Academic Freedom protected via the CJEU? – The Advocate’s General Opinion in Commission v Hungary (C-66/18)
In a recent Opinion, Advocate General Juliane Kokott (AG) suggested that the Court of Justice of the European Union (CJEU) should strike down a Hungarian national legislation which limits the operations of foreign academic institutions in Hungary. While the Opinion is a strong affirmation of academic freedom in the European Union (EU), it also gives guidance on the applicability of the World Trade Organization (WTO) provisions of the General Agreement on Trade in Services agreement (GATS) in the EU legal order. The most striking statement of the Opinion is that the EU shall enforce public international law treaties, such as the GATS, towards Member States to uphold the Union’s intention to comply with concluded international treaties, insofar the Union has taken over the treaty obligations as a party to the treaty. This post will, first, outline the jurisdiction and the admissibility of the infringement proceeding, then, discuss the merits of the case, and conclude with some comments on the significance and the potential outcome of the proceedings.
The History of the Hungarian ‘Lex CEU’
The new Hungarian higher education law came into force 2017 (see here). It was dubbed as ‘lex Central European University (CEU).’ Commentators offered the view that the main target of the law was the academic institution of the CEU, which operated in Budapest (see here and here). The Hungarian government regards the CEU as a bastion of liberal thought, which is not welcome under the current government in Hungary. The principal founder and sponsor of the CEU are the Open Society Foundations, which were established by George Soros who is demonized by the current Hungarian government (see here). As a consequence of the new law, the CEU had to relocate its operations to Vienna and opened its new Vienna campus in 2019 (see here).
The main restrictions imposed by the new Hungarian higher education law are (i) the need for a treaty on academic cooperation between Hungary and the relevant third State, and (ii) the requirement that foreign-based higher education institutions must also provide academic offerings in their home state. An Opinion by the Venice Commission came to the assessment that the new law was highly problematic. Specifically, it argued that the new law “will cause a disproportionate and unnecessary interference with the freedoms of association and expression, the right to privacy, and the prohibition of discrimination” (para. 68 of the Venice Opinion).
The European Commission (Commission) regarded the two restrictions introduced by the new law as infringing upon the GATS (see here), which was incorporated into EU law via a 1994 Council Decision 94/800/EC, the freedoms of establishment (Article 49 Treaty on the functioning of the European Union (TFEU)) and to provide services (Article 56 TFEU), and a violation of the Directive 2006/123/EC (Bolkenstein Directive, or Services Directive). Finally, the Commission maintained that the new law infringes upon the Charter of Fundamental Rights of the European Union (Charter), respectively on the right to academic freedom (Article 13 Charter) and the freedom to found an educational establishment (Article 14 (3) Charter). In 2017, the Commission therefore initiated infringement proceedings against Hungary, which were based on a four-fold claim, reflecting the foregoing concerns.
Jurisdiction of the CJEU
The AG started her analysis with discussing the jurisdiction of the CJEU regarding the GATS (paras. 39-69). A crucial question that she had to answer was whether the infringement proceedings under Article 258 TFEU, are a suitable instrument to enforce the provisions of the GATS, which are part of an international law treaty.
The GATS was until the Treaty of Lisbon a so-called mixed agreement, which means that Member States and the EU are equally parties to the agreement. However, with entering into force of the Treaty of Lisbon in 2009 the obligations were transferred onto the EU (paras. 46-47). The EU’s competence to conclude international trade agreements flows from Article 216 TFEU. The legal basis for international agreements in the area of common commercial policy (CCP) is Article 207 TFEU. CCP is an area where the Union possesses exclusive competence after Lisbon, as the AG highlighted in her Opinion (para. 43). She therefore concluded that the obligations of the GATS were “transferred to the European Union by the Treaty of Lisbon at the latest and thus constitute […] an obligation under EU law the infringement of which can be the subject of infringement proceedings” (para. 47). Thus, a Member State’s failure to comply with the GATS can be subject to infringement proceedings under Article 258 TFEU.
Interestingly, the AG also found that the EU might be held liable by a third state for the infringement of GATS provisions by its Member States (para. 48). In this regard, the principle of sincere cooperation (Article 4 (3) Treaty on European Union (TEU)) is crucial as it ensures a common action and representation of the Member States via the EU in relation to third states. The AG referred in this regard also to the current ‘trade war’ between the EU and the United States regarding subsidies granted by several governments to Airbus which resulted in punitive tariffs on Italian Parmesan cheese (para. 54). Finally, the AG stressed that “compliance with th[e] duty of sincere cooperation can also be enforced in infringement proceedings” (para. 55).
After suggesting that the CJEU should seize jurisdiction under Article 258 TFEU, the AG moved to assess the substance of the Commission’s claims. Thereby, she followed a two-prong approach by, first, scrutinizing the requirement of a cooperation treaty against the GATS and the Charter and, second, by evaluating the condition of a teaching activity against the GATS, the Services Directive and the Charter. Both claims will be explained subsequently.
I. Requirement of a Cooperation Treaty between Hungary and the Third State
The AG started analyzing the national requirement of a cooperation treaty against the provisions of the GATS which were transposed into Union law pursuant to Article 216 TFEU. Further, she examined if the national requirement complies with the Charter. The Charter was applicable due to the implementation of the GATS via Council Decision 94/800/EC (see Article 51 Charter). While the AG found that Member States retain a degree of organizational freedom in the sector of education (para. 89), she assessed that there was a manifest infringement of the provisions of the GATS (para. 91) because Hungary had breached the principle of national treatment (comparable to equivalent treatment under EU law) (paras. 95-109), laid down in Article XVII of the GATS. This principle requires that foreign institutions are equally treated as national ones.
Hungary justified its derogations from the principle of national treatment by invoking an exception under Article XIV of the GATS. Specifically, the government argued that the requirement of an international treaty is necessary to maintain public policy, public security and good practice (para. 114). The AG disagreed: in her view, the requirement of an international treaty is not compatible with the obligations flowing from the GATS since it appears to be an arbitrary discrimination against countries which have no cooperation treaty with Hungary (para. 125). The means used by the ‘lex CEU’ were not suitable to achieve the objectives invoked by Hungary (paras. 119-122). Therefore, Hungary has infringed upon the GATS in conjunction with Article 216 TFEU.
Hungary’s infringement on the duty of national treatment, in turn, also triggered the application of the Charter (para. 129), which contains very specific provisions protecting academic freedom. First, Article 14 (3) Charter provides for the freedom to found educational establishments which appears to be custom-made for the current proceedings. In the AG’s view, Article 14 (3) Charter aims to protect the diversity of educational opportunities in the Member States (para. 133). Hungary disregarded this Article by imposing a restrictive requirement that specifically targeted foreign private academic institutions (para. 139). Second, Article 13 Charter provides for the freedom of the arts and sciences. The AG stressed that Article 13 Charter can be regarded as the right to hold opinions, and thus as a freedom of speech article within the realm of arts and sciences (cf. the interpretation of Article 13 of the Charter in Pelham v Hütter, paras. 34-35). By taking inspiration from the case-law of the European Court of Human Rights (ECtHR), she concluded that, equally, the limitations on Article 13 by the new Hungarian law are disproportionate and cannot be maintained (para. 149).
II. Requirement of a Teaching Activity in the Home State
Regarding the second restriction imposed by the ‘lex CEU’, requiring a specific teaching activity in the home state, the AG went into a quick analysis of the compatibility of the provision with Article 49 TFEU, the freedom of establishment (paras. 153-156). As the new law limits this freedom, the AG carried out a justification assessment (paras. 157-162) only to find that the provision is discriminatory and therefore cannot constitute an overriding reason in the public interest (para. 162). Therefore, Hungary has infringed upon the freedom to provide services with this requirement.
Finally, the AG also scrutinized the new law under Article 16 of the Services Directive, which is an expression of the general freedom to provide services (of Article 54 TFEU). Since the legislation would not withstand a justification test under the more general Article 54 TFEU, the AG concluded that the measure could likewise not be considered justified under the Services Directive (para. 174).
Since the new law infringed upon the Services Directive, the AG also evaluated the second restriction on foreign academic institutions under the Charter. Again, the AG scrutinized the restriction under Articles 13 and 14 (3) Charter and in light of the justification provided by Hungary that the restriction is necessary to ensure the legality and quality of higher education in Hungary (paras. 182-188). According to the AG, the link to the existence of teaching activities in the home state is neither appropriate nor necessary for ensuring the objectives laid out by Hungary (para. 187). Therefore, she deduced that the second restriction of the new law also impinged on the GATS in conjunction with Article 216 TFEU (para. 192). In conclusion, the AG suggested that both restrictions imposed by the new law on academic institutions conflict with the GATS (Council Decision 94/800/EC) and the Charter, while only the latter restriction conflicts with the freedom to provide services in the internal market.
This Opinion is a silver lining for the Central European University, which had to relocate from Budapest to Vienna, due to the new Hungarian legislation. Moreover, it is a strong signal for academic freedom in the European Union. Freedom of the arts and the sciences is a fundamental freedom in a liberal democracy. These values are mirrored in Article 2 TEU. In her Opinion, AG Kokott argues that academic freedom should be protected within the EU legal order, and this substantive right can be enforced via the CJEU. Notably, this case oscillates between EU external relations law, internal market, and fundamental rights protected by the Charter. On the backdrop of the current rule of law crisis (see here), the Opinion is a further brick in the bulwark of a Union based, not only on a formal but also on a substantial rule of law, which includes fundamental rights such as academic freedom.
The most exciting assessment from the AG’s Opinion is two-fold. First, the Commission may bring infringement proceedings against Member States that infringe on obligations flowing from international treaties that have been incorporated into EU law via Article 216 TFEU in conjunction with Article 207 TFEU. This reinforces the EU’s internal coherence towards trading partners. Second, the freedom of the arts and sciences (Article 13 Charter) and the right to found an academic establishment (Article 14 (3) Charter) serve as a floor to national limitations on academic institutions that Member States may impose. A further element in the fundamental rights jigsaw of the EU. The pathway to the applicability of the Charter is the transposition of an international agreement into EU law, which is provided by Council Decision 94/800/EC. This link can be provided by an international agreement, such as the GATS, or by the freedom to provide services in primary and secondary legislation (e.g., the Services Directive).
It will be interesting to see if the CJEU follows the AG, and if yes, which route the CJEU will take to protect academic freedom in the Member States: the implementation of the GATS, the four freedoms of the internal market, or the Services Directive.