EU Court Blasts Hungary for Targeting Soros-Funded University

Philanthropist George Soros, founder and chairman of the Open Society Foundations, attends the European Council On Foreign Relations Annual Meeting in Paris on May 29, 2018. (AP Photo/Francois Mori)

(CN) — Hungary on Tuesday lost another round in its wide-ranging rule-of-law fight with European Union leaders after Europe’s highest court said a Soros-funded university was illegally forced to move most of its classes to Vienna from Budapest.

The grand chamber of the European Court of Justice blasted Hungary’s far-right government for amending its higher education laws in such a way as to make the Central European University unable to teach American-accredited classes at its campus in Budapest. The ruling came in an infringement case brought by the European Commission, the EU’s executive body, challenging Hungary’s maneuvers targeting the Central European University. It has not yet been translated into English.

After the fall of communism, Hungarian-born Jewish billionaire George Soros set up the university in 1991 as an institute based around pro-democratic teachings meant to help foster a pluralistic society in Hungary.

But since taking power in 2010, Hungary’s far-right nationalist government led by Prime Minister Viktor Orban has fed into conspiracy theories claiming Soros and his liberal causes are seeking to undermine traditional ways of life and traditional values in Hungary.

Besides targeting the Central European University, Orban has sought to close down pro-democracy and humanitarian groups funded through Soros’ philanthropic Open Society Foundations. These groups have helped refugees in Hungary. 

Orban is a strident anti-immigrant voice in Europe, postulating that Europe’s Christian foundation is being destroyed by liberal values and Muslim immigration. He has even touted the benefits of “illiberal democracy.”

Tuesday’s ruling strikes down amendments Hungary made in 2017 to its law on higher education requiring universities from outside of the EU’s economic zone be approved by an international treaty signed with the Hungarian government and that any such foreign university offer the same courses it teaches in Hungary in its home country. The Central European University was the only institution in Hungary affected by the amendments, according to court documents. 

For the Luxembourg-based court those changes violated World Trade Organization rules governing the free trade in services and also broke EU laws protecting academic freedom. WTO and EU laws require foreign and national higher-education institutions to be treated equally, the Grand Chamber found.

The ruling notes that the EU as a whole is bound by its commitment to uphold WTO rules, in this case the General Agreement on Trade in Services, commonly known as GATS. As a signatory to GATS, the EU has agreed to the liberalization of trade in private educational services, the ruling said.

Hungary’s law changed “the conditions of competition to the detriment of the institutions concerned and in favor of Hungarian institutions,” the court said in a statement about its ruling. 

As for requiring that a foreign university offer the same courses it teaches in Hungary in its home country, the court said this constitutes a “competitive disadvantage.” 

The court also held that Hungary was impeding academic freedom and violating EU law by “depriving the universities concerned of the autonomous infrastructure necessary for conducting their scientific research and for carrying out their educational activities.”

In 2018, the Central European University closed many programs at its campus in Budapest and opened a campus in Vienna. The university said changes to Hungary’s higher education rules in 2017 made it illegal for it to continue offering its American-accredited programs in Budapest. The university is registered in New York but it has no campus there.

“This judgment is a total repudiation of Viktor Orban’s legal strategy since 2017,” said Michael Ignatieff, the university’s president and rector, during a news conference in Vienna. “This judgment vindicates us legally and politically.”

He said the university will consider bringing back American-accredited courses to Budapest.

The university has said it hopes to be able to once again offer American-accredited courses in Budapest. The university, which has about 1,400 students, also offers Hungarian-accredited courses and runs an Institute of Advanced Study, an Open Society Archives and a Democracy Institute in Budapest.

Though Ignatieff estimated the cost of opening a Vienna campus at about $235 million, he said the university is not looking at prolonging the legal fight by seeking compensation.

In a statement, Soros hailed the ruling as a “victory for the fundamental values of the European Union” but he shot down the idea of making Budapest the main campus of the university. The 90-year-old financier was born in Budapest. 

“We cannot return to Hungary because its prevailing laws don’t meet the requirements of academic freedom,” Soros said. He also accused the Hungarian government of continuing “to trample EU law.”

In its defense, Hungarian lawyers argued that the commission launched this legal challenge for political reasons and had breached its duty of independence and impartiality. 

The Court of Justice said the commission has the right to decide when to start infringement proceedings and that those decisions are not subject to judicial review. 

Hungary also argued that WTO rules do not apply to nonprofit organizations, such as the Central European University, and that the changes it made in 2017 to the higher education law were meant to ensure foreign-registered colleges operating in Hungary are run properly and offer quality classes.

The court shot down those arguments too. 

“Hungary had not established, in a specific and detailed manner, that there was a genuine and sufficiently serious threat affecting a fundamental interest of Hungarian society,” the court’s press release on the ruling states. 

The court’s ruling was not a surprise after a magistrate in March issued a legal opinion calling Hungary’s moves against the Central European University illegal. Tuesday’s ruling, though, will likely only deepen the wide-ranging legal and political fight between Orban and EU leaders over a series of laws passed by Orban’s government.

After the ruling, Judit Varga, the Hungarian justice minister, told MTI, Hungary’s state-run news agency, that the ruling was unacceptable. Nonetheless, she said Hungary would implement the judgment “in accordance with the interests of the Hungarian people.” 

She said the higher education reforms were designed to ensure students obtain the diplomas they are promised, and that the changes affected numerous foreign universities. She said the Central European University was the only institution unable to comply with it. 

Ignatieff said Hungary must obey the ruling and cannot try to find new ways around it. “The law has been overturned by the highest court in Europe, end of story.”

In September 2018, the European Parliament voted to initiate punishment proceedings against Hungary, taking aim at a number of laws deemed to undermine the rule of law and violate democratic values and human rights. The European Commission is taking legal action against Hungary as well. 

But the EU has not found effective ways to punish Hungary and force it away from what many see as an authoritarian path. Under EU rules, all other EU member states must agree 

to punish Hungary and getting consensus has proven impossible so far, in particular because other EU member states, most notably Poland, are enacting their own anti-liberal laws and are facing punishment too.

At the moment, EU leaders are in an acrimonious debate over whether Hungary and other EU member states seen as undermining the rule of law at home should be punished by way of the purse. Some European leaders want this to be done by tying the disbursement of $883 billion in funds to help EU states recover from the coronavirus pandemic and economic collapse to commitments to rule of law. 

Courthouse News reporter Cain Burdeau is based in the European Union.

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