s judicial council. An ‘omnibus’ legislation introduced in December 2019 allows members of the Constitutional Court, who are elected by Parliament, to request to be appointed as a judge without an application procedure. Having obtained the status of a judge, members of the Constitutional Court can request to be appointed to the Kúria after the termination of their mandate, without the need to follow the normal appointment procedure. As a result, in practice, the election by Parliament to the Constitutional Court, which does not entail the involvement of a body drawn in substantial part from the judiciary, can in itself lead to the appointment as a judge of the Kúria if requested by the judge concerned. These legislative changes have de facto increased the role of Parliament in judicial appointments to the Kúria. Moreover, the Kúria President is elected by Parliament following a proposal from the President of the Republic, from among judges – not necessarily of the Kúria – with at least five years’ experience as a judge. As of 1 January 2020, rules on selecting the Kúria President were also amended allowing time served as a senior legal secretary at the Constitutional Court or at an international court to be taken into account when calculating the ‘experience as a judge’. This widening of the eligibility criteria increases the pool of candidates that could potentially be elected as Kúria President, increasing the discretion of the President of the Republic in this regard. The ‘omnibus’ legislation introduced structural changes to the existing court system seeking to make administrative justice work faster and more predictably. District-court level administrative and labour courts have been abolished. As of 1 April 2020, administrative cases at first instance are heard by eight designated regional courts, and all requests for ordinary or extraordinary remedies are determined by the Kúria. The envisaged establishment of a separate administrative court system has been abandoned. Judicial salaries have been increased since January 2020 and a system of bonuses is in place. Under the ‘omnibus’ legislation, judicial salaries will be raised by 60% over a period of 3 years. The increased remuneration of judges is a positive development as salaries of Hungarian judges were amongst the lowest in the EU. Such an increase contributes to enhancing judicial independence. However, concerns have been raised as regards the possibility for the authorities managing the courts to award bonuses to judges on a discretionary basis, without objective and transparent criteria. According to the Council of Europe, systems making judges’ core remuneration dependent on performance should be avoided as they could create difficulties for the independence of judges. The impact of such a system on judicial independence is the subject-matter of a preliminary question referred to the Court of Justice. While a number of aspects related to the organisation of the prosecution service have been addressed, some elements still raise concerns. In November 2019, the Prosecutor General was re-elected by Parliament with a two-thirds majority, for a period of nine years. The prosecution service is organised in a strictly hierarchical structure. While the independence of the prosecution service is enshrined in law, certain elements of the legal framework led GRECO to issue recommendations to review the rules for appointment of the Prosecutor General in order to safeguard the office from political influence. GRECO also recommended introducing strict criteria to guide and justify decisions to remove cases from subordinate prosecutors, and called for the review of how disciplinary proceedings are handled. While most GRECO recommendations have been addressed, the full implementation of the outstanding recommendations would also have a positive impact on the anti-corruption framework. Quality The digitalisation of the justice system is overall high. Hungary ranks very high when it comes to the availability of electronic means, as regards online access to published judgments by the general public. It also ranks high as regards arrangements for producing machine-readable judicial decisions, although judgments are not modelled according a standard that would enable their machine readability. Moreover, Hungary has very good results as regards the promotion of and incentives for using alternative dispute resolution methods. However, court fees remain high, and there are concerns as regards the level of inclusiveness of the legal aid scheme. Government measures in response to the COVID-19 pandemic had an impact on the functioning of the courts. On 14 March 2020, following a proposal by the NOJ President, the Kúria President and the Prosecutor General, the Government ordered by Decree that the functioning of Hungarian courts be suspended, apart from certain urgent cases, for an undefined period of time. However, on 30 March 2020, that Decree became ineffective. On 31 March 2020, the Government introduced changes to the procedural laws, aimed at facilitating the operation of the justice system during the ‘state of danger’.

Efficiency The efficiency in civil and administrative cases is high. According to the 2020 EU Justice Scoreboard, Hungary performs very well as regards the estimated time needed to resolve administrative cases at first instance and the number of pending administrative cases at first instance courts . Hungary also performs well as regards the estimated time needed to resolve litigious civil and commercial cases. The new Codes of Civil Procedure, of Administrative Court Procedure and of Criminal Procedure entered into force in 2018. These new rules could facilitate the hearing of civil and criminal cases and judicial review of administrative decisions within a reasonable time. Effective remedies in cases of excessively lengthy proceedings are still lacking. The execution of the European Court of Human Rights judgment Gazsó v. Hungary, is still ongoing and Hungary remains under enhanced supervision of the Committee of Ministers of the Council of Europe. II.Anti-Corruption Framework The competence to prevent, investigate and prosecute corruption is shared among different specialised authorities. The coordination of anti-corruption activities in Hungary is carried out by the National Protective Service (NVSZ) under the oversight of the Ministry of Interior. The investigation and prosecution of corruption in the public sector fall under the exclusive competence of the Investigation Division of the Central Chief Prosecution Office of Investigation and five regional offices. The prosecution service is supported by the investigative forces of the police and the National Protective Service. The State Audit Office has competences for the financial management of public funds and auditing of political parties. In the latest Corruption Perceptions Index by Transparency International, the country scores 44/100 and ranks 19th in the EU and 70th globally. Amongst Hungarian respondents, 87% believe that corruption is widespread (EU average 71%) and 32% believe that corruption affects their daily life (EU average 26%). 80% of companies perceive corruption as widespread (EU average 63%) and 48% of companies believe that corruption is a problem when doing business (EU average 37%). 39% of people consider that there are enough successful prosecutions to deter people from corrupt practices (EU average 36%) while 19% of companies believe that people and businesses caught for bribing a senior official are appropriately punished (EU average 31%). The criminal anti-corruption legal framework is largely in place. The Criminal Code includes the relevant definitions of corruption and related offences and criminalises different forms of bribery and trading in influence, embezzlement, misappropriation of public funds and abuse of public authority. In April 2020, a draft law was tabled in Parliament aimed at addressing the recommendations made by the OECD Working Group on Bribery, namely to amend the definition of ‘foreign public official’ in order to clarify that it includes officials of foreign public enterprises. Anti-corruption competences are shared among different bodies. The National Protective Service under the Ministry of Interior is in charge of coordinating anti-corruption policies. As of February 2019, following a reform of the Code of Criminal Procedure, criminal investigation and prosecution of corruption in the public sector fall under the exclusive competence of the Investigation Division of the Central Chief Prosecution Office and five regional offices. The Division investigates complex corruption cases committed by or involving persons enjoying immunity, foreign public officials, the President of the Republic, the Prime Minister, members of the Government, and high-ranking officials of the public security authorities. The prosecution service is supported by the investigative forces of the police and the National Protective Service. The State Audit Office also plays a role in the implementation of anti-corruption policies, notably through its control functions on finances of state institutions and political party financing. The State Audit Office also carries out regular national integrity surveys. While there is prosecution of high-level corruption in some cases, it remains very limited. In its 2018 Annual Report, the Prosecutor General’s Office published corruption crime statistics for 2016-2018. According to the figures, the number of registered proceedings in corruption-related crimes has increased: 984 for 2016, 1123 for 2017 and 2046 for 2018. However, the number of convicted persons has remained almost the same: 250 in 2018, 254 in 2017 and 351 in 2016. According to the Prosecutor General’s Office, most corruption-related cases involve public officials, typically tax and customs officials. The fact that there had been no determined action to prosecute corruption involving high-level officials or their immediate circle has also been addressed in the context of the European Semester. While the prosecution service has launched a limited number of corruption-related investigations against members of Parliament from the ruling party, there has been no prosecution of high-level government officials in recent years. Corruption prevention policies in Hungary have focused on integrity in state administration and law-enforcement agencies. Following the expiry of the previous anti-corruption programme in 2018, in June 2020, the Government adopted a new programme covering a two-year period (2020-2022). The strategy maintains the focus of previous strategic programmes on integrity in the public administration and contains actions related to strengthening e-administration and automated decision-making to prevent corruption. Furthermore, the strategy aims at increasing the efficiency of investigations, assessing corruption risks and evaluating the legal framework as well as establishing internal controls in public administration and strengthening integrity measures. The integrity framework gives a central role to internal integrity advisors in public authorities. However, the strategic anti-corruption framework does not include actions in other areas relevant for corruption prevention, such as political party financing, asset disclosure, or regulation of lobbying and ‘revolving doors’. It also does not address risks related to clientelism, favouritism and nepotism in high-level public administration or those arising from the interface between businesses and political actors. According to the State Audit Office’s 2019 integrity survey, the highest level of risk of corruption was calculated for government bodies (50%), local administrative bodies (51%) and higher education (50%). During the period 2015-2019, Hungary had the highest number of OLAF investigations (43) closed with a financial recommendation among Member States. The verification of assets and interests declarations may be improved as regards systematic checks and independent oversight. Hungary has an extensive asset disclosure system. The system in place requires members of Parliament, government officials, and public officials to declare their assets and interests. Asset and interest declarations of government members, as well as senior civil servants and parliamentarians are available on the Internet . Nevertheless, verifications are not systematic but based on notifications of suspicions. Verification is left to the employer of the public official, or to the Parliamentary Committee of Immunity and Credentials Verifications for the declarations of members of Parliament and high-ranking government officials. Suspicions of unjustified increase in wealth may lead to a verification procedure conducted by the National Tax and Customs Authority. However, the Tax Authority can start such proceedings only if investigative authorities have also opened criminal inquiries, which restricts the room for independent verifications. The issue of effective supervision and enforcement of rules of conduct, conflict of interests and asset declarations for members of Parliament was subject to recommendations by GRECO, the implementation of which is pending. Regulation of lobbying in Hungary is incomplete and there are no rules in place to effectively regulate ‘revolving doors’. The 2010 dedicated lobbying legislation has been revised, making it mandatory for public officials to disclose contacts with lobbyists. Public officials are obliged to inform their superior in writing if a certain meeting with lobbyists carries risks for the organisation’s integrity. The superior may prohibit the meeting or may make it conditional upon the presence of a third person. However, the applicable Decree regulates only certain aspects of meetings between government officials and lobbyists. In particular, it does not provide for the mandatory registration of lobbyists or the obligation to disclose or report contacts with lobbyists to an independent control body, nor does it require civil servants to ask permission and report back on such contacts. GRECO noted the need to improve integrity standards and adopt a code of conduct for members of Parliament and to ensure an effective supervision and enforcement of rules of conduct and conflicts of interest. Hungary lacks specific regulation as regards the prevention of ‘revolving doors’. Although both the Labour Code and a special Act on public officials contain confidentiality clauses, they do not specify any cooling off period. Hungary has specific legislation in place to protect whistle-blowers. The Whistle-blowers Protection Act provides anonymity for whistle-blowers and enables the submission of complaints electronically, using a designated reporting channel, which is operated by the Ombudsman (‘Commissioner for Fundamental Rights’) (see section on Other Institutional Issues related to Checks and Balances below). However, the Ombudsman has only limited competence in relation to reports submitted to their office. In practice, the primary task of the Ombudsman is to forward the reports to competent authorities. These reports are not automatically transmitted to law enforcement authorities, and an administrative investigation is carried out instead first by the integrity advisor of the institution concerned. Integrity advisors report directly to their head of institution. Either upon request or ex officio, the Ombudsman may, however, examine whether those authorities have followed up appropriately on the reports. The public interest disclosures are investigated by the institutions concerned, and their answer containing the result of the investigation is uploaded to an electronic registry. Party financing in Hungary remains a concern. GRECO noted that while the registries of political parties are transparent, the sources of party income and the length of election campaign periods lack clarity. Also as regards political parties receiving state subsidies, there is a need to have monitoring mechanisms in place. III.Media Pluralism Protection of media freedom and pluralism in Hungary is provided for in the Fundamental Law, as well as in sectoral legislation (the Media Act and the Freedom of the Press Act). The Freedom of the Press Act, stipulates that freedom of the press embodies independence from the State and from any and all organisations and interest groups. The right to access public information is recognised by the Fundamental Law and finds expression in the Freedom of Information Act. The Media Act establishes the National Media and Info-communications Authority (the Media Authority), whose decision-making body is the Media Council. Whilst the Media Authority has adequate resources, the independence and effectiveness of the Media Council is at risk. The Media Council is composed of a President and four members elected by Parliament. The rules on nomination are designed to favour political consensus in the appointment of the members of the Media Council. The 2020 Media Pluralism Monitor points to the fact that in practice these rules have not prevented the governing party from nominating all five members of the Media Council. The Monitor registers medium risk (53%) in terms of the independence and effectiveness of the Media Council. The Editors-in-Chief’s Forum Hungary (Főszerkesztők Fóruma) is an industry NGO established in 2012. It gathers editors of all major electronic, print and online media in Hungary on a voluntary basis. Its main objectives include strengthening ethics in journalism education, preparing guidelines, fostering best practices in ethical journalism and increasing trust in media and formulating media self-regulation procedures. In 2015, the Forum laid down the ethical standards and values of journalism such as impartiality, thoroughness, rules for obtaining and handling information. It seeks to promote quality journalism in particular through prizes for journalists. The plurality of the media market is at high risk in Hungary. By virtue of a Government Decree, the merger of more than 470 government-friendly media outlets through the creation of the ‘KESMA’ media conglomerate in November 2018 was exempted from scrutiny by Competition Authority and the Media Authority by declaring it ‘a merger of strategic national importance’ thereby preventing the authorities from scrutinising it. By decision dated 25 June 2020, the Constitutional Court rejected an application lodged by a quarter of the members of Parliament challenging the Government Decree. The Constitutional Court found that it rests solely and exclusively within the prerogative of the Government to determine matters of ‘strategic national importance’, and that nothing in the merger could be read as necessarily threatening media pluralism in the country. An ad-hoc report of the Centre for Media Pluralism and Media Freedom concluded that ‘the establishment of KESMA via the merger of more than 470 […] different media outlets will exacerbate the overall risk(s)’ to media pluralism in Hungary across several key indicators analysed by the Media Pluralism Monitor, including journalists’ working conditions, horizontal and cross-media ownership concentration and the allocation of state advertising. Specifically, analysing these developments from the prism of media authority independence from political and/or economic influence and governmental ability to override the Media Authority, the report found that ‘the total exclusion of scrutiny by the Hungarian media authority of an important operation such as KESMA […] represents an additional element of risk’ to media pluralism in Hungary. Serious concerns have been voiced by Hungarian and European media freedom organisations as well as civil society following the dismissal, on 22 July 2020, of the editor-in-chief and the ensuing resignation of almost all journalists of Hungary’s most-widely read independent news media site, Index.hu. The concerns were also pointing to the fact that Index.hu might follow a pattern of economic takeover of the remaining independent news media sites by pro-government businesspersons, as previously observed in the case of news media outlet Origo. Transparency of media ownership is not regulated in sector-specific legislation . Linear media service providers must notify the Media Authority about their (or their parent company’s) direct or indirect ownership in media service providers. The Media Act contains detailed rules for the prevention of media market concentration. However, the 2020 Media Pluralism Monitor considers the situation with regard to transparency of media ownership as one presenting high risk (75%).

State advertising allows the Government to exert indirect political influence over the media. According to the Media Pluralism Monitor, and as argued by key stakeholders , the highest risk to media freedom and pluralism in Hungary is in the area of political independence (82%). The Media Pluralism Monitor finds that although direct political influence and control is not widespread, it is common knowledge that indirect influence is exerted over the media. The KESMA conglomerate referred to above is considered a culmination of this process in terms of pro-government media. This has been exacerbated by the absence of legislation and transparency in the distribution of state advertising, leading the 2020 Media Pluralism Monitor to score this indicator at the highest possible risk level (97%). The 2020 Media Pluralism Monitor highlights the fact that in 2019, the share of state advertising that went to pro-government outlets in the newspaper market was 75%, in the television market 95%, in the online news market 90% and in the radio market 90%. Public access to information is hindered. Classifying this area at ‘low risk’, the 2020 Media Pluralism Monitor points out that, while the applicable legislation is clear and courts tilt towards granting access to journalists and the general public, court judgments overturning negative decisions of public bodies are often unenforceable in practice . In 2016, the United Nations Special Rapporteur on human rights defenders recommended that Hungary review the legal provisions related to freedom of information and data protection in order to guarantee free and uncontrolled access to public interest information . This issue was also raised by a country-specific recommendation in the context of the 2020 European Semester . The Freedom of Information Act provides that any ‘organ performing public duties’ must provide access to data of public interest under its control if so requested subject to the exceptions stipulated in that Act . While the Freedom of Information Act has been relatively stable, piecemeal changes to other sectoral laws have continued, corroding the overall transparency and access-to-information framework . In 2013, Hungary amended the Freedom of Information Act in order to prevent ‘abusive’ information requests. In 2016, the Government issued a Decree which empowers public institutions to require the reimbursement of the costs incurred by the requests of access to public information in case replying to the request would entail additional work on the part of the public authority. With regard to journalists’ direct access to public events, the 2020 Media Pluralism Monitor reports that barring journalists’ access to certain public events is an increasing phenomenon. Independent media outlets face systemic obstruction and intimidation. Mérték Media Monitor reported that based on revenue, pro-government media controls about 80% of the news media market and coverage of political content . The small market share occupied by independent media is complemented by systemic obstruction and intimidation of independent journalists and media outlets. Research conducted by the Hungarian Civil Liberties Union (TASZ) in 2019 and during the COVID-19 pandemic in 2020 points to ‘systemic obstruction of the work of the independent media’ by, inter alia, ignoring press inquiries, limiting physical access of journalists and the discrediting, stigmatisation and intimidation of sources. There have been no reports of physical attacks on journalists and other media professionals. In Hungary, imprisonment is among the envisaged sanctions for defamation.In 2019, the Council of Europe’s Platform to promote the protection of journalism and the safety of journalists published two alerts concerning Hungary on restrictions to activities of journalists in Parliament and a smear campaign against two Index.hu reporters in pro-governmental media, far-right media and by means of posters, widely considered to be anti-Semitic, which appeared in Budapest. In the same year, a weekly pro-government magazine published a list of more than 200 individuals, among which several journalists, that were labelled ‘mercenaries’ of George Soros. In 2020, the Platform published four alerts concerning the ban of the dissemination of Forbes Hungary business magazine, Government instructions to Hungarian State media staff to request permission before writing on a number of issues, a campaign of legal and other threats and intimidation against cartoonist Gábor Pápai, following the publication of an allegedly blasphemous cartoon and the Bill (which became law on 30 March 2020) which introduced the offence of spreading ‘false information’ on COVID-19 and sanctions of up to five years in prison. Hungary provided detailed replies to several of these alerts. As to the criminalisation of stating or spreading false information related to the pandemic, the European Commission has stated that this raises concerns as regards legal certainty and may have a chilling effect on freedom of expression. IV.Other institutional issues related to checks and balances Hungary is a parliamentary republic with a unicameral Parliament (National Assembly). Parliament – inter alia – adopts and amends the Fundamental Law of Hungary, legislates, elects the Prime Minister, and elects – by a two-thirds majority – the most important public officials of the country. The President of the Republic is elected by Parliament. There are a number of institutions tasked with counter-balancing the powers of the legislature and the executive, including the Constitutional Court, the State Audit Office and the Ombudsman (‘Commissioner for Fundamental Rights’). Not only the Government, the President of the Republic and every parliamentary committee, but any member of Parliament may table a bill. The use of public consultations and impact assessments has diminished. Hungarian legislation provides for the mandatory use of public consultation, as well as ex ante and ex post impact assessments. In practice, the consultation and impact assessments are rather formal or symbolic. Concerns relating to the involvement of the social partners and to the quality and predictability of policy-making have been raised in the context of the European Semester. Consultations and impact assessments have been recurrently bypassed by applying special legislative procedures, such as via urgent procedures or individual member’s bills, since the consultation and impact assessment requirements apply only to bills proposed by the Government. On 11 March 2020, a ‘state of danger’ was declared by the Government in response to the COVID-19 pandemic. Its duration was not predefined and the Government had discretionary power to maintain it or to terminate it. On 30 March 2020, Parliament passed a new law that allowed the Government to set aside any law by decree. The emergency powers granted appeared extensive, in light of the combined effect of broadly defined powers and the absence of a clear time limit. Certain emergency measures using those powers raised questions as regards their necessity and proportionality and interfered with business activities and the stability of the regulatory environment. This issue was also addressed by a country-specific recommendation in the context of the 2020 European Semester, where the Council recommended that Hungary ‘ensure that any emergency measures be strictly proportionate, limited in time and in line with European and international standards and do not interfere with business activities and the stability of the regulatory environment’. As of 18 June 2020, the Government terminated the ‘state of danger’ and declared a ‘state of public health emergency’ until 18 December 2020. The applicability of some of the emergency measures were extended beyond the ‘state of danger’. Certain emergency measures have been challenged before the Constitutional Court. In July 2020, the Constitutional Court dismissed a motion to review an emergency measure issued during the ‘state of danger’, invoking the exclusion of its competence in taxation and budgetary matters. New rules on the constitutional complaint procedure were introduced by the ‘omnibus’ legislation in December 2019. As a result of this legislative reform, administrative authorities may challenge before the Constitutional Court a judicial decision that has already become final, if it violates their rights and curtails their powers under the Fundamental Law. Such a procedural arrangement raises questions as regards the principle of legal certainty. While the Commissioner for Fundamental Rights was accredited with ‘A’ status, its re-accreditation was deferred. In October 2019, the UN Sub-Committee on Accreditation (‘SCA’) considered that the information provided as regards the steps taken to respond to a number of recommendations and concerns was insufficient. The SCA was of the view that the selection process is not sufficiently broad and transparent and that the information provided by the Commissioner did not demonstrate adequate efforts in addressing all human rights issues, nor had it spoken out in a manner that promotes and protects all human rights. This was raised in particular as regards the position taken by the Commissioner on the ‘Foreign Funded Organisations Act’ (see below). The SCA also recommended advocating for adequate funding. As of May 2020, a new law on the status and remuneration of the Commissioner’s staff provides for a 30% average pay rise. Moreover, in 2020, the Commissioner took over the responsibilities of the Independent Police Complaints Board. Concerns have been raised as regards the independence of a number of institutions and their capacity to function as counter-weight to the Government’s powers. Civil society remains under pressure, especially when taking a critical stance towards the Government. In June 2020, the Court of Justice found that the Hungarian legislation on the transparency of foreign-funded civil society organisations, adopted in June 2017, is incompatible with free movement of capital as well as with the right to freedom of association and the rights to protection of private life and personal data enshrined in the Charter of Fundamental Rights. Legislative measures required to execute the Court of Justice judgment are under preparation. In November 2019, the Commission referred Hungary to the Court of Justice in relation to a piece of legislation (labelled ‘Stop Soros’ by the Government) that criminalised the organisation of assistance offered by any person on behalf of national, international and non-governmental organisations to people wishing to apply for asylum. In June 2018, the Venice Commission and the OSCE ODIHR published a Joint Opinion, concluding that the provisions examined infringe upon the right to freedom of association and expression and should be repealed. Another law, introducing a special 25% immigration tax applicable to financial support to organisations carrying out ‘activities facilitating immigration’, was criticised by the Venice Commission and OSCE ODIHR. Moreover, hostile rhetoric used by the Government and pro-government media hinders constructive cooperation with civil society organisations. Civic space in Hungary is rated ‘obstructed’. It is important that the applicable legal framework and the political and public environment take account of Council of Europe recommendations relating to protection and promotion of civil society space.



Annex I: List of sources in alphabetical order* * The list of contributions received in the context of the consultation for the 2020 Rule of Law report can be found at (COM website). Bertelsmann Stiftung (2019), Sustainable Governance Indicators. https://www.sgi-network.org/2019/Governance/Executive_Capacity/Evidence-based_Instruments . Budapest Institute, Corruption Research Center Budapest (2019), Transparency and Integrity: the Online Presence of Hungarian Municipalities – Analysis of Urban Municiaplities’ websites in Hungary. http://www.crcb.eu/?p=1799 . Centre for Media Pluralism and Media Freedom (2019), Assessing certain recent developments in the Hungarian media market through the prism of the Media Pluralism Monitor. https://op.europa.eu/en/publication-detail/-/publication/79196553-5c39-11ea-8b81-01aa75ed71a1 . Centre for Media Pluralism and Media Freedom (2019), Decriminalisation of Defamation. https://cmpf.eui.eu/wp-content/uploads/2019/01/decriminalisation-of-defamation_Infographic.pdf . Centre for Media Pluralism and Media Freedom (2020), Media Pluralism Monitor 2020. https://cmpf.eui.eu/media-pluralism-monitor/mpm-2020 . CEPEJ (2018), European judicial systems - Efficiency and quality of justice, CEPEJ STUDIES No. 26, 2018 Edition (2016 data). https://rm.coe.int/rapport-avec-couv-18-09-2018-en/16808def9c . CIVICUS, Monitor tracking civic space: Hungary. https://monitor.civicus.org/country/hungary/ .

Commissioner for Human Rights of the Council of Europe (2018), Commissioner calls on Hungary’s President to return to the Parliament the legislative package on administrative courts (statement of 14 December 2018). https://www.coe.int/en/web/commissioner/-/commissioner-calls-on-hungary-s-president-to-return-to-the-parliament-the-legislative-package-on-administrative-courts . Commissioner for Human Rights of the Council of Europe (2019) Dunja Mijatović report following her visit to Hungary from 4 to 8 February 2019 – Strasbourg, 21 May 2019. https://rm.coe.int/report-on-the-visit-to-hungary-from-4-to-8-february-2019-by-dunja-mija/1680942f0d . Council of Europe, Platform to promote the protection of journalism and safety of journalists – Hungary. https://www.coe.int/en/web/media-freedom/hungary . Council of Europe: Committee of Ministers (2010), Recommendation CM/Rec(2010)12 of the Committee of Ministers to member states on judges: independence, efficiency and responsibilities. Council of Europe: Committee of Ministers (2018), Recommendation CM/Rec(2018)11 of the Committee of Ministers to member States on the need to strengthen the protection and promotion of civil society space in Europe. Council of Europe: Committee of Ministers (2019), Decision of 25 September 2019, CM/Del/Dec(2019)1355/H46-11. Council of Europe: Committee of Ministers (2020), Interim Resolution CM/ResDH(2020)180. Council of Europe: Venice Commission (2012), Hungary – Opinion on Act CLXIII of 2011 on the Prosecution Service and Act CLXIV of 2011 on the Status of the Prosecutor General, Prosecutors and other Prosecution Employees and the Prosecution Career of Hungary, CDL-AD(2012)008. Council of Europe: Venice Commission (2010), Report on the Independence of the Judicial System Part I: The Independence of Judges, CDL-AD(2010)004. Council of Europe: Venice Commission (2012), Hungary – Opinion on Act CLI of 2011 on the Constitutional Court of Hungary, CDL-AD(2012)009. Council of Europe: Venice Commission (2012), Hungary – Opinion on Act CLXII of 2011 on the Legal Status and Remuneration of Judges and Act CLXI of 2011 on the Organisation and Administration of Courts of Hungary, CDL-AD(2012)001. Council of Europe: Venice Commission (2012), Hungary – Opinion on the Cardinal Acts on the Judiciary that were amended following the adoption of Opinion CDL-AD(2012)001 on Hungary, CDL-AD(2012)020. Council of Europe: Venice Commission (2015), Hungary – Opinion on Media Legislation (Act CLXXXV on Media Services and on the Mass Media, Act CIV on the Freedom of the Press, and the Legislation on Taxation of Advertisement Revenues of Mass Media) of Hungary, CDL-AD(2015)015. Council of Europe: Venice Commission (2017), Poland – Opinion on the Draft Act amending the Act on the National Council of the Judiciary; on the Draft Act amending the Act on the Supreme Court, proposed by the President of Poland, and on the Act on the Organisation of Ordinary Courts, CDL-AD(2017)031. Council of Europe: Venice Commission (2019), Hungary – Opinion on the law on administrative courts and the law on the entry into force of the law on administrative courts and certain transitional rules, CDL-AD(2019)004. Council of Europe: Venice Commission (2020), Report - Respect for democracy, human rights and the rule of law during states of emergency: reflections - taken note of by the Venice Commission on 19 June 2020 by a written procedure replacing the 123rd plenary session, CDL-AD(2020)014. Council of Europe: Venice Commission and Organization for Security and Co-operation in Europe Office for Democratic Institutions and Human Rights (OSCE ODIHR) (2018), Hungary – Joint Opinion on the Provisions of the so-called “Stop Soros” draft Legislative Package which directly affect NGOs (in particular Draft Article 353A of the Criminal Code on Facilitating Illegal Migration), CDL-AD(2018)013. Council of Europe: Venice Commission and Organization for Security and Co-operation in Europe Office for Democratic Institutions and Human Rights (OSCE ODIHR) (2018), Hungary – Joint Opinion on Section 253 on the special immigration tax of Act XLI of 20 July 2018 amending certain tax laws and other related laws and on the immigration tax, CDL-AD(2018)035-e. Council of the European Union (2019), Council Recommendation of 9 July 2019 on the 2019 National Reform Programme of Hungary and delivering a Council opinion on the 2019 Convergence Programme of Hungary, OJ C 301, 5.9.2019. Council of the European Union (2020), Council Recommendation of 20 July 2020 on the 2020 National Reform Programme of Hungary and delivering a Council opinion on the 2020 Convergence Programme of Hungary, OJ C 282/17, 26.8.2020.

Court of Justice of the European Union, judgement of 27 February 2018, Associação Sindical dos Juízes Portugueses, C-64/16. Court of Justice of the European Union, judgement of 7 February 2019, Carlos Escribano Vindel, C-49/18. Court of Justice of the European Union, judgement of 19 November 2019, AK, joined cases C‑585/18, C‑624/18 and C‑625/18. Court of Justice of the European Union, judgement of 18 June 2020, Commission v. Hungary, C-78/18. Court of Justice of the European Union, case C-564/19 – IS, pending. Court of Justice of the European Union, case C-821/19, pending. Directorate-General for Communication (2019), Flash Eurobarometer 482: businesses’ attitudes towards corruption in the EU. Directorate-General for Communication (2020), Special Eurobarometer 502: corruption. Eötvös Károly Policy Institute (21 February 2020), statement. http://www.ekint.org/alkotmanyossag/2020-02-21/csend-vagy-kialtas-hallgathatnak-e-a-birak-ha-megtamadjak-a-biroi-fuggetlenseget . European Association of Judges (2019), Report on the fact-finding mission of the EAJ to Hungary, 3 May 2019. https://www.iaj-uim.org/iuw/wp-content/uploads/2019/05/Report-on-the-fact-finding-mission-of-a-delegation-of-the-EAJ-to-Hungary.pdf . European Commission (2020), The OLAF Report 2019. European Commission (2020), The EU Justice Scoreboard 2020. European Commission, 2019 Country Report Hungary, SWD(2019) 1016 final. European Commission, 2020 Country Report Hungary, SWD(2020) 516 final. European Court of Human Rights, judgment of 10 March 2015, Varga and others v. Hungary, application nos. 14097/12, 45135/12, 73712/12, 34001/13, 44055/13, and 64586/13. European Federation of Journalists (2020), Hungary media freedom crackdown: our letter to EU leaders. https://europeanjournalists.org/blog/2020/07/28/hungary-media-freedom-crackdown-our-letter-to-eu-leaders/ . European Network of Councils for the Judiciary (ENCJ) (2019): Independence and Accountability of the Judiciary – ENCJ Survey on the independence of judges, 2019. https://pgwrk-websitemedia.s3.eu-west-1.amazonaws.com/production/pwk-web-encj2017-p/Reports/Data%20ENCJ%202019%20Survey%20on%20the%20Independence%20of%20judges.pdf . European Network of Councils for the Judiciary (ENCJ) and Council of Bars and Law Societies of Europe (CCBE) (2019): Independence and Accountability of the Judiciary – ENCJ/CCBE Survey among lawyers on the independence of judges, 2018-2019. https://pgwrk-websitemedia.s3.eu-west-1.amazonaws.com/production/pwk-web-encj2017-p/Reports/ENCJ%20Survey%20on%20Independence%20Accountability%20of%20the%20Judiciary%20among%20lawyers%20%202019.pdf . GRECO (2015), Fourth Evaluation Round – evaluation report on Hungary on Corruption prevention in respect of members of parliament, judges and prosecutors. GRECO (2017), Third Evaluation Round - Second Addendum to the Second Compliance Report on Hungary on Incriminations (ETS 173 and 191, GPC 2) - Transparency of Party Funding.

GRECO (2018), Fourth Evaluation Round – Interim compliance report on Hungary on Corruption prevention in respect of members of parliament, judges and prosecutors. GRECO (2019), ‘Hungary: Insufficient progress and lack of transparency hamper fight against corruption’ (1 March 2019). https://www.coe.int/en/web/portal/-/hungary-insufficient-progress-and-lack-of-transparency-hamper-fight-against-corruption . Human Rights Watch (23 March 2020), Hungary’s Orban Uses Pandemic to Seize Unlimited Power. https://www.hrw.org/news/2020/03/23/hungarys-orban-uses-pandemic-seize-unlimited-power . Hungarian Association of Judges (‘MABIE’) (10 March 2020), Statement. http://mabie.hu/index.php/1526-a-birok-neveben . Hungarian Bar Association (21 January 2020), Statement of the Presidium. https://jogaszvilag.hu/napi/a-magyar-ugyvedi-kamara-visszautasitja-az-ugyvedeket-ert-tamadasokat/ . Hungarian Civil Liberties Union (2020), Research on the obstruction of the work of journalists during the coronavirus pandemic in Hungary (15 April 2020). https://tasz.hu/a/files/coronavirus_press_research.pdf . Hungarian Government (2020), Input from Hungary for the 2020 Rule of Law Report. Index.hu (24 July 2020), Editorial board of Index and more than 70 staff members resign. https://index.hu/english/2020/07/24/editorial_board_of_index_resigns . International Press Institute (2020), Hungary seeks power to jail journalists for ‘false’ COVID-19 coverage (23 March 2020). https://ipi.media/hungary-seeks-power-to-jail-journalists-for-false-covid-19-coverage/ . International Press Institute (IPI), Article 19, the Committee to Protect Journalists (CPJ), the European Centre for Press and Media Freedom (ECPMF), the European Federation of Journalists (EFJ), Free Press Unlimited (FPU) and Reporters Without Borders (RSF) (2019): Conclusions of the joint international press freedom mission to Hungary (3 December 2019). https://www.ecpmf.eu/fact-finding-mission-hungary-2019/ . Kúria (2018), A “közérdekű adatok kiadásával kapcsolatos perek” bírósági gyakorlata tárgykörére felállított joggyakorlat-elemző csoport összefoglaló véleménye, 3 December 2018). https://kuria-birosag.hu/sites/default/files/joggyak/osszefoglalo_velemeny_adatvedelem.pdf . Mérték Media Monitor (2019): Fidesz-friendly media dominate everywhere. https://mertek.eu/en/2019/05/02/fidesz-friendly-media-dominate-everywhere/https://mertek.eu/en/2019/05/02/fidesz-friendly-media-dominate-everywhere/ . National Authority for Data Protection and Freedom of Information (2019), Annual Report of the National Authority for Data Protection and Freedom of Information 2018, National Authority for Data Protection and Freedom of Information, Budapest. https://naih.hu/files/NAIH-Annual-report-2018-v190830.pdf . Organisation for Economic Co-operation and Development (OECD) (2019), Implementing the OECD Antibribery Convention. Phase 4 Report Hungary. Prosecutor General’s Office (2019), Criminality and Criminal Justice. http://ugyeszseg.hu/pdf/statisztika/Criminality_and_CriminalJustice_2009_2018.pdf . Reporters Without Borders (2020), ‘Hungary: Urgent EU response needed to leading independent news site’s demise.’ (28 July 2020). https://rsf.org/en/news/hungary-urgent-eu-response-needed-leading-independent-news-sites-demise . Reporters Without Borders (2020), World Press Freedom Index. https://rsf.org/en/ranking . Transparency International (2019), Corruption Perceptions Index. United Nations (2019), Global Alliance of National Human Rights Institutions (GANHRI), Sub-Committee on Accreditation (SCA), Accreditation Report – October 2019. United Nations Special Rapporteur on human rights defenders (2016), End of mission statement by Special Rapporteur on the situation of human rights defenders, Visit to Hungary 8 - 16 February 2016. https://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=17048&LangID=E .

Virtual country visit to Hungary in the context of the 2020 Rule of Law Report.



Annex II: Country visit to Hungary The Commission services held virtual meetings in June 2020 with: ·Amnesty International Hungary ·Committee on Legislation of the National Assembly ·Corruption Research Center Budapest ·Editors-in-Chief’s Forum (Főszerkesztők Fóruma) ·Eötvös Károly Policy Institute ·Hungarian Bar Association ·Hungarian Civil Liberties Union ·Hungarian Helsinki Committee ·K-Monitor ·Mérték Media Monitor ·Ministry of Interior ·Ministry of Justice ·National Authority for Data Protection and Freedom of Information ·National Judicial Council ·National Media and Infocommunications Authority

·National Office for the Judiciary ·Office of the Commissioner for Fundamental Rights ·Office of the Constitutional Court ·Prosecution Service of Hungary ·State Audit Office ·Supreme Court (Kúria) ·Transparency International Hungary * The Commission also met the following organisations in a number of horizontal meetings: ·Amnesty International ·Civil Liberties Union for Europe ·Civil Society Europe ·Conference of European Churches ·EuroCommerce ·European Center for Not-for-Profit Law ·European Centre for Press and Media Freedom ·European Civic Forum ·Free Press Unlimited ·Front Line Defenders ·ILGA-Europe