Despite Venice Commission Review, Hungary Passes Foreign-Funded NGO Law

Council of Europe
Credit: High Contrast via Wikimedia Commons

On June 2, upon the request of the Parliamentary Assembly of the Council of Europe (PACE), the European Commission for Democracy through Law (Venice Commission) issued a preliminary opinion on Hungary’s draft law regarding foreign-funded non-governmental organizations (NGOs), concluding that while the law serves the legitimate aim of achieving transparency within civil society, its requirements and penalties are too strict. [Venice Commission Press Release] While the Hungarian government subsequently announced that it planned to submit a revised version of the law, on June 13 Hungary’s parliament passed an amended version that reportedly does not accommodate for all of the Venice Commission’s recommendations. [Washington Post; New York Times] The law, as presented to the Venice Commission, requires organizations receiving at least 7.2 million forints (approximately 24,000 Euros or 26,000 USD) to register as organizations “receiving support from abroad” and provides for the possible dissolution of an organization as a penalty for non-compliance ­– an option the Venice Commission would like to see stricken. The law presented to the Venice Commission also requires civil society organizations to abstain from receiving foreign funding for a period of three years prior to beginning the deregistration process ­– an obligation the Venice Commission finds excessive and believes should be replaced with a one-year period. The Venice Commission also suggested that the rationale behind the exclusion of several types of organizations, including sports and religious establishments, be clarified, among other recommendations. See European Commission for Democracy Through Law, Draft Law on the Transparency of Organisations Receiving Support from Abroad (Hungary), Opinion 889/2017, CDL-PI(2017)002, Preliminary Opinion of 2 June 2017. Reports indicate that the amended law as passed still allows for dissolution of organizations not in compliance but now only requires organizations to refrain from receiving foreign funding for two years before entering the process to deregister, a standard that fails to meet the Venice Commission’s recommendation of one year. [Washington Post; Politico] International experts and bodies as well as civil society members have expressed concern over the law as well, particularly as it appears to reflect a trend in the region to restrict civil society organizations and a trend to, according to the Council of Europe’s (COE) Commissioner of Human Rights, backslide on the right to freedom of association. [COE Press Release; HRW; Independent

The Venice Commission’s Recommendations

First, the Venice Commission recommends that a public consultation be held prior to the law’s formal adoption, in the presence of civil society organizations that may be affected. See Draft Law on the Transparency of Organisations Receiving Support from Abroad (Hungary), para. 63. Such a consultation was not held prior to the law’s submission to parliament, precluding any meaningful public debate or input. See id. at para. 23.

Second, Hungary should, according to the Venice Commission, clarify its reasoning behind the exclusion of certain types of organizations from the law’s scope. See id. at para. 63. If the intent of the law is in fact to improve transparency, then, in the view of the Venice Commission, the law should apply across the board to all civil society organizations. See id. at paras. 8, 28, 63.

Third, the period during which a civil society organization is prohibited from receiving foreign funding in order to be eligible to start the deregistration process should be reduced to one year, according to the Venice Commission. See id. at paras. 46–47, 63. The Venice Commission is of the view that a three-year waiting period is arbitrary and unnecessary and that a reduction would not hinder the law’s objectives. See id. at para. 63.

Fourth, the information regarding funding sources that civil society organizations must record in the public register should be limited to “major sponsors” to minimize their reporting obligations. See Draft Law on the Transparency of Organisations Receiving Support from Abroad (Hungary), paras. 49–51, 63. As submitted to the Venice Commission, the law requires civil society organizations to disclose the identities of all sponsors, which the Venice Commission views as unnecessary, given that minor sponsors are unlikely to hold great influence over an organization’s operations. See id. at para. 51.

Fifth, the requirement that qualifying organizations display their foreign-funded status on their websites and publications should be eliminated. See id. at paras. 52–54, 63. According to the Venice Commission, this requirement is neither necessary nor proportionate to the aim of achieving transparency, as this information is already required to be included in the public register. See id. at para. 53.

Lastly, sanctions should be applied proportionally – that is, they should only be imposed for non-fulfillment of the law’s most important obligations or serious violations of the law’s requirements. See id. at paras. 57–58, 63. The dissolution of an organization for failure to comply should be eliminated as a possible sanction. See id. at paras. 60, 63.

Context and Commentary

According to reports, in addition to changing the temporal requirement for deregistration, the amended version of the law also changed the reporting requirements. While under the previous version organizations had to report on all foreign donors, under the amended law organizations only have to report on foreign donors that provide more than 500,000 forints (1,800 USD). [New York Times] The requirement to list an organization’s status as foreign-funded on publications and on organizations’ websites was expected to remain in the amended law. [Washington Post] Civil society organizations still believe the amended law will make the work of NGOs that are critical of the government more difficult, with one civil society member calling the amendments “cosmetic.” [New York Times]

This law has been the subject of growing attention in recent weeks, due in part to its resemblance to Russia’s highly controversial “foreign agents” law, which requires independent groups engaging in the broadly defined action of “political activity” and receiving any amount of foreign funding to register as foreign agents, which has a very negative connotation akin to “traitor” in the eyes of the Russian public. [HRW] Enforcement of the law has subjected numerous groups to hefty fines for failure to comply and has caused many others to close. [HRW] The law has been called “part of a sweeping crackdown to silence critical voices.” [HRW]

Hungary introduced its version of a foreign agents law in response to concerns within the Hungarian government that foreign-funded NGOs are essentially serving the political goals of their overseas funders. See Draft Law on the Transparency of Organisations Receiving Support from Abroad (Hungary), para. 20. Hungarian Prime Minister Viktor Orban strongly supports the passage of legislation that places these NGOs under greater scrutiny, particularly those funded by philanthropist George Soros, a Hungarian-American investor and promoter of democratic principles with whom Orban has had a publicized rivalry. [Reuters]

Critics of the law question Orban’s motives, alleging that the law’s intent is not to improve transparency, but rather to silence dissent and bring institutions, like the media, under tighter State control. [Reuters] United Nations experts condemn the move as an unnecessary change that will have a “chilling effect not only on expressions of peaceful dissent but also on the legitimate work of NGOs and individual human rights defenders.” [Independent] The State has also recently introduced additional proposed legislation that targets foreign universities. [New York Times]

The Venice Commission

The Venice Commission, which was established in 1990, is an advisory body of the Council of Europe whose responsibility is to offer legal advice to its Member States, particularly as they seek to bring their institutional structures into conformity with European standards regarding democracy, human rights, and the law. The Venice Commission may also provide “emergency constitutional aid” to States in periods of transition. It holds plenary sessions in Venice, Italy four times per year. See Venice Commission, The Venice Commission of the Council of Europe.

The Venice Commission has 61 Member States – the 47 Member States of the Council of Europe as well as 14 others from around the world: Algeria, Brazil, Chile, Costa Rica, Israel, Kazakhstan, the Republic of Korea, Kosovo, Kyrgyzstan, Morocco, Mexico, Peru, Tunisia, and the United States. It is composed of independent experts from each Member State who serve in their personal capacities for four-year periods with the possibility to renew. See Venice Commission, The Venice Commission of the Council of Europe; Council of Europe, Resolution RES (2002) 3, Adopting the Revised Statute of the European Commission for Democracy Through Law, CDL (2002) 27, 27 February 2002, art. 2.

The Venice Commission issues opinions on legislation proposed or in force to provide Member States with legal advice. Member States; certain bodies and the Secretary General of the Council of Europe; and international organizations, including the European Union, can request opinions. See Venice Commission, The Commission’s Activities.

Additional Information

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