The European Commission (EC) has refered Hungary to the Court of Justice of the European Union of failure to comply with EU regulations on the rights of foreign investors to buy agricultural land, the EU executive announced on June 16.
Brussels has long expressed raised concern over a law passed in 2013 that deprives foreign and domestic investors of their rights to use of land without providing compensation. The commission had sent a letter of formal notice in October 2014, and a reasoned opinion in June 2015 requesting Hungary to bring the rules in line with EU law.
The ruling Fidesz party argues that the law is needed to "promote the interests of Hungarian farmers against foreign speculation." It terminated those contracts that had allowed foreign investors to buy farmland in the country through Hungarian middle-men.
While the original contracts were subject to a 20-year transitional period, the law shortened this to four and a half months. The contracts were terminated on 1 May 2014.
“The commission maintains that, among other things, the very short period between the publication of the legislation and its date of application was not sufficient to give investors the opportunity to adapt to the new legal environment,” the executive said in a statement. It added that the law violates the principles of free movement of capital and freedom of establishment.
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