EUROPEAN COMMISSION Brussels, 20.7.2021 SWD(2021) 714 final COMMISSION STAFF WORKING DOCUMENT 2021 Rule of Law Report







Country Chapter on the rule of law situation in Hungary Accompanying the COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS 2021 Rule of Law Report







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Abstract As regards efficiency and quality, the Hungarian justice system performs well in terms of the length of proceedings and has a high level of digitalisation. The gradual increase of salaries of judges and prosecutors continues. However, as regards judicial independence, the justice system has been subject to new developments adding to existing concerns, expressed also in the context of the Article 7(1) TEU procedure initiated by the European Parliament. The new rules allowing for appointment of members of the Constitutional Court to the Supreme Court (Kúria) outside the normal procedure, have been put in practice, and enabled the election of the new Kúria President, whose position was also endowed with additional powers. This Kúria President was elected despite a negative opinion of the National Judicial Council. The recommendation to strengthen judicial independence, made in the context of the European Semester, remains unaddressed. This includes the need to formally reinforce the powers of the independent National Judicial Council to enable it to counter-balance the powers of the President of the National Office for the Judiciary. The implementation of the anti-corruption strategy is ongoing but its scope remains limited. Shortcomings persist as regards political party financing, lobbying and ‘revolving doors’. Risks of clientelism, favouritism and nepotism in high-level public administration as well as risks arising from the link between businesses and political actors remain unaddressed. Independent control mechanisms remain insufficient for detecting corruption. Concerns remain regarding the lack of systematic checks and insufficient oversight of asset and interest declarations. New criminal law provisions aim to address foreign bribery and informal payments in healthcare. While the indictment rate for corruption cases is high, and some new high-level corruption cases were opened since 2020, the track record for investigations of allegations concerning high-level officials and their immediate circle remains limited. Media pluralism remains at risk. Concerns persist with regard to the independence and effectiveness of the Media Authority, also in the light of the Media Council’s decisions leading to independent radio station Klubrádió being taken off air. While no media support schemes were established to counter the impact of the COVID-19 pandemic on news media outlets, significant amounts of state advertising have continued to permit the government to exert indirect political influence over the media. Access to public information was tightened through emergency measures introduced during the pandemic, making timely access to such information harder for independent media outlets. Independent media outlets and journalists continue to face obstruction and intimidation. As regards the system of checks and balances, the transparency and quality of the legislative process remain a source of concern. An amendment to the constitution will limit the powers of Government as regards the ‘state of danger’ regime after July 2023. The Commissioner for Fundamental Rights has gained more competences, but its independence has been questioned by stakeholders. The Commission launched infringement proceedings to ensure the implementation of the Court of Justice judgment on the law on the transparency of foreign-funded civil society organisations. Subsequently, Parliament repealed the law and introduced new rules on legality checks for civil society. Pressure remains on civil society organisations critical towards the government, whilst concerns have been expressed about newly established private trusts receiving significant public funding, managed by board members close to the current government. I.Justice System Hungary has a four-tier ordinary court system. 113 district courts operate at first instance, while 20 regional courts hear appeals against district court decisions and decide on 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 Fundamental Law tasks the President of the National Office for the Judiciary (NOJ), elected by Parliament, with the central administration of the courts. The National Judicial Council is an independent body, which, under 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 ordinary 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 autonomous self-governing public bodies. Independence Perceived judicial independence continues to be average among the general public and low among companies. The perceived independence of courts and judges by the general public continues to be average, dropping from 48% in 2020 to 40% in 2021. 32% of companies perceive judicial independence as ‘fairly or very good’ , an increase compared to the 26% in 2020. As regards the general public, there has been a negative trend in perceptions in the last five years (interrupted in 2020); as regards companies, after a significant drop in 2019, perception continued to improve. The National Judicial Council continues to face challenges in counter-balancing the powers of the President of the National Office for the Judiciary as regards the management of the courts. As indicated in the 2020 Rule of Law Report, 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. The National Judicial Council has no legal personality and has no right to propose legislation or to be consulted on legislative proposals affecting the justice system. New members and substitutes have been elected to the National Judicial Council; it has an agreed budget, and the NOJ President has provided it with one additional staff member. The current NOJ President cooperates better with the Council than his predecessor, but that cooperation is limited to the extent required by law, and no legislative steps have been taken to address structural issues. The Council recommendations in the context of the European Semester, to ‘strengthen judicial independence’ remain to be addressed. The NOJ President has repeatedly filled vacancies in higher courts, without a call for applications, with judges performing administrative tasks in the NOJ. The President of the Kúria, the Supreme Court, has received additional powers in organising the functioning of that court. As of 1 January 2021, new rules entered into force, allowing the Kúria President to set up judicial panels composed of a presiding judge and four judges for certain groups of cases, following a non-binding opinion of the department concerned and of the judicial council of the Kúria. This further increased the administrative powers of the Kúria President, which include appointing presiding judges, assigning judges and presiding judges to chambers, appointing heads of department, and establishing the case allocation scheme among chambers. The Kúria President also has important powers as regards the role of the Kúria in ensuring the uniform application of law by courts. To that effect, the Kúria makes uniformity decisions which are binding on courts. When a chamber wishes to deviate from the Kúria’s published case law, it must stay the proceedings and request a uniformity decision. The uniformity panel can be chaired by the Kúria President or Vice President; its six members are selected by the chair on an ad hoc basis from among judges of the given department. Moreover, the parties may lodge a uniformity complaint against a final decision of the Kúria if it deviates from the Kúria’s published case law. The uniformity complaint panel is chaired by the Kúria President or Vice President; its eight members are selected by the chair based on an algorithm. The uniformity complaint panel may quash final decisions handed down by the chambers in individual cases. The Kúria’s judicial bodies (e.g. the judicial council or the departments), which have a merely consultative role, are unable to counter-balance the extensive powers of the Kúria President. A new Kúria President was elected as of 1 January 2021 under the new special rules on judicial appointments. It is recalled that in June 2020, the President of the Republic, appointed as of 1 July 2020 eight members of the Constitutional Court as Kúria judges upon their request, six of which without experience as a judge in an ordinary court. As explained in the 2020 Rule of Law Report, following an amendment adopted in 2020, members of the Constitutional Court, having obtained the status of a judge, could request to be appointed to the Kúria after the termination of their service in the Constitutional Court. On 5 October 2020, the President of the Republic recommended that Parliament elects one of them to the post of Kúria President. After having heard the person concerned in line with the relevant legal provisions, the National Judicial Council rejected his nomination almost unanimously. After having terminated his membership in the Constitutional Court, on 19 October 2020, the nominee was elected by the National Assembly to the post of Kúria President as of 1 January 2021 for a period of nine years. Also on 19 October, the then Kúria President assigned him to the Kúria, where he served as a presiding judge in one of the chambers until he took office as Kúria President. These developments confirm the concerns already flagged in the 2020 Rule of Law Report, with an appointment to the top judicial post being decided without involvement of a judicial body, and not in line with European standards. The UN Special Rapporteur on the independence of judges and lawyers characterised the election as an ‘attack to the independence of the judiciary and as an attempt to submit the judiciary to the will of the legislative branch, in violation of the principle of separation of powers’. In the light of the administrative powers of the Kúria President and the key role of the Kúria in the justice system, these developments raise serious concerns as regards judicial independence. The practice of the President of the National Office for the Judiciary of annulling the procedures for selecting court presidents and appointing ad interim court presidents without the approval of the National Judicial Council continued. The NOJ President has continued the practice of cancelling – in a growing number of cases and often without sufficient explanations – selection procedures for court presidents and other court managers, even where there were suitable applicants supported by their peers. This practice was criticised by the National Judicial Council already under the mandate of the previous NOJ President. Over the last year, the selection of court presidents was repeatedly delayed due to the COVID-19 pandemic; as a result, vacant posts either remained empty or were filled by the NOJ President on a temporary basis, or the mandate of court managers was extended by legislation. The court presidents exercise powers that are relevant to judges’ career perspectives. Since judges’ first appointment is limited to three years, the continuation of their judicial career depends on an assessment of their suitability for judicial tenure, for which the court president is to evaluate their judicial activity. If judges are found suitable, the court president requests the NOJ President to recommend that the President of the Republic appoint them for an unlimited period of time. If found unsuitable, they have to leave the bench at the end of the initial appointment. The results of the evaluation may be challenged before the service court; the service court cannot grant interim relief to prevent an interruption of the judicial career during the review of the evaluation. Also, every three years, the court president and the NOJ President may reassign judges – without their consent – to another court for up to one year, although in practice they have not availed themselves of this possibility since 2012. Concerns have been raised as regards the impact of this power on the irremovability of judges. The gradual increase of salaries of judges and prosecutors continues. The increase in judicial salaries noted by the 2020 Rule of Law Report continued as foreseen in the omnibus legislation of 2019, and is expected to contribute to enhancing judicial independence. In the first phase, as of January 2020, salaries were increased on average by 32%, and in the second phase, as of January 2021, by 12%. A further increase of 13% is scheduled for 2022. However, concerns persist as regards the system of bonuses and the power of the authorities managing the courts to award bonuses to judges on a discretionary basis, without objective and transparent criteria. Concerns persist as regards some elements of the organisation of the prosecution service. As the 2020 Rule of Law Report noted, 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. Whereas most recommendations of GRECO related to the prosecution service have been implemented, some remain unaddressed. This is the case as regards the recommendation to remove the possibility to maintain the Prosecutor General in office after the expiry of his/her mandate. It is also the case as regards GRECO’s recommendation that situations in which a superior prosecutor takes over a case from a subordinate prosecutor be guided by strict criteria and that such decisions be justified in writing. GRECO also recommended to enhance accountability and transparency of disciplinary proceedings against prosecutors; GRECO remains concerned that it is still the direct superior prosecutor who decides on the merits of the case, rather than an impartial body. The full implementation of these recommendations would have a positive impact on the anti-corruption framework. Quality The digitalisation of the justice system is overall high. Hungary continues to rank very high when it comes to digital solutions to initiate and follow proceedings in civil/commercial and administrative cases, digital solutions to conduct and follow court proceedings in criminal cases, and online access to published judgments by the general public. Moreover, Hungary has very good results as regards the promotion of and incentives for using alternative dispute resolution methods. However, there are concerns as regards the level of inclusiveness of the legal aid scheme, and court fees in commercial cases remain high. More training in communication could be made available for judges. The operation of the courts was adapted during the COVID-19 pandemic. Digital solutions (e.g. a remote hearing system) were already in place at the outbreak of the pandemic. The use of remote hearing (videoconference) tools during the pandemic has become widespread, rendering certain court proceedings more efficient. Certain court procedures have been simplified. On 8 March 2021, the Government introduced changes to procedural laws, aimed at facilitating the operation of the justice system during the ‘state of danger’. Efficiency

The efficiency in civil and administrative cases remains high. According to the 2021 EU Justice Scoreboard, Hungary performs very well as regards the estimated time needed to resolve administrative cases at first instance and at all court instances; the number of pending administrative cases at first instance courts; and the number of pending civil, commercial and administrative and other cases. Hungary also performs well as regards the estimated time needed to resolve litigious civil and commercial cases at first instance and the rate of resolving civil, commercial, administrative and other cases. New procedural rules allow as of 9 July 2020 expedited proceedings in cases involving civil law claims of victims of crime. Effective remedies in cases of excessively lengthy proceedings are being developed. 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 as regards this matter. On 15 June 2021, Parliament adopted a new law introducing as of 2021 a compensatory remedy limited to excessively long civil proceedings. II.Anti-Corruption Framework The National Protective Service (NVSZ) under the oversight of the Ministry of Interior coordinates anti-corruption activities in Hungary and is also responsible for the prevention of crime within the police, law enforcement, and other government agencies. 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 its 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 control of financial management of public funds and auditing of political parties. The perception of public sector corruption among experts and business executives is that the level of corruption in the public sector remains high. In the 2020 Corruption Perceptions Index by Transparency International, Hungary scores 44/100 and ranks 19th in the European Union and 69th globally. This perception has significantly decreased over the past five years. Some revisions were introduced to criminal law legislation to address foreign bribery and informal payments in healthcare. As reported in 2020 Rule of Law Report, the relevant anti-corruption offences are criminalised. In response to a recommendation by the OECD, an amendment to the Criminal Code came into force on 1 January 2021. This amendment modifies the definition of ‘foreign public official’ in order to clarify that it includes officials of foreign public enterprises. It also introduces stricter sentences for facilitation payments. Provisions on bribery were also amended to include undue advantage to healthcare professionals thus limiting the possibility of informal (‘gratitude’) payments in healthcare and making the promising or giving of undue advantages for the provision of health services a subsidiary crime. The implementation of the National Anti-corruption Strategy for 2020-2022 and dedicated Action Plan is ongoing. As reported in 2020 Rule of Law Report, the scope of the anti-corruption strategic framework is limited to fostering integrity in public administration. The Strategy, adopted in June 2020 foresees actions such as: the introduction and development of electronic solutions for increasing transparency (e.g. automated decision-making system), monitoring integrity risks, integrity training for civil servants, and specialised anti-corruption training for law enforcement, judges and prosecutors. Other relevant areas, such as political party financing, asset disclosure, lobbying and ‘revolving-doors’ provisions are covered in specific instruments. However, since they are not covered by the Strategy, shortcomings are not addressed in a coordinated manner. Similarly, risks related to clientelism, favouritism and nepotism in high-level public administration or those arising from the interface between businesses and political actors remain unaddressed. Challenges remain as regards the investigation and prosecution of high-level corruption cases. The legal framework ensures the conditions for efficient investigations and prosecutions and the police and the Prosecution Service report adequate levels of resources and specialisation to carry out their tasks. However, prosecutors highlight challenges in detecting corruption and obtaining evidence in such cases. Criminal proceedings for corruption offenses are mainly initiated on the basis of the criminal investigation activities of the investigating authorities. The majority of the investigated cases are detected by the National Protective Service. Notifications from administrative authorities and possible irregularities signalled through preventive tools (e.g. asset declarations, whistleblower reporting channels, information from various registries) play a relatively smaller role in criminal investigations and independent control mechanisms remain insufficient for detecting corruption. As reported last year, deficient independent control mechanisms and close interconnections between politics and certain national businesses are conducive to corruption. According to data from the prosecution service, the indictment rate for corruption cases investigated by the prosecution is overall very high (86.5%). Some new high-level cases involving politicians were opened since 2020, however the track record of investigations of allegations concerning high-level officials and their immediate circle remains limited, as noted in the 2020 Rule of Law Report. The full implementation of the GRECO recommendations as regards the effective functioning of the prosecution would further strengthen the anti-corruption framework. Integrity tests continue to be considered by the authorities as an effective deterrent to corrupt behaviour and have led to the opening of several criminal cases for petty corruption in the reporting period. As of 1 January 2021, a new amendment of the Police Act entered into force broadening the scope of staff that may be subject to integrity tests beyond the police. Accordingly, all staff of budgetary organisations under the supervision of the Government and members of the Government can now be subject to integrity tests. Hungary has an extensive asset disclosure system, however, concerns remain regarding the lack of systematic checks and insufficient oversight of asset and interest declarations. The system in place requires members of Parliament, government officials, and public officials to declare their assets and interests. However, concerns remain as regards the lack of systematic monitoring. Verification of asset declarations occurs only upon notification of suspicions and is left to the employer of the public official or to the Parliamentary Committee on Immunity for the declarations of members of Parliament and high-ranking government officials. The Committee reported that, in the past five years, out of 16 notifications submitted for verification, 15 were rejected as not substantiated. In the remaining case, the person concerned corrected his declaration of assets and liabilities and the procedure was not initiated. As reported last year, 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 possibility for independent verifications. Following an amendment of the relevant rules, members of Parliament must declare to the Speaker any conflict of interest or incompatibility, following which they are subject to certain restrictions pending the resolution of the situation. However, declarations of interests and information about any follow-up are not publicly available. The issue of effective supervision, verification and enforcement of rules of conduct, conflicts of interests and asset declarations for members of Parliament was subject to recommendations by the Group of States against Corruption of the Council of Europe (GRECO), which have been partly implemented. The regulation of lobbying continues to remain incomplete and lacks systematic enforcement. There is no mandatory registration of lobbyists and disclosure of contact reports. According to a 2013 Government Decree, employees of state administration bodies may only meet interest representatives in relation to their work after informing their superiors, who may prohibit the meeting. Meetings with interest representatives have to be documented but there is no obligation to make the encounters public. GRECO has recommended a clear set of rules in the interaction with lobbyists as regards members of Parliament. Clear rules as regards revolving doors and cooling-off periods continue to be lacking. Although both the Labour Code as well as specific legislation applicable to public officials contain confidentiality clauses. In practice, these rules are not enforced, as the Government still needs to specify the sectors and positions where a clear time restriction applies for public officials to pursue business careers in the area in which they were active. Party financing in Hungary remains a concern. The State Audit Office is charged with overseeing the accountability of the use of public funds and controls the legality of financial management of political parties. As also noted by GRECO, while some measures have been taken to ensure that the financial registries of political parties are transparent and up-to-date, to clarify party income sources and campaign periods, as well as to ensure a more in-depth monitoring, overall concerns remains as regards the transparency of party financing. A regulatory framework is in place for the protection of whistleblowers and further steps are needed to enhance protection in practice. The Whistleblower Protection Act provides anonymity for whistleblowers and enables the submission of complaints electronically. The public interest disclosures are investigated by the institutions concerned, and their answer containing the result of the investigation is to be uploaded to the electronic registry. Whistleblowers may not be held liable for their reporting unless they are found to have intentionally made a false report. The Commissioner for Fundamental Rights, acts as reporting channel and operates the electronic platform but has only limited formal competence as regards whistleblower complaints. The OECD recognised the positive aspects of the regulatory framework, but raised concerns as regards the effectiveness of the protection of whistleblowers. The narrowing of the scope of application of public procurement rules has heightened the risk of corruption. A new law adopted on 27 April 2021 repealed a specific requirement of the public procurement law, thus taking trusts established by the state, as well as legal persons managed by them, out of the explicit scope of application of procurement rules in respect of procurements financed by European Union funds. The same law also removes rules aimed at preventing conflict of interest, thereby allowing holders of public office to sit on the board of trustees of such trusts. A number of OLAF investigations were completed with the support of the Hungarian AFCOS (anti-fraud coordination service). In recent years, the number of indictments following OLAF’s judicial recommendations was higher in Hungary than the EU average. However, despite repeated requests, the Hungarian authorities have not yet communicated an authority in charge to provide assistance to OLAF during its on-the-spot checks if an economic operator subject to control refuses to cooperate. It is further noted in the field of shared management, that the Hungarian authorities frequently withdraw projects from EU funding when OLAF issues a financial recommendation, or sometimes when the authorities become aware that an OLAF investigation has been opened. Furthermore, it appears that amounts due are not systematically recovered from the economic operator who committed the irregularity or fraud. In such cases, the EU subsidy is simply replaced by national funds, with a negative impact on the deterrent effect of an OLAF investigation and higher risks for the national budget. During the period 2016-2020, Hungary had 32 OLAF investigations closed with a financial recommendation in the two main ares of shared management. The authorities acknowledged that the COVID-19 pandemic may increase corruption risks, but no specific measures were deemed to be necessary. Stakeholders pointed to concerns in the area of public procurement, where derogations from procurement rules and direct awards, coupled with deficiencies in access to information increase the risk of corruption and raised questions as regards the purchase of medical equipment through intermediary companies. III.Media Pluralism and Media Freedom Hungary’s Fundamental Law and sectoral legislation – in particular the Media Act and the Freedom of the Press Act – provide the legal framework for the protection of media freedom and pluralism. The Freedom of the Press Act stipulates that freedom of the press embodies independence from the State and from any 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 . Legislation was adopted in 2019 to align Hungarian legislation with the AVMS Directive .

Concerns persist as regards the independence and effectiveness of the Media Council and the Media Authority. Act LXIII of 2019, transposing the revised Audiovisual Media Services Directive, strengthened certain provisions relating to the resources and operational transparency of the Authority . The Authority has budgetary autonomy and reports annually to the Parliament. It employs a staff of 650 persons. The decision-making body of the Media Authority, the Media Council, is composed of a President and four members elected by Parliament. While the rules on nomination – which have remained unchanged since last year’s report – favour political consensus in the appointment of the members of the Media Council , in practice they have led to the governing party nominating all members. Certain decisions of the Media Council have added to the concerns regarding its effective independence. The 2021 Media Pluralism Monitor confirms its previous assessment that while the Media Law formally guarantees the independence of the Media Authority, the appointment procedures do not provide adequate legal safeguards for independence, once more registering medium risk for Hungary in terms of the independence and effectiveness of the Media Authority. Media pluralism has further deteriorated in Hungary. After the establishment of the ‘KESMA’ media conglomerate in November 2018, there has been, to date, no attempt by the Media Authority to examine its impact on the plurality and diversity of the Hungarian media market. According to stakeholders, while a broad range of media outlets continue to operate in Hungary, the diversity of the media market is negatively affected by the concentration of ownership in the hands of a few pro-government businesspersons and the resulting lack of editorial independence. Hungarian and European media freedom organisations, as well as civil society, have voiced concerns with regard to the Media Council’s refusal to renew the broadcasting license of independent radio station, Klubrádió, based on the station’s alleged failure to comply with certain administrative obligations. This has resulted in the radio being taken off air. On 17 June 2021, the Kúria upheld the Media Council’s decision. On 9 June 2021, the Commission launched an infringement procedure against Hungary with regard to this case. The 2021 Media Pluralism Monitor confirms the previous year’s high risk score with regard to news media concentration in the light of the creation and operation of the KESMA, and because of the economic takeover of the independent news media site Index.hu by pro-government interests . Transparency of media ownership is still not fully guaranteed. The current legal framework contains transparency rules on media ownership only in specific cases, and there are currently no plans to amend it. While some ownership data is available from national registers, only basic information on company ownership is freely accessible from the company register. The 2021 Media Pluralism Monitor continues to rate transparency of media ownership at high risk. The allocation of state advertising continues to permit the Government to exert indirect political influence over the media. As reported last year, there is no legislation regulating the distribution of state advertising. The Media Pluralism Monitor 2021 highlights that the state is the largest advertiser in Hungary spending approximately one third of the total advertising revenue of the market. The data reveals that in 2020 the Hungarian state increased its spending on advertising by 13.8% over 2019, with 85% of that revenue going to pro-government media companies. This state of affairs permits control over both pro-government as well as certain independent outlets leading the Media Pluralism Monitor 2021 to consider editorial independence being at the highest risk (92%) in the country. While no media support schemes were established to counter the impact of the COVID-19 pandemic on news media outlets, the Media Authority exempted commercial linear media service providers from paying the quarterly media service provision fee for the first half of 2021. Access to public information was tightened through emergency measures introduced during the COVID-19 pandemic. The rules of the Freedom of Information Act have not been changed; they provide 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 . The statutory deadline for handling such requests is 15 days, which can be extended by 15 days. However, during the pandemic, the Government issued a decree allowing public authorities to delay giving access to public documents by up to 90 days in case such provision of information was seen as ‘jeopardising the public institution’s fulfilment of its duty related to the state of emergency’. On 13 April 2021, the Constitutional Court ruled that while the new provisions are in line with the Fundamental Law, derogations from the normal deadlines must be limited to the cases where handling the request would impede the holder of public information to perform tasks related to countering the pandemic and need to be duly justified in writing. Stakeholders pointed out that in practice this derogation was often abused by the authorities, with a major impact for independent journalists in particular, who reportedly could not obtain timely access to data on public spending or vaccinations. This further aggravated the situation of independent media outlets that have difficulties to access information in a timely manner. The deficiencies in access to public information reported last year, including as regards the charging of fees, continue to be an issue also for the prevention of corruption. As the Ninth Amendment to the Fundamental Law gave a restrictive definition of ‘public funds’, questions have been raised by stakeholders as regards possible consequences on restricting access to public information related to public companies and public-interest trusts. Journalists and media outlets continued to face diverse threats in Hungary. According to stakeholders, journalists working for independent media are subject to negative narratives by pro-government media and by government representatives. Stakeholders report that female journalists are in a more difficult situation; some also reporting gender-based online harassment. Courts continued to order interim relief banning the dissemination of magazines. Since October 2020, the Council of Europe’s Platform to promote the protection of journalism and the safety of journalists published five further alerts concerning Hungary. These concerned, respectively: the dismissal of the former editor of online news portal Index.hu prior to its takeover; instructions issued by the Ministry of Foreign Affairs and Trade for embassies in EU Member States to provide information with regard to professional trips undertaken by Hungarian journalists; an injunction issued by a civil court preventing a weekly newspaper from publishing an article on a company and its owners on data protection grounds; the police interrogation of two journalists who published articles about a public figure and the above-mentioned refusal by the Hungarian Media Council to renew Klubrádió’s radio licence. In 2021, the Platform published one alert concerning what the Platform called a ‘tirade of insults’ directed against an Austrian journalist by the Hungarian public broadcaster. IV.Other Institutional Issues related to Checks and Balances Hungary is a parliamentary republic with a unicameral Parliament (National Assembly). Parliament –among others– adopts and amends the Fundamental Law of Hungary, legislates, elects the Prime Minister, and elects – by a two-thirds majority – the top rank 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, and entrusted with guaranteeing the respect of the constitutional order, including the Constitutional Court, the State Audit Office and the Ombudsperson (‘Commissioner for Fundamental Rights’). In addition to the Government, the President of the Republic and every parliamentary committee, any member of Parliament may table a bill. Frequent and sudden changes of the legislation continue to undermine the predictability of the regulatory environment. Stakeholders reported that the pace of legislation has accelerated even further compared to previous years. According to stakeholders, consultations, if any, are purely formal. This raises questions as regards legal certainty and the quality of legislation. The short periods of time between the adoption and the entry into force of frequently changing rules do not always allow for the adequate preparation of their application. During the reporting period, the Government declared a new ‘state of danger’ in response to the COVID-19 pandemic. On 18 June 2020, the Government terminated the first ‘state of danger’. In accordance with the current constitutional rules, the duration of the new ‘state of danger’ introduced on 4 November 2020 is not predefined, and the Government has discretionary power to maintain it or to terminate it. Emergency measures (Government decrees) adopted under this regime may set aside any law and remain in force for 15 days unless their extension is authorised by Parliament. On 10 November 2020, Parliament authorised the Government to extend the applicability of emergency measures by 90 days. On 8 February 2021, the Government terminated the ‘state of danger’, and on the same day declared it again. This way, emergency measures could remain in force without parliamentary approval for a period of 15 days. On 22 February 2021, Parliament authorised the Government to extend the applicability of emergency measures by 90 days. On 18 May 2021, Parliament further extended the authorisation until ‘the 15th day following the opening day of the Autumn Session in 2021’. Concerns over the current rules on the ‘state of danger’ and emergency measures remain. Despite a country-specific recommendation in the context of the 2020 European Semester, interference with business activities and the stability of the regulatory environment continued, and some emergency measures raise questions as regards their necessity and proportionality. The Constitutional Court continued to review the constitutionality of certain emergency measures. An amendment to the Constitution will limit the powers of Government as regards the ‘state of danger’ regime. On 15 December 2020, the Ninth Amendment to the Fundamental Law was adopted by Parliament. There was no prior stakeholder consultation. It significantly changes the rules concerning the special legal order regime (including ‘the state of danger’) as of 1 July 2023. It reduces the types of special legal orders from six to three: state of war, state of emergency and state of danger. The amendment does not affect the current rule providing that under a special legal order, the application of the Fundamental Law may not be suspended, and the operation of the Constitutional Court may not be restricted. In case of state of danger, Parliament will primarily have control over the maintenance of the special legal order. The Government will be able to declare a ‘state of danger’ for a period of 30 days, and will be able to extend it only following an authorisation by Parliament. These new rules will increase oversight by Parliament. The powers of the Commissioner for Fundamental Rights were extended, while questions were raised about its independence. On 20 November 2020, the Council of Europe Commissioner of Human Rights expressed concerns about the merger of the Equal Treatment Authority and the Office of the Commissioner for Fundamental Rights, recalling that doubts remained about the appointment process of the incumbent and the adequacy of the institution’s efforts to address all human rights issues and speak out in a manner that promotes and protects all human rights. The national human rights institution was accredited with ‘A’ status in October 2014. In October 2018, the UN Sub-Committee on Accreditation (SCA) of the Global Alliance of NHRIs (GANHRI), decided to defer its decision on its re-accreditation. The SCA is reviewing the Commissioner for Fundamental Rights. As of January 2021, new legislation integrated the Equal Treatment Authority in the Office of the Commissioner for Fundamental Rights. In the performance of its duties specified in the Equal Treatment Act, the Office of the Commissioner for Fundamental Rights acts as an administrative authority. The Commissioner may also initiate the review of laws by the Constitutional Court. According to EU law, equality bodies ‘may form part of agencies charged at national level with the defence of human rights or the safeguard of individuals’ rights’. According to the relevant legal framework, the Commissioner for Fundamental Rights shall be independent, subordinated only to Acts and may not be given instructions regarding its activities. In this regards, the Government maintains that the executive does not have any influence on how the Commissioner performs his or her activities. However, stakeholders have expressed concerns as regards the independent and effective functioning of the Commissioner. Concerns have been expressed about the role of the Constitutional Court in reviewing final court decisions. As noted in the 2020 Rule of Law Report, following a legislative amendment, 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. Over the past year, public authorities have challenged before the Constitutional Court some final judgments affecting them, handed down by ordinary courts. This possibility of review raises questions in particular as regards legal certainty. Moreover, although it is not part of the court system, the Constitutional Court hearing constitutional complaints is nonetheless adjudicating on the merits of the case and has been characterised as ‘a court of fourth instance’, acting in the same manner as ordinary appellate courts. In this context, it is recalled that members of the Constitutional Court are elected by Parliament voting with a two-thirds majority, on the basis of broad eligibility criteria. Civil society organisations critical towards the Government remain under pressure. Following the Court of Justice’s ruling in the infringement action brought against Hungary by the Commission, on 18 May 2021, Parliament adopted a new law repealing the Act on the transparency of foreign-funded civil society organisations which breached EU law. The same law introduced new rules requiring the State Audit Office to carry out legality checks on the accounts of civil society organisations with an annual balance sheet total exceeding a certain amount. Infringement proceedings are currently ongoing in relation to legislation that criminalises the organisation of assistance offered by persons on behalf of national, international and non-governmental organisations to people wishing to apply for asylum. Another law introducing a special 25% immigration tax applicable to financial support to organisations carrying out ‘activities facilitating immigration’, which also raised concerns, continues to apply. The Government and pro-government media continue to use hostile rhetoric against civil society organisations that take a critical stance towards the Government. Civic space in Hungary is rated as ‘obstructed’. According to the Government, the National Cooperation Fund and the 1% personal income tax donation scheme are financing tools designed to support the operation and activities of civil society organisations. Nonetheless, according to stakeholders, the civil society organisations continue to be underfinanced, in particular if they are critical towards the government. The Ninth Amendment to the Fundamental Law (15 December 2020) introduced a qualified majority in Parliament for amending the rules on public-interest trusts performing public duties. A new law adopted on 27 April 2021 has created a legal framework for the functioning of such trusts. The boards of trustees include current Ministers and State secretaries. Some stakeholders have expressed concerns about public assets being donated to such private entities, also taking into account the composition of the boards of trustees. These developments take place against the background of the legal uncertainty noted above as regards the applicability to such trusts of rules on public procurement and on access to public information. The Venice Commission acknowledged that the new definition does not dismiss private entities managing public funds from their duties of accountability, but it warned against the risk of removing public funds and public tasks from democratic control, also taking into account the new definition of public funds. Annex I: List of sources in alphabetical order* * The list of contributions received in the context of the consultation for the 2021 Rule of Law report can be found at https://ec.europa.eu/info/policies/justice-and-fundamental-rights/upholding-rule-law/rule-law/rule-law-mechanism/2021-rule-law-report-targeted-stakeholder-consultation . Alapjogokért Központ (2021), Contribution from Alapjogokért Központ for the 2021 Rule of Law Report. Amnesty International Hungary, Eötvös Károly Institute, Hungarian Civil Liberties Union, K-Monitor, Mérték Media Monitor, Political Capital and Transparency International Hungary (2021), Contribution from Amnesty International Hungary, Eötvös Károly Policy Institute, Hungarian Civil Liberties Union, K-Monitor, Mérték Media Monitor, Political Capital and Transparency International Hungary for the 2021 Rule of Law Report. Centre for Media Pluralism and Media Freedom (2021), Media pluralism monitor 2021 – Report on Hungary Civil Liberties Union for Europe (2021), Contribution from Civil Liberties Union for Europe for the 2021 Rule of Law Report.

Committee to Protect Journalists (2021), Contribution from the Committee to Protect Journalists for the 2021 Rule of Law Report. Council of Bars and Law Societies of Europe (2021), Contribution from the Council of Bars and Law Societies of Europe for the 2021 Rule of Law Report. Council of Europe Commissioner for Human Rights (2020), Council of Europe Commissioner for Human Rights, Dunja Mijatović, statement of 20 November 2020 ( https://www.coe.int/en/web/commissioner/-/commissioner-urges-hungary-s-parliament-to-postpone-the-vote-on-draft-bills-that-if-adopted-will-have-far-reaching-adverse-effects-on-human-rights-in- ). European Association of Judges (2021), Contribution from the European Association of Judges for the 2021 Rule of Law Report. European Centre for Press and Media Freedom (2021), European Centre for Press and Media Freedom statement of 15 March 2021 ( https://www.ecpmf.eu/hungaryon-national-day-new-hope-that-klubradio-may-return-to-airwaves/ ). European Civic Forum (2021), Contribution from the European Civic Forum for the 2021 Rule of Law Report. European Commission (2020), EU Justice Scoreboard. European Commission (2020), Rule of Law Report, Country Chapter on the rule of law situation in Hungary. European Commission (2021), EU Justice Scoreboard. European Commission (2021), The OLAF Report 2021. European Federation of Journalists (2021), Contribution from the European Federation of Journalists for the 2021 Rule of Law Report. European Network of Councils for the Judiciary (2020), European Network of Councils for the Judiciary letter to the European Commission dated 27 October 2020 ( https://pgwrk-websitemedia.s3.eu-west-1.amazonaws.com/production/pwk-web-encj2017-p/News/Letter%20ENCJ%20RoL%20Hungary%20EC%2027%20October%202020.pdf ). European Network of National Human Rights Institutions (2021), Contribution from the European Network of National Human Rights Institutions for the 2021 Rule of Law Report. Government of Hungary (2021), Input from Hungary for the 2021 Rule of Law Report. GRECO (2019), Third Evaluation Round – Second Addendum to the Second Compliance Report on Hungary – Transparency of Party Funding.GRECO (2020), Fourth Evaluation Round – Second Interim Compliance Report on Hungary – Corruption prevention in respect of members of parliament, judges and prosecutors. Háttér Society (2021), Contribution from Háttér Society for the 2021 Rule of Law Report. International Press Institute (2021), Contribution from the International Press Institute for the 2021 Rule of Law Report. K-Monitor and Transparency International Hungary (2021), Contribution from K-Monitor and Transparency International Hungary for the 2021 Rule of Law Report. Kúria President (2021), Contribution from the Kúria President for the 2021 Rule of Law Report. OECD (2019), Implementing the OECD Anti Bribery Convention – Phase 4 Report: Hungary.

Ökotárs - Hungarian Environmental Partnership Foundation (2021), Contribution from Ökotárs - Hungarian Environmental Partnership Foundation for the 2021 Rule of Law Report. Századvég (2021), Contribution from Századvég for the 2021 Rule of Law Report. UN Special Rapporteur on the independence of judges and lawyers (2021), Letter of the UN Special Rapporteur on the independence of judges and lawyers dated 15 April 2021. https://spcommreports.ohchr.org/TMResultsBase/DownLoadPublicCommunicationFile?gId=26371 Venice Commission (2021), Opinion on the constitutional amendments adopted by the Hungarian parliament in December 2020 (CDL(2021)028). Annex II: Country visit to Hungary The Commission services held virtual meetings in April 2021 with: ·Alapjogokért Központ ·Amnesty International Hungary ·Corruption Research Center Budapest ·Editors-in-Chief’s Forum (Főszerkesztők Fóruma) ·ELTE Media and Communication Department ·Eötvös Károly Policy Institute ·Hungarian Bar Association ·Hungarian Civil Liberties Union (TASZ) ·Hungarian Helsinki Committee ·Hungarian Association of Judges (MABIE) ·K-Monitor ·Kúria (Supreme Court) ·Mathias Corvinus Collegium

·Mérték Media Monitor ·Ministry of Interior ·Ministry of Justice ·National Association of Hungarian Journalists (MÚOSZ) ·National Authority for Data Protection and Freedom of Information ·National Judicial Council ·National Media and Infocommunications Authority ·National Office for the Judiciary ·Nézőpont ·Office of the Commissioner for Fundamental Rights ·Office of the Constitutional Court ·Országgyűlés (National Assembly) Committee on Legislation ·Országgyűlés (National Assembly) Committee on Immunity ·Prosecution Service of Hungary ·Procurement Authority ·State Audit Office (Számvevőszék) ·Századvég ·Transparency International Hungary * The Commission also met the following organisations in a number of horizontal meetings:

·Amnesty International ·Center for Reproductive Rights ·CIVICUS ·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 ·European Federation of Journalists ·European Partnership for Democracy ·European Youth Forum ·Front Line Defenders ·Human Rights House Foundation ·Human Rights Watch ·ILGA-Europe ·International Commission of Jurists ·International Federation for Human Rights ·International Planned Parenthood Federation European Network (IPPF EN)