Opinion of Advocate General Kokott delivered on 5 March 2020.

• Jurisdiction: European Union
• ECLI: ECLI:EU:C:2020:172
• Date: 05 March 2020
• Celex Number: 62018CC0066
• Court: Court of Justice (European Union)

Provisional text

OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 5 March 2020 (1)

Case C‑66/18

European Commission

v

Hungary

(Infringement proceedings — Article 258 TFEU — Jurisdiction of the Court — Infringement by a Member State of obligations under the General Agreement on Trade in Services (GATS) — Freedom to provide services — Directive 2006/123/EC — Article 16 — Article 56 TFEU — Freedom of establishment — Article 49 TFEU — Education services — Higher education — Service suppliers who are third-country nationals — Legal conditions for the supply of education services in a Member State — Requirement of an international treaty with the State of origin — Requirement of genuine teaching activities in the State of origin — Applicability of the Charter of Fundamental Rights of the European Union — Article 13 — Academic freedom — Article 14(3) — Freedom to found educational establishments)

I. Introduction

1. These infringement proceedings concern two amendments to the Hungarian Law on higher education in 2017. Following those amendments, higher education institutions from States outside the European Economic Area (EEA) are required, in order to commence or continue their activities in Hungary, to prove the conclusion of an international treaty between Hungary and their State of origin, which, in the case of federal States, must be concluded by the central government. In addition, the activity of all foreign higher education institutions is conditional on higher education also being offered in their State of origin.

2. According to critics, by introducing this law the Hungarian Government has the sole aim of preventing the activity of the Central European University (CEU) in Hungary. It has therefore sometimes been referred to in the public debate as a ‘lex CEU’.

3. The CEU was founded in 1991 through an initiative which, by its own account, sought to promote critical analysis in the education of new decision-makers in the Central and Eastern European States in which pluralism had previously been rejected. The CEU is a university founded under the law of New York State and holding an operating licence issued by that State (‘the absolute charter’). The main funders are the Open Society Foundations established by the Hungarian-born US businessman George Soros, a controversial figure in some circles. (2) Because of its specific remit, the CEU has never undertaken any teaching or research activities in the United States.

4. Of the six foreign higher education institutions which carried on activities subject to a licence in Hungary at the time of the amendment of the Law on higher education, the CEU was, on account of its particular model, the only one that was unable to fulfil the new requirements. It therefore ceased operation in Hungary. In November 2019 a new campus opened in Vienna.

5. Against this background, the Commission considers the new rules to be not only a restriction of freedom to provide services, but in particular an infringement of academic freedom, as enshrined in the Charter of Fundamental Rights of the European Union.

6. Furthermore, as one of the two new requirements applies only to higher education institutions from States outside the EEA, the case takes on a further special dimension, as the Commission alleges that Hungary infringed the law of the World Trade Organization (WTO), specifically the GATS. In this case, the Court will therefore also have to decide to what extent infringement proceedings can serve as an instrument to enforce and increase the effectiveness of international trade law.

II. Legal framework

A. EU law

1. Council Decision 94/800/EC concerning the conclusion of the agreements reached in the Uruguay Round multilateral negotiations

7. By Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986-1994), (3) the Council approved the Agreement establishing the WTO and the Agreements in Annexes 1, 2 and 3 to that Agreement, which include the General Agreement on Trade in Services (‘GATS’).

8. Article I of the GATS provides:

‘1. This Agreement applies to measures by Members affecting trade in services.

2. For the purposes of this Agreement, trade in services is defined as the supply of a service

(a) from the territory of one Member into the territory of any other Member;

(b) in the territory of one Member to the service consumer of any other Member;

(c) by a service supplier of one Member, through commercial presence in the territory of any other Member;

(d) by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member.

…’

9. Article XIV of the GATS, under the heading ‘General Exceptions’, provides:

‘Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on trade in services, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any Member of measures:

(a) necessary to protect public morals or to maintain public order; (4) …

(c) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement including those relating to:

(i) the prevention of deceptive and fraudulent practices or to deal with the effects of a default on services contracts, …

(iii) safety; …’

10. Article XVI of the GATS appears in Part III of the Agreement on ‘Specific Commitments’. That provision, headed ‘Market Access’, stipulates as follows:

‘1. With respect to market access … each Member shall accord services and service suppliers of any other Member treatment no less favourable than that provided for under the terms, limitations and conditions agreed and specified in its Schedule. …’

2. In sectors where market-access commitments are undertaken, the measures which a Member shall not maintain or adopt … are defined as:

(a) limitations on the number of service suppliers whether in the form of numerical quotas, monopolies, exclusive service suppliers or the requirements of an economic needs test;

(b) limitations on the total value of service transactions or assets in the form of numerical quotas or the requirement of an economic needs test;

(c) limitations on the total number of service operations or on the total quantity of service output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test;

(d) limitations on the total number of natural persons that may be employed in a particular service sector or that a service supplier may employ and who are necessary for, and directly related to, the supply of a specific service in the form of numerical quotas or the requirement of an economic needs test;

(e) measures which restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service; and

(f) limitations on the participation of foreign capital in terms of maximum percentage limit on foreign shareholding or the total value of individual or aggregate foreign investment.’

11. Article XVII of the GATS, headed ‘National Treatment’, provides:

‘1. In the sectors inscribed in its Schedule, and subject to any conditions and qualifications set out therein, each Member shall accord to services and service suppliers of any other Member, in respect of all measures affecting the supply of services, treatment no less favourable than that it accords to its own like services and service suppliers.

…

3. Formally identical or formally different treatment shall be considered to be less favourable if it modifies the conditions of competition in favour of services or service suppliers of the Member compared to like services or service suppliers of any other Member.’

12. Article XX of the GATS provides:

‘1. Each Member shall set out in a schedule the specific commitments it undertakes under Part III of this Agreement. With respect to sectors where such commitments are undertaken, each Schedule shall specify:

(a) terms, limitations and conditions on market access;

(b) conditions and qualifications on national treatment; …

2. Measures inconsistent with both Articles XVI and XVII shall be inscribed in the column relating to Article XVI. In this case the inscription will be considered to provide a condition or qualification to Article XVII as well.

3. Schedules of specific commitments shall be annexed to this Agreement and shall form an integral part thereof.’

2. Council Decision (EU) 2019/485 on the conclusion of the relevant Agreements under Article XXI of the General Agreement on Trade in Services

13. By Council Decision (EU) 2019/485 of 5 March 2019 on the conclusion of the relevant Agreements under Article XXI of the General Agreement on Trade in Services with Argentina, Australia, Brazil, Canada, China, the Separate customs territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), Colombia, Cuba, Ecuador, Hong Kong China, India, Japan, Korea, New Zealand, the Philippines, Switzerland and the United States, on the necessary compensatory adjustments resulting from the accession of Czechia, Estonia, Cyprus, Latvia, Lithuania, Hungary, Malta, Austria, Poland, Slovenia, Slovakia, Finland and Sweden to the European Union, (5) the Council approved the Agreements described in the title, which was a condition for the entry into force of the ‘Consolidated Schedule’ of EU-25 GATS commitments. The Consolidated Schedule entered into force on 15 March 2019. It adopts Hungary’s commitments from its Schedule of Specific Commitments (6) without modification. (7)

14. The Schedule of Specific Commitments for Hungary consists of two parts, Part I concerning limitations relating to horizontal commitments and Part II...