FFa and MVu © 2010
Please, cite with permission only
Work in Progress
EUROPEAN UNION LAW BEFORE THE HUNGARIAN CONSTITUTIONAL COURT
AND THE HUNGARIAN JUDICIARY
Dr. Flora Fazekas (University of Debrecen) and Dr. Marton Varju (University of Hull)
1 European Union law and the Hungarian Constitutional Court
1/a The constitutional context of EU accession
According to leading Hungarian legal scholars, the Constitution had to be amended before EU
accession. The Constitution had not contained any reference to the participation in international
organizations – and it does not contain such a disposition today. The amendment inserted Article
2/A into the Constitution referring only to EU membership. According to par. 1 of the the clause
“The Republic of Hungary may, in order of her participation in the European Union as a member
state, based upon international treaty, exercise certain constitutional competences, to the extent
that is necessary to exercise rights and perform obligations, under the European Communities and
European Union (hereinafter: the European Union) foundation treaties in conjunction with the other
member states; the exercise of these competences may be realized independently, through the
institutions of the European Union.” During the modification process an initiative appeared
according to which another new article should have been inserted, referring to the membership in
international organizations but this concept was rejected. The insertion of a new Article 7 par. 2 was
also rejected, which would have referred to the application of EC law ”according to the Foundation
Treaties and the legal principles deriving therefrom”. 1 This clause would have raised the principles of
supremacy, direct applicability or consistent interpretation (and their boundaries) on a constitutional
level making their application mandatory to all national organs.
As we can see, the final text of the “Europe clause” of the Constitution refers to an exercise of
constitutional powers in conjunction with the Member States as the general rule opposite to the
exercise of these powers by EU institutions. This concept shows that the Hungarian Parliament
refrained from clearly declaring a loss of Hungarian sovereignty or independence by EU accession.2
This is all the more interesting that Hungary had been committed to EU accession since the change
of regime of 1989, being the first country of CEE to declare that. Through Article 2/A EU accession is
consistent with the Hungarian constitution since it creates a legal basis of a certain limitation of
constitutional competences. The application of legal norms of the EU in Hungary can be traced back
1
Bill No. T/1270, 5 November 2002.
An earlier draft of the Act on Constitutional Amendment referred to the transfer of constitutional
competences to the European Union.
2
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
to the legitimising force of Article 2/A.3 Establishing such legitimising force of the Constitution had
been made necessary also by a pre-accession decision of the Hungarian Constitutional Court (of
1998) where the HCC contended that without express constitutional authorization EU norms could
not be applied in Hungary.4
The reasoning of the Act on the Constitutional Amendment (Act 2002:LXI) declares that the
authorization of the limitation (“joint exercise”) of constitutional competences has two limitations:
on the one hand, joint exercise of competences is possible only as far as the fulfilment of rights and
obligations deriving from the Founding Treaties demand; on the other hand, the authorization
regards only certain (not all) state competences flowing from the Constitution. Consequently, the
Hungarian Parliament cannot transfer more powers to the EU than those necessary to reach the
objectives of the Founding Treaties; and it is impossible to transfer the entirety of constitutional
competences since it would lead to the disappearance of Hungarian state sovereignty.5 This
interpretation of Article 2/A concerning the limitation of the transfer of competences has been
accepted by the Hungarian Constitution Court in one decision6 although without any further
consequences.
It must be noted that the Constitutional Amendment of 2002 added a new paragraph (par. 4) into
Article 6 according to which “The Republic of Hungary contributes to achieve European unity in
order to realize the liberty, the well-being and the security of the European people.” This
constitutional provision could be interpreted as one prescribing a constitutional obligation towards
national organs (i.e. Parliament, administration or even the judiciary) to respect and support the
objectives of European integration and refrain from imperilling these aims. The Hungarian
Constitutional Court has not referred to this constitutional norm until today when dealing with EU
law matters so it has not given any orientation on the interpretation or application of this article.
1/b European Union law in the jurisprudence of the Hungarian Constitutional Court
The nature of European Union law
The HCC has expressed itself several times on the nature of EU legal norms without placing them in
the hierarchy of domestic legal norms. The HCC soon made it clear that it would treat EU law and
international law differently so the HCC case-law relevant to international obligations would not be
3
This statement is affirmed by the HCC in Decision 61/B/2005 of 29 September 2008: “Community law being
applied in the Hungarian legal order [i.e. in Hungary] is valid [preferably applicable] through Article 2/A just like
Hungarian legislation.”
4
Decision 30/1998 (VI. 25.) of 25 June 1998 of the HCC, available in English at:
http://www.mkab.hu/admin/data/file/687_30_1998.pdf (10 June 2010)
5
All this raises the question of judicial Competence-Competence: who has the final authority to decide if a
transfer of competence is necessary and authorized? The reasoning of the Act does not touch upon this
question nor has the HCC so far.
6
Decision 61/B/2005 of 29 September 2008 of the HCC.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
applied as regards EU law. It can be noted that this distinction is not evident since Article 2/A refers
to a joint exercise of constitutional competences “in order of *Hungary’s+ participation in the
European Union as a member state, based upon international treaty” so theoretically the HCC (and
Hungarian state organs) could treat EU treaties and the law deriving from it analogously to
international law. As we will see, generally this is not the case.
According to settled case-law of the HCC, founding treaties of the European Union and their
amendments are not international treaties from the perspective of the Constitutional Court’s
competence.7 In the HCC’s view “these treaties are primary sources of Community law and the
directives are secondary sources of Community law. They form part of the national legislation, since
Hungary is a member of the EU.” We have to emphasize that in the relevant decisions the HCC did
not present a well-based reasoning of the distinction between EU law and international law. All it
declared was that primary and secondary sources of EU law form part of domestic law “since
Hungary is a member of the EU” without any reference to ECJ case-law or any analysis of the
domestic effects of EU law (or international law). In a decision of 20088 the HCC added to this
concept a reference to the autonomy of the EU legal order, saying that “despite its international law
origin the Community legal order is a sui generis legal order”, therefore it cannot be regarded as
international law.
However, in one particular type of proceedings the HCC considers a European integration treaty
international law (international treaty): in proceedings aiming at an a priori constitutional review of
an international treaty.9 In other words, amendments of the EU founding treaties are considered
international treaties as long as they do not enter into force in Hungary. In the moment an EU treaty
is promulgated in Hungary and has legal force it separates from its international law basis and will be
treated by the HCC as part of an autonomous legal order and part of Hungarian law.
Supremacy of EU law over the national constitution
The essential question of the concept of the supremacy of EU law is the solution of collisions
between EU law and national constitutional provisions. The approach of the HCC towards this
problem can be described mostly as “refraining”. It is true that the HCC has not have too many
opportunities to pronounce on this fundamental constitutional consequence of EU membership but
7
Decision 1053/E/2005 of 16 June 2006 of the HCC, a summary in English is available at:
http://www.codices.coe.int/NXT/gateway.dll/CODICES/precis/eng/eur/hun/hun-2006-3-005?fn=documentframeset.htm$f=templates$3.0 (10 June 2010); Decision 72/2006 (XII. 15.) of 15 December 2006 of the HCC,
available in English at: http://www.mkab.hu/admin/data/file/721_72_2006.pdf (10 June 2010); Decision
32/2008 (III. 12.) of 12 March 2008 of the HCC, available in English at:
http://www.mkab.hu/admin/data/file/751_32_2008.pdf (10 June 2010); Decision 61/2008 (IV. 29.) of 29 April
2008 of the HCC; Decision 76/2008 (V. 29.) of 29 May 2008 of the HCC; Decision 61/B/2005 of 29 September
2008 of the HCC; Decision 281/B/2007 of 6 April 2009 of the HCC.
8
Decision 32/2008 (III. 12.) of 12 March 2008 of the HCC, available in English at:
http://www.mkab.hu/admin/data/file/751_32_2008.pdf (10 June 2010).
9
Declared in Decision 61/2008 (IV. 29.) of 29 April 2008 of the HCC.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
it is also true that even in those cases where it had the opportunity it did everything to avoid taking
stand. We note that at present a motion of unconstitutionality is pending before the HCC regarding
the constitutionality of the Act on the promulgation of the Lisbon Treaty so there is a slight chance
that the HCC’s attitude will soon take a new direction.
The case which offered the most favorable opportunity to the HCC to make clear statements on the
issue of supremacy was the widely commented case of agricultural surplus stocks.10 Some aspects of
the case expressly concerned contradictions between EU Commission regulations and Hungarian
constitutional provisions. Opposite to the conclusions of the Estonian Supreme Court and the Czech
Constitutional Court which delivered judgments on resembling matters at the time, the HCC did not
acknowledge that the case was linked to EU law matters and engaged in a customary constitutional
review. This attitude indirectly resulted in the HCC not giving precedence to EU law over the
Hungarian Constitution. Without entering into details, the relevant point of the case is that the
Hungarian Act on Agricultural Surplus Stocks, based on two Commission regulations, was predicated
unconstitutional by the President of the Republic for the following reason (and others): the Act
prescribed an obligation to pay a certain amount of money to those who own surplus stocks of sugar
on the 1st of May 2004 but it could not enter into force before the middle of May for some
legislative reasons. The President of the Republic found that this situation equalled retroactive
legislation which was contrary to the constitutional principle of legal certainty, meaning that the real
question in the case was if the Commission regulations prescribing the obligation to eliminate
surplus stocks prevailed over the principle of legal certainty of the Hungarian Constitution.
The HCC did not face the above-mentioned question. It stated that the case concerned purely
Hungarian legal matters and had nothing to do with Community law related issues, given that it
touched upon the conformity of a Hungarian Act and the Constitution. Therefore, the HCC – without
admitting it – gave precedence to the Hungarian Constitution over a Commission regulation. It can
be assumed that the HCC actually wanted to exclude the absolute supremacy of Community law. But
we do not know yet if the HCC assigns the entirety of the Hungarian Constitution a limit of
supremacy or only some essential, hard-core constitutional principles, such as legal certainty. Did it
give precedence to legal certainty because it was one of the most significant constitutional principle
of the new Hungarian democracy and law-based state or did it give precedence to legal certainty
solely because it was a disposition of the Hungarian Constitution? Unfortunately since May 2004 the
HCC has not delivered any other judgment which could bring us closer to the answer. At the moment
it can be considered certain that the HCC denies the absolute supremacy of Community law – but
indirectly and without making any clear statements for the future as far as its doctrinal approach
towards supremacy is concerned.
The reasons behind the decision are hard to clearly determine. Assumedly, the HCC did not have a
clear conception of how to approach a Community law related issue at the time and probably did
not want to be the first constitutional court among Member States of Central and Easter Europe to
10
Decision 17/2004 (V. 25.) of 25 May 2004 of the HCC, available in English at:
http://www.mkab.hu/admin/data/file/672_17_2004.pdf (10 June 2010). EU legislation on transitional
agricultural measures caused some constitutional problems right after EU accession also in Estonia and the
Czech Republic. See in detail Anneli Albi: Ironies in Human Rights Protection in the EU: Pre-Accession
Conditionality and Post-Accession Conundrums. European Law Journal, 2009. no. 1. pp. 46-69.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
deal with such an issue. At the same time it had to find a solution to avoid what it may consider a
limitation of state sovereignty and independence: a derogation of the constitutional values of the
new democracy.11 We have to add that before the HCC a case concerning fairly similar constitutional
problems is pending12 so it is possible that soon we will see a clearer picture on the HCC’s concept of
supremacy.
Supremacy of EU law over sub-constitutional legal norms
Another crucial issue of EU law matters at a national constitutional level is the question if a control
of compatibility between EU law and national law may form part of a constitutional review, making
the incompatibility of a national act with EU law a basis for declaring it unconstitutional. In Hungary
the answer seems to be mostly “no”, which means that in the HCC’s point of view contradictions
between Hungarian sub-constitutional legal norms and EU law are to be settled by the national
judiciary or by the ECJ, obviously by the principle of supremacy. We emphasize that the HCC has not
expressly declared this conclusion but it can be derived from its attitude.
The HCC has had to deal with several cases where the constitutionality of certain Hungarian acts was
questioned by referring to their incompatibility with EU law. The approach of the HCC to these issues
could be summarized by that the HCC does not have competence to review the compatibility of
Hungarian legal acts with EU law13 nor to review the conformity of the implementation of an EU
directive by an implementing act14. Motions against Hungarian legal acts on grounds of their
incompatibility with EU law are dismissed with reference to lack of competence. It is also part of
settled case-law that from Article 2/A of the Constitution does not flow an express obligation to
legislate15, therefore insufficiencies of Hungarian legislation in transposing EU law cannot be
remedied by the HCC. This concept also excludes a successful reference to Article 4 par. 3 of the EU
11
See in more detail András Sajó: Learning Co-operative Constitutionalism the Hard Way: the Hungarian
Constitutional Court Shying Away from EU Supremacy. 3 Zeitschrift für Staats- und Europawissenschaften
(2004) pp. 351-371.; Sadurski, Wojciech: „Solange, chapter 3”: Consitutional Courts in Central Europe–
Democracy–European Union. European Law Journal, 2008. no. 1. pp. 1-35.
12
The case concerns the Act on the single payment scheme for direct support payments under the Common
Agricultural Policy.
13
Decision 66/2006 (XI. 29.) of 29 November 2006 of the HCC, available in English at:
http://www.mkab.hu/admin/data/file/719_66_2006.pdf (10 June 2010); Decision 87/2008 (VI. 18.) of 18 June
2008 of the HCC; Decision 61/B/2005 of 29 September 2008 of the HCC; Decision 770/B/2005 of 1 September
2009 of the HCC.
14
Decision 744/B/2004 of 1 February 2005 of the HCC, available in English at:
http://www.mkab.hu/admin/data/file/727_744_b_2004.pdf (10 June 2010); Decision 66/2006 (XI. 29.) of 29
November 2006 of the HCC, available in English at: http://www.mkab.hu/admin/data/file/719_66_2006.pdf
(10 June 2010); Decision 9/2007 (III. 7.) of 7 March 2007 of the HCC; Decision 695/B/2004 of 12 June 2007 of
the HCC.
15
Decision 1053/E/2005 of 16 June 2006 of the HCC, a summary in English is available at:
http://www.codices.coe.int/NXT/gateway.dll/CODICES/precis/eng/eur/hun/hun-2006-3-005?fn=documentframeset.htm$f=templates$3.0 (10 June 2010).
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
Treaty (former Article 10 of the EC Treaty) – although such request has not been tested in front of
the HCC.
It is also worth noting that the HCC has so far eliminated the exigency of interpretation of national
law consistent to EU law. The HCC – opposite to the Polish or Czech constitutional court, for example
– does not take account of the EU law background even when adjudicating the constitutionality of
an act implementing an EU directive. It does not make use of ECJ interpretation (e.g. on fundamental
rights) either when interpreting provisions of the Constitution. There is only one exception where
the HCC seemed to take into consideration the provisions of a directive when reviewing the act
implementing it16 – but without making any express reference to the concept of consistent
interpretation. It has to be observed that this attitude has been since then without sequel.
2 European Union law and the Hungarian judiciary
A fundamental question of the accession process was how rapidly will CEE judiciaries adapt to the
new circumstances in which the application and interpretation of an unfamiliar body of law is
demanded from them. In this regard, a complex task of institutional coordination fell upon the
judicial body on the top of the domestic judicial hierarchy, in Hungary, the Supreme Court
(Legfelsőbb Bíróság). The Supreme Court is the supreme judicial body in Hungary as stated in Act No.
1997: LXVI on the judicial system and has been assigned with the task of coordinating the operation
of the principally uniform judicial system. Its duty of coordinating the application of European Union
law by domestic courts is clearly established in the case law of the Court of Justice. The judgments in
Lyckeskog and Cartesio, regarding the obligation to make a preliminary reference to the Court of
Justice, confirmed the overall responsibility and autonomy of domestic supreme courts in managing
the appropriate application of European Union law within the domestic judicial system.17 In
Lyckeskog the Court declared that the role of Member State supreme courts is to prevent the
evolution judicial practice in lower courts that would run contrary to European Union law.18 This
gives the honourable duty to domestic supreme courts to take part together with the Court of
Justice in the high level governance of the European Union decentralised judicial system in which the
lower courts of the Member States provide the backbone for the judicial application of European
Union law.
The task imposed on the Hungarian Supreme Court is considerable. The judgment in Köbler makes it
clear that a mistake could lead to establishing a liability in tort on the basis of European Union law.19
Establishing this remedy also signals that domestic supreme courts are regarded by the Court of
Justice as key actors in this complex decentralised judicial system. Domestic supreme courts are,
nevertheless, not left unaided in performing this task as the Court of Justice by affirming the
16
Decision 485/E/2003 of 13 October 2008 of the HCC.
Paras. 16-17, Lyckeskog and paras.76-78, Cartesio.
18
Vö. Lyckeskog-ügy (lj. 24.) 14. pont. CHECK
19
C-224/01. sz., Köbler v. Ausztria ügyben 2003. szeptember 30-án hozott ítélet [EBHT 2003., I-10239. o.] 39.
pont.
17
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
(potential) obligation to refer questions for preliminary ruling has offered its assistance to them,
which in turn helps maintaining close scrutiny over them. Apart from the fact that domestic supreme
courts enjoy inevitable autonomy in governing the national judicial system, perhaps, this explains
why the actual duties and means of domestic supreme courts in this endeavour are left largely
undefined. Well-aimed interventions by the court (the Court of Justice) on top of this federal-like
judicial construction will ensure that courts, like the Hungarian Supreme Court, are informed of their
options when a problem arises.
This part of the paper focuses on the performance of the Supreme Court in coordinating the
application of European Union law in Hungarian courts. The coordination duties of the Supreme
Court are twofold. One is the important task of signposting which involved the transposition of key
principles in European Union law domestic courts must follow and the confirmation of what is
regarded as the appropriate interpretation of European Union legal provisions. The other is the
crucial chore of ‘cleaning up’ when the Supreme Court was required to close a higher number of
cases which originated from the same legal problem under European Union law. A ‘clean up’ is often
associated with signposting as the cleanup operation is based on proclaiming what is the
appropriate legal solution under European Union law. Some of the activities in lower courts are also
examined as they provide an example of coordination issues the Supreme Court had to face, and
they allow an insight into how lower courts regard and approach their rights and duties under
European Union law.
Generally, the Hungarian Supreme Court`s performance in coordinating the application of European
Union law within the Hungarian judicial system has been reasonably good. In the early days after
accession in 2004 its important task was to convey the message to the lower courts that in legal
terms a new era had commenced. In this process of signposting the Supreme Court acted rapidly to
secure the place of key principles of European Union law, such as supremacy and direct effect, in the
toolbox of Hungarian judges. As we will see, the Supreme Court proceeded in full awareness of its
duties and independence in its actions, and established a relatively solid framework for the judicial
application of European Union law in Hungary. An outstanding case of signposting was the delivery
of Joint Opinion 1/2009 the purpose of which was to react to the procedural consequences of the
judgment in Cartesio.20
Other significant coordination challenges arose from an influx of challenges in domestic courts
against domestic measures suspected of contravening EU law. The attempts by different courts to
solve these cases represented threats to the coherent application of European Union law in Hungary
and the likelihood of repeated and unnecessary references to the Court of Justice was also
considerable. Therefore, the Supreme Court was required to intervene by establishing and
announcing the legal construction to be followed by domestic courts, and, if needed, by closing the
cases with a final judgment. This activity of signposting and ‘cleaning up’ was evident in the car
registration tax and in the local business tax cases. The VAT deduction and the road transport cases
also demanded involvement from the Supreme Court.
20
1/2009 PK-KK Joint Opinion regarding appeals against orders concerning references for a preliminary ruling
and the obligation to make a reference for a preliminary ruling.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
In the following, a cross-section of Supreme Court and lower court judgments will be provided in an
analysis of the coordination activity of the Supreme Court. The issues discussed involve accepting
the applicability of European Union law, supremacy and direct effect, and indirect effect. A separate
part examines the ‘domestication’ of European Union law and the role of ex Article 10 TEC before
Hungarian court. We deal separately with the larger coordination tasks of the past half decade and
the independent operations of Hungarian judges under European Union law. Finally, the integration
of the preliminary ruling procedure into the domestic legal environment as conceived by the
Supreme Court and the Court of Justice will be investigated followed by the examinations of the
approach of Hungarian courts on national remedies under European Union law.
Our focus is not only on the sweeping measures of coordination, but also on the details of
incorporating European Union law into Hungarian judicial reasoning. It is essential that the
Hungarian judiciary demonstrate a strong performance in this respect. Our task was not helped by
the anonymity requirement in place in publishing judicial decisions in Hungary as it made identifying
the parties and the facts of the case a challenge. A general rule on anonymity on domestic level is
surely undermined when before the Court of Justice, if a reference is made, the name of the parties
and the facts are revealed, save for considerations to the contrary.
2/a Laying down the foundations
Accepting the applicability of European Union law
Perhaps the cardinal signposting duty of the Supreme Court was to establish and proclaim that
European Union law is binding and applicable in Hungary. It acted rapidly after the accession and its
judgments formulated their message very clearly. In the Supreme Court’s terms by virtue of the
Treaty of Accession Community law forms part of domestic law.21 The general position of domestic
courts in relation to European Union law was also made clear in another judgment where the
Supreme Court ruled that domestic courts are the ordinary courts of the European Community.22
Regarding the applicability of European Union law the Supreme Court held that as stipulated by
Article 2/A of the Constitution (the ‘Europe-clause’) Community legislation guarantees rights for and
imposes obligations on individuals directly without the need to resort to incorporating domestic
21
Case No. Kfv. I. 35.052/2007/7, Case No. Kfv.I.35.055/2007/5 and Case No. Kfv.I.35.014/2007/4. In another
formulation after the date of accession national courts must apply Community law, Case No. 9.K.30
582/2006/4; and in another: as a result of Hungary’s membership in the European Union, Community law is
directly applicable and has direct effect in Hungary, Case No. 5.P.21.333/2005/22; it was also held that the
applicability of Community law was established by virtue of the Constitution and the Treaty of Accession, Case
No. 14.K.20.933/2006.6.
22
Case No. BH 2006.35.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
measures.23 It added that the obligation for Hungary to apply Community law, in harmony with the
relevant interpretation of the ECJ and as required under Article10 TEC, was established by Treaty of
Accession.24 In a case involving the Community Customs Code it was ruled that Article 2/A of the
Constitution and the Treaty of Accession make the incorporation of “directly effective” (applicable
rather) Community measures unnecessary, despite the requirement that international treaties must
first be incorporated into domestic law.25 The domestic legal principle that no one may rely on his
ignorance of the law to justify his actions was also raised in connection with directly applicable
Community measures.26
The direct applicability of regulations was equally accepted.27 The applicability of regulations before
domestic courts is usually taken without further examination and questioning.28 This in a rather
absurd case involving domain name registration and personality rights did not prevent a county
court in connection with the applicability of Regulation 874/2004/EC from lamenting on direct
applicability and direct effect in general, and holding that Article 21 of that regulation was applicable
as it was directly effective.29 It found that the particular regulation was applicable in the case before
it on the basis of the (additional) reasoning that “directly effective Community measures provide
rights to individuals that are enforceable in domestic law and directly applicable regulations entail
direct effect”.30 The meticulous analysis of the county court proved to be redundant as in appeal the
court found that the regulation is not applicable ratione material because it applied only to the
registration of .eu top level domains.31 It added, however, the regulation could be taken into account
per analogiam. This is important as the same court in a different case held that although the
regulation is not applicable in the particular case, it provides important guidance to the national
court (it must be regarded as authoritative in domestic law) because regulations under ex Article 249
TEC are of general application, binding in their entirety, and they are directly applicable in all
Member States.32
The H5N1 case is perhaps the most comprehensive account from a domestic higher court of the
legal consequences of membership in the European Union affecting individuals and domestic
23
Case No. EBH2006.1442 – the reasoning relies on the INDOKOLÁS to Law No. 2002:LXI on ???; mm. Case No.
14.K.20.933/2006.6; mm. 24.K.30647/2006/20, also Case No. Pf.III.20.255/2009/5.
24
Ibid.
25
Case No. Kfv.I.35.014/2007/4 measures that were in force before the date of accession.
26
Case No. Kfv.I.35.511/2006/7 and BMC Case No. 11.K. 31.613/2007/3.
27
Case No. 5.P.21.333/2005/22; Case No. Kfv.I.35.511/2006/7 (based on the Treaty of Accession); Case No.
Pf.I.20.229/2006/28 (based on Article 249 EC); Case No. Kfv.I.35.014/2007/4; Case No.6.P.20.341/2006/50; see
to this effect Case No.Kfv.I.35.480/2006/6. See also, Cases Nos. 17.K.30.290/2006/5 and Kfv.III.37.509/2006/4,
where the failure to follow the provisions of CAP regulations by the domestic authority led to the annulment of
the administrative decision.
28
See, inter alia, Cases No. Pfv.IV.20.562/2009/5 and No Pfv.IV.21.474/2009/4. A striking exception was Case
No. 5.P.21.333/2005/22 before a county court which in connection with the applicability of Regulation
874/2004/EC lamented on direct applicability and direct effect, and held that Article 21 of that regulation was
applicable as it was directly effective.
29
Case No. 5.P.21.333/2005/22.
30
Ibid.
31
Case No. Pf.I.20.229/2006/28 (Pécs Regional Court of Appeal).
32
Case No. Pf.I.20.320.2006/20 (Pécs Regional Court of Appeal).
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
courts.33 In this case the Szeged Regional Court of Appeal, which was also responsible for making the
reference for a preliminary ruling in the Cartesio case, listed with textbook precision all the
necessary panels which are required to establish the domestic application of Community law. The
binding nature of Community law, without the necessity for individual incorporating measures, was
deducted from Article 2/A of the Constitution and from the case law of the Court of Justice declaring
Community law an autonomous and structured legal order which carries its own legal instruments,
and has its own procedures and institutions for the creation and application of those instruments.
On the basis of Van Gend en Loos and Costa it was concluded that Community law forms part of the
domestic legal order, and, consequently, domestic courts are required to take Community law into
account.
The binding nature of decisions – the case involved the execution of Commission Decision
2005/734/EC – was derived from ex Article 249 TEC, and also from ex Article 10 TEC, in the case the
decision is addressed to a Member State, requiring Member States to follow what is stated in the
decision.34 The court repeated that the obligation to introduce domestic measures for the purpose
of attaining the objectives set in the decision arose from ex Article 10 TEC. It pointed out that the
obligations that follows from a decision may not only be fulfilled by legislative action, but also by
means of effective administrative action – in this case a communication, a circular, and individual
measures against poultry farmers. This statement was crucial as the applicant claimed that the
appropriate domestic response should have been taken in legislation and any subsequent domestic
action should have had its legal basis in that legislative instrument. Essentially, the applicant claimed
that domestic administrative action is ultra vires if it is based solely on a European Union decision
without any form of domestic legislation serving as its legal basis. In this regard the Court of Appeal
held that a domestic legislative response to the Commission decision would not have been
appropriate, and the individual administrative measures introduced against the applicant were by no
means illegal on account of the lack of a domestic legislative background (and legal basis). With this
the Court of Appeal appears to have rejected the claim that a domestic administrative measure
issued pursuant a Commission decision would be ultra vires as a matter of Hungarian law when no
domestic legislative measures were to establish a legal basis for that measure.35
The final conclusion of the Regional Court of Appeal, intentionally or not, represents a critical
surrender of jurisdiction and domestic legal principles on administrative legality to the requirement
of effective application of European Union law. It admitted that it will not examine the legality of
domestic administrative measures and that the legality of domestic administrative measures was a
matter for European Union law in the case that domestic administrative action took place on
account of a decision addressed to the Member States. With this the court appears to suggest that
the external (EU) legality of domestic administrative action overrides the concerns raised in
33
Case No. Pf.III.20.255/2009/5.
The court corrected the reference of the first instance court to ex Article 189 TEC to ex Article 240 TEC. It
must be mentioned that the first instance court referred to ex Article 189 EEC in its 2009 judgment, see Case
No. 9.G.40268/2008/10.
35
The issue whether it was clear for the Member States what was required from them (to legislate or not) was
also raised in the BSE case Case C-1/00 Commission v. France (???) where France sought clarification from the
Commission which meant that it could not provide a defence of its failure to implement the decision in
question but for the same reason was not found in breach of ex Article 10 TEC.
34
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
connection of its internal (Hungary) legality without explaining the justifications for that decision.
The fact that a domestic measure meets the requirement of external legality does not mean that it
escapes from the conditions of legality in domestic law. It is part of Member State autonomy to
enforce the requirements of internal legality.36
The principle that may require domestic courts to follow the rules of external legality instead of
internal legality is the principle of loyalty laid down in ex Article 10 TEC. The judgment of the Court of
Appeal relied heavily on Article 10 TEC but its reasoning never went so far as to declare this
possibility. It only insinuated rather feebly that providing for a legislative background and conducting
administrative action on that basis would have been an inappropriate response which could have
resulted in the breach of ex Article 10 TEC. In fact, there is very little evidence that ex Article 10 TEC
would require the Member States to dispense with internal legality. The breach of ex Article 10 TEC
might lead to an infringement action against the Member State,37 and indeed it lays down the
general obligation on the basis of which Hungary my not refrain from action in executing a decision
addressed to it, however, it is questionable that ex Article 10 TEC would demand from the Member
State concerned to overlook the internal conditions of administrative legality in order to ensure the
effectiveness of an European Union measure when following the principles of internal legality could
be key in securing the effective implementation of that measure. Domestic measures suffering from
domestic administrative illegality must not be regarded as the most appropriate means under ex
Article 10 TEC. Having decided not to refer the case to the Court of Justice the Regional Court of
Appeal should have made it clear how it viewed the relationship between Member State
administrative autonomy and ex Article 10 TEC, and whether following or disregarding internal
legality would serve better the effective application of European Union law in the Member States.
The judgment also appears to challenge the question of ultra vires measures in Hungary as in the
case extremely broad discretionary powers were provided by the said decision as it left the actual
measures required from the Member States unidentified, and domestic courts in judicial review
refrained from enforcing any benchmarks regarding the use of discretionary powers and stated that
the domestic measures adopted were the appropriate response to the decision to be enforced
effectively in Hungary. The fact that the challenged administrative action was not adopted in the
form of an administrative decision led only to the domestic courts voicing their disapproval of the
selection of administrative instruments by the authorities concerned.
Direct effect and supremacy before Hungarian courts
The recognition of the principles of direct effect and supremacy in Hungarian courts was generally
unproblematic. As regards the primary and secondary sources of Community law the principles of
36
Regarding the requirements of internal legality to be followed in the course of implementing EU measures
(protecting rights in EU law) see paras. 25-26, Case C-10/97 IN.CO.GE ??? (repayment of levies); para. 34, Case
230/78 Eridania (implementing measures of a regulation)
37
See Case C-266/03 Commission v Luxembourg.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
direct effect and supremacy, as established in Luxembourg case law,38 are considered as imperative
before national courts.39 The distinction between the vertical and horizontal direct effect of
directives was recognised.40 In case of vertical direct effect of non- or ill-implemented directives the
conditions of clarity, preciseness, that it is unconditional, that it leaves no room for the exercise of
discretion in implementation, and that the directive was not implemented correctly were
examined.41 In one case it was acknowledged that direct effect is subject to the conditions set by the
Court of Justice – although in this case it was not particularly visible how those conditions affected
the domestic court’s judgment.42 When domestic legislative activity was required to achieve the aim
of directives, the direct effect of those directives was rightly denied.43 A county court judgment has
also embraced the formula according to which the Member State cannot take advantage of its own
failure to implement a directive and impose obligations on individuals on the basis of that
directive.44 It was also held that before the expiry of the implementation period a directive cannot
be “applicable”.45 The international treaties concluded by the European Community were also held
to be “applicable” in domestic law without the need to resort to implementing measures.46 The
direct effect of decisions was accepted by means of extensive reference to the judgment in Grad.47
The legal consequences of applying these principles were also recognised. The principles of
supremacy and direct effect now provide the basis (in part) for national courts to rely on Community
law in order to establish the illegality of domestic administrative measures (to overrule domestic
judicial decisions).48 Domestic courts were was not hesitant when they had to declare that national
38
References have been made to Case 26/62 Van Gend en Loos [1963] ECR I; Case 6/64 Costa v. ENEL [1964]
ECR 585; Case C-188/89 Foster [1990] ECR I-3313; Case 80/86 Kolpinghuis Nijmegen [1987] ECR 3969; Case C253/96 Kampelmann [??]; Case 15284 Marshall [??]; Case C-188/89 British Gas [??]. The direct effect of
directive 77/388/EEC was accepted by reference to Case 8/81 Becker [1982] ECR 53 in Case
No.7.K.20.590/2006/10 and Case No. Kfv.I.35.525/2006/4.
39
Case No. Kfv. I. 35.052/2007/7; Kfv.I.35.508/2007/6.Case No. Kfv.I.35.055/2007/5; Case No.
Kvf.III.37.043/2007/4; Case No. 9.K.30 582/2006/4; mm. Case No. 8.Pkf.25.228/2007/11; mm. Case No.
24.K.34.580/2006/1; Case No. EBH2006.1442; Case No. 14.K.20.933/2006.6; Case No. 6.P.20.341/2006/50;
Case No. Kfv.I.35.160/2007/4.
40
Case No.6.P.20.341/2006/50; see to this effect Case No. EBH 2006.1442. Kfv.I.35.165/2008/7.szám
41
Case No. Kfv.III.37.043/2007/4; Case No. Kfv.I.35.160/2007/4; Case No. Kfv.I.35.165/2008/7 referring to and
citing 41/74 (not 40/74) Van Duyn and 9/70 Grad (not Grand). A textbook clear definition of direct effect of
directives and its conditions was given in Case No. 11.K. 31.613/2007/3 by the Budapest Metropolitan Court;
for the same directive see the Supreme Court in Case No. Kfv.I.35.160/2007/4 and a county court in Case No.
8.K.21.361/2006/10 (where the case Grad was again mentioned as laying down the foundation of the “direct
effect and applicability of directives”).
42
Case No. 5.P.21.333/2005/22.
43
Case No. 24.K.30647/2006/20 concerning Directive 2003/4/EC on public access to environmental
information and Directive 2003/35/EC on public participation in relation to environmental matters in
connection with ensuring access to justice.
44
County Court C Case No.7.K.20.590/2006/10 referring (and citing) Case 80/86 Kolpinghuis Nijmegen [1987]
ECR 3969 and BMC Case No. 4.K.33.328/2007/10. See also BMC in Case No. 11.K. 31.613/2007/3 – the failure
of implementation must not result in discrimination based on nationality within the Community.
45
Case No. 19.K.34.314/2005/18.
46
Case No. 14.K.20.933/2006.6.
47
Case No. Pf.III.20.255/2009/5.
48
Inter alia, Case No. Kfv. I. 35.052/2007/7; Case No. Kfv.I.35.055/2007/5; Case No. 9.K.30 582/2006/4; Case
No. Kfv.III.37.043/2007/4; Kfv.I.35.511/2007/7; Case No. Kfv.IV.37.240/2007/11; Case No. 7.K.20.198/2006/12.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
legal provisions incompatible with Community law must be set aside to give effect to Community
measures.49
The ruling of the Supreme Court in one of the VAT deduction cases is a good example for
coordination by signposting concerning the principle of supremacy and its consequences.50 In this
case having determined that the particular provision of Hungarian VAT legislation was contrary to
Article 17 of the Sixth VAT Directive and the related case law, the Supreme Court ruled that the
affected provision of domestic law must be disapplied (set aside) by domestic courts. The Supreme
Court also found support for this in the fact that in the meantime Hungarian VAT legislation was
amended on grounds that the regulation of VAT deduction was contrary to the directive as signalled
in the infringement procedure initiated by the European Commission. The Supreme Court did not
reflect on the statement of the first instance court that domestic courts are not only entitled but
also obliged to set aside domestic provisions conflicting with EC law as it follows from case law
(reference to Case 148/78 Ratti), which defines domestic courts as bodies before which individuals
may invoke their rights based in Community law and which are obliged to protect those rights. More
importantly, the first instance court held that administrative bodies, being subordinate bodies, are
not entitled to overrule domestic legislation (on grounds that it is contrary to EU law); therefore, are
prevented from following EU provisions in their proceedings and they must only apply domestic
provisions. This, according to the court, follows from the jurisprudence (not specified) of the Court
of Justice which states that administrative bodies may be required to apply the provisions of a
directive only so far as it does not result in the breach of domestic legal provisions. This is when the
administrative body is able to find an interpretation of domestic law in the light of the directive that
conforms with the provisions of that directive; in any other instances it may only apply domestic law.
The court continued that only before a court of law can the consequences of a clash between
domestic law and Community law be adequately addressed. In the light of the judgment in Larsy C118/00 (paras. 43-45 and 51-53) these statements might require some qualification. The Supreme
Court also made it clear the registration tax cases that the tax authority should have interpreted the
relationship between domestic tax legislation and Community law as it had been provided by the
Court of Justice in the Nádasdi and Németh cases.51 In the case above the Supreme Court acting in
its coordinator role should not have addressed the statements by the first instance court.
The taxi-voucher taxation case provided a further example of signposting by the Supreme Court by
way of establishing a clear framework for the applicability of European Union law.52 The judgment
commenced its reasoning that the Republic of Hungary by virtue of its membership in the European
Union is required to harmonise its laws and regulation with Community law. It continued that this
obligation of the Member State and domestic authorities (courts and administrative authorities) also
stands in the situation where domestic law provides no ground for action to comply with this
49
Case No.7.K.20.590/2006/10; Case No. Kfv.I.35.160/2007/4; Case No. Kfv.III.37.043/2007/4;
10.K.27.687/2006/10.
50
Case No. Kfv.I.35.165/2008/7. See also Case No. Kfv.I.35.160/2007/4 regarding the same directive. The court
proceeding at first instance (BMC) in Case No. 11.K. 31.613/2007/3 produced a high quality reasoning on the
basis of Community law; it is overshadowed by the statement that ”setting aside the domestic provision comes
from direct effect, and also supported by the principle of supremacy.”
51
Cases No. Kfv.I.35.312/2007/5, No. Kfv.I.35.052/2007 and No. Kfv.I.35.008/2007.
52
Case No. Kfv.I.35.344/2008/7.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
obligation and when domestic law demands action in contravention of this obligation. As an
authority supporting the latter, rather vague statement, the Supreme Court referred to Case C118/00 Larsy without identifying any particular provision of that judgment. Perhaps, para. 51 of the
judgment contains something comparable to the Supreme Courts statement, and says “any
provision of a national legal system and any legislative, administrative or judicial practice which
might prevent Community rules from having full force and effect” are incompatible with EU law.
The Supreme Court then asserted that before domestic administrative authorities individuals against
the Member State may rely on certain precise and unambiguous provisions of a directive
determining rights or obligations, and the rights derived directly from these must be protected by
domestic courts. As an authority supporting this, the Supreme Court referred to Case C-200/90
Denkavit in which the closest matching statement is in para. 17 holding that “a provision of a
directive can be relied upon by individuals before the national courts if it is clear, precise and
unconditional”. Following this the Supreme Court repeated the statement, examined in detail below,
that that the Court of Justice had held that “the Directive in question (6th VAT Directive) does not
require a specific implementing measure from the Member States, its provisions can be directly
effective.”
Finally, the ’dog breeders association’ judgment of the Budapest Metropolitan Court should be
mentioned.53 The Supreme Court in reviewing the judgment refrained from commenting on the
particular part of the decision introduced here and left the opportunity for effective coordination
unutilised. The case concerned freedom of association, in particular the right of dog breeders to
freely establish professional associations. When considering the fundamental rights aspect of the
case having examined the international and domestic provisions on freedom of association the court
turned to the possible human rights implications of the dispute in European Union law.
The judgment was opened by recalling that after the dace of accession Community law is effective in
Hungary and listed the corresponding principles in brackets (supremacy, direct effect, direct
applicability). Then, it referred to Title I Article F(2) of the Maastricht Treaty on the protection of
fundamental rights and freedoms in the European Union. It continued with asserting that on the
basis of the principle of supremacy domestic measures contravening Community law must be
disapplied and cited point 3 of the summary in Costa. Next, it held that the supremacy principle
provides that a national court is not required to initiate or wait for a procedure normally applicable
in the given Member State for the resolution of conflicts between legal instruments eg. a procedure
before the constitutional court. It added that domestic courts are required to set aside conflicting
domestic measures ex officio without a claim from the parties submitted in this regard, and that the
principle of supremacy must also be applied by the administrative authorities of the Member States.
The court then included numerous citations from Case 11/70 Internationale Handellsgesellschaft
concerning national law and the validity of Community law (point 1 of summary) and fundamental
rights in European Community law (point 2 of summary). In the next sentence it proclaimed that the
supremacy of Community law is absolute, and „the principle of supremacy, in the given case the
obligation to ’set aside’ domestic measures extends to the procedural provisions of the Member
53
Case No. 3.K-30698/2006/33. The Supreme Court judgment in the case: Case No. Kfv.IV.37.256/2008/14.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
States. This was supported with a reference to the Factortame case; it did not specify which. The
court continued with reference to Case 7/73 Nold in which the Court of Justice declared that
(Community) provisions contravening fundamental rights must be inapplicable. The reference to
Case 36/75 Rutili recited the Court of Justice`s reference to the ECHR that no restrictions in the
interests of national security or public safety shall be placed on fundamental rights other than such
as are necessary for the protection of those interests in a democratic society.54 It added that the
Court of Justice has acknowledged the right of individuals to rely on the principle of legal certainty
against the state, reference to Case 148/78 Ratti , and that legal certainty involved the protection of
legitimate expectations. From this, the domestic court concluded that “therefore, Convention rights
(assumedly the ECHR) must be given full protection on the basis of both ordinary international law
and Community law.” It added that limitations on fundamental rights must be construed narrowly,
and the domestic measure applicable in the case must be interpreted and applied with regard to the
findings above. On this basis, it declared that the limitations imposed by the domestic public
authority were illegal. Surely, the approach of domestic courts on fundamental rights in the
European Union requires some refinement by means of signposting from the Supreme Court.
‘Indirect effect’ before Hungarian courts
The ‘indirect effect’ of directives has also been recognised55 and given salient position before
Hungarian courts. The Supreme Court has held that when the implementation of a directive was
omitted, it is necessary to provide the interpretation of relevant domestic provisions in the light of
the purpose of that directive. In the particular case this meant that in order to ensure access to
justice in environmental matters as required by Community law domestic law was interpreted in a
way to grant a locus standi to the applicants.56
The ‘indirect effect’ of directives was also taken on board on a voluntary basis in a case that ratione
temporis fell out of the scope of Community law.57 It was a trade mark case the facts of which
occurred before the date of accession and concerned an inaccurate implementation of the relevant
directive. In the 2006 judgment the domestic court rejected that in the case before it the obligation
54
Para. 32, the Court of Justice made that reference in order to support its vision that the limitations on the
powers of Member States to control aliens in EEC law was a special manifestation of the limitations clause
regarding Articles 8-11 ECHR.
55
Case No. 24.K.30647/2006/20 Kfv.I.35.165/2008/7. In Case No. Kfv.IV.37.177/2008/4 the Supreme Court
ruled that it achieved the interpretation of domestic law in harmony with Community law (the Treaty of
Accession), when essentially it reached the conclusion that domestic law was not in contravention with
European Community law.
56
Case No. 24.K.30647/2006/20 - following the purpose of Directive 2003/4/EC on public access to
environmental information and Directive 2003/35/EC on public participation in relation to environmental
matters the limit of this interpretative obligation was found in restricting the locus standi to procedures where
the relevant authority proceeds specifically as an environmental authority.
57
3.Pk/2005/13, this did not prevent court from relying excessively on EC trade mark jurisprudence to guide its
decision. Accepted in appeal 8.Pkf.25.203/2007/9. In 8.Pkf.26.160/2007/4 the reasoning supporting the duty
of interpretation merely stated that the directive had been implemented to domestic law and no application of
domestic law contrary to the directive took place.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
to interpret domestic law in the light of the directive would arise from the judgment in Case 14/83
Von Colson which had established the ‘indirect effect’ of directives. The reason for this was found in
that the directive at issue had been implemented on the basis of the Association Agreement of 1994
and not under the Treaty of Accession. It continued that in any event the voluntary undertaking of
approximation (as follows from the Association Agreement) provides support for, but does not
establish, the obligation to interpret the relevant domestic legal provision in the light of the
directive.
Interpreting domestic law in the light of the wording and purpose of directives has manifested in
extreme forms before domestic courts. In a case concerning designs the court proceeding at first
instance, led by the ruling in Marleasing,58 decided to provide an extravagant grammatical and
logical interpretation of domestic regulation implementing, among others, Article 1 of Directive
98/71/EC on the legal protection of design.59 The court in appeal, however, failed to welcome the
puzzling interpretative attempt. It simply ruled that the interpretation of the domestic statute was
irrelevant for the purpose of deciding the case. More curiously, it suggested that an interpretation of
the English version of a directive may not be appropriate in Hungarian courts when a Hungarian
version published in the Official Journal is available.60
The last example mentioned here is the a trade mark case where the domestic court provided an
interpretation of the domestic legal provision, mirroring the wording of the directive it had
implemented, on the basis of relevant Luxembourg jurisprudence. This meant excessive reference to
the judgment in Philips v. Remington when deciding on the issue whether the trade mark should be
declared invalid.61 By adopting the interpretation of the Court of Justice the domestic court managed
an interpretation of the national measure in the light of the directive; practically, an interpretation in
conformity with the Court of Justice`s jurisprudence was provided.62
2/b Local variation
The ‘domestication’ of European Union law by Hungarian courts
The previous sections provided a wealth of evidence that the fundamental principles governing the
domestic application of European Union law have been acknowledged by the Hungarian judiciary
with the substantive coordinating contribution of the Supreme Court. Today domestic courts regard
EU law as part of the ‘general law of the land’ which is applied and interpreted in the cases before
them. The Supreme Court was determined to convey the message to all domestic courts by issuing
important authoritative judgments which confirmed and clarified the tasks of domestic courts under
58
Case C-106/89 Marleasing ??
3.P…./2004/33.
60
8.Pf.21.087/2007/4.
61
Case C-299/99 Philips Electronics NV v. Remington Ltd. [2002] ECR I-5475.
62
Case No. 3.Pk./2005/13. Upheld in Case No. 8.Pkf.25.203/2007/9.
59
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
European Union law. It was also demonstrated above, however, that inaccuracies in reasoning are
not uncommon and tighter coordination might result in more satisfactory results.
In the following the ‘domestication’ of direct effect, a key principle regarding the application of
European Union law before domestic courts, will be examined. Our cardinal point is that the
successful transplantation into domestic law of the key principles of European Union law, such as
direct effect, must rely on the appropriate understanding of those principles. From the perspective
of the Court of Justice the most appropriate solution would be the adoption of the communautaire
reasoning prepared by the Court in establishing those principles. Mutations to the reasoning in the
course of reception could affect the effectiveness of these principles in the domestic legal
environment. Nonetheless, domestic courts are not prevented from finding legal arguments arising
from the domestic legal order when transplanting these principles which are addressed to them.
Therefore, finding the basis for European Union law in the domestic setting in the Hungarian
Constitution and the Treaty/Act of Accession cannot be objected, and such practice is not
unprecedented among the Member States.
It is a different case, however, when the reception of key principles of European Union law results in
detaching those principles from their original rationale and limits, and they gaining a meaning in the
interpretation of domestic courts which may be at variance with EU law. The ‘domestication’ of
principles like direct effect in this manner questions the integrity of the reception process and the
acceptability of judicial reasoning produced by domestic courts. It the following it will be examined
whether distortions in judicial reasoning by Hungarian courts in ‘domesticating’ direct effect has
produced acceptable outcomes as a matter of European Union law, and whether ‘domestication’ is
an appropriate in a legal environment which requires coordination by signposting from the higher
courts.
Hungarian courts were prone to engage in a ‘domestication’ of the principle of direct effect. They
appear determined to avoid beyond the acceptance of the principle the standard formulas and tests
deployed by Community courts, and instead they provide their own conclusions based on legal
sources such as the Constitution, the Treaty of Accession, and the European Union Treaties. The
judgments discussed below give reasonable ground to the assumption that Hungarian courts are not
willing to accept the direct effect of Community law on the terms dictated by Community courts.
They also demonstrate that Hungarian courts are more comfortable when their obligations under
European Union law are supported by legal texts and textual interpretation as opposed to the more
teleological/functional approach of the Court of Justice.
Hungarian courts appear to have managed to deduct the direct effect of the relevant Community
measure from the single fact that the measure “did not require an implementing measure from the
Member State (an internal measure for its domestic application)”.63 The Supreme Court in a few
cases concerning the Sixth VAT Directive produced the formula, mentioned above regarding the taxivoucher case, that “the Court of Justice had held that the Directive did not require an implementing
measure from the Member States, (therefore) its provisions can be directly effective for the Member
63
Case No. 5.P.21.333/2005/22 on Regulation 874/2004/EC, and Cases Case No. Kfv.I.35.344/2008/7, No.
Kfv.I.35.525/2006/4, and No. Kfv.I.35.344/2008/7 on Directive 77/388/EC (Sixth VAT Directive).
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
States.64 A possible explanation for the formula is that it is an unfortunate translation of the case law
which holds that “in the absence of implementing measures adopted within the prescribed period
(the provisions of the directive can) be relied upon as against any national provision which is
incompatible with the directive”.65 The difference is visible, and the formula from Luxembourg has
been used by the Supreme Court in another VAT deduction judgment.66
The justiciability of Article 9 of Directive 2001/14/EC on the allocation of railway infrastructure
capacity was subject to some unusual reasoning. While the court proceeding at first instance found
that the domestic provisions deviate from Article 9 of the Directive, it held that “from these
differences the applicants cannot derive a right stemming from Community law that could be relied
upon against the defendants.”67 Although the case was eventually decided on the basis of the
relevant provisions of domestic law and the directive which were not affected by incomplete
implementation, the claim made in connection with Article 9 by the domestic court remains
puzzling.
The direct effect of a directive has been based on arguments containing a reference to Article 3 of
the Treaty of Accession which provides that the Treaties and all secondary legislation in force at the
time of accession bind the new Member States.68 The connection between justiciable rights before
domestic courts and the textual reference was left unexplained by the Supreme Court. The
attractiveness of the textual approach for Hungarian courts is also apparent in the case concerning
the direct effect of Decision 1/95 of the EC-Turkey association council.
Establishing the direct effect of Decision 1/95 is among the most striking examples of
‘domestication’. The “international obligation” embedded in ex Article 10 TEC was the starting point
of establishing the supremacy and direct effect of Community law. Then from the obligations that
Community law must enjoy primacy when in conflict with domestic law and that domestic courts
must not impede the effective enjoyment of Community rights it was deducted that “those
Community measures which require no implementing measures enjoy direct effect” – a reasoning
familiar from the VAT cases. Thirdly, the applicability before domestic courts of international treaties
concluded by the European Community not requiring domestic transposition was accepted by the
court on the basis of Article 2/A of the Constitution, the Treaty of Accession, and Article 10 TEC.
These arguments led to the final conclusion that the application in Hungary of Decision 1/95 of the
association council was not unlawful even in the absence of an incorporating measure otherwise
required by domestic law.69
Not only direct effect but direct applicability – again similar as in the case above with regulations
While the motivation to resolve the problem arising from the domestic requirement of incorporation
in relation to international law is understandable, it remains unclear why the domestic court did not
attempt to resolve the issue on grounds of the direct effect of association council decisions as
64
Ibid.; see also first instance judgment in Case No. 11.K. 31.613/2007/3.
Case 8/81 Becker ???
66
Case No. Kfv.I.35.508/2007/6.
67
Case No. 24.K.34.580/2006/1 translation by the author.
68
Case No.7.K.20.590/2006/10.
69
Case No. 14.K.20.933/2006.6.
65
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
established by the Court of Justice. Instead of seeking a result based on some form of textual
interpretation of legislation and treaties, the domestic court should have taken into account
judgments such as Demirel or Sevince the solutions in which would have deemed the domestic
requirement of incorporation irrelevant.70 Moreover, relying on those judgments would have
established the domestic application of association council decisions which the argument of the
domestic court had failed to achieve, since, instead of association council decisions, it concentrated
on the direct effect of international treaties concluded by the EC.
SIGNposting
Variance
In line with Hungarian supremacy doctrine
The trouble comes when it declares measures that do not have dir effect on grounds of EC law – but
they doon grounds of nat law as dir effect is interpreted after those positive legal provisios – lásd
case when dir effect but not examining conditions.
The role of ex Article 10 TEC
The “principle of loyal cooperation”, ex Article 10 TEC, was seen as the seminal textual signpost put
to use in the reception of European Union law by the Hungarian judiciary. It was seen as a ground for
the obligation for Hungary (Hungarian courts) to apply Community law.71 It was noted in the H5N1
case as the ground for Member States to enforce a Commission decision and it was connected to the
principle of proportionality requiring Member State action under ex Article 10 TEC to adhere to the
requirement of proportionality.72 It manifested in a statement that as a result of its membership
Hungary (Hungarian courts) must ensure the effective application of binding Community measures.73
Another example for reliance on ex Article 10 TEC is the case concerning the direct effect of Decision
1/95 of the EC-Turkey association council decided by a lower court where Article 10 was used to
establish supremacy and direct effect, and to accept the applicability before domestic courts of
international treaties concluded by the European Community.74
The H5N1 judgment requires separate examination as the Regional Appeal Court appears to have
derived/associated the binding nature of decision from/with ex Article 10 TEC. It proposed that the
actions a Member State needs to perform under a decision addressed to it follow from that Article.
It is not suggested here that ex Article 10 TEC cannot be connected with Member State action to
comply with obligations under a binding measure, however, it appears inessential to derive the
70
See para. 14, Case 12/86 Demirel [1987] ECR 3719, paras. 14-15, Case C-192/89 Sevince [1990] ECR I-3461.
Supra ??? in Case No. EBH2006.1442.
72
Supra ??? H5N1 PROPIT miert nem viszi vegig – hiszen a BSE cases alapjan propi, right to tulajdoin would
have been the vcae CHEKKKK
73
11.K. 31.613/2007/3. Budapest Metropolitan Court
74
Supra ??? Case No. 14.K.20.933/2006.6.
71
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
obligation to follow a binding measure from the “principle of loyal cooperation”. In fact the first
instance court relied on the clear and simple formula that decisions are enacted to bind the
addressee (the Member State) to comply after its publication or communication to the addressee.75
It remains unclear why the first instance court felt it necessary to address the direct effect of
decisions in this context.
The most excessive use of ex Article 10 TEC by the Hungarian judiciary came in Joint Opinion PK-KK
1/2009, discussed below, which is a non-binding reaction from the Supreme Court to the judgment
of the Court of Justice in Cartesio.76 That judgment formulated key principles regarding preliminary
rulings in domestic courts, namely, whether an appeal should be allowed against judicial decisions
on whether a request for preliminary ruling should be made and whether extraordinary appeal was a
judicial remedy in the meaning of ex Article 234 3) TEC, both of which required the reassessment of
the domestic procedural environment. The Joint Opinion is the most prominent example for the
activity of the Supreme Court in coordinating the reception of European Union law in Hungarian
courts.
Concerning the Joint Opinion, it remains unclear why it based directly on ex Article 10 TEC the
obligation for the comprehensive reconsideration in the light of the Cartesio judgment of the
affected provisions of the Code on Civil Procedure. The Supreme Court reached this conclusion after
denying the erga omnes effect of the judgment without identifying the arguments for and against
the erga omnes effect of judgments from the Court of Justice in domestic and in EU law. A possible
explanation is that it preferred the textual certainty of ex Article 10 TEC to the relative insecurity of
principles laid down in case law regarding the duties of domestic courts and, in general, of the
Member State.
The choice of ex Article 10 TEC as the basis for issuing a consolidating opinion which clarifies the
legal situation after a difficult judgment by the Court of Justice is perplexing. The decision to produce
a non-binding reaction to the judgment is a good example of effective coordinative work from the
Supreme Court, however, the choice of ex Article 10 TEC seems unsound as it does not seem to
incorporate such an obligation for domestic courts. According to Temple Lang the ‘good faith clause’
must be connected to a Treaty article, a fundamental principle of law, or a clear public policy aim in
order to establish an obligation for the Member States (domestic courts); ex Article 10 TEC is a
subsidiary, a residual principle.77 The specific obligations of domestic courts under ex Article 10 TEC
are identifiable;78 therefore, it can be concluded that conjoining the judgment of the Court of Justice
with ex Article 10 TEC does not generate a direct obligation in European Union law on the basis of
which issuing Joint Opinion 1/2009 would have been ineluctable for the Supreme Court. This begs
the question why a supreme court so keen on protecting its autonomy in matters relating to
European Union law accepts unhesitatingly an obligation which may only be deducted indirectly
75
9.G.40268/2008/10. szám
Supra ???
77
John TEMPLE LANG: „Article 10 EC – The most important „general principle” of Community law”
(http://www.juridicum.su.se/nef/Publikationer/JTL%20artikel.htm) 2007. Lásd még, John TEMPLE LANG: „The
duties of cooperation of national authorities and courts under Article 10 EC: Two more reflections”, European
Law Review 2001. 84.
78
Vö. TEMPLE LANG (lj. 68.).
76
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
from ex Article 10 TEC. This clearly was not a case of a specific situation for the application of
European Union law in relation to which direct obligations flow from that article for domestic courts.
As justification for the use of ex Article 10 TEC the opinion without further explanations referred to
two judgments from the Court of Justice. The first was the judgment in Köbler79 which seems as an
adequate choice as the liability of domestic courts is an effective stimulus for adopting a opinion
aiming to consolidate and coordinate domestic judicial practice to follow European Union law.
Nonetheless, a direct obligation to produce such opinion, as suggested by the Supreme Court, does
not follow from Köbler, and the relationship between the tasks of domestic courts that may follow
from Köbler and the obligation under ex Article 10 TEC remains unclear.
The second case referred was Willy Kempter KG80 which, although it relates to the application of ex
Article 10 TEC, appears as unsuitable to support the argument of the Supreme Court. It concerned a
legal problem distinct from the question whether a general obligation to reassess the domestic legal
environment may arise from a judgment of the Court of Justice. In Willy Kempter the Court of Justice
was required to clarify whether its judgment would require action from the administrative authority
the decision of which had been challenged before the domestic court. Therefore, the reference to
the Willy Kempter judgment appears as an unsuccessful attempt at finding a textual basis for the
presumed obligation to adopt the Joint Opinion.
In our view the basis for a measure such as Joint Opinion 1/2009 can only be the voluntary decision
of a Member State to abide by European Union law in respect to which ex Article 10 TEC may only be
evoked in an indicative manner without creating any form of direct obligation.81 It is not excluded by
European Union law that a Member State as a symbolic abutment for its voluntary action may rely
on the textual ground provided by ex Article 10 TEC. It must be mentioned here that voluntary
compliance action on behalf of the Member States outside the framework of the particular case in
which the preliminary ruling was requested is rarely demonstrated.82 In this light, issuing the Joint
Opinion was an exceptional act of coordination from the Supreme Court and must be viewed as an
attempt, if not completely correctly reasoned, to comply on its own volition with European Union
law following the legislature which had led the way in voluntary compliance by adopting
amendments to the Code of Civil Procedure to enter into force in January 2010.
Another point which demands attention is the choice of ex Article 10 TEC over the erga omnes effect
of the judgment of the Court of Justice. The Supreme Court denied erga omnes effect from the
judgments of the Court of Justice. This begs the question whether this manoeuvre was a power
demonstration on behalf of the head of the Hungarian judiciary regarding the authority of the Court
of Justice, or an unfortunate summary opinion left unclarified by the lack of judicial explanations, or,
as it was suggested above, an attempt to find a textual foundation for the opinion. The first option
could be quickly discarded as choosing ex Article 10 TEC instead of the erga omnes effect of
preliminary rulings, while it may appear as undermining the authority of the Court of Justice,
represents a clear subordination to perceived obligations under the Treaty. The second case seems
79
Vö. Köbler-ügy (lj. 65.).
C-2/06. sz., Willy Kempter KG ügyben 2008. február 12-én hozott ítélet [EBHT 2008., I-411. o.].
81
Az erga omnes hatály kiterjesztésének lehetőségét itt nem érintjük.
82
Lisa CONANT: Justice Contained: Law and Politics in the EU (Ithaca: Cornell University Press 2002) 72.
80
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
very likely as it is improbable that the Supreme Court would not accept at least an ultra partes effect
of Luxembourg judgments.83 A more likely explanation is that the Supreme Court might have
regarded the question of issuing Opinion 1/2009 independent from the problem of erga omnes
effect. Finding a textual basis may also be accepted as an explanation as it always remains a safer
option for judges in a complex decisional situation. Nonetheless, domestic courts must be clear to
distinguish the particular obligations arising under ex Article 10 TEC in relation to the judicial
application of European Union law, such as ‘indirect effect’, and the general obligations of Member
States under the same Treaty article.
See notes
Binding effect of decisions from 249 Grad
2/c Coordination of domestic litigation
Signposting and cleaning up (INTRO)
Coordinating the registration duty litigation
The registration duty cases were the among first cases after accession where the Hungarian judiciary
was required to manage an influx of litigation based on the alleged incompatibility of domestic tax
law with European Community law. Registration duty regimes on used motor vehicles have been
under attack in a number of Member States, and looking at the original version of domestic
legislation it was not surprising that individuals decided to challenge the administrative decisions
issued under the act. Perhaps the most controversial element of the registration duty saga was that
lower courts rejected to apply Community law and to follow the judgments given by the Court of
Justice in this matter.84 Also, some litigants were not completely satisfied with how Hungary (and
Hungarian courts) resolved the matter following the Nádasdi and Németh judgment of the Court of
Justice.
These required some ‘cleaning up’ from the Supreme Court coupled with assertive signposting to
guide domestic courts in deciding registration tax cases. Regarding the first instance judgments
83
In Cases No. Kfv.I.35.052/2007/7 and No. Kfv.I.35.055/2007/5 on registration duty, examined below, an ultra
partes effect of Luxembourg judgments was acknowledged.
84
The court proceeding at first instance (Budapest Metropolitan Court) declined that ex Article 90 TEC and the
relevant case law would be applicable, and argued that the only applicable law was Act No. 2003:CX on
Registration Duty, and that tax legislation does not fall under the competence of the Community, Cases No.
8.K. 32.509/2006/2 and No. 8.K.32.821/2006/2.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
rejecting the applicability of Community law the Supreme Court reacted quickly and in two
judgments delivered in 2007 it overruled the first instance court and declared the original decisions
of the administrative authority void.85 The Supreme Court attempted to deliver the message to
domestic courts regarding their obligations under EU law by using clear and authoritative language.
It declared that by virtue of Hungary`s membership in the European Community, Community law
forms part of domestic law and domestic courts must follow the provisions of primary and
secondary law, even that concerning taxation, and they must not neglect the relevant case law of
the Court of Justice. The Supreme Court declared that the direct effect and the supremacy of
Community law bind domestic courts, and that the judgments of the Court of Justice in preliminary
ruling must also be followed.
As to the question whether the registration duty was incompatible with Community law the
Supreme Court highlighted that the Court of Justice in the Nádasdi and Németh joined cases had
declared the Hungarian registration duty system incompatible with ex Article 90 TEC – an issue
raised by the applicants in the administrative procedure and before the first instance court. It
affirmed that due to the ex tunc effect of the judgments of the Court of Justice domestic courts must
apply domestic law in conformity with those judgments even in cases that arose before the delivery
of those judgments. The court also called attention to the fact that domestic courts are not
exempted from applying Community law in the case before them on grounds that a separate
procedure might be available for remedying the breach of Community law (here, the possibility to
reclaim the unlawfully collected part of the registration duty as enabled by Hungarian law (Act No.
2006:CXXX on Repayment) enacted after the intervention of the Court of Justice).
Subsequent cases (...)
The end, however, of the registration duty saga was only reached in late 2009 when the Supreme
Court delivered the final judgment in the case, which after the first judgment of the Supreme Court
in 2007 was reconsidered by the administrative authority, the decision of which was later challenged
in judicial review before the Budapest Metropolitan Court in 2008, and reached again the Supreme
Court in extraordinary appeal.86 The applicant`s claim was that neither the original Act on
Registration Duty nor the Act as modified after the relevant judgment of the Court of Justice were
applicable to his case, and the Act on Repayment (of unlawfully collected registration duty) did not
provide a ground for issuing a new administrative decision. This was submitted to contest the 2007
judgment of the Supreme Court according to which the registration duty payable in the given case
must be determined by the administrative authority on the basis of the modified Act on Registration
Duty and the Act on Repayment.
The Supreme Court ruled that its earlier judgment must be considered as res judicata and bound the
administrative authority in delivering its new decision. It stated that the case of the applicant had
been in progress before and after the modification of the Act on Registration Duty, and nothing
prevented the administrative body to decide the case on the basis of the modified Act. Basically, the
85
Cases No. Kfv.I.35.052/2007/7 and No. Kfv.I.35.055/2007/5.
Case No. Kfv.V.35.344/2009/6. 2009 brought another interesting case to the Supreme Court regarding the
recalculation and repayment system (Case no. Kfv.VI.35.431/2008/6). This judgment will be examined below
within the section on national remedies and Community law.
86
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
judgment upheld the judgment of the first instance court87 which rejected the argument of the
applicant that no registration duty should be imposed on him because the Act on the basis of which
the original procedure was commenced was found to be in breach of EC law, and the modified Act
could not be applied in his case as it had been commenced before the modifications were passed. It
argued that the Court of Justice in its judgment did not declare the registration duty as such
incompatible with EC law; it only ruled that the system of calculating the duty contravened the
prohibition of discriminatory taxation. It continued that the obligation to pay registration duty can
be based lawfully on the original Act, and only the calculation and the actual amount needed to be
reconsidered. For this purpose, the Act on Repayment, which covers procedures which had
commenced before it came into force, should be applied, which together with the modified Act on
Registration Duty “put the interpretation of the Court of Justice into a domestic legislative
framework, thus making it part of domestic law”. This meant that the new decision by the
administrative authority was lawful.
Coordinating the VAT deduction litigation
Coordinating the road transport litigation
Coordinating the local business tax litigation
2/d Independent interpretation
2/e Preliminary references and Hungarian courts
Having appraised the independent activity of Hungarian courts in interpreting Community law
without resorting to preliminary rulings from the Court of Justice, now the reception by Hungarian
courts of the institution of preliminary ruling has to be examined. The attitude of domestic courts
towards preliminary references as a decisional and procedural alternative has an impact on their
willingness to turn to the Court of Justice. Domestic courts are in a difficult situation when it comes
to preliminary references as the advantages and disadvantages of referring questions to the Court of
Justice are equally visible. (...) Moreover, responding to the issues that may arise in the complicated
relationship between the Court of Justice and domestic courts in the framework of the preliminary
ruling procedure has its own complications, as instead of absolute rules on jurisdiction domestic
courts meet principles or signposts governing their role and duties in the procedure, such as the
87
Case No.18.K.34.430/2008/3. See also Case No. 6.K.21.102/2006/17.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
concepts of necessity or acte claire. (...) Also, preliminary references involve considerable judicial
politics and define the judicial roles played in the Europe-wide structure for the judicial application
(enforcement) of EU law, in relation to which all players, the Court of Justice and domestic (higher)
courts, wish to express their own autonomous opinion. In this environment calibrating the
appropriate domestic response requires good judgement. Hungarian courts with their willingness to
engage in independent interpretations of European Union law appear to have a strong opinion of
preliminary rulings as procedural and functional tools of European integration.88 The Supreme Court
was again a key actor, and within the limits described in domestic legislation went on to design a
domestic framework for preliminary rulings, which was subject to some refinement by the Court of
Justice.
Beginning with a relatively minor issue, one of the key judgments of the early period after accession
from the Court of Justice, which proved to be crucial in the registration tax litigation, appears to
have been delivered in breach of Hungarian law. Provided that our observation produced below is
valid regarding the Nádasdi case that the referring court went beyond the applicant`s claim when
raising the issue that the registration duty was contrary to EC law on its own motion, it is highly
questionable that the preliminary reference was lawful as a matter of domestic procedural law
which appears to reject the ex officio application of European Union law in domestic courts.89 This
was very clearly stated in another judgment by the Supreme Court in which the conditions of a
request for a preliminary ruling were not seen as fulfilled because the applicant had failed to include
in its application the grounds which would demonstrate that a decision by the Court of Justice was
necessary, and neither the court, nor the applicant could go beyond the content of the original
application.90
Domestic court might hesitate to accept certain legal provisions as part of European Union law
which significantly reduces the chances of a reference for a preliminary ruling. In a rather complex
taxation case the applicant wished to obtain a preliminary ruling on whether the (basic) right to
pursue an economic activity affected the lawfulness of a domestic taxation provision according to
which the relevant authority may modify or declare contracts between private undertakings void.91
The Budapest Metropolitan Court rejected to refer the question to the Court of Justice on grounds
that the administrative decision’s legal basis was not the tax provision in question, which, in a formal
sense, appears as acceptable. The court, however, continued and noted that since the jurisdiction of
the Court of Justice under ex Article 234 TEC only covers measures of Community law, and since no
provision of Community law was highlighted by the applicant in supporting his claim, the
requirement of necessity under ex Article 234 TEC was not fulfilled.92 The court, for undisclosed
reasons, seems to have failed to consider the right to pursue an economic activity, a general
principle of EU law, as a ‘Community measure’ which could be brought before the Court of Justice. It
is also unclear why in appeal the Supreme Court decided to uphold the judgment in rejecting the
88
It characterises the attitude of Hungarian courts that the costs associated with the preliminary ruling are
considered bona fide and necessary costs, Case No. 9.K.30 582/2006/4.
89
See infra ???.
90
Case No. I.35.504/2006/8 – domestic law excludes the modification of an application for the revision of a
judgment.
91
Art. 1 (7) Law No: Adózás RENDJLRŐL
92
Case No. 11.K. 34.338/2004/28.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
reference for a preliminary ruling on the specific ground that European Union law must not be
applicable to facts (tax years) that arose before the 2004 accession.93
One of the VAT deduction cases can also be mentioned here as an example for when the domestic
court decided not to request a preliminary ruling and went on to provide an independent
interpretation on the Sixth VAT Directive and the Hungarian system of VAT deduction, the essence of
which were shown above in connection with the VAT deduction cases.94 The county court began its
reasoning with reference to direct effect as established in Van Gend en Loos and its conditions as
provided in subsequent case law. Having described what the conditions ‘unconditional’ and ‘precise’
meant, it observed that the Court of Justice had declared the particular article of the directive of
having direct effect. Then, it turned to the question whether to make a preliminary reference by
confirming the powers of the Court of Justice under ex Article 220 TEC and the aim of uniform
interpretation of Community law as provided under ex Article 234 TEC. It continued with a reference
to Case 66/80 ICC which according to the court established that it is not necessary to request a
preliminary ruling on the interpretation of a particular provision in EU law, if the question for
interpretation is materially identical to a question which had already been the subject of a
preliminary ruling in a similar case. Clearly, the court wished to refer to the judgment in Da Costa
instead of that in ICC. This, however, does not affect the validity of the interpretation given in the
light of the case law of the Court of Justice on the compatibility of VAT deductions with Community
law which followed the path set by previous judgments by Hungarian courts in this regard.
The right and obligation of domestic courts to refer questions to Luxembourg has been associated in
Hungarian law with the purpose of ensuring the uniform application and interpretation of
Community law.95 The Supreme Court admitted in one of the local business tax judgments that this
can be necessitated by the number of cases in progress before domestic courts and the potential for
inconsistent domestic case law.96 This was repeated in the consolidating opinion issued in response
to the judgment of the Court of Justice in Cartesio, PK-KK Joint Opinion 1/2009, which is discussed in
detail below.
The interpretation by domestic courts when not to refer when there is a duty to request a
preliminary ruling from the Court of Justice is perhaps the most crucial element in constructing a
cooperative relationship between the Court of Justice and domestic (higher) courts. Generally, the
approach in Hungary is trouble-free as the Supreme Court has identified the relevant issues as
provided by the Court of Justice in Da Costa and CILFIT.97 In the same case the Supreme Court went
on to interpret these conditions as follows. Having taken into account the Court`s previous
judgments on Hungarian preliminary references which fell ratione temporis out of its jurisdiction,98 it
claimed that the Court of Justice did not have jurisdiction to rule on the proposed request for a
preliminary ruling as the facts of the case had occurred before the date of Hungary`s accession. In its
93
Case No. Kfv.I.35.101/2007/6.
Case No. 10.K.27.687/2006/10.
95
Case No. Kfv.I.35.021/2006/8; Case No. BH 2006.235.
96
Case No. Kfv.I.35.021/2006/8.
97
Case No. BH 2006.235. See Case No. BH 2006.216 on CILFIT. See also Case No. Kfv.I.35.344/2008/7
mentioning acte claire regarding the interpretation of Sixth VAT Directive in the light of case law.
98
Case C-206/05 Ynos and Lakép.
94
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
view the judgments of the Court of Justice unequivocally, clearly, and without doubt supported this
position, and the questions regarding the necessity or the obligation to refer to the Court of Justice
were moot as the subject matter of the proposed reference had been appropriately clarified in the
domestic procedure.99
In another case the Supreme Court held that the duty to refer the case to the Court of Justice did not
apply when (the interpretation of) the Community measure in question were clear and its
application (interpretation) had been settled in case law.100 The court added that in cases with
identical or similar subject matter domestic courts are not required to refer a question to the Court
of Justice – reference to the appropriate previous Luxembourg judgments will suffice.101
A decision not to request a preliminary ruling by domestic courts could be viewed with suspicion as
it represents an instance when the authority to interpret EU law is retained by the domestic court.
However, domestic courts are entitled to assess the necessity of a reference, and in many instances
they are in a good position to reject motions from the parties seeking to have the Court of Justice
involved. Hungarian courts have turned down motions to have questions referred to the Court of
Justice on grounds that it would not lead to a different conclusion in the given case,102 that domestic
law was clearly in harmony with the Treaty of Accession,103 or that there was no doubt that the given
provision of the directive was directly effective.104 In another case a request for a preliminary ruling
was turned down by the Supreme Court with reference to the judgments in Foglia II,105 concerning
questions objectively unnecessary to resolve the case before the domestic court, and in CILFIT,106
concerning the circumstance when the answer by the Court of Justice would not have an influence
on the outcome of the domestic dispute. With this background the Supreme Court ruled that having
regard to the fact that the applicant had no justiciable right in domestic law before domestic courts
the request for preliminary ruling could not be granted.107
Examining whether the domestic provision is appropriate to ensure that the obligation imposed by a
directive on the Member State had been adequately implemented has also led the domestic court to
exclude the necessity of a preliminary reference. In a case concerning the prerogative of the Public
Prosecution Service to launch an action for the protection of consumers was found to be compatible
with Article 7 of Directive 93/13/EEC which creates the obligation for the Member States to ensure
that persons or organizations, having a legitimate interest under national law in protecting
consumers, may take action before the courts or before competent administrative bodies for a
decision as to whether contractual terms drawn up for general use are unfair. The court argued that
99
Case No. BH 2006.235; Case No. Gfv.XI.30.486/2007/4 argued less extensively; Case No.
Gfv.X.30.143/2007/19, reference to case C-302/04 Ynos and Varga ??; Case No. BH 2006.216 less extensively
(the fact that the question on raising matters ex officio related to a procedural issue that occured after the
date of accession was not considered as problematic as the facts of the main dispute occured before
accesson).
100
Case No. EBH.2006.1442.
101
Case No. EBH 2006.1442.
102
Pest Megyei Bíróság 6.K.26683/2006/5.
103
Case No. Kfv.IV.37.177/2008/4.
104
8.K.21.361/2006/10.
105
Case 244/80
106
Case 283/81 Case 283/81 CILFIT [1982] ECR 3415.
107
Case No. Gfv.X.30.143/2007/19.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
considering the discretion Member States enjoy in this respect and that the prerogative of the
prosecution service is not contrary to the said provision, a reference to the Court of Justice is not
necessary as it will not lead to a result that would find the prerogative of the public prosecution
service contrary to Community law.108
The necessity to refer the case to the Court of Justice was also declined in a case where domestic
regulation was found to be compatible with the relevant directive and the dispute at hand was
resolved by way of the interpretation and application of domestic law. The courts went on to claim
that the interpretation of domestic law is for the domestic courts, and with the same confidence
they also ruled that the national authorities by demanding proof of compliance with the relevant
technical specifications did not impede the free movement of goods – the authorities merely acted
to ensure that the products at issue complied with the technical specifications.109
It appears from these examples that the Hungarian judiciary approached the issue of preliminary
references with the boldness characterised by its approaches to other matters in European Union
law. The Supreme Court managed to indicate to other courts the signposts introduced by the Court
of Justice regarding the rights and obligations of domestic courts. Da Costa, CILFIT and Foglia now
have a place in domestic law and domestic courts are informed of the purpose of a reference for a
preliminary ruling as interpreted by the Supreme Court. As in other contexts, the reserved reasoning
style of domestic courts prevents exploring the process leading to the rejection to refer the case to
the Court of Justice. In a cooperative framework characterised by dialogue burdened with linguistic
and terminological difficulties between the participants, the Court of Justice and the domestic
courts, this might be unfortunate. This does not mean, however, that a dialogue would be
impossible as demonstrated in the Cartesio case.
Cartesio and preliminary rulings in the Hungarian legal system
Perhaps the most notable episode in the reception of European Union law in Hungary was the
Cartesio case in which, apart from issues in domestic company law and domestic international
private law, questions regarding the obligations and rights of the Hungarian judiciary in the
preliminary ruling procedure were clarified. It was a significant judgment as it determined the
position of the Supreme Court in relation to the Court of Justice and also its role in relation to the
application of the EU law in domestic courts. In this case four questions were referred to the Court
of Justice three of which concerned fundamental issues in the preliminary ruling procedure. Here,
the questions regarding the appeal against the decision to refer and the court obliged to refer will be
examined.
108
Case No. 22.P.21.792/2006/20
Case No. 20.K.20.831/2006/6; Case No.Kfv.IV.37.130/2007/7 (the courts held that washbasins were
contruction products as they are produced for incorporation in a permanent manner in construction works
(Article 1 of Directive 89/106/EEC) and that the national technical specifications could be applied as the
products had no other accepted technical specification (Article 4 of the Directive).
109
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
Appeals against the decision to refer and Cartesio
Pp. 249/A. § és 340. (3) §Preliminary rulings were incorporated into the Hungarian procedural setting by means of Article
155/A. és 249/A ??of the Code on Civil Procedure and Artilce of the Code on Criminal Procedure.
They provide for the suspension of the domestic procedure and contain rules on appeals against
decisions brought by domestic ourts in this regard. While (..), the . The provisions on appeal (in the
CCP) had been subject to criticism as they appear to impose a limitation in domestic law on the right
of domestic courts to refer the case of the Court of Justice as provided in ex Article 234 TEC110 the
validity of which were finally acknowledged in the judgment in Cartesio.
Before the Court of Justice had the opportunity to express its opinion regarding the Hungarian
regulation of appeals against decisions by domestic courts to request a preliminary ruling, the
Supreme Court had been offered a chance for a bit of muscle-flexing in a case concerning
compensation for unlawful conviction and confinement.111 The basis of this was that both courts are
entitled to assess the lawfulness of the appeal provisions – one on the basis of domestic law, the
other on grounds of ex Article 234 TEC. In its judgment the Supreme Court without contemplating a
referral to the Court of Justice decided to answer the question, which was originally intended for the
Court of Justice, concerning whether subjecting a decision of the domestic court to refer to appeal in
domestic law entails the limitation of the rights of that court under ex Article 234 TEC. The Supreme
Court reserved the answer to itself as in its interpretation the question related to a matter regarding
its own jurisdiction as provided by domestic procedural law on preliminary references. The setting
was ready for a Kompetenz-Kompetenz discord between the Supreme Court and the Court of
Justice.112
As regards the main question the Supreme Court held that the answer is available in part from the
Rheinmühlen case113 where it was ruled that ex Article 234 TEC did not exclude making the decision
of a court against whose decisions there is a judicial remedy under national law to refer subject to
remedies normally available under domestic law. It concluded that on this basis it is for the Member
States to choose whether to provide remedies against a decision referring the case to the Court of
Justice.
In the Supreme Court`s reasoning the question of domestic regulatory autonomy in relation to
procedure and remedies was clearly given more weight than the right of courts to refer a question to
the Court of Justice established in the Treaty. It held that Member States enjoy complete freedom in
deciding whether to provide remedies against the order which mandates the preliminary reference.
110
111
Case No. BH 2006.216.
The Advocate General in Cartesio was on the opinion that the right of domestic courts to refer a case to the
Court of Justice is a matter for Community law only, and domestic laws are excluded from regulating that right,
para. 20, Opinon.
113
The court referred to Case 166/73 Rheinmühlen [1974] ECR 139; the appropriate case law appears to be
Case 146/73 Rheinmühlen [1974] ECR 139.
112
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
This was the ground for the Supreme Court to establish by means of a peculiar interpretation of the
Lyckeskog formula that
the appeal against the order of the court requesting a preliminary ruling does not jeopardise the
right of a court to refer the case to the Court of Justice because the decision delivered in appeal can
be challenged in extraordinary appeal (???) before a court of law.
A possible interpretation of this is that by the availability of the extraordinary appeal the appeal
decision unfavourable to the first instance decision ordering the request for a preliminary ruling can
be challenged and appropriately amended. Nonetheless, the rather short reasoning fails to reveal
the connection between the case law on the duty to refer, the possibility of an extraordinary appeal,
and the right of a court to make a reference to the Court of Justice, and it leaves the question
unanswered how the right of the court the order of which is challenged in appeal to request a
preliminary ruling would be safeguarded by extraordinary appeal proceedings between the parties
to the case.
The Supreme Court’s confident statements are clearly overshadowed by the judgment delivered by
the Court of Justice in Cartesio where the Szeged Regional Court of Appeal felt necessary to make a
reference regarding a similar question. The Court of Justice held that rules which enable an appeal
against a decision making a reference for a preliminary ruling the order for reference alone being the
subject of a limited appeal leaving the main proceedings pending before the referring court in their
entirety, where those rules permit the appellate court to vary the order for reference, to set aside
the reference, and to order the referring court to resume the proceedings, are in contravention with
the Treaty.114 While the Court of Justice did not deny that the Member States may provide remedies
against an order making a preliminary reference, which was the core of the decision of the Supreme
Court, and that appeals, in principle, are permissible, it rejected that the appeal as regulated in
Hungarian law would be compatible with ex Article 234 TEC and that this was a matter reserved for
the Supreme Court it being a question regarding its jurisdiction.115
The Hungarian response to the judgment was to scrape the problematic provision on appeal from
01/01/2010 as achieved by Act (???). This appears as the only reasonable solution as maintaining an
appeal as suggested by the Court of Justice enabling the domestic court to decide on the referral
despite the decision in appeal116 was considered to be impossible and unrealistic in the domestic
legal order.117 It was suggested that an appeal which were compatible with ex Article 234 TEC would
be deprived of all practical functions.118 The solution offered in the order in De Nationale Loterij119
also appears as alien from the domestic legal setting. The Hungarian Rheinmühlen-situation, as
114
Para. 98.
It affirmed that the right to make a reference is for the particular domestic court and the Court of Justice to
assess, paras. 89-91.
116
Paras. 39, 96-97
117
Lásd FAZEKAS Judit: „Quo vadis Cartesio?” Európai Jog 2009/2. 24., Vö. BLUTMAN 2009 (lj. 55.) 34. és OSZTOVITS
2009 (lj. 55.) 29.
118
Vö. BLUTMAN 2009 (lj. 55.) 34. és OSZTOVITS 2009 (lj. 55.) 29.
119
C-525/08. sz. De Nationale Loterij NV ügyben 2009. március 24-én hozott ítélet [EBHT 2009., I-0000. o.].
115
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
labelled in academic commentary,120 when domestic procedural rules and in applying them domestic
higher courts make the activity of lower courts concerning the application of European Union law
impossible, was resolved by disabling the interference of higher courts with the functioning of lower
courts. It is a different question whether the lack of remedies against an order making a reference
for a preliminary ruling is acceptable in the Hungarian legal order.
The Supreme Court reacted to the judgment in PK-KK Joint Opinion 1/2009121 which was also to
establish the guidelines to be followed by domestic courts in the transitional period between the
judgment of the Court of Justice and the entry into force of the new domestic procedural provisions.
The opinion held that in the transitional period the court proceeding in appeal against the order
requesting a preliminary ruling must not examine the necessity of the reference, the substance of
and the reasons offered for the questions referred, and it must refrain amending the first instance
decision in this regard. The same, with the exception of the points concerning the questions
referred, applies to first instance decisions rejecting to make a reference.
The opinion confirmed that the Supreme Court in the light of the current framework of the CPC is
unable to subscribe to the flexible interpretation of appeals as suggested by the Court of Justice. The
reason for this is that all decisions brought in appeal bind the court of first instance and it must not
depart from those decisions under any circumstances. Until the new procedural provisions enter into
force the Supreme Court suggested the application of the `emptied` interpretation of the appeal in
which the appeal court may only review the first instance decision from a procedural perspective.
The opinion did not react to what was stated in the order in De Nationale Loterij.
The opinion also addressed the question whether providing for an appeal was necessary in order to
enforce the reference to the Court of Justice when the first instance court decides not to make a
preliminary ruling. It held that in the domestic procedural context the appeal court is generally
prevented from making a decision that would bind the first instance court to make a reference as it
would qualify as a decision on the merits the delivery of which is reserved for the court proceeding
in the case (the first instance court). It also appeared to criticise the reasons given originally in the
ministerial appraisal for the appeal against an order rejecting the referral to the Court of Justice,
which, leaving out of consideration the actual relationship between the first instance and the appeal
courts described above concerning a binding decision in appeal to make a reference, felt allowing an
appeal against an order rejecting a reference necessary because this way the duty to make a
reference will be enforceable before the appeal courts. It was based on the presumption that all
courts proceeding in appeal would be bound to make a reference as in the absence of rather
ordinary appeals these courts qualify as courts under paragraph 3 of ex Article 234 TEC against
whose decisions there is no judicial remedy under national law. In reaction to this the opinion
highlighted that on the basis of the Cartesio judgment regarding the duty to refer and the possibility
of an extraordinary appeal, discussed below, this explanation is invalid as due to the fact that only
the courts proceeding in extraordinary appeal can be regarded as paragraph 3 courts the appeal
courts will not be bound by a duty to make a reference to the Court of Justice. It can be regarded as
an appropriate interpretation of the judgment in Cartesio when the opinion continued that a
120
Lásd Vö. BLUTMAN 2009 (lj. 55.) 32-33. BLUTMAN László: „Az előzetes döntéshozatalt kezdeményező határozat
elleni fellebbezés kérdőjelei” Európai Jog 2009/2. 34-35
121
Supra ???
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
decision in appeal binding the first instance court to refer would unlawfully limit the discretion in
making a reference of the first instance court which has decided not to request a preliminary ruling
from the Court of Justice. It continued that the lack of a challenge against the first instance court`s
decision not to make a reference does not jeopardise the enforceability of the reference as in the
later stages of the proceedings the higher courts may (must) turn to the Court of Justice for a
preliminary ruling.
The duty to refer and Cartesio
Finding the court in the domestic judicial system which would qualify as the court obliged to make a
reference for a preliminary ruling as provided in ex Article 234 (3) TEC was another instance in which
a dialogue, with the Cartesio judgment in its centre, developed between the Court of Justice and the
Supreme Court. The main question was whether the availability of an extraordinary appeal against a
judicial decision would mean that judicial remedy was available under national law making the court
which delivered that decision free from the obligation to make a reference to the Court of Justice.
The answer was not entirely clear and the Supreme Court was again required to act to ensure that
the principles developed in European Union law are incorporated adequately into domestic law.
In the same case (BH 2006.216) in which the question of appeal was addressed the Supreme Court
considered the Lyckeskog ruling122 as relevant to the question whether Regional Appeal Courts
(ITELOTABLA) in Hungary were subject to the obligation to refer.123 In that judgment the Court of
Justice held, cited by the Supreme Court, that
decisions of a national appellate court which can be challenged by the parties before a supreme court
are not decisions of a court or tribunal of a Member State against whose decisions there is no judicial
remedy under national law within the meaning of Article 234 EC. The fact that examination of the
merits of such appeals is subject to a prior declaration of admissibility by the supreme court does not
have the effect of depriving the parties of a judicial remedy.124
From this the Supreme Court concluded that
by virtue of the availability of the extraordinary appeal in the given case the appeal against the
decision on referring the case to the Court of Justice does not breach the right of the lower court
provided under Article 234 EC, (???)
which can be read that extraordinary appeals must be interpreted as a judicial remedy under
national law which makes the courts (the Regional Courts of Appeal) against the decisions of which
extraordinary appeal is available not subject to the obligation included in paragraph 3 of ex Article
122
Case C-99/00 Lyckeskog [2002] ECR I-4839.
There had been a Regional Court of Appeal which had rejected to regard itself as a national court of “last
instance” in the meaning of ex Article 234 TEC, see BH 2007.377.
124
Para. 16 (above) cited in Case No. BH 2006.216.
123
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
234 TEC.125 Unfortunately, the Supreme Court’s judgment left the question unaddressed which
attributes of extraordinary appeals led the court to follow the conclusion in Lyckeskog. Since the
Court of Justice also neglected this issue in Cartesio it may seem as an irrelevant point of distinction.
Nonetheless, it remains unclear how the Lykeskog test on the duty to refer could have led the
Supreme Court to conclude, as cited above, that the right of the court (the Regional Appeal Court) to
refer the case to the Court of Justice was unaffected.
As in case of the question of appeal against an order to refer this problem was also referred to the
Court of Justice by the Szeged Regional Court of Appeal in Cartesio. The Court of Justice held that
regarding the possibility of extraordinary appeal against the decisions of the Regional Court of
Appeal it cannot be regarded in the meaning of (ex) Article 234 TEC as a court against whose
decisions there is nop judicial remedy under national law. In other words Regional Court of Appeal
are not subject to the obligation to make a reference to the Court of Justice. The judgment relied
upon the nature of extraordinary appeals in Hungary and on the judgment in Lyckeskog, and found
that the existence of a (any) judicial remedy irrespective of its limitations would suffice in
substantiating the same conclusion.
The message of the Court of Justice was clear and the Supreme Court`s previous decision was in
harmony with the judgment. Nonetheless, the Supreme Court went on to comment on the
postulation directed to it in PK-KK Joint Opinion 1/2009.126 It held that within the Hungarian judicial
system, provided that extraordinary appeal is not excluded, the Supreme Court can be regarded as
the only court obliged to request a preliminary ruling, which left the Regional Courts of Appeal, the
courts one step lower in the judicial hierarchy, out of the scope of the obligation.127 The obligation to
request a preliminary ruling was seen by the Supreme Court to follow from the overriding interest of
ensuring the uniform application of European Union law. Ex. Article 10 TEC also played an important
role in the reasoning of the Supreme Court which was assessed separately above in relation to the
‘domestication’ of principles of European Union law. The Supreme Court also appeared to accept
that the Lyckeskog/Cartesio case law was a necessary development as the question of the availability
of domestic remedies, which is central to the issue of the obligation to refer, is a procedural
requirement which can be easily assessed in all courts, and through the application of which the
uniform treatment of the issue of the obligation to request a preliminary ruling could be ensured in
all domestic procedural settings and judicial systems. The cooperative attitude of the opinion was
slightly overshadowed by the statement, which is completely legitimate in the light of the case law
of the Court of Justice, that the domestic court obliged under EU law to make a reference may,
nonetheless, within its autonomous powers examine the necessity of such reference.
125
The court declined to examine the hypothetical event when no remedy is provided against the final decision
of a court as the Court of Justice would deny jurisdiction to hypothetical questions.
126
Supra
127
A vélemény kivételként rögzíti, hogy a másodfokú - a Pp. XX. fejezete szerinti közigazgatási perekben a 340.
§ (1) bekezdésének hatálya alá tartozó ügyekben az elsőfokú - bíróságokat akkor terheli az előzetes
döntéshozatali eljárás kezdeményezésének kötelezettsége, ha a Pp. (271. §, 235. § (4) bekezdés) a jogerős
ítélet elleni felülvizsgálat lehetőségét kizárja. Az EKSZ 68. cikk alapján megnyíló előzetes döntéshozatali eljárás
kapcsán a vélemény megállapította, hogy mivel ilyen előzetes döntéshozatali eljárást csak azok a nemzeti
bíróságok kezdeményezhetnek, amelyek határozatai ellen a nemzeti jog értelmében nincs jogorvoslati
lehetőség, az EKSz. 68. cikk ezen szabályának hatálya alá a Legfelsőbb Bíróság tartozik, kivéve, ha az adott
ügyben a Pp. kizárja a jogerős ítélet ellen a felülvizsgálatot.
FFa and MVu © 2010
Please, cite with permission only
Work in Progress
2/f National remedies under European Union law and Hungarian courts