The Central European University ruling of the European Court of Justice

In its judgement of 6 October 2020 (C-66/18), the European Court of Justice ruled that Hungary's Higher Education Act is incompatible with Union law. This Higher Education Act places an obligation on higher education institutions from countries outside the EEA which wish to take up or continue their activities in Hungary to prove that an international treaty between Hungary and their country of origin has been concluded and that higher education is offered in the respective country of origin. This law was clearly aimed at prohibiting the activities of the Central European University (CEU).

The European Court of Justice concluded that this Higher Education Act was incompatible with Union law for a number of reasons. In doing so, its case law is in part breaking new ground:

First of all, the European Court of Justice examines to what extent there is a violation of GATS (the General Agreement on Trade in Services) concluded within the framework of the WTO. The European Court of Justice initially concludes that it is competent to determine whether Member States are in breach of their obligations under GATS. Furthermore, it affirms that a course offered by a university, which is predominantly financed by its provider, constitutes a service provided for consideration within the meaning of GATS. Consequently, it concludes that Hungary has breached its obligation to ensure equal treatment for its own nationals (i.e. to grant foreign providers the same rights as domestic ones).

With regard to the freedom of establishment, the European Court of Justice also very clearly states that the form of financing is not detrimental to the existence of a service provided for consideration. It is essentially a question of services being provided against payment. It is clear that legislation such as the Hungarian Higher Education Act make the exercise of freedom of establishment less attractive. The European Court of Justice subsequently rejected Hungary's attempts to justify that the provisions were necessary to protect public order, since the State had to ensure that a genuine and legitimate activity was carried out in the State in which it was established. Furthermore, in its justification Hungary also contests possible deception, but fails to provide sufficient evidence. Although Hungary wishes to ensure a high level of training quality, this justification is hardly persuasive.

It is only logical that the European Court of Justice should then also find that the Services Directive (Directive 2016/123) has been infringed.

Finally, the European Court of Justice also concludes that the provisions on scientific freedom of the Charter of Fundamental Rights (Article 13) have been violated. Here the European Court of Justice emphasises – and this is probably the most "contestable" passage in the ruling – that scientific freedom also has an institutional and organisational dimension to it. Consequently, it is necessary to allow the establishment of universities.

The fact that the European Court of Justice has put a stop to Hungary's attempt to ban the activities of the CEU is to be welcomed unreservedly.

However, the argumentation will still cause some headaches in the future: If the European Court of Justice considers that the GATS rules are applicable to education and training essentially independent of its financing and if it also emphasises the need for equal treatment of nationals, it is questionable to what extent access to the Austrian market can be restricted for education and training providers from outside the EU  – at least in the way currently provided for in Section 27b of Higher Education Quality Assurance Act.

The discussion on the extent to which the fundamental right to academic freedom enshrined in the Charter of Fundamental Rights has a so-called institutional content will indeed be of primary academic interest. It is known that the Austrian Constitutional Court takes a contrary position on the national fundamental right to academic freedom (Article 17 of the Basic Law). In view of the fact that the European Court of Justice also assumes a violation of fundamental freedoms and the Services Directive, it is obvious that the de facto scope of application of this provision will generally be limited.

What remains: A small step for the rule of law in Hungary, but a bigger step in the direction of opening the European higher education sector up and making it a global higher education sector.