Court of Justice of the European Union: Hungary may not delete EU citizens’ usufruct rights over agricultural land

Since 1 January 2013, a law has been in force in Hungary under which usufruct rights over agricultural land may be granted to EU citizens only if they are “close relatives” of the owner. Since, for 20 years, ownership rights could be acquired only by Hungarian nationals, the owners are generally Hungarian citizens. In addition, the law provided that all already existing usufruct rights would expire. Is this hidden discrimination?

Several individuals from Germany and Austria — including our law firm — challenged this law. The reason was that the law would deprive them of their rights without any compensation.

In the spring, the Court of Justice of the European Union ruled on the case. It found that the law constituted discrimination on the grounds of the nationality of the usufructuary, since there was only a low probability that the usufructuaries would meet the requirement of having a close family relationship with a Hungarian citizen.

The Court of Justice of the European Union also held that the alleged objective of the Hungarian government — namely to prevent speculation in arable land through this legislation — could not in fact be achieved by the new rules. This is because the law contains no provisions on the cultivation of the land. A family relationship does not guarantee that the lessee will actually cultivate the property personally.

In any event, such a drastic measure is not proportionate to the purported benefit of the law. The Court of Justice of the European Union held that less intrusive measures could also have been adopted to achieve such objectives.

Finally, it is also inappropriate to deprive usufructuaries of their rights of use without adequate compensation. This makes the measure all the more disproportionate.