Provisional text

OPINION OF ADVOCATE GENERAL

KOKOTT

delivered on 11 July 2024 (1)

Case C‑419/23

CN

v

Nemzeti Földügyi Központ,

Intervener:

GW

(Request for a preliminary ruling from the Győri Törvényszék (Győr High Court, Hungary))

(Reference for a preliminary ruling – Article 63 TFEU – Free movement of capital – Article 17 of the Charter of Fundamental Rights of the European Union – Right to property – Right of usufruct over agricultural land – Reinstatement of a right of usufruct whose deletion was contrary to EU law – Obligations of a Member State in order to comply with a judgment establishing a failure to fulfil obligations – Finality of the original registration of the right of usufruct – Conflict between fundamental freedoms and fundamental rights of different legal entities)

I.      Introduction

1.        This request for a preliminary ruling from the Győri Törvényszék (Győr High Court, Hungary) follows on from several judgments delivered by the Court which concern the compatibility of Hungarian legislation governing the deletion of rights of usufruct of non-resident persons over agricultural land which have been registered in the land register with the free movement of capital under Article 63 TFEU and the guarantee of the right to property under Article 17 of the Charter of Fundamental Rights of the European Union (‘the Charter’). (2)

2.        According to that case-law, national legislation infringes Article 63 TFEU in conjunction with Article 17 of the Charter if the deletion, provided for by that legislation, of such a right of usufruct – which is protected by the guarantee of the right to property – is to the detriment of nationals of other Member States. Following a finding to that effect made in a judgment establishing a failure to fulfil obligations, (3) the Court was called on to address the question of the conditions under which holders affected by a deletion of such rights of usufruct, which has become final, may obtain their reinstatement by the competent authorities. (4)

3.        The situation in the main proceedings is precisely the opposite. The holder of the right of usufruct who was affected by the deletion, namely the intervener in support of the defendant authority (‘the intervener’), that authority being the Nemzeti Földügyi Központ (National Land Centre, Hungary), successfully obtained the reinstatement of his right by that authority on the basis of the legal situation in Hungary, which has changed in the meantime following the judgment establishing a failure to fulfil obligations, and thus achieved precisely the situation required by the Court’s case-law. This is being challenged by the landowner, the applicant, who is resident in Germany and is relying on the free movement of capital and the guarantee of the right to property. She claims that the defendant authority should have examined, prior to the reinstatement of the intervener’s right of usufruct in the land register, whether his original – subsequently deleted – registration was unlawful in the light of the Hungarian legislation applicable at the time. This should be the case regardless of the fact that the registration had become final and the Court subsequently declared the legislation governing its deletion to be contrary to EU law. According to the applicant, the reinstatement of the right of usufruct should have been refused in order to protect her free movement of capital and her property.

4.        The present case therefore concerns a ‘conflict’ between the same fundamental freedoms (free movement of capital) and fundamental rights (guarantee of the right to property) of different legal entities. It is uncertain, however, whether the applicant is able to rely on the free movement of capital under Article 63 TFEU and the right to property under Article 17 of the Charter in order to obtain the renewed deletion of the right of usufruct. Her approach seeks to achieve an outcome which, according to the Court’s case-law, is specifically incompatible with Article 63 TFEU and Article 17 of the Charter in so far as those provisions protect the holder of the right of usufruct who is affected by the deletion provided for by law, and not the landowner who is favoured by it.

II.    Legal framework

A.      European Union law

5.        Article 63(1) TFEU provides:

‘Within the framework of the provisions set out in this Chapter, all restrictions on the movement of capital between Member States and between Member States and third countries shall be prohibited.’

6.        Article 17(1) of the Charter provides:

‘Everyone has the right to own, use, dispose of and bequeath his or her lawfully acquired possessions. No one may be deprived of his or her possessions, except in the public interest and in the cases and under the conditions provided for by law, subject to fair compensation being paid in good time for their loss. The use of property may be regulated by law in so far as is necessary for the general interest.’

B.      National law

7.        Paragraph 38(1) of the a földről szóló 1987. évi I. törvény (Law No I of 1987 on land) provided that natural persons who did not possess Hungarian nationality or who did possess that nationality but resided permanently outside Hungary, as well as legal persons whose seat was outside Hungary or whose seat was in Hungary but whose capital was held by natural or legal persons resident or established outside Hungary, could acquire ownership of productive land by means of purchase, exchange or donation only with the prior authorisation of the Pénzügyminisztérium (Ministry of Finance, Hungary).

8.        Paragraph 1(5) of the a külföldiek ingatlanszerzéséről szóló 171/1991. (XII. 27.) Korm. [Kormány] rendelet (Government Decree 171/1991 of 27 December 1991 on the acquisition of real estate by foreigners), which entered into force on 1 January 1992, precluded the acquisition of productive land by persons not having Hungarian nationality, with the exception of persons in possession of a permanent residence permit and those with refugee status.

9.        The a termőföldről szóló 1994. évi LV. törvény (Law No LV of 1994 on productive land, ‘the 1994 Law on productive land’) maintained that prohibition on acquisition and extended it to legal persons, whether or not they were established in Hungary.

10.      That law was amended, with effect from 1 January 2002, by the a termőföldről szóló 1994. évi LV. törvény módosításáról szóló 2001. évi CXVII. törvény (Law No CXVII of 2001 amending Law No LV of 1994 on productive land) in order also to preclude a right of usufruct over productive land from being created by contract in favour of natural persons not possessing Hungarian nationality or legal persons. Following those amendments, Paragraph 11(1) of the 1994 Law on productive land provided that ‘for the right of usufruct and the right of use to be created by contract, the provisions of Chapter II regarding the restriction on the acquisition of property must be applied. …’

11.      Paragraph 11(1) of the 1994 Law on productive land was subsequently amended by the az egyes agrár tárgyú törvények módosításáról szóló 2012. évi CCXIII. törvény (Law No CCXIII of 2012 amending certain laws on agriculture). In the new version resulting from that amendment, which entered into force on 1 January 2013, Paragraph 11(1) provided that ‘the right of usufruct created by a contract shall be null and void unless it is created for the benefit of a close relation’.

12.      Law No CCXIII of 2012 also introduced into the 1994 Law a new Paragraph 91(1), in accordance with which ‘any right of usufruct existing on 1 January 2013 and created, for an indefinite period or for a fixed term expiring after 30 December 2032, by a contract between persons who are not close members of the same family shall be extinguished by operation of law on 1 January 2033’.

13.      The a mező- és erdőgazdasági földek forgalmáról szóló 2013. évi CXXII. törvény (Law No CXXII of 2013 on transactions in agricultural and forestry land; ‘the 2013 Law on agricultural land’) was adopted on 21 June 2013 and entered into force on 15 December 2013.

14.      Paragraph 37(1) of the 2013 Law on agricultural land maintains the rule that a right of usufruct or a right of use over such land which is created by contract is to be null and void unless it was created for the benefit of a close member of the same family.

15.      The a mező- és erdőgazdasági földek forgalmáról szóló 2013. évi CXXII. törvénnyel összefüggő egyes rendelkezésekről és átmeneti szabályokról szóló 2013. évi CCXII. törvény (Law No CCXII of 2013 laying down various provisions and transitional measures concerning Law No CXXII of 2013 on transactions in agricultural and forestry land; ‘the 2013 Law on transitional measures’) was adopted on 12 December 2013 and entered into force on 15 December 2013.

16.      Paragraph 108(1) of that law, which repealed Paragraph 91(1) of the 1994 Law on productive land, states:

‘Any right of usufruct existing on 30 April 2014 and created, for an indefinite period or for a fixed term expiring after 30 April 2014, by a contract between persons who are not close members of the same family shall be extinguished by operation of law on 1 May 2014.’

17.      Following the delivery of the judgment of 6 March 2018, SEGRO and Horváth (C‑52/16 and C‑113/16, EU:C:2018:157), Paragraph 108 of the 2013 Law on transitional measures was amended by the introduction, with effect from 11 January 2019, of two new subparagraphs 4 and 5, which are worded as follows:

‘(4)      Where, pursuant to a judicial decision, a right extinguished under subparagraph 1 must be restored but, because of a procedural or substantive error, that right could not be registered in accordance with the legislation in force at the time of its original registration, the authority responsible for administering the land register shall inform the Public Prosecutor’s Office and stay the proceedings pending the conclusion of the investigation by the Public Prosecutor’s Office and the resultant judicial proceedings.

(5)      The following shall constitute an error within the meaning of subparagraph 4:

(a)      the holder of the right of use is a legal person;

(b)      the right of usufruct or the right of use was registered in the land register after 31 December 2001 in favour of a holder who is a legal person or a natural person not of Hungarian nationality;

(c)      at the time when the application to register the right of usufruct or the right of use was made, acquisition of the right required a certificate or authorisation issued by another authority, in accordance with the legislation in force at the time, but the applicant failed to provide that document.’

18.      Paragraph 94 of the az ingatlan-nyilvántartásról szóló 1997. évi CXLI. törvény (Law No CXLI of 1997 on the land register; ‘the Law on the land register’), inserted by paragraph 9 of the az egyes földügyi tárgyú törvények módosításáról szóló 2014. évi XXXI. törvény (Law No XXXI of 2014 amending certain land laws), provides:

‘(1)      With a view to the deletion from the land register of rights of usufruct and rights of use (for the purposes of this paragraph referred to collectively as “rights of usufruct”) extinguished under Paragraph 108(1) of [the 2013 Law on transitional measures], the natural person holding rights of usufruct shall, in response to a notice sent on 31 October 2014 at the latest by the authority responsible for administering the land register, within 15 days of the delivery of such notice, declare, using the form prescribed for that purpose by the Minister, the existence, as the case may be, of a close family relationship with the person shown as landowner in the document which served as the basis for registration. Where no declaration is made within the prescribed period, no application for continuation shall be accepted after 31 December 2014.

…

(3)      If the declaration does not reveal a close family relationship or if no declaration has been made by the right holder within the prescribed period, the authority responsible for administering the land register shall of its own motion delete the rights of usufruct from the register within six months following the expiry of the deadline for making the declaration and no later than 31 July 2015.

…

(5)      The authority responsible for administering the land register shall, no later than 31 December 2014, of its own motion delete from the land register any right of usufruct which was registered on behalf of a legal person or an entity not having legal personality but having the capacity to acquire a registrable right and which has been extinguished pursuant to Paragraph 108(1) of [the 2013 Law on transitional measures].’

19.      After the Commission had brought an action, the Court found in its judgment establishing a failure to fulfil obligations of 21 May 2019, Commission v Hungary (Usufruct over agricultural land), C-235/17, EU:C:2019:432), that, by adopting Paragraph 108(1) of the 2013 Law on transitional measures and thereby deleting, by operation of law, the rights of usufruct over agricultural and forestry land located in Hungary that are held, directly or indirectly, by nationals of other Member States, Hungary had failed to fulfil its obligations under Article 63 TFEU in conjunction with Article 17 of the Charter.

20.      Thereupon, the Hungarian legislature amended the 2013 Law on transitional measures with effect from 1 January 2022 and inserted, inter alia, the following provisions into subsection 20/F (‘Specific provisions to implement the judgment of the Court of Justice of the European Union delivered in Case C‑235/17, European Commission v Hungary, on the extinguishment by operation of law of usufruct rights over agricultural land’).

21.      Under Paragraph 108/B(1) of the 2013 Law on transitional measures, ‘any natural or legal person whose usufruct right has been deleted from the land register by virtue of the provisions of Paragraph 108(1) hereof in force on 30 April 2014 (‘the holder of a deleted usufruct’), or a successor in title to that person, may apply under this subsection to have the deleted usufruct right reinstated in the land register and for any compensation to which that person is entitled under this subsection.’

22.      Paragraph 108/F(6) of the 2013 Law on transitional measures provides:

‘A declaration should be made that the deleted usufruct right may be reinstated where:

(a)      any of the persons referred to in subparagraph (7) is not considered to be in good faith; and

(b)      there is no legal obstacle within the meaning of subparagraph (8).’

23.      Paragraph 108/F(7) of the 2013 Law on transitional measures states:

‘The following persons shall, between the parties, be considered not to be in good faith in relation to the property in question:

(a)      the owner, if that person’s property right already existed when the usufruct right was deleted;

(b)      the owner, where that person’s property right arose, either under a contract concluded after 6 March 2018 [(5)] or before that date if it was submitted to the competent authorities after that date in a procedure compliant with [the 2013 Law on agricultural land], including the registration procedure, or by a disposition on death occurring after 6 March 2018;

(c)      the owner, where that person’s property right arose after 6 March 2018 in any manner other than by contract or inheritance;

(d)      the owner, if that person, despite being considered to be in good faith in accordance with point (b) or (c), created a usufruct over the property after 6 March 2018;

(e)      the usufructuary, where that person’s right was created by a contract or disposition on death subsequent to 6 March 2018 or where, in a transaction transferring a property right after that date, the transferor reserved a usufruct right;

(f)      the owner, where that person acquired the property right by inheritance from one of the owners referred to in points (a) to (d).’

24.      Paragraph 108/F(8) of the 2013 Law on transitional measures provides:

‘The fact that the property in question has been expropriated or the property right over it has been transferred by a sale and purchase agreement in lieu of expropriation shall be regarded as a legal obstacle to reinstatement.’

III. Facts

25.      The applicant in the main proceedings is resident in Germany and is the owner of arable land in registered plot 0380/1 in the Kőszeg area. Her right over the property was registered in the land register on 18 May 2012. At that time it was encumbered by a right of usufruct held by the intervener. Even though it is not expressly mentioned in the order for reference, it must be assumed on the basis of the underlying facts and the applicable national legislation that the intervener is also a non-resident investor.

26.      That right of usufruct was created on behalf of the intervener by the previous landowner by a contract with effect from 30 December 2001 and was registered in the land register on 29 January 2002. The registration decision was not contested in either administrative or judicial proceedings.

27.      By decision of the Vas Megyei Kormányhivatal Szombathelyi Járási Hivatal (Szombathelyi District Registry, part of the Vas Region Administrative Department, Hungary) of 27 July 2015, the intervener’s right of usufruct was deleted in accordance with Paragraph 108(1) of the 2013 Law on transitional measures and Paragraph 94(1) and (3) of the Law on the land register.

28.      Following the judgment establishing a failure to fulfil obligations (6) (see above, point 18), the intervener requested the defendant authority to reinstate his right of usufruct pursuant to Paragraph 108/B(1) of the 2013 Law on transitional measures.

29.      By decision of 30 November 2022, the defendant authority ordered the reinstatement in the register of the intervener’s deleted right of usufruct over the property concerned. In its decision, it stated that the applicant was not considered to be in good faith within the meaning of Paragraph 108/F(7) of the 2013 Law on transitional measures because she had already been the landowner when the right of usufruct was deleted.

30.      In her application to the referring court, the applicant is seeking the deletion of the reinstatement of the right of usufruct from the land register on the ground that the right in question was originally registered unlawfully since, from 1 January 2002, this was no longer permitted under Paragraph 11(1) of the 1994 Law on productive land.

31.      The defendant authority and the intervener have applied for the application to be dismissed, claiming that there was no legal obstacle to the reinstatement decision and that, in relation to that decision, the 2013 Law on transitional measures does not require an examination of whether the registration of the right of usufruct was lawful.

32.      The referring court points out that since 1 January 2002, by virtue of the 1994 Law on productive land, no rights of usufruct over agricultural land could be created in favour of foreign nationals. National case-law had interpreted Paragraph 11(1) of the 1994 Law on productive land along these lines. (7) In the present case too, the registration of the right of usufruct in 2002 had been unlawful. The registration decision nevertheless became final because it was not contested.

33.      The referring court has doubts whether the reinstatement of the right of usufruct – which was originally registered unlawfully – is compatible with Article 63 TFEU and Article 17 of the Charter because the applicant is also able to rely on the free movement of capital and that right of usufruct constitutes an unjustified interference with her fundamental right to the property in question. On the basis of those provisions, the defendant authority may be obliged to declare that the registration of the right of usufruct is unlawful and to refuse to reinstate it. The referring court has therefore referred the following question to the Court for a preliminary ruling pursuant to Article 267 TFEU:

‘Must Article 63 TFEU and Article 17 of the Charter be interpreted as meaning that they do not preclude legislation of a Member State that, on reinstatement of a usufruct right, ordered following proceedings for failure to fulfil obligations – subsequent to the deletion of a usufruct right whose registration was unlawful but final – does not provide for a mandatory examination of whether the usufruct right was registered lawfully?’

34.      The Hungarian Government and the European Commission submitted written observations on this question in the proceedings before the Court. In accordance with Article 76(2) of its Rules of Procedure, the Court did not consider it necessary to hold a hearing.

IV.    Assessment

A.      Admissibility

35.      The Hungarian Government considers the question referred for a preliminary ruling to be inadmissible because the subject matter of the main proceedings and the applicable national legislation bear no relation to the requested interpretation of Article 63 TFEU and Article 17 of the Charter. The reinstatement of the right of usufruct is, first and foremost, a measure promoting the free movement of capital in so far as it eliminates the infringement of those provisions, with which the Court found fault, for the benefit of EU citizens from other Member States. The requirement to review the lawfulness of the original registration of the right of usufruct on this occasion would stand in the way of achieving that result. Conversely, the fact that it is impossible to conduct such a review of lawfulness, without distinction (for all EU citizens), has no connection with the free movement of capital.

36.      The question referred for a preliminary ruling concerns the interpretation of Article 63 TFEU and Article 17 of the Charter in connection with cross-border acquisition of property and the protection of the associated right to property. The referring court rightly considers the free movement of capital under Article 63 TFEU to be applicable in this case because the applicant and landowner is a legal person resident in Germany. (8)

37.      The main proceedings also concern the implementation of EU law for the purposes of Article 51(1) of the Charter. As a result of the judgment establishing a failure to fulfil obligations, it is necessary in principle to reinstate rights of usufruct, which were deleted by operation of law, over agricultural land located in Hungary held by nationals of other Member States in order to remedy the established infringement of the combined provisions of Article 63 TFEU and Article 17 of the Charter. (9) This also follows from the direct effect of Article 63 TFEU in conjunction with the primacy principle. (10)

38.      In my view, there is therefore a sufficient link between the subject matter of the proceedings and EU law, which is relevant to the decision in the main proceedings.

39.      The request for a preliminary ruling is thus admissible.

B.      Substance

1.      Preliminary remarks

40.      The referring court wishes to know, in essence, whether a national authority which is considering a request for reinstatement of a right of usufruct that was deleted (in contravention of EU law) is required, in accordance with Article 63 TFEU and Article 17 of the Charter, to examine, in the interest of the landowner, the lawfulness of the original registration of that right, which has become final, on the basis of the national legislation applicable at the time even if that legislation was also contrary to those provisions of EU law.

41.      In my view, there can be little doubt as to the answer to this question. In the ‘conflict’ arising in the main proceedings between the fundamental freedoms and fundamental rights of the two legal entities – pursuing conflicting interests – that is to say, the applicant and owner of the property concerned, on the one hand, and the intervener and holder of the reinstated right of usufruct, on the other, the freedoms and rights of the latter prevail. As I will show, this solution also forms the basis for the Court’s existing case-law.

42.      I will first examine whether the landowner is able to rely on the freedoms and rights under Article 63 TFEU and Article 17 of the Charter (2). I will then explain whether and to what extent it follows, in principle, from the judgment establishing a failure to fulfil obligations, the final findings of which are binding on the referring court under Article 260(1) TFEU, that the freedoms and rights of holders of rights of usufruct over the properties concerned lawfully restrict those of the landowners (3). Lastly, I will examine whether such restriction on the freedoms and rights of the landowner is also justified in a case such as the present one or whether the corresponding freedoms and rights of the holder of the right of usufruct also prevail here (4).

2.      Protection of the non-resident landowner under Article 63 TFEU and Article 17 of the Charter

43.      The applicant acquired the property at issue, which is located in Hungary, as a legal person resident in Germany. In principle, she is therefore able to rely on the free movement of capital under Article 63 TFEU. (11)

44.      In addition, national legislation, even if it applies indiscriminately, which enables a previously deleted right of usufruct to be reinstated without an examination of the lawfulness of its original registration could deter foreign investors from acquiring or subsequently disposing of properties in Hungary, as they cannot be certain that the properties are unencumbered. This could entail an unlawful restriction on the free movement of capital under Article 63 TFEU to their detriment. (12)

45.      Because the main proceedings are connected with the implementation of EU law (see above, point 36), the applicant also enjoys, in respect of the property at issue, the protection of the guarantee of the right to property under Article 17(1) of the Charter.

46.      However, the protection of the landowner under Article 63 TFEU and Article 17(1) of the Charter is not unlimited. It is restricted in particular by the protection of the holder of a right of usufruct over the property in question under the same provisions. This is also the basic idea underlying the judgment establishing a failure to fulfil obligations and Paragraph 108/B(1) of the 2013 Law on transitional measures, which was enacted in order to comply with that judgment and which the defendant authority applied with a view to reinstating the intervener’s deleted right of usufruct.

47.      I will thus consider below whether and to what extent, in the judgment establishing a failure to fulfil obligations, the Court has already examined with force of res judicata such a restriction for the purposes of Article 260(1) TFEU and weighed against each other, with binding force, the opposing freedoms and rights of the owners of the properties concerned and of the holders of the rights of usufruct over those properties which were originally registered, but then deleted again (in contravention of EU law).

3.      Requirement to comply with the binding interpretation of Article 63 TFEU and Article 17 of the Charter, in particular in a judgment establishing a failure to fulfil obligations

(a)    Force of res judicata and duty to comply under Article 260(1) TFEU

48.      Under Article 260(1) TFEU, Hungary is required to take the necessary measures to comply with the judgment establishing a failure to fulfil obligations with a view to remedying the failures to fulfil its obligations under the Treaties established in the judgment, provided it has the force of res judicata as regards the matters of fact and law actually or necessarily settled by that judgment. (13)

49.      The situation of the applicant (the landowner) and the intervener (the holder of the right of usufruct which was originally registered but deleted) is covered, in principle, by the findings in the judgment establishing a failure to fulfil obligations, as the intervener’s right of usufruct was deleted by operation of law in accordance with Paragraph 108(1) of the 2013 Law on transitional measures, which was found to be contrary to EU law in that judgment. Furthermore, it is undisputed that the defendant authority reinstated that right of usufruct in the land register upon a request by the intervener pursuant to Paragraph 108/F(6) and (7) of the 2013 Law on transitional measures, which was amended following the judgment establishing a failure to fulfil obligations. As a result, the applicant’s property was again encumbered by the intervener’s right of usufruct, whose deletion at the time had been contrary to EU law, and the infringement of Article 63 TFEU and Article 17 of the Charter to his detriment, which had been established by the Court, was remedied at least with prospective effect. (14)

50.      The referring court is not permitted, in principle, to take a decision which runs counter to the binding findings made in the judgment establishing a failure to fulfil obligations unless there are special circumstances in respect of the applicant and the intervener which are not covered by its force of res judicata. The national courts, for their part, have an obligation, when performing their duties, to take account of the elements of law established by that judgment in order to determine the scope of the provisions of EU law which they have the task of applying. (15) The same holds for the binding interpretation of EU law provided by the Court in a preliminary ruling. (16)

51.      It must therefore be clarified whether and to what extent the binding findings made in the judgment establishing a failure to fulfil obligations take account – at least implicitly – of the opposing freedoms and rights under Article 63 TFEU and Article 17 of the Charter which are at issue in the main proceedings and of the necessary weighing exercise.

(b)    Binding findings made in the judgment establishing a failure to fulfil obligations regarding the protection of the holder of the right of usufruct under Article 63 TFEU and Article 17 of the Charter

52.      In the judgment establishing a failure to fulfil obligations, the Court did not have to address the question whether and to what extent a non-resident landowner is protected by the freedoms and rights under Article 63 TFEU and Article 17 of the Charter. It did recognise, however, the need for protection of the corresponding freedoms and rights of the holder of a right of usufruct whose deletion was contrary to EU law not only by the State authorities, but also vis-à-vis any landowner, that is to say, regardless of his or her origin.

53.      First, the Court found that the deletion, by operation of law, of rights of usufruct of non-resident investors resulted in an unlawful restriction on their right to the free movement of capital under Article 63 TFEU. They were thereby deprived of the possibility of continuing to enjoy the rights of usufruct, for example by farming, letting or alienating the land concerned (including, depending on circumstances, to the landowner) or making money from it in some other way. In addition, according to the Court, the deletion provided for by law was liable to deter non-residents from making investments in Hungary in the future. (17)

54.      Second, the Court considered the deletion, by operation of law, of rights of usufruct of non-resident investors to be a deprivation of their possessions protected by Article 17 of the Charter. (18) The right of usufruct is a fraction of ownership. It confers on its holder – including vis-à-vis the landowner – the right to use the property and to collect the revenue from it. Intrinsically linked to that right is therefore a corresponding restriction on the right of use stemming from the landowner’s right to property. The deletion, by operation of law, of existing rights of usufruct thus gives rise, according to the Court, to a compulsory, complete and definitive deprivation of those rights to the detriment of their holders, but to the benefit of the landowner. (19) This holds irrespective of whether or not the landowner is non-resident.

55.      Furthermore, the Court considered in this connection the deleted rights of usufruct, which were created by contract before 1 January 2002, as having been ‘lawfully acquired’ in accordance with the applicable national law for the purposes of Article 17(1) of the Charter. (20) This also applies to the acquisition of the intervener’s right of usufruct at issue in the main proceedings. That right was created before 1 January 2002, but was registered only thereafter. The assertion by the applicant and the referring court that that right was seemingly registered in the land register unlawfully after that date cannot therefore call into question the fact that the intervener’s situation is covered, in principle, by the findings made in the judgment establishing a failure to fulfil obligations.

56.      In a subsequent preliminary ruling the Court even concluded from this that national legislation providing for such deletion and the measures implementing that legislation constitute a manifest and serious infringement both of the fundamental freedom provided for in Article 63 TFEU and of the right to property guaranteed in Article 17(1) of the Charter to the detriment of holders of rights of usufruct. (21)

57.      These binding findings regarding the protection of non-resident holders of rights of usufruct do, in principle, cover the conflict with the landowners encumbered by such rights, as has arisen in the main proceedings. However, they do not take into consideration the situation where, as in this case, not only the holder of the right of usufruct but also the landowner is a foreign investor. The latter is also able to rely, in principle, on Article 63 TFEU and Article 17 of the Charter in order to benefit fully from his or her investment and the protection of his or her property (see above, points 42 to 44).

58.      Such a course of action taken by the landowner also cannot be regarded as an abuse of rights. The conditions governing the general principle of EU law or prohibition of abuse of rights, which is often equated with fraudulent conduct in case-law, are clearly not met here. (22) There is no question of benefiting from an advantage granted by EU law when the objective conditions required for obtaining it, prescribed by EU law, are met only formally. (23) Rather, in a case such as the one at issue – going beyond the binding findings made in the judgment establishing a failure to fulfil obligations – it must be examined closely whether the restriction on the freedoms and rights of the landowner under Article 63 TFEU and Article 17 of the Charter which is concomitant with the protection of the corresponding freedoms and rights of the holder of rights of usufruct is also justified and proportionate.

4.      Justification and proportionality of the restriction on the freedoms and rights of the landowner under Article 63 TFEU and Article 17 of the Charter

(a)    Overriding reasons in the public interest and fundamental freedoms and rights of third parties

59.      A restriction on the free movement of capital under Article 63 TFEU is permissible if it is justified by overriding reasons in the public interest and observes the principle of proportionality. It must therefore be appropriate for ensuring the attainment of the objective legitimately pursued and not go beyond what is necessary in order for it to be attained. Such a restriction may also be justified by the reasons referred to in Article 65 TFEU provided that it complies with the principle of proportionality. (24)

60.      Similarly, an interference with the fundamental right to property under Article 17(1) of the Charter may be justified under Article 52(1) of the Charter on the basis of a public interest and subject to the principle of proportionality. (25) Although this relates only to deprivation for the purposes of the second sentence of Article 17(1) of the Charter, it also applies, as is evident from the general limitation in Article 52(1) of the Charter, to a mere restriction of property rights. Where such a restriction, as in this instance (see above, points 52 and 53), constitutes regulation of the use of property for the purposes of the third sentence of Article 17(1) of the Charter, it is sufficient, additionally, that such regulation is necessary for the general interest and proportionate. (26)

61.      Where there is a conflict between fundamental freedoms and rights as in the present case, such justification can also be based on the fundamental freedom or the fundamental right of another person. A fair balance must then be struck between the conflicting freedoms and rights as a ‘practical concordance’ in the context of the examination of proportionality. (27) This is also clear from settled case-law according to which the lawfulness of restrictions on fundamental freedoms on the basis of an overriding public interest and their proportionality must be reviewed by reference to EU fundamental rights. (28) This includes the protection granted to another holder of fundamental rights by Article 17(1) of the Charter. (29)

62.      I will examine below what overriding reasons in the public interest can justify a restriction on the freedoms and rights of non-resident landowners, such as the applicant, under Article 63 TFEU and Article 17(1) of the Charter. Such reasons can follow not only from the binding findings having force of res judicata made in the judgment establishing a failure to fulfil obligations, but also from the fundamental freedoms and rights of third parties, such as the intervener in this case. These opposing freedoms and rights must be weighed against one another for purposes of proportionality.

(b)    Weighing of the fundamental freedoms and rights of the landowner and of the holder of the right of usufruct

(1)    Distinction between the conflict of rights at issue and the situation in previous case-law

63.      The judgment establishing a failure to fulfil obligations is based, in essence, on the finding that the deletion, by operation of law, of rights of usufruct of non-resident holders – corrected in this case by the defendant authority – not only infringed the free movement of capital under Article 63 TFEU to their detriment, but also constituted, in respect of them, unlawful deprivation of possessions for the purposes of Article 17(1) of the Charter (see above, points 52 to 56). (30) It follows, conversely, that resident landowners must, in principle, at least tolerate the restoration of the original legal position in favour of non-resident holders of rights of usufruct. (31)

64.      The present case, however, unlike the situations at issue in the previous case-law, concerns a conflict between the fundamental freedoms and rights of a non-resident landowner encumbered by the right of usufruct, on the one hand, and those of a non-resident holder of that right, on the other.

65.      Nevertheless, in my view, there are no special circumstances in a situation such as the one at issue, above all with regard to the non-resident landowner, which would call for a different assessment from that underlying the judgment establishing a failure to fulfil obligations.

(2)    Lawful restriction on the right to free movement of capital of the non-resident landowner

66.      This concerns, first of all, the justification for a possible restriction on the right of non-resident landowners to free movement of capital under Article 63 TFEU. If, like the applicant in this case, they acquired the property in question in full knowledge of a previously registered right of usufruct, the exercise of their free movement of capital was not hindered at all. This applies a fortiori where, as in this case, the registration of the right of usufruct had already become final at the time of acquisition of the property. In this situation, the encumbrance of the property associated with that right cannot, in principle, have a negative influence on the decision to acquire the property. Rather, as the Commission asserts, such an encumbrance allows a property to be acquired on better terms, in particular at a lower price, than if it were not present.

67.      The same conclusion must be reached with regard to the restriction claimed by the referring court of the free power of disposition of the non-resident landowner resulting from the subsequent reinstatement of a right of usufruct which was deleted by operation of law, but whose registration had previously become final, without an examination of the lawfulness of its original registration. In so far as this could constitute a restriction on the free movement of capital at all, it is lawful and justified in view of the final registration of the right of usufruct at the time of acquisition of the property.

68.      According to the referring court (see above, point 31), the consequence of this finality is that, despite the unlawfulness of its registration, the right of usufruct could no longer be called into question, in principle, in accordance with the national legislation applicable at the time. Consequently, a non-resident landowner such as the applicant could not have the expectation that a deletion, by operation of law, of the right of usufruct which had become final, occurring after he or she acquired the property and subsequently found to be contrary to EU law in the judgment establishing a failure to fulfil obligations, would mean that the property remains permanently unencumbered. This is even less so since the obstacle to its reinstatement claimed in the present case is based on national legislation the result of which the Court found to be incompatible with Article 63 TFEU and Article 17 of the Charter, with the result that it can no longer be applied (see above, point 36). For essentially these reasons, the defendant authority also denied the good faith of the applicant within the meaning of Paragraph 108/F(7) of the 2013 Law on transitional measures.

69.      On the other hand, the deletion, by operation of law, of a right of usufruct – which was cancelled by the reinstatement at issue – constitutes a serious restriction on the free movement of capital of the non-resident holder of that right (see above, points 52 and 55). There is no need here to resolve the question whether the situation would have to be assessed differently if the landowner had not granted the right of usufruct himself or herself or had acquired originally unencumbered property. Nevertheless, I consider it generally reasonable, having regard to the direct applicability of Article 63 TFEU, for non-residents acquiring property to find out in advance from the land register whether the property is or was encumbered by a right of usufruct of a non-resident investor, which may have been deleted by operation of law and may not (yet) have been reinstated.

70.      Consequently, the right of non-resident landowners under Article 63 TFEU is lawfully restricted by the corresponding right of the non-resident holder of the right of usufruct. This restriction is also lawful, as will be shown below, on the basis of the necessary protection of the property of the holder of that right under Article 17(1) of the Charter.

(3)    Lawful restriction on the right to property of the non-resident landowner

71.      In accordance with the findings made in the judgment establishing a failure to fulfil obligations, I also consider the interference with the property of the holder of the right of usufruct, which is protected by Article 17(1) of the Charter, resulting from its deletion by operation of law to be more serious than the interference with the right to property of the non-resident landowner caused by the contested reinstatement of the right of usufruct which had been deleted by operation of law.

72.      As the Court rightly found, a legally effective right of usufruct, originally created and registered with the consent of the landowner, restricts the right to the property in question and merely makes it subject to other rules of use. By contrast with the deletion, by operation of law, of the right of usufruct with which the judgment establishing a failure to fulfil obligations found fault, it does not therefore entail a complete deprivation of possessions. (32) The renewed restriction of the landowner’s right to property resulting from the contested reinstatement of the deleted right of usufruct – even against his or her will – is also far outweighed by the compulsory, complete and definitive deprivation of the right to property of the holder of the right of usufruct (as a fraction of ownership, see above, point 53).

73.      The non-resident landowner is not therefore able to rely on the protection of his or her property in such a case in order to have the deletion (which was contrary to EU law) of that right of usufruct revived and the associated encumbrance of his or her property cancelled in his or her favour. This applies a fortiori in a situation where, as in this case, the property was acquired at a time when it was already encumbered by a right of usufruct whose registration had become final (see above, point 67).

74.      Reliance by the non-resident landowner on Article 63 TFEU and Article 17 of the Charter cannot therefore result in the renewed deletion of the reinstated right of usufruct. The Hungarian Government rightly asserts in this respect that the national legislation which was amended in response to the judgment establishing a failure to fulfil obligations and its implementation are necessary in order to comply with that judgment pursuant to Article 260(1) TFEU and to establish a state of affairs compatible with those provisions of EU law.

75.      Contrary to the assertion made by the referring court, a breach of the finality of the original registration of the right of usufruct in accordance with the principles of equivalence and effectiveness can also therefore be ruled out. This question would arise only in respect of failure to comply adequately with the judgment establishing a failure to fulfil obligations, which is not the case here. Rather, it follows from the principle of legal certainty that administrative acts which have become final and which produce legal effects may no longer be called into question in principle. (33) In addition, such a breach of finality would be to the detriment of the protection of the rights of the holder of the right of usufruct which are guaranteed by Article 63 TFEU and Article 17 of the Charter and would be based on precisely the national legislation which the Court has declared to be contrary to EU law with a view to such protection.

76.      Lastly, no other circumstances are evident which might call into question the appropriateness and proportionality of the contested reinstatement of the right of usufruct concerned in order to restrict lawfully the rights of the landowner under Article 63 TFEU and Article 17 of the Charter. In any case, such reinstatement did not go beyond what was necessary to achieve the abovementioned objectives, including the protection of the fundamental freedoms and rights of the holder of the right of usufruct.

5.      Interim conclusion

77.      Accordingly, a landowner encumbered by a right of usufruct whose original registration became final, which was later deleted in contravention of EU law, but was subsequently reinstated again is not able successfully to rely on his or her rights under Article 63 TFEU and Article 17 of the Charter in order to compel the competent authority to delete that right of usufruct again on the ground that its original registration infringed Hungarian rules which were applicable at the time.

V.      Conclusion

78.      In the light of the foregoing considerations, I suggest that the Court answer the question referred by the Győri Törvényszék (Győr High Court, Hungary) as follows:

Legislation of a Member State providing for the reinstatement of a usufruct right whose original registration became final but which was deleted in contravention of EU law is not precluded by Article 63 TFEU and Article 17 of the Charter of Fundamental Rights of the European Union if it does not compel the competent authorities to examine, prior to the reinstatement of that right, whether its original registration had been lawful in accordance with national legislation which was applicable at the time.

1      Original language: German.

2      Judgments of 6 March 2018, SEGRO and Horváth (C‑52/16 and C‑113/16, EU:C:2018:157); of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432); and of 10 March 2022, Grossmania (C‑177/20, EU:C:2022:175).

3      Judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraph 131 and paragraph 1 of the operative part).

4      Judgment of 10 March 2022, Grossmania (C‑177/20, EU:C:2022:175).

5      According to the referring court, this was the date on which the judgment of 6 March 2018, SEGRO and Horváth (C‑52/16 and C‑113/16, EU:C:2018:157), was delivered.

6      Judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432).

7      Judgments of principle EBH 2004.1173 and EBH 2005.1277.

8      See judgments of 6 March 2018, SEGRO and Horváth (C‑52/16 and C‑113/16, EU:C:2018:157, paragraph 56 and the case-law cited), and of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraph 54).

9      See judgments of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraph 65 et seq.), and of 10 March 2022, Grossmania (C‑177/20, EU:C:2022:175, paragraph 33 et seq.).

10      Judgment of 10 March 2022, Grossmania (C‑177/20, EU:C:2022:175, paragraphs 43 to 46 and 64). This applies subject to the principle of procedural autonomy, according to which it is for the Member States – in compliance with the principles of equivalence and effectiveness – to establish procedural rules for actions intended to safeguard the rights of individuals (see paragraph 49 et seq.).

11      See judgments of 6 March 2018, SEGRO and Horváth (C‑52/16 and C‑113/16, EU:C:2018:157, paragraph 56 and the case-law cited), and of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraph 54).

12      See, to that effect, judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, end of paragraph 58 and the case-law cited).

13      See, to that effect, judgment of 10 March 2022, Grossmania (C‑177/20, EU:C:2022:175, paragraph 35 and the case-law cited).

14      See, to that effect, judgment of 10 March 2022, Grossmania (C‑177/20, EU:C:2022:175, paragraph 65).

15      See, to that effect, judgment of 10 March 2022, Grossmania (C‑177/20, EU:C:2022:175, paragraph 36 and the case-law cited).

16      See judgment of 10 March 2022, Grossmania (C‑177/20, EU:C:2022:175, paragraphs 41 and 42 and the case-law cited).

17      See judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraph 54 et seq., in particular paragraph 58 and the case-law cited).

18      Judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraph 67 et seq., in particular paragraph 82).

19      See, to that effect, judgments of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraph 81), and of 10 March 2022, Grossmania (C‑177/20, EU:C:2022:175, paragraph 56).

20      Judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraphs 73 to 75).

21      Judgment of 10 March 2022, Grossmania (C‑177/20, EU:C:2022:175, paragraph 57).

22      See judgments of 26 February 2019, T Danmark and Y Denmark (C‑116/16 and C‑117/16, EU:C:2019:135, paragraph 70 et seq.), and of 21 December 2023, BMW Bank and Others (C‑38/21, C‑47/21 and C‑232/21, EU:C:2023:1014, paragraph 281 et seq.).

23      See judgment of 21 December 2023, BMW Bank and Others (C‑38/21, C‑47/21 and C‑232/21, EU:C:2023:1014, paragraph 283 and the case-law cited).

24      See, to that effect, judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraphs 59 and 60 and the case-law cited).

25      See, to that effect, judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraphs 88 and 89).

26      See judgment of 5 May 2022, BPC Lux 2 and Others (C‑83/20, EU:C:2022:346, paragraph 36 et seq.).

27      See, to that effect, judgments of 22 January 2013, Sky Österreich (C‑283/11, EU:C:2013:28, paragraph 60 and the case-law cited); of 19 December 2019, Deutsche Umwelthilfe (C‑752/18, EU:C:2019:1114, paragraph 50); and of 26 April 2022, Poland v Parliament and Council (C‑401/19, EU:C:2022:297, paragraph 75). With regard to equal ranking for fundamental rights and fundamental freedoms and resolution of conflicts between them on the basis of the principle of proportionality, see Opinion of Advocate General Trstenjak in Commission v Germany (C‑271/08, EU:C:2010:183, point 183 et seq.); with regard to the legal concept of ‘praktische Konkordanz’ or ‘practical concordance’, see my Opinion in Parliament v Council (C‑540/03, EU:C:2005:517, point 39).

28      See judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraphs 64 to 66 and the case-law cited).

29      See judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraph 66 et seq.).

30      Judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraphs 54 et seq. and 67 et seq., in particular paragraph 82).

31      See, to that effect, judgment of 10 March 2022, Grossmania (C‑177/20, EU:C:2022:175, paragraph 57 et seq.).

32      See judgment of 21 May 2019, Commission v Hungary (Usufruct over agricultural land) (C‑235/17, EU:C:2019:432, paragraph 82 et seq.).

33      See, to that effect, judgment of 10 March 2022, Grossmania (C‑177/20, EU:C:2022:175, paragraph 49 et seq., in particular paragraph 52).