Brussels Refers Hungary To Court As Part Of Debate On Cross-Border Farmland Contracts
Tamás Székely 2016.06.17.
The European Commission (EC) has referred Hungary to the European Court of Justice for failing to comply with EU rules on the rights of cross-border investors in farmland. A 2013 law terminated certain usufruct or “pocket contracts” that confer rights to use a property and profit from it. The contracts were terminated on May 1, 2014, although earlier it was announced that holders of the contracts would enjoy a transitional period of 20 years.
The commission sent a letter of formal notice in October 2014 and a reasoned opinion in June 2015 requesting Hungarian authorities to bring their rules into line with EU law, but was not notified of any measures. It also contested another provision in the same law that allows for the unilateral termination of certain land lease contracts concluded more than 20 years ago, subject to a very short notice period. “The law deprived existing investors of their acquired rights and the value of their investments in a way that did not ensure legal certainty and the respect of the right to property, as enshrined in the EU Charter of Fundamental Rights,” it said, adding that this violated the principles of free movement of capital and freedom of establishment.
János Lázár, the Hungarian government office chief, told a news briefing on Thursday that Hungary’s stand on the matter was “defensible”. But he added that Hungary is ready to compensate around 200 Austrian farmers who whose contracts were terminated. At the same time, the government insists on its policy of banning foreigners from purchasing farmland, Lázár said.
In May, the the European Commission also launched a new infringement procedure against Hungary for the country’s “very restrictive system which imposes a complete ban on the acquisition of land by legal entities and an obligation on the buyer to farm the land himself.” According to the EC, however, “rules on farmland purchases must be proportionate and cannot be discriminatory towards other EU citizens.”