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Hungary cannot curb land sales to EU foreigners, says CJEU

Hungarian restrictions on farmland investors from other European Union nations violate basic rights enshrined in EU law, the Court of Justice of the European Union (CJEU) has ruled, as reported by news wire Bloomberg. The judgment cannot be appealed.

The European Commission (EC) sued Hungary in 2017, arguing that the nation had adopted rules that unlawfully restricted the rights of foreign investors in agricultural land, and deprived them of the value of their investment.

The Hungarian law “terminated so-called ʼusufruct rightsʼ - contracts giving the right to use a property and to profit from it - held by investors in Hungary,” the EC said in 2016, when it decided to sue the country.

According to the EC, the original contracts were subject to a 20-year transitional period, meaning that the contracts were expected to end on January 1, 2033. The new law cut this period, meaning the investors’ contracts were terminated on May 1, 2014, without compensation.

“In cancelling the rights of usufruct over agricultural land in its territory that are held, directly or indirectly, by nationals of other Member States, Hungary has failed to fulfil its obligations arising from the principle of the free movement of capital and the right to property guaranteed by the Charter,” reads a CJEU press release, referring to the Charter of Fundamental Rights of the European Union.

“The deprivation of property” under the contested Hungarian rules “cannot be justified on the ground that it is in the public interest,” the CJEU ruling said. “Nor are any arrangements in place whereby fair compensation is paid in good time,” it added.