European Court of Justice imposes €200 million fine on Hungary for failing to comply with EU asylum rules

The European Court of Justice has fined Hungary a total of €200 million (nearly 80 billion forints at current exchange rates) for the government's failure to comply with EU asylum rules, with the fine increasing by €1 million a day, the body ruled on Thursday. The amount is much higher than the original proposal's lowest limit.

This “failure, which consists in deliberately avoiding the application of a common EU policy as a whole, constitutes an unprecedented and extremely serious infringement of EU law”

– the statement of the ECJ said in its justification of the decision.

3,5 years weren't enough for the government to properly comply with the judgment

The European Commission had launched the infringement proceedings because of Hungarian asylum rules, including the transit zones set up by Hungary, which ended up in the EU Court of Justice after a series of written exchanges. The Hungarian government lost the case in December 2020, and although it did take some steps, such as closing the transit zones, according to the European Commission, it did not fully align Hungarian legislation with the judgment.

Even the system temporarily put in place after the transit zones were closed was found to be in breach of common law in another case last June. Under the system, asylum applications submitted at the Hungarian border are – barring a few exceptions – only processed if the applicant has previously submitted a declaration of intent at the Hungarian embassy in Kyiv or Belgrade, which has been accepted and an entry permit issued.

The delay led the EU body to take the next step in February 2022 and request that the EU Court impose a fine. In the first instance, it asked for a fine of at least €5,500 per day for the time between the latest and the current ruling. This already amounted to roughly €1 million (almost 400 million forints) in December, and it considered increasing the daily fine to more than €16,000 if the Hungarian government had not enforced the judgment even after this. The court decided to increase the daily amount by €900,000 for the asylum system and €100,000 for the system of deportation, which is what adds up to €1 million.

Such penalties can be deducted from the subsidies due to the EU member state in question. In 2021, Poland received a similar fine due to the overhaul of its judicial system, with a much higher penalty of €1 million per day than Hungary's, which was halved in 2023 following an appeal.

The EU court had three options:

• to go against the European Commission's opinion and declare that the 2020 judgment has been complied with;
• to approve the European Commission's proposal both pertaining to the fine and the amount;
• to accept that there should be a fine, but modify (reduce or even increase) the amount.

What the Hungarian government did actually violates an EU principle

In its reasoning on Thursday, the court said the Hungarian government disregards “the principle of sincere cooperation, is deliberately evading the application of the EU common policy on international protection as a whole and the rules relating to the removal of illegally staying third-country nationals. (The principle of sincere cooperation is a fundamental EU principle, and this is not the first time that the Hungaian government ha been accused of disregarding it.) That conduct constitutes a serious threat to the unity of EU law, which has an extraordinarily serious impact both on private interests, particularly the interests of asylum seekers, and on the public interest.”

According to the court,

“Hungary’s failure to fulfil obligations, which has the effect of transferring to the other Member States its responsibility, including financial responsibility, for ensuring, in accordance with EU law, the reception of applicants for international protection, the examination of their applications and the return of illegally staying third-country nationals, seriously undermines the principle of solidarity and fair sharing of responsibility between the Member States.”

We could lose more than the daily increasing fines

Due to the serious risks related to questions of asylum law also led the European Commission to block payments for Hungary from the EU's home affairs fund, but this is one of the conditions that is not part of any other procedure affecting Hungarian funds. This means that this is not why, for example, the rest of the €22 billion in catch-up funding, parts of which have already been made available, or the €10.4 billion recovery fund are being withheld. This is the smallest horizontal conditionality blocking only 0.3% of the catch-up funds.

Gulyás: The committee asked for prison and death was imposed

Shortly after the verdict, the Hungarian government held its weekly press conference. The expected ruling came up at a government briefing in May as well, when Gergely Gulyás, head of the Prime Minister's Office, Gergely Gulyás, said that as far as they are aware, the court has already reached a decision, but the announcement has been postponed until after the EP elections. Gulyás then said that the European Commission is in the habit of attacking Hungary, which "has been setting an example in protecting its external borders".

Speaking at the government briefing after the sentence was handed down, Gulyás called the decision outrageous, contrary to EU law and the Basic Law, and said it was a cowardly move to only announce it after the EP elections. He complained about the 70-fold increase in the fine, which he claimed reminded him of the communist reign of terror and the Rákosi regime, in which "when the committee asked for prison a death penalty was imposed".

The EU's system is being overhauled

The current default position is that the responsibility for examining an asylum application lies with the member state where the applicant has crossed the EU's external border. This effectively puts the responsibility on the countries alongside the Union's outer borders. If an applicant does not register with them – say because they are expected to take an extra administrative step and would rather try elsewhere or they are simply allowed through – they have no further responsibility. EU asylum statistics show that most applications are usually submitted in Germany and Austria rather than in countries along the outer Schengen border. In response, these two countries, among others, have introduced 'temporary' border controls, circumventing Schengen rules by extending these every six months.

The EU's asylum system is currently being overhauled, for example by introducing a fast-track 'border procedure' for applicants whose applications are suspected to be unfounded and likely to be rejected, and who must be kept close to the border (even in a transit zone). The key elements of the package were adopted by Member States – after the European Parliament – in May this year.

The package came into force on Tuesday, but most of it must only be implemented from June 2026. The European Commission unveiled its implementation plan on Wednesday which aims to ensure that member states are ready by the deadline. The document will next be presented to the EU's Council of Interior Ministers, which meets on Thursday, and governments will have until 12 December to draw up their national implementation plans. Speaking at the presentation, European Commission Vice-President Margaritis Skinas said that while they could have waited until September with this, they wanted to give member states more time. (He did not say whether the Hungarian government taking over the helm of the Council of Ministers in July played a role in the decision.)

Meanwhile, the EU is negotiating with non-EU countries in an attempt to reduce migration: last autumn it signed an agreement with Tunisia, and a few months ago with Egypt and Morocco, all of which are designed to reduce migration. In May, Czech Prime Minister Petr Fiala announced that 19 out of 27 member states were pushing for the outsourcing of refugee management to countries outside the EU. Euractiv reported that together with his Italian counterpart Giorgia Meloni, he said the two countries "want to go further than where the migration pact is taking us". Meloni drew an analogy with Italy's development plan for Africa and the agreement under which asylum seekers arriving in Italy would be housed in refugee camps in Albania until their applications are processed.

Hungarian Prime Minsiter reacted to the ECJ ruling on his social media page, saying that the decision is

"outrageous and unacceptable. We will not give in to the financial blackmail of Brussels bureaucrats! We will defend our borders and protect the Hungarian people!"