Contents
Judgment of the General Court (Intermediate Chamber)30 September 2026note(Implementation of the Union budget — Regulation (EU, Euratom) 2020/2092 — General regime of conditionality for the protection of the Union budget — Implementing Decision (EU) 2022/2506 — Measures for the protection of the Union budget against breaches of the principles of the rule of law in Hungary — Article 2(2) of Implementing Decision 2022/2506 — Prohibition preventing the Commission from entering into legal commitments with any public interest trust or any entity maintained by such a trust — Article 4(1) of Regulation 2020/2092 — Obligation to state reasons — Legal certainty — Legitimate expectations — Rights of the defence — Intensity of judicial review — Proportionality — Right to operate on an undistorted market — Article 16 of the Charter of Fundamental Rights — Principle of equal treatment and non-discrimination — Plea of illegality)In Case T‑140/23,Dunaújvárosi Egyetem, established in Dunaújváros (Hungary), represented by V. Łuszcz and K. Bendzsel-Varga, lawyers,supported byHungary, represented by M. Fehér, acting as Agent,vCouncil of the European Union, represented by E. Rebasti, G. Rugge and L. Vétillard, acting as Agents,supported byEuropean Parliament, represented by R. Crowe and U. Rösslein, acting as Agents,and byEuropean Commission, represented by J. Baquero Cruz and D. Drambozova, acting as Agents,THE GENERAL COURT (Intermediate Chamber),composed of S. Papasavvas, President, M.J. Costeira, L. Truchot, J. Schwarcz, M. Kancheva, U. Öberg (Rapporteur), P. Zilgalvis, E. Tichy-Fisslberger and S. Verschuur, Judges,Registrar: S. Spyropoulos, Administrator,having regard to the written part of the procedure, in particular the order of 4 April 2024, Dunaújvárosi Egyetem v Council and Commission (T‑140/23, not published, EU:T:2024:210),further to the hearing on 10 September 2025,gives the following
Judgment
1By its action under Article 263 TFEU, the applicant, Dunaújvárosi Egyetem, seeks, in essence, the annulment of Article 2(2) of Council Implementing Decision (EU) 2022/2506 of 15 December 2022 on measures for the protection of the Union budget against breaches of the principles of the rule of law in Hungary (OJ 2022 L 325, p. 94; ‘the contested provision’), by which the Council of the European Union prohibited the European Commission, where it implements the budget of the European Union under direct or indirect management, from entering into legal commitments with any public interest trust established on the basis of the közfeladatot ellátó közérdekű vagyonkezelő alapítványokról szóló 2021. évi IX. törvény (Law IX of 2021 on public interest trusts with a public service function (Magyar Közlöny 2021/75.); ‘Hungarian Law IX’) or with any entity maintained by such a public interest trust.
Background to the dispute
2The applicant is a university founded in 1953 and based in Dunaújváros (Hungary). Until 2021, the applicant was owned, controlled and in part financed by the Hungarian State as a public university.
3The provisions of Hungarian Law IX removed the applicant from the pool of institutions directly managed and financed by the State, with effect from 1 August 2021. Its founding and management rights were transferred to a public interest trust. It was incorporated into the Dunaújvárosi Egyetemért Alapítvány (Dunaújvárosi Egyetemért Foundation).
4On 24 November 2021, the Commission sent a request for information to Hungary pursuant to Article 6(4) of Regulation (EU, Euratom) 2020/2092 of the European Parliament and of the Council of 16 December 2020 on a general regime of conditionality for the protection of the Union budget (OJ 2020 L 433 I, p. 1).
5On 15 December 2022, following exchanges between Hungary and the Commission, the Council adopted Implementing Decision 2022/2506 on the basis of Commission proposal COM(2022) 485 final of 18 September 2022 for a Council Implementing Decision on measures for the protection of the Union budget against breaches of the principles of the rule of law in Hungary (‘the Commission proposal’) and Communication COM(2022) 687 final from the Commission to the Council of 30 November 2022 on the remedial measures notified by Hungary under Regulation 2020/2092 for the protection of the Union budget (‘the Commission communication’).
6By Implementing Decision 2022/2506, the Council found, inter alia, that the conditions laid down in Article 4(1) of Regulation 2020/2092 were met and therefore adopted measures for the protection of the Union budget against breaches of the principles of the rule of law in Hungary. Those breaches related to public procurement, prosecutions, conflicts of interest, the fight against corruption and public interest trusts.
7The Council adopted two measures: (i) a suspension of 55% of the budgetary commitments for three cohesion policy programmes for the period between 2021 and 2027, imposed by Article 2(1) of Implementing Decision 2022/2506; and (ii) a prohibition preventing the Commission from entering into any new legal commitments with public interest trusts or with entities maintained by them in relation to EU funding implemented under direct or indirect management, imposed by the contested provision.
8Thus, Implementing Decision 2022/2506 provides, in the contested provision, that ‘where the Commission implements the Union budget in direct or indirect management pursuant to … Article 62(1) points (a) and (c), of Regulation (EU, Euratom) 2018/1046, no legal commitments shall be entered into with any public interest trust established on the basis of [Hungarian Law] IX … or any entity maintained by such a public interest trust’. Implementing Decision 2022/2506 took effect on 16 December 2022.
Forms of order sought
9The applicant claims, in essence, following a request made by the Court at the hearing for clarification of the form of order sought by it, that the Court should:– annul the contested provision;– in the alternative, annul the contested provision in so far as it concerns the applicant;– order the Council and any intervener opposing the applicant to bear the costs.
10The Council, supported by the Commission, contends that the Court should:– dismiss the action;– order the applicant to pay the costs.
11Hungary claims that the Court should uphold the applicant’s action.
12The European Parliament contends that the Court should dismiss the action.
Law
Admissibility of the documents produced in the course of the proceedings
13On 28 October 2024, the applicant lodged before the Court a notice from the national agency Tempus, responsible for managing international cooperation programmes, including Erasmus+, on the scholarship rates for that programme (Annex R.1), a notice from the Commission of 2 September 2024 published on the ‘Funding and Tenders’ portal of its website as an ‘FAQ’ (frequently asked question) (Annex R.2) and a declaration of honour concerning the award of scholarships under the Erasmus+ programme by the director of international relations of the applicant (Annex R.3), in order to rebut the observations submitted by the Council in its rejoinder.
14The Council, supported by the Commission, contends that those items of evidence are inadmissible under Article 85(3) of the Rules of Procedure of the General Court.
15Article 85(3) of the Rules of Procedure provides that the main parties may, exceptionally, produce or offer further evidence before the oral part of the procedure is closed or before the Court’s decision to rule without an oral part of the procedure, provided that the delay in the submission of such evidence is justified.
16However, evidence in rebuttal and the amplification of the offers of evidence submitted in response to evidence in rebuttal from the opposite party, in the rejoinder, are not covered by the time-bar laid down in Article 85(1) and (3) of the Rules of Procedure. That provision concerns fresh offers of evidence and must be read in the light of Article 92(7) of those rules, which expressly provides that evidence may be submitted in rebuttal and previous evidence may be amplified (see, to that effect, judgments of 17 December 1998, Baustahlgewebe v Commission, C‑185/95 P, EU:C:1998:608, paragraph 72, and of 13 December 2018, Monolith Frost v EUIPO – Dovgan (PLOMBIR), T‑830/16, EU:T:2018:941, paragraph 21).
17In the present case, the documents in question address the Council’s new observations and offers of evidence set out in the rejoinder. In its rejoinder, the Council maintained that, despite the award and grant documents referred to by the applicant in its reply, there was a risk of misuse or misappropriation of EU funds as a result of previous decisions of public interest trusts. Thus, the Council stated that possible conflicts of interest affecting those trusts entailed, for example, a risk of interference in the selection of students under the Erasmus+ programme, by introducing political considerations, and produced an article in support of that assertion. In addition, the Council disputed the relevance of the merger legislation relied on by the applicant in its reply. Consequently, Annexes R.1 to R.3 were produced in order to respond to that line of argument put forward by the Council. They cannot therefore be declared inadmissible on the ground that they were produced in connection with the request for a hearing in breach of Article 85(3) of the Rules of Procedure.
18In those circumstances, the time-bar laid down in Article 85(1) and (3) of the Rules of Procedure does not apply to the offers of evidence at issue, with the result that those offers of evidence are admissible.
Admissibility of the plea submitted after the close of the written part of the procedure
19On 13 May 2025, the applicant lodged, in the course of the proceedings, a document pursuant to Articles 84 and 88 of the Rules of Procedure. In that document, it primarily raises a plea alleging infringement of Articles 20 and 21 TFEU, based on matters of law and of fact which came to light after the close of the written part of the procedure, namely the delivery of the judgment of 16 January 2025, Ministarstvo financija (Erasmus+ grant) (C‑277/23, EU:C:2025:18).
20According to the applicant, when the application was lodged, the effect of the contested provision on the mobility of university students under the Erasmus+ programme was not yet clear, in so far as they were still able to participate in that programme, at least until the end of July 2024. Moreover, since the Commission and the Hungarian Government had conducted negotiations throughout the summer of 2024, it was not until September 2024, after the reply had been lodged, that it became clear that Implementing Decision 2022/2506 also applied to the Erasmus+ mobility programme.
21The applicant argues, inter alia, that the judgment of 16 January 2025, Ministarstvo financija (Erasmus+ grant) (C‑277/23, EU:C:2025:18), demonstrates that the contested provision restricts the freedom of movement of its students in the present case and confirms that those students have the right to participate in the Erasmus+ programme.
22In the alternative, the applicant submits that its arguments, based on the judgment of 16 January 2025, Ministarstvo financija (Erasmus+ grant) (C‑277/23, EU:C:2025:18), must, in any event, be regarded as an amplification of its first and second pleas.
23The Council, supported by the Commission and the Parliament, contests the admissibility of that plea.
24Under Article 84(1) of the Rules of Procedure, no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which have come to light in the course of the procedure or it amplifies a plea put forward previously, whether directly or by implication, in the application initiating proceedings and is closely connected therewith (judgment of 19 May 1983, Verros v Parliament, 306/81, EU:C:1983:143, paragraph 9; see also judgment of 7 November 2019, Intas Pharmaceuticals v EUIPO – Laboratorios Indas (INTAS), T‑380/18, EU:T:2019:782, paragraph 26 (not published) and the case-law cited).
25In the present case, it should be observed that the plea alleging infringement of Articles 20 and 21 TFEU was not raised at the stage of the application and cannot be regarded as an amplification of the first and second pleas, alleging infringement of Regulation 2020/2092 and breach of the obligation to state reasons and of the principles of equal treatment and non-discrimination. It therefore constitutes a new plea in law within the meaning of Article 84 of the Rules of Procedure.
26As regards whether a new matter of fact exists, it is clearly and unambiguously apparent from the contested provision that it prohibits the Commission from entering into new legal commitments with public interest trusts established on the basis of Hungarian Law IX or with entities maintained by such trusts, from the date on which Implementing Decision 2022/2506 took effect. Therefore, even though the applicant’s staff who were already benefiting from the Erasmus+ programme continued to benefit from it after the entry into force of Implementing Decision 2022/2506, the applicant knew, as soon as that decision was published, that the Commission would no longer be able, from the entry into force of that decision, to enter into new legal commitments with it, including under the Erasmus+ programme, and that, consequently, students and other potential beneficiaries of that programme would be affected by the contested provision.
27As regards whether a new matter of law exists, it must be borne in mind that a judgment given in the course of proceedings cannot be relied on as a new matter since, in principle, that judgment gives only an interpretation ex tunc of EU law (see, to that effect, judgment of 27 February 1997, FFSA and Others v Commission, T‑106/95, EU:T:1997:23, paragraph 57 and the case-law cited).
28In that regard, on the date of delivery of the judgment of 16 January 2025, Ministarstvo financija (Erasmus+ grant) (C‑277/23, EU:C:2025:18), Articles 165 and 179 TFEU already provided that the objective of education and research policies was to ‘encourag[e] mobility of students and teachers’ and to achieve ‘a European research area in which researchers, scientific knowledge and technology circulate freely’.
29Furthermore, as is apparent from paragraphs 38 to 40 of the judgment of 16 January 2025, Ministarstvo financija (Erasmus+ grant) (C‑277/23, EU:C:2025:18), that judgment simply confirms settled case-law relating to the importance of the principle of freedom of movement of persons in the field of education. That is particularly so given that, in its judgment, the Court refers to its earlier case-law, thus demonstrating that that case-law is of a settled nature.
30In those circumstances, the judgment of 16 January 2025, Ministarstvo financija (Erasmus+ grant) (C‑277/23, EU:C:2025:18), cannot be regarded as a matter of law that came to light in the course of the procedure, within the meaning of Article 84(1) of the Rules of Procedure.
31Accordingly, the plea raised after the close of the written part of the procedure must be rejected as inadmissible.
Merits of the pleas in law
32In support of its action, the applicant raises four pleas in law, alleging, first, infringement of Article 4(1) of Regulation 2020/2092 and breach of the obligation to state reasons and of the principle of proportionality; secondly, breach of the presumption of innocence and of the principles of equal treatment and non-discrimination; thirdly, breach of the right to operate on an undistorted market, enshrined in Article 16 of the Charter of Fundamental Rights of the European Union, read in conjunction with Articles 101 to 108 TFEU; and, fourthly, breach of the principles of legal certainty and the protection of legitimate expectations and breach of the rights of the defence.
33In its first, second and fourth pleas in law, the applicant also raises, in the alternative, a plea of illegality in respect of Regulation 2020/2092, if that regulation were to be interpreted as permitting measures targeting a specific category of persons without providing for the possibility of individual exemptions.
34In that connection, it should be borne in mind that, according to the case-law, the Court must interpret an applicant’s pleas in law by reference to their substance rather than their characterisation and must thus characterise the pleas in law and the arguments in the application (judgment of 17 January 2024, Troy Chemical Company and Troy v Commission, T‑297/21, not published, EU:T:2024:13, paragraph 48).
35In those circumstances, the Court is of the view that the applicant raises, in essence, seven pleas in law, alleging, first, breach of the obligation to state reasons; secondly, breach of the principles of legal certainty and the protection of legitimate expectations and breach of the rights of the defence; thirdly, infringement of Article 4(1) of Regulation 2020/2092; fourthly, breach of the principle of proportionality; fifthly, breach of the right to operate on an undistorted market, enshrined in Article 16 of the Charter of Fundamental Rights, read in conjunction with Articles 101 to 108 TFEU; sixthly, breach of the presumption of innocence and of the principles of equal treatment and non-discrimination; and, seventhly and in the alternative, the illegality of Regulation 2020/2092.
The plea in law alleging breach of the obligation to state reasons
36The applicant, supported by Hungary, submits that neither the Commission proposal, nor the Commission communication, nor Implementing Decision 2022/2506 contains an adequate statement of reasons.
37First of all, the applicant submits that the statement of reasons for the Commission proposal, the Commission communication and Implementing Decision 2022/2506 does not explain how the alleged risk of conflicts of interest affects or seriously risks affecting the sound financial management of the Union budget or the protection of the financial interests of the Union, given that the boards of public interest trusts play no role in the implementation of the budget under direct or indirect management. Next, it argues that the statement of reasons does not explain how universities are concerned by the contested provision, since the financial relationship between the university and the trust was not examined, even though those entities have separate budgets. Lastly, it states that there is nothing in the statement of reasons to indicate that the test requiring there to be a genuine link between the breach of the principles of the rule of law and the effect or risk of an effect on the Union budget was applied.
38The Council, supported by the Commission, disputes those arguments.
39The second paragraph of Article 296 TFEU provides that legal acts are to state the reasons on which they are based and are to refer to any proposals, initiatives, recommendations, requests or opinions required by the Treaties.
40According to settled case-law, the obligation to state reasons laid down in Article 296 TFEU is an essential procedural requirement that must be distinguished from the question whether the reasoning is well founded, which goes to the substantive legality of the measure at issue (see judgment of 10 September 2024, Commission v Ireland and Others, C‑465/20 P, EU:C:2024:724, paragraph 389 and the case-law cited).
41A measure which lacks an adequate statement of reasons, for the purpose of the formal obligation to state reasons, is one which does not make it possible to understand why, on what basis or for what reason it was adopted, whereas the reasons for a measure and its justifications may be sufficiently known and comprehensible, but inadequate to justify it in law, in that they are not substantiated, clear or compliant with the relevant provisions (judgment of 24 January 2024, Veritas v Commission, T‑602/22, EU:T:2024:26, paragraph 18).
42Furthermore, the statement of reasons required by Article 296 TFEU must be appropriate to the act at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution which adopted that act in such a way as to enable the persons concerned to ascertain the reasons for it and to enable the competent court to carry out its review. In that regard, it is not necessary for the reasoning to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of that article must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (see judgment of 10 September 2024, Commission v Ireland and Others, C‑465/20 P, EU:C:2024:724, paragraphs 391 and 392 and the case-law cited).
43Thus, the statement of reasons required by the second paragraph of Article 296 TFEU must disclose in a clear and unequivocal fashion the specific grounds and evidence on which the Council relied in order to adopt the contested provision, in particular as regards the breaches of the principles of the rule of law alleged by that institution and the reasons why it considers that those breaches affect or seriously risk affecting the sound financial management of the Union budget or the protection of the financial interests of the Union in a sufficiently direct way.
44At the outset, the present plea must be rejected as ineffective in so far as it alleges that the statement of reasons for the Commission proposal and the Commission communication is inadequate. In accordance with the case-law cited in paragraph 42 above, whether the obligation to state reasons has been complied with must be assessed with regard not only to the wording of the measure in respect of which annulment is sought, but also to its context and to all the legal rules governing the matter in question. That context, which includes, inter alia, the proposal for the measure concerned, cannot justify, in itself and irrespective of the statement of reasons contained in that measure, the annulment of the latter (judgment of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 250). Thus, in the present case, although the Commission proposal and the Commission communication form part of the context in which Implementing Decision 2022/2506 was adopted, any inadequacy in the statement of reasons for those documents cannot justify, in itself and irrespective of the statement of reasons specific to Implementing Decision 2022/2506, the annulment of that decision.
45Next, it should be noted that recital 11 of Implementing Decision 2022/2506 states:‘… there are concerns regarding the non-application of public procurement and conflict of interest rules to “public interest trusts” and the entities managed by them, and the lack of transparency with regard to the management of funds by those trusts. Those issues and their recurrence over time demonstrate a systemic inability, failure or unwillingness, on the part of the Hungarian authorities, to prevent decisions that are in breach of the applicable law, as regards … conflicts of interest, and thus to adequately tackle risks of corruption. They constitute breaches of the principles of the rule of law, in particular the principles of legal certainty and prohibition of arbitrariness of the executive powers and raise concerns as regards the separation of powers.’
46In addition, recital 43 of Implementing Decision 2022/2506 states:‘[Despite some legislative amendments,] the regulatory framework [in Hungary] still does not prevent top-level officials, including senior political executives from the National Assembly and Hungary’s autonomous bodies, from sitting on boards of public interest asset management foundations … Moreover, Hungary has reintroduced as of 1 November 2022 the possibility (by means of an exception from the general prohibition) for senior political executives to have other remunerated employment, including on boards of public interest asset management foundations. The Council considers that for these reasons as further set out in the Commission’s communication, the weaknesses of the regulatory framework combined with the new legislative developments aggravate the possible conflict of interest that the remedial measure was meant to address and therefore renders it inadequate to address the concerns originally raised by the Commission.’
47Lastly, recital 62 of Implementing Decision 2022/2506 states:‘Concerning the identified breaches in relation to public interest trusts, the regulatory framework in Hungary has weaknesses, as set out above, which have not remedied the risk of conflict of interest that the remedial measure was meant to address. In light of the inadequacy of the remedial measure, a serious risk for the Union budget remains and can best be addressed by a prohibition on entering into new legal commitments with any public interest trust and any entity maintained by them under any programme under direct or indirect management. …’
48It thus follows from recitals 11, 43 and 62 of Implementing Decision 2022/2506 that the alleged breach of the principles of the rule of law which affects or seriously risks affecting the sound financial management of the Union budget or the financial interests of the Union is assessed from the perspective of the principle of legal certainty, the prohibition of arbitrariness of the executive and the principle of the separation of powers and is manifested, in the present case, by the existence of possible conflicts of interest.
49The alleged breach of the principles of the rule of law stems from a factual situation and from the regulatory framework in Hungary, which does not prevent top-level officials, including senior political executives, from sitting on boards of public interest asset management foundations established by Hungarian Law IX. That breach of the principles of the rule of law is exacerbated by the fact that, with effect from 1 November 2022, Hungary reintroduced the possibility for senior political executives to hold other remunerated positions, including on boards of public interest asset management foundations established by that law.
50It follows that the Council set out, in a sufficiently detailed and comprehensive manner, the reasons why the contested provision was adopted.
51As regards the applicant’s argument that public interest trusts have no influence over EU funds, in the context of the direct or indirect management of the Union budget, since, in any event, those funds are received by universities directly, that argument must be rejected as it seeks to challenge the merits of the contested provision and not the statement of reasons for it. The same is true of the applicant’s argument concerning the genuine link between the breach of the principles of the rule of law and the effect or risk of an effect on the Union budget.
52Accordingly, the plea alleging breach of the obligation to state reasons must be rejected as being in part ineffective and in part unfounded.
The plea in law alleging breach of the principles of legal certainty and the protection of legitimate expectations and breach of the rights of the defence
53The applicant submits that the contested provision breaches the principle of legal certainty in so far as it only became aware of the effects of that provision when it was published in the Official Journal of the European Union. The contested provision is also at variance with the principle of the protection of legitimate expectations, since neither the suspension of the signing of a grant agreement in respect of which a selection procedure had already been completed nor the suspension of the annual renewal of grant agreements could have been foreseen. In addition, the applicant argues that its rights of defence were not observed because there was no consultation with Hungarian higher education institutions maintained by public interest trusts prior to the adoption of the contested provision.
54The Council, supported by the Commission, disputes those arguments.
55In the first place, as regards the breach of the principle of legal certainty, it is settled case-law that that principle requires, on the one hand, that the rules of law be clear and precise and, on the other, that their application be foreseeable for those subject to the law, in particular where they may have adverse consequences. That principle requires, inter alia, that legislation must enable those concerned to know precisely the extent of the obligations imposed on them and that those persons must be able to ascertain unequivocally their rights and obligations and take steps accordingly (see judgment of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 319 and the case-law cited).
56However, those requirements cannot be interpreted as precluding an EU institution from having recourse, in a provision of an act that it adopts, to an abstract legal notion, or as requiring that such an abstract provision refer to the various specific hypotheses in which it applies, given that all those hypotheses cannot be determined in advance by that institution (see, to that effect, judgment of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 320 and the case-law cited).
57Consequently, a provision of an EU act breaches the principle of legal certainty on the ground of lack of clarity only if it displays such ambiguity as to prevent individuals from resolving with sufficient certainty any doubts as to the scope or meaning of that provision (see, to that effect, judgments of 14 April 2005, Belgium v Commission, C‑110/03, EU:C:2005:223, paragraph 31, and of 22 May 2007, Mebrom v Commission, T‑216/05, EU:T:2007:148, paragraph 108).
58In the present case, the contested provision states that ‘where the Commission implements the Union budget …, no legal commitments shall be entered into with any public interest trust established on the basis of [Hungarian Law] IX … or any entity maintained by such a public interest trust’.
59Thus, it is apparent from the contested provision that the fact that the applicant is an entity maintained by a public interest trust established on the basis of Hungarian Law IX prevents the Commission from entering into legal commitments with it, in the context of the implementation of the Union budget under direct or indirect management.
60In those circumstances, the contested provision is sufficiently clear and precise and therefore meets the requirements of legal certainty and foreseeability.
61That finding is not called into question by the applicant’s argument that it became aware of the content of the contested provision only on the day of its publication in the Official Journal of the European Union. It does not follow from that fact that the applicant was unable to ascertain precisely its rights and obligations or that the application of that provision was unforeseeable.
62In the second place, as regards the breach of the principle of the protection of legitimate expectations, it must be borne in mind that the right to rely on such a principle extends, as a corollary of the principle of legal certainty, to any person whom an EU institution has caused, by giving him or her precise assurances, to entertain justified expectations (see judgment of 16 December 2020, Council v K. Chrysostomides & Co. and Others, C‑597/18 P, C‑598/18 P, C‑603/18 P and C‑604/18 P, EU:C:2020:1028, paragraph 178 and the case-law cited).
63In the present case, the Court finds that the applicant cannot claim to have entertained legitimate expectations regarding the award of further EU funding in connection with the implementation of the Union budget under direct or indirect management in the event of a breach of the principles of the rule of law by Hungary. Moreover, it has failed to demonstrate that it received precise assurances in that respect.
64In the third place, concerning the breach of the rights of the defence, the right to be heard or the right to be consulted, claimed by the applicant, the Court makes the following observations.
65First, as regards whether it was necessary to consult Hungarian higher education institutions maintained by public interest trusts, it is clear from Article 5 of Implementing Decision 2022/2506 that the addressee of that decision is Hungary. Article 6(1) to (9) of Regulation 2020/2092 lays down the procedure to be followed by the Commission and provides for the various exchanges with the Member State concerned. No provision required the Commission to consult any party other than the Member State concerned.
66Secondly, the right to be heard is enshrined in Article 41(2)(a) of the Charter of Fundamental Rights and includes, inter alia, the right of every person to be heard before any individual measure which would affect him, her or it adversely is taken.
67The right to be heard is one of the rights of the defence and is a general principle of EU law which is applicable even in the absence of any specific rules in that regard. That principle requires that the addressees of decisions which significantly affect their interests should be placed in a position in which they may effectively make known their views with regard to the evidence on which those decisions are based (see judgment of 28 October 2021, Vialto Consulting v Commission, C‑650/19 P, EU:C:2021:879, paragraph 122 and the case-law cited).
68However, the right to be heard in an administrative procedure taken against a specific person, which must be observed even in the absence of any rules governing the procedure, cannot be transposed to a procedure leading to the adoption of a measure of general application (see, to that effect, judgments of 22 June 2023, Arysta LifeScience Great Britain v Commission, C‑259/22 P, not published, EU:C:2023:513, paragraph 50, and of 11 September 2002, Alpharma v Council, T‑70/99, EU:T:2002:210, paragraph 388 and the case-law cited), such as Implementing Decision 2022/2506 (see, to that effect, order of 4 April 2024, Dunaújvárosi Egyetem v Council and Commission, T‑140/23, not published, EU:T:2024:210, paragraph 41).
69In particular, in the case of acts of general application, neither the process of drafting them nor those acts themselves require, in accordance with the general principles of EU law, such as the right to be heard, consulted or informed, the participation of the persons affected. The position is different if an express provision of the legal framework governing the adoption of that act confers such a procedural right on an affected person (judgment of 22 June 2023, Arysta LifeScience Great Britain v Commission, C‑259/22 P, not published, EU:C:2023:513, paragraph 51; see also judgment of 19 December 2019, Probelte v Commission, T‑67/18, EU:T:2019:873, paragraph 87 and the case-law cited).
70The procedure provided for in Article 6(1) to (9) of Regulation 2020/2092 for the adoption of appropriate measures to protect the Union budget merely lays down the obligation to consult the Member State concerned and provides for the various exchanges that are to take place between the Commission and that Member State. The applicant does not, moreover, dispute that that procedure was properly conducted. In addition, in the present case, it follows from recitals 1, 2, 6 and 8 to 10 of Implementing Decision 2022/2506 that the Commission engaged in discussions with the Hungarian authorities before sending its proposal to the Council.
71It should be added that the Commission and the Council did not make allegations of individual breaches of the principles of the rule of law, of systemic fraud or of particular conflicts of interest involving the applicant, justifying the adoption of specific measures under Regulation 2020/2092, which would have required its right to be heard to be observed. The fact that the contested provision affects the applicant in the same way as other beneficiaries due to serious systemic breaches of the principles of the rule of law, as alleged by the Commission and the Council, does not, on its own, confer such a special procedural right on the applicant.
72In those circumstances, it must be held that the applicant cannot validly claim breach of its right to be heard.
73Accordingly, the present plea must be rejected as unfounded in so far as it alleges breach of the principles of legal certainty and the protection of legitimate expectations and as ineffective in so far as it concerns the rights of the defence.
The plea in law alleging infringement of Article 4(1) of Regulation 2020/2092
74The applicant, supported by Hungary, claims that the contested provision infringes Article 4(1) of Regulation 2020/2092.
75According to the applicant, the Commission and the Council failed to substantiate the conditions for the adoption of the measure referred to in the contested provision, namely the identification of a breach of the principles of the rule of law, the serious risk of an effect on the sound financial management or the protection of the financial interests of the Union in a sufficiently direct way and the causal link, in particular the existence of a genuine link between that breach and such an effect or serious risk of an effect.
76The Council, supported by the Commission, disputes those arguments.
77As a preliminary point, it should be recalled that Article 4 of Regulation 2020/2092 lays down the conditions for the adoption of appropriate measures under that regulation.
78Article 4(1) of Regulation 2020/2092 states that such measures are to be taken where it is established, in accordance with Article 6 thereof, that breaches of the principles of the rule of law in a Member State affect or seriously risk affecting the sound financial management of the Union budget or the protection of the financial interests of the Union in a sufficiently direct way.
79Under Article 6 of Regulation 2020/2092, it is for the Commission to set out, in a written notification to the Member State concerned, the factual elements and specific grounds on which it based its findings that there are reasonable grounds for considering that the conditions set out in Article 4(1) of that regulation are fulfilled (judgment of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 338) and, in particular, that the breaches affect or seriously risk affecting the sound financial management of the Union budget or the protection of the financial interests of the Union in a sufficiently direct way, that latter condition requiring a genuine link between those breaches and that effect or serious risk of an effect (see, to that effect, judgment of 16 February 2022, Hungary v Parliament and Council, C‑156/21, EU:C:2022:97, paragraphs 111 and 147).
80In addition, the Court has held that the prevention of effects such as those referred to in Article 4(1) of Regulation 2020/2092 requires that the breaches of the principles of the rule of law which have been established must ‘seriously’ risk affecting the sound financial management of the Union budget or the financial interests of the Union and requires, therefore, the Commission and the Council to demonstrate that that risk has a high probability of occurring, in relation to the situations or to the conduct of authorities referred to in Article 4(2) of Regulation 2020/2092 (judgment of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 299).
81Lastly, it follows from Article 4(1) and (2) of Regulation 2020/2092 that breaches of the principles of the rule of law liable to justify the adoption of appropriate measures under that regulation must concern the situations or conduct of authorities listed in Article 4(2)(a) to (h) of that regulation, in so far as they are relevant to the sound financial management of the Union budget or the protection of the financial interests of the Union.
82In that regard, Article 4(2)(h) of Regulation 2020/2092 expressly refers to any other situations or conduct of authorities that are relevant to the sound financial management of the Union budget or the protection of the financial interests of the Union.
83The Court has held that the expression ‘other situations or conduct of authorities’, appearing in Article 4(2)(h) of Regulation 2020/2092, must be interpreted in the light of Article 4(2)(a) to (g) and Article 4(1) of that regulation and in the light of the procedural requirements laid down in Article 6(1) to (9) thereof. According to the Court, Article 4(2)(h) of Regulation 2020/2092 does not mean that the list of breaches of the principles of the rule of law set out in Article 4(2) is not exhaustive, on the ground that those situations are defined in abstract and general terms (judgment of 16 February 2022, Hungary v Parliament and Council, C‑156/21, EU:C:2022:97, paragraphs 252 to 255; see also, to that effect, judgment of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraphs 178 and 334).
84Thus, it follows from a combined reading of Article 4 and Article 6(1) of Regulation 2020/2092 that, in order to justify the adoption of appropriate measures under that regulation, the Council and the Commission must establish in a specific manner, first, that there are reasonable grounds for considering that at least one of the principles of the rule of law referred to in Article 2(a) of that regulation has been breached in a Member State; secondly, that that breach concerns at least one of the situations attributable to an authority of a Member State or at least one instance of conduct of such an authority referred to in Article 4(2) of that regulation, in so far as those situations or that conduct is relevant to the sound financial management of the Union budget or to the protection of the financial interests of the Union; and, thirdly, that that breach affects or seriously risks affecting that sound management or the protection of those financial interests, in a sufficiently direct way, by a genuine link between those breaches and that effect or serious risk of effect (judgment of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 288).
85Therefore, in order to determine whether the contested provision infringes Article 4(1) of Regulation 2020/2092, as the applicant claims, it is necessary to examine, in the light of the arguments put forward by the applicant, whether the requirements laid down in Regulation 2020/2092 and the case-law have been met.
–The intensity of judicial review
86The Council, supported by the Commission, submits that the institutions have a broad discretion in deciding on the measures they consider appropriate in order to remedy breaches of the principles of the rule of law in a Member State.
87At the hearing, the Commission stated that, given the complexity of the matters and budgetary measures subject to judicial review in the present case, both the Commission and the Council should be allowed a broad discretion as regards their assessments in that context, with judicial review being confined to manifest errors of assessment.
88However, the Council and the Commission conceded at the hearing that the condition of the existence of a breach of the principles of the rule of law, laid down in Article 4 of Regulation 2020/2092, was a question of law in respect of which judicial review by the EU Courts had to be strict.
89The applicant, supported by Hungary, submits that the Court must carry out a full and complete judicial review in the present case.
90As a preliminary point, the Court recalls that the principles of the rule of law, on which the European Union is founded, mean that neither the Member States nor the EU institutions can avoid review of the question whether the measures adopted by them are in conformity with the FEU Treaty, which has established a complete system of legal remedies and procedures designed to permit the Court of Justice of the European Union to review the legality of measures adopted by the institutions (see, to that effect, judgment of 23 April 1986, Les Verts v Parliament, 294/83, EU:C:1986:166, paragraphs 23 and 24).
91In the context of that judicial review, the EU Courts carry out a full review of questions of law, which includes the interpretation to be given to legal provisions on the basis of objective factors as well as the verification of whether or not the conditions for the application of such provisions are satisfied (see, to that effect, judgment of 9 November 2022, Cambodia and CRF v Commission, T‑246/19, EU:T:2022:694, paragraph 45).
92Moreover, where the EU institutions enjoy a broad discretion, in particular as regards the assessment of highly complex economic, technical or scientific facts in order to decide on the nature and scope of the measures which they adopt, the exercise of that discretion is not excluded from judicial review. In that review, the EU Courts must verify whether the exercise of such discretion is vitiated by a manifest error of assessment or a misuse of powers, or whether those authorities have manifestly exceeded the limits of their discretion. In such a context, the EU Courts cannot substitute their assessment of economic, scientific or technical facts for that of the institutions upon which, alone, the Treaties have conferred that task (see, to that effect, judgments of 18 July 2007, Industrias Químicas del Vallés v Commission, C‑326/05 P, EU:C:2007:443, paragraphs 75 and 76; of 4 May 2023, ECB v Crédit lyonnais, C‑389/21 P, EU:C:2023:368, paragraph 55; and of 1 August 2025, France and Commission v CWS Powder Coatings and Others, C‑71/23 P and C‑82/23 P, EU:C:2025:601, paragraph 106 and the case-law cited).
93In that regard, it is settled case-law that the EU Courts must, inter alia, establish not only whether the evidence relied on is factually accurate, reliable and consistent, but also whether that evidence contains all the relevant information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it (see judgment of 4 May 2023, ECB v Crédit lyonnais, C‑389/21 P, EU:C:2023:368, paragraph 56 and the case-law cited).
94By contrast, as regards the establishment of facts devoid of economic, technical or scientific complexity, the judicial review carried out by the EU Courts continues to be a full review (see, to that effect, judgment of 23 September 2020, Medac Gesellschaft für klinische Spezialpräparate v Commission, T‑549/19, EU:T:2020:444, paragraph 47 (not published)).
95As the Court has observed in its case-law, the EU legislature has in no way conferred on the Council and the Commission an unlimited right to assess, in the light of political considerations, observance of the principles of the rule of law or to link any identified breach of those principles, in a general manner, to the principle of sound financial management of EU funds. It made the initiation of the procedure subject to criteria, referred to in paragraphs 77 to 84 above, which ensure that the assessments of those institutions fall within the scope of EU law and are of a legal rather than political nature (judgment of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 358).
96It follows from that case-law that the obligation for the Commission and the Council, when examining whether the adoption of appropriate measures is justified, to follow an evidence-based approach and to respect the principles of objectivity, non-discrimination and equal treatment of Member States before the Treaties is subject to full judicial review by the EU Courts (see, to that effect, judgments of 16 February 2022, Hungary v Parliament and Council, C‑156/21, EU:C:2022:97, paragraph 149, and of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraphs 167, 202 and 286).
97It cannot therefore be argued that the judicial review to be carried out in the present case is a limited review.
–The existence of breaches of the principles of the rule of law
98In the application, the applicant expressly states that it puts forward no arguments concerning the existence of an infringement of Article 4(2) of Regulation 2020/2092 relating to breaches of the principles of the rule of law.
99The applicant does, however, challenge the existence of a breach of the principles of the rule of law, in that it claims the Commission and the Council failed to establish, to the requisite legal standard, that breaches were committed by universities in general and by the applicant in particular. In addition, it states that the concerns regarding the application of the rules on public procurement procedures and conflicts of interest to public interest trusts were addressed by the remedial measures notified by Hungary.
100The Council, supported by the Commission, disputes the applicant’s arguments.
101As is apparent from the case-law cited in paragraph 84 above, the first condition for adopting budget protection measures under Regulation 2020/2092 is to establish a breach of the principles of the rule of law, as defined in Article 2(a) of that regulation.
102First of all, as regards the applicant’s argument that the concerns relating to the application of the rules on public procurement procedures and conflicts of interest to public interest trusts were resolved by the remedial measures notified by Hungary, it should be recalled that, in recitals 3 and 11 of Implementing Decision 2022/2506, the Council stated that the Commission initially had concerns about the non-application of the rules on public procurement procedures and conflicts of interest to public interest trusts and to the entities managed by them.
103Recital 29 of Implementing Decision 2022/2506 stated that, taken together, the remedial measures proposed by Hungary were in principle capable of addressing the issues regarding systemic irregularities, deficiencies and weaknesses in public procurement, risks of conflicts of interest and concerns regarding public interest trusts.
104Consequently, the Court concludes from this that the serious systemic weaknesses in public procurement procedures, on account of the non-application of the rules on conflicts of interest and public procurement to public interest trusts and to the entities managed by them, were resolved by Hungary’s remedial measures. They are therefore no longer, in themselves and in so far as they relate to public interest trusts alone, the subject of the breaches of the principles of the rule of law alleged by the Council in Implementing Decision 2022/2506, which the General Court is examining in the present case.
105Secondly, as regards the existence of breaches committed by entities maintained by public interest trusts in general or by the applicant in particular, it should be noted that Regulation 2020/2092 covers both individual breaches of the principles of the rule of law and systemic breaches.
106The situations or conduct of the authorities listed in Article 4(2)(a) to (h) of Regulation 2020/2092, as breaches of the principles of the rule of law within the meaning of that regulation, include situations or conduct of both an individual and a systemic nature. Moreover, recital 15 of Regulation 2020/2092 states that not only individual breaches of the principles of the rule of law, but also breaches that are widespread or due to recurrent practices or omissions by public authorities, or due to general measures adopted by such authorities, may seriously harm the financial interests of the Union.
107In that regard, the Court has held that, where breaches of the principles of the rule of law liable to be systematic in nature are also liable to affect or seriously risk affecting the sound financial management of the Union budget or the protection of the financial interests of the Union, the European Union cannot be criticised for implementing the means necessary to protect that sound management and those financial interests (see, to that effect, judgment of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 362).
108In the present case, it should be recalled that it follows from recitals 11, 43 and 62 of Implementing Decision 2022/2506 that the breach of the principles of the rule of law stems from a factual situation and from the regulatory framework in Hungary, which does not prevent top-level officials, including senior political executives, from sitting on boards of public interest asset management foundations, thus exacerbating the potential risk of conflicts of interest.
109Moreover, recital 58 of Implementing Decision 2022/2506 expressly states that ‘the identified cases of non-compliance refer to breaches of a systemic character’.
110In that connection, paragraph 128 of the Commission proposal states that, ‘as regards the nature of the breaches, the Commission considers that the assessment of the breaches … relevant to conflicts of interest for public interest trusts has led to the conclusion that these issues are indicative of breaches of the rule of law, in particular of those of Article 3(b) of Regulation … 2020/2092, as they fail to prevent, correct or sanction arbitrary or unlawful decisions by public authorities and fail to ensure the absence of conflicts of interest’.
111In paragraph 57 of its proposal, the Commission also took the view that the breaches of the principles of the rule of law concerned, inter alia, the situation referred to in Article 4(2)(h) of Regulation 2020/2092, that is to say, ‘other situations … that are relevant to the sound financial management of the Union budget or the protection of the financial interests of the Union’, manifested in this case by the increased risk of conflicts of interest due to the fact that senior political executives sat on the boards of public interest trusts.
112In addition, paragraph 130 of the Commission proposal states:‘… the identified breaches of the principles of the rule of law concern important parts of the public sector in Hungary, i.e. all public entities implementing Union funds that may be or become contracting authorities, as well as all public interest trusts, which despite being private entities, have a public interest objective, such as education, research, environment and climate protection and heritage protection. Thus, the identified breaches of the principles of the rule of law are systemic and widespread, and thus serious.’
113Lastly, in paragraph 142 of its proposal, the Commission observed that it was practically impossible to consider that the prohibition on entering into new legal commitments, in connection with programmes under direct and indirect management, with public interest trusts and entities maintained by them should apply only to certain public interest trusts and certain entities maintained by them, or that partial legal commitments could be entered into with such entities.
114As is apparent from paragraph 70 of the Commission communication, the fact that top-level officials and senior political executives are able to sit on the boards of public interest trusts ‘creates a situation in which [those] senior political executives may participate in decision-making relating to the disbursement of public funds to entities, in which they themselves are employed and have key decision-making powers’. As the Council has stated, public interest trusts exercise, by legislative design, decisive influence and control over the entities maintained by them, such that, in practice, the two are inextricably linked as a unit. As a result, any decision regarding the use of EU funds by an entity managed by a public interest trust is affected by the risk of conflicts of interests relating to public interest trusts.
115Therefore, it follows from Implementing Decision 2022/2506, read in the light of the Commission proposal and the Commission communication, that the concerns regarding breaches of the principles of the rule of law related to the legal framework applicable to public interest trusts, in particular the organisation, functioning and systemic lack of transparency in connection with the management of funds by those trusts and the entities maintained by them, and not breaches committed on an individual basis by them or by the entities maintained by them, such as the applicant.
116Consequently, since the breaches of the principles of the rule of law alleged by the Council are systemic in the present case, the Commission and the Council were not required to establish individual breaches of the principles of the rule of law by each entity concerned. Such an interpretation would make it impossible to adopt measures aimed at remedying systemic breaches of the principles of the rule of law.
117In the present case, it must be found that the Commission and the Council established, to the requisite legal standard, in accordance with Article 4(1) of Regulation 2020/2092, taken together, inter alia, with Article 3(b) thereof, breaches of the principles of the rule of law, within the meaning of Article 2(a) of that regulation. Those breaches consist of a serious risk of potential conflicts of interest due to the Hungarian regulatory framework, which permits top-level officials and senior political executives to sit on boards of public interest trusts established by Hungarian Law IX, and they are of a systemic nature owing to Hungary’s systemic inability, failure or unwillingness to prevent decisions taken in breach of the applicable law on conflicts of interest.
118In those circumstances, the finding of a breach of the principles of the rule of law did not, for the purpose of adopting the contested provision, require individual breaches committed by entities, such as the applicant, or by the trusts which maintained them, to be established.
119It follows that the applicant’s arguments relating to breaches of the principles of the rule of law must be rejected.
–The requirement of an effect or a serious risk of an effect on the sound financial management of the Union budget or the protection of the financial interests of the Union
120In the first place, the applicant submits that, in the context of projects under direct or indirect management, neither Hungarian public interest trusts nor the entities maintained by them are entities tasked with the implementation of those projects. Thus, it does not fall to them to launch calls for proposals, to evaluate proposals, to sign grant agreements, to monitor the implementation of projects, to review and assess the results, to carry out checks or to ensure that those projects are compliant. Those tasks instead lie with the Commission or with other entities responsible for implementation.
121In that connection, Hungary submits that, during the procedure which led to the adoption of Implementing Decision 2022/2506, the Commission in no way demonstrated how the existence of potential conflicts of interest specifically affected the use of EU funds. For programmes such as Erasmus+ or Horizon Europe, the Commission – acting on its own initiative – supervises the operation of the programmes and the use of funds from the Union budget. Hungary thus rejects the notion that a potential conflict of interest could pose a genuine risk to EU funds.
122Those arguments are premissed on a flawed assumption. Contrary to what the applicant claims, both Hungarian public interest trusts and the entities maintained by them are covered by the contested provision because they could be tasked with the implementation of projects under indirect management, and also because they could be beneficiaries of those projects under direct or indirect management.
123In that regard, it should be borne in mind that the contested provision is the result of the application of one of the measures provided for in Article 5(1) of Regulation 2020/2092. Article 5(1)(a)(ii) of Regulation 2020/2092 provides that, where the Commission implements the Union budget under direct or indirect management, pursuant to Article 62(1)(a) and (c) of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ 2018 L 193, p. 1), and where a government entity is the recipient of the funds from that budget, the Council may prohibit the Commission from entering into new legal commitments with that entity. The applicant does not challenge the assertion made in recital 22 of Implementing Decision 2022/2506 that public interest trusts and entities maintained by them are considered to be government entities which may be beneficiaries of projects under direct or indirect management.
124In the second place, the applicant submits that public interest trusts and the members of the boards of those trusts are not able to access direct EU funding received by the entities maintained by such trusts.
125It follows from Paragraph 22(4) of Hungarian Law IX that, depending on the deed of foundation of the Hungarian higher education institution, the public interest trust may have significant powers over the institution’s budgetary, operational and organisational affairs.
126The powers of public interest trusts which maintain higher education institutions in Hungary are set out in the nemzeti felsőoktatásról szóló 2011. évi CCIV. törvény (Law CCIV of 2011 on national higher education (Magyar Közlöny 2011/165.); ‘Hungarian Law CCIV’), which applies to all higher education institutions in Hungary. Paragraphs 12 and 73 of that law govern the division of powers between the boards of higher education institutions and the entities which maintain them, namely public interest trusts, as the case may be.
127In that regard, Paragraph 12(3) of Hungarian Law CCIV provides, as a general rule, that it is for the board, inter alia, to adopt the budget, the annual accounts and the organisational and operational rules of the higher education institution.
128Paragraph 73(1) of Hungarian Law CCIV states that, unless otherwise provided, the rights and obligations relating to control by the maintaining entities are to be the same, irrespective of which entity exercises those rights and fulfils those obligations. Thus, it follows from Paragraph 73(3) of that law that the maintaining entities have, inter alia, the power to adopt and amend the deed of foundation of the higher education institution and the power to review its organisational and operational rules.
129Lastly, Paragraph 94(6) of Hungarian Law CCIV states that, by way of derogation from Paragraph 12(3) and Paragraph 73(3) of that law, the deed of foundation of a private higher education institution may stipulate, inter alia, that the maintaining entity is to approve the budget of the higher education institution, its annual accounts and its organisational and operational rules.
130It follows from all the provisions referred to in paragraphs 125 to 129 above that, contrary to what the applicant claims, public interest trusts established by Hungarian Law IX as well as top-level officials and senior political executives sitting on the boards of those trusts are able to exert decisive influence over the entities maintained by such trusts and, thus, over direct EU funding received by such entities, on the basis of their own economic interests, preferences or affiliations of a religious, professional, political or family nature.
131In the third place, the applicant submits that the conflict of interest identified in Implementing Decision 2022/2506 does not involve EU resources.
132In that regard, recital 43 of Implementing Decision 2022/2506 states that Hungarian higher education institutions maintained by a public interest trust are excluded from EU funding due to the risk of conflicts of interest deriving from the possibility for top-level officials and senior political executives to sit on the boards of public interest trusts.
133Therefore, contrary to what the applicant claims, it follows from Implementing Decision 2022/2506 that top-level officials and senior political executives sitting on the boards of Hungarian public interest trusts could exert decisive influence over the entities maintained by those trusts and, thus, over direct EU funding received by such entities.
134Accordingly, the Court must reject the applicant’s argument that the Council failed to demonstrate that there was a serious risk of an effect on the sound financial management or the protection of the financial interests of the Union in a sufficiently direct way.
–The existence of a genuine and sufficiently direct link between the breach of the principles of the rule of law and its impact on the Union budget
135According to the applicant, the Commission and the Council failed to establish a genuine and sufficiently direct link between the breach of the principles of the rule of law and the effect or the serious risk of an effect on the sound financial management of the Union budget or the protection of the financial interests of the Union.
136The Council, supported by the Commission, contends that that argument should be rejected.
137Under Article 4(1) of Regulation 2020/2092, in order for appropriate measures to be adopted, it must be established that breaches of the principles of the rule of law in a Member State affect or seriously risk affecting the sound financial management of the Union budget or the protection of the financial interests of the Union in a sufficiently direct way. That condition thus requires that a ‘genuine link’ be established between those breaches and that effect or serious risk of an effect (judgment of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 165).
138It is apparent from recitals 58 and 62 of Implementing Decision 2022/2506 that, due to the inadequacy of the remedial measures notified by Hungary to address the systemic breaches of the rule of law, a serious risk for the Union budget remained, given that those breaches threatened the sound financial management of the Union budget and the protection of the financial interests of the Union in a sufficiently direct way.
139Paragraph 33 of the Commission proposal states, in that regard, that the establishment of private law entities to which the State has donated significant public assets may imply a lack of public control over the functioning and governance of those entities.
140In addition, in paragraph 142 of that proposal, the Commission observes that the exception exempting board members of public interest trusts from compliance with conflict of interest requirements may affect the budgets which those entities may implement or manage.
141In the same vein, according to paragraph 70 of the Commission communication, the exception which Hungary reintroduced, with effect from 1 November 2022, allowing senior political executives to sit on the boards of public interest trusts creates a situation whereby those senior political executives are able to participate in decision making relating to the disbursement of public funds to entities on which they sit and in which they have key decision-making powers.
142Lastly, paragraph 154(vi) of the Commission communication states that ‘… important risks remain as regards a number of other issues, namely: … the further facilitation, after the Commission’s September assessment of the proposed remedial measure, of the presence of top-level officials on boards of public interest management foundations whose purpose it is to disburse large amounts of public funds’.
143In the present case, in the light of the considerations set out in paragraphs 138 to 142 above, the Court finds that the applicant is maintained by a public interest trust and is under the control of the board of that trust, the members of which are appointed for an indefinite term by the executive. There is therefore a genuine and serious risk, from a systemic perspective, that decisions on the development of university programmes and training courses as well as EU-funded research and development projects could be directly influenced politically or would simply no longer be supported for such reasons.
144Thus, it must be held that, in the absence of the contested provision, trusts on which top-level officials, including senior political executives, may sit and entities maintained by such trusts could receive resources from the Union budget. As is apparent from paragraph 125 above, public interest trusts may wield considerable powers over the budgetary, operational and organisational affairs of the entities maintained by them, such as the applicant in the present case.
145In addition, there is a genuine risk that staff involved in the implementation of research and development projects or higher education projects, financed from the Union budget, could be hired by the board of a public interest trust or by university management on the basis of their political alignment.
146Therefore, in the context of the Erasmus+ and Horizon Europe programmes, public interest trusts are able to play a role in the disbursement of EU funds to final beneficiaries. There is thus a genuine risk that political, economic or personal conflicts of interest could interfere with the choice of those beneficiaries.
147Moreover, the Council was right to state that there was a genuine and systemic risk, in the case of the Erasmus+ programme, that conflicts of interest could interfere with the selection of beneficiary students, in particular with the choice and mutual recognition of eligible courses taken in other Member States, thereby introducing into that selection process considerations going beyond the assessment of academic merit.
148The Council also claimed, without being contradicted to any significant degree by the applicant or Hungary, that, as regards the implementation of grants under the Horizon Europe programme, the selection of providers in procurement procedures for the implementation of projects governed by that programme, which were often of considerable importance in terms of budget for scientific projects, would be vulnerable to the risk of undue influence. According to the Council, the Hungarian regulatory framework also has an impact on the recruitment of staff and other human resources processes. In view of the pervasiveness of political control and the risk of conflicts of interest, the Council asserted that all internal processes, university procedures and governance structures involved in the use of EU funds are susceptible to external influence, which could result in the inappropriate expenditure of EU funds.
149The protection of the financial interests of the Union is based on the premiss that its financial resources are not to be used to finance public interest entities of Member States, such as trusts, or entities maintained by them, the operating arrangements of which breach the principles of the rule of law.
150Consequently, contrary to what the applicant claims, in the present case the Commission and the Council established to the requisite legal standard a genuine and sufficiently direct link between the serious and systemic breaches of the principles of the rule of law, as alleged, and the effect or the serious risk of an effect on the sound financial management of the Union budget or the protection of the financial interests of the Union.
151It follows from the foregoing that the Court must reject as unfounded the argument alleging that Implementing Decision 2022/2506 did not establish a genuine and sufficiently direct link between the breach of the principles of the rule of law and its impact on the Union budget. Accordingly, the Court also rejects the plea alleging infringement of Article 4(1) of Regulation 2020/2092 in its entirety.
The plea in law alleging breach of the principle of proportionality
152The applicant, supported by Hungary, submits that the contested provision breaches the principle of proportionality.
153In that regard, the applicant puts forward eight arguments. First, in the context of projects under direct or indirect management, the Commission should have examined the situation of public interest trusts and the entities maintained by them differently, depending on whether they were beneficiaries or entities tasked with the implementation of those projects. Secondly, in adopting Implementing Decision 2022/2506, the Council erred in relying on the issue of the application of the rules on public procurement procedures to public interest trusts. Thirdly, the measure adopted is not the least onerous in relation to the type of funding and the type of eligible costs. Fourthly, Implementing Decision 2022/2506 calls into question the effectiveness of fair procedures for the selection and award of EU funding. Fifthly, the contested provision is disproportionate to the objective pursued. Sixthly, the Council failed to allow for the possibility of granting individual exemptions. Seventhly, the Council should have conducted an individual assessment of each public interest trust and the entities maintained by them. Eighthly, the Commission and the Council did not consider the possibility of reducing funding in proportion to the nature, duration, gravity and scope of any breaches.
154The Council, supported by the Commission, disputes the applicant’s arguments.
155In recital 62 of Implementing Decision 2022/2506, the Council stated that the best way to address the serious risk posed to the budget, caused by potential conflicts of interest in public interest trusts, was the contested provision, namely the prohibition preventing the Commission, when implementing the Union budget under direct or indirect management, from entering into new legal commitments with those trusts or the entities maintained by them. According to the Council, such a measure is proportionate to what is strictly necessary in order to achieve the objective of protecting the Union budget against the effects or risks of effects stemming from breaches of the principles of the rule of law in a Member State.
156The Court recalls that Article 5(3) of Regulation 2020/2092 provides that measures taken pursuant to that regulation are to be proportionate. They are to be determined in the light of the actual or potential impact of the breaches of the principles of the rule of law on the sound financial management of the Union budget or the financial interests of the Union. The nature, duration, gravity and scope of the breaches of the principles of the rule of law are to be duly taken into account. In so far as possible, the measures are to target the Union actions affected by the breaches. It follows that the measures taken must be strictly proportionate to the impact of the breaches of the principles of the rule of law found on the Union budget or on the protection of the financial interests of the Union (judgment of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 302).
157The principle of proportionality, which is one of the general principles of EU law and is enshrined in Article 5(4) TEU and Article 52(1) of the Charter of Fundamental Rights, requires that acts of the EU institutions be appropriate for attaining the legitimate objectives pursued by the legislation at issue and not go beyond what is necessary in order to achieve those objectives; when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (judgment of 16 February 2022, Hungary v Parliament and Council, C‑156/21, EU:C:2022:97, paragraph 340; see, also, judgment of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 353 and the case-law cited).
158In the first place, it is necessary to examine whether the contested provision is necessary and appropriate.
159In that regard, the applicant has not submitted any specific evidence to the Court which casts doubt on the ability of the contested provision to achieve the objective of protecting the Union budget against breaches of the principles of the rule of law.
160More particularly, the applicant simply claimed that, in the context of projects under direct or indirect management, the Commission should have examined the situation of public interest trusts and the entities maintained by them differently, depending on whether they were beneficiaries or entities tasked with the implementation of those projects.
161However, as indicated in paragraphs 122 and 123 above, that argument is premissed on a flawed assumption, since both Hungarian public interest trusts and the entities maintained by them are covered by the contested provision not only because they can be tasked with the implementation of projects financed by the Union budget under indirect management, but also because they may be beneficiaries of funding from the Union budget for the implementation of projects under direct or indirect management.
162Furthermore, the applicant’s argument that, in adopting Implementing Decision 2022/2506, the Council erred in relying on the issue of the application of the rules on public procurement procedures to public interest trusts is ineffective. As stated in paragraph 104 above, that issue is no longer a matter of concern to the Council.
163In those circumstances, the applicant’s arguments are not sufficient to demonstrate that the contested provision is inappropriate and they must be rejected.
164In the second place, as regards whether the contested provision is strictly necessary, the applicant submits that the measure which was adopted is not the least onerous. Thus, in order to preclude higher education institutions from implementing the Union budget, it would have been sufficient to prohibit the entering into of new legal commitments with higher education institutions in their capacity as funding institutions, entities or bodies, and therefore to exclude those institutions from the category of bodies referred to in Article 62(1)(c)(v) to (vii) of Regulation 2018/1046.
165In that regard, it should be noted that the contested provision imposes a prohibition on entering into new legal commitments not with the aim of precluding higher education institutions from implementing the Union budget, but rather, as is apparent from the contested provision and recital 22 of Implementing Decision 2022/2506, to ensure that public interest trusts and entities maintained by them can no longer be beneficiaries or entities tasked with the implementation of Union programmes under direct and indirect management.
166Furthermore, as regards, first of all, the applicant’s argument that the Council did not allow for the possibility of granting individual exemptions, it follows from paragraphs 225 to 228 below that Regulation 2020/2092 does not preclude the Council from establishing individual exemptions in the context of those appropriate measures. However, it must be stated that, given the systemic nature of the breaches of the principles of the rule of law justifying Implementing Decision 2022/2506, individual exemptions would not have protected the Union budget effectively.
167Next, as regards the applicant’s argument that the Council should have conducted an individual assessment of the situation of each public interest trust and the entities maintained by them, it is apparent from recital 19 of Regulation 2020/2092 that it is ‘essential that the legitimate interests of final recipients and beneficiaries are properly safeguarded when measures are adopted in the event of breaches of the principles of the rule of law’ and that, ‘when considering the adoption of measures, the Commission should take into account their potential impact on final recipients and beneficiaries’.
168Since the Council, in the present case, based its decision on potential systemic breaches of the principles of the rule of law, and inasmuch as Implementing Decision 2022/2506 does not claim that the final recipients or beneficiaries were involved in individual breaches of the principles of the rule of law, for example in specific cases of corruption, fraud or conflict of interest, that decision retains its nature as an act of general application and may thus have an impact on those beneficiaries or recipients, without it having been necessary, in the present case, to conduct an individual examination of each public interest trust or each entity maintained by it.
169It should also be borne in mind that Article 5(2) of Regulation 2020/2092 provides that the imposition of appropriate measures is not to affect the obligations of government entities or Member States to implement the programme or fund, and in particular the obligations they have towards final recipients or beneficiaries, unless the decision adopting the measures provides otherwise.
170In the present case, it follows from Implementing Decision 2022/2506, read in the light of the Commission proposal, that the potential impact of the measure, in particular, on recipients or beneficiaries such as the applicant was taken into account.
171First, it must be stated that the least onerous of the five measures listed in Article 5(1)(a) of Regulation 2020/2092, in the light of the objectives pursued, is the prohibition on entering into new legal commitments. The other measures listed in that provision would have disruptive effects on the programmes already in progress on the date of taking effect of Implementing Decision 2022/2506, also entailing difficulties for third parties. In practical terms, that measure allowed the final recipients of the Erasmus+ and Horizon Europe programmes to continue to receive, even after the adoption of the contested provision, grants awarded before its adoption, until the end of the agreements signed under those programmes.
172Secondly, recital 63 of Implementing Decision 2022/2506, which states that that decision does not affect Hungary’s obligations, in particular, towards final recipients or beneficiaries, including the obligation to make payments, demonstrates that the Council took into account the effects of that decision on the final recipients and beneficiaries of EU funding.
173Moreover, as is apparent from recital 62 of Implementing Decision 2022/2506, the contested provision does not affect the overall allocation of funds from EU programmes under direct or indirect management. That means, specifically, that Hungarian universities which are not maintained by public interest trusts established on the basis of Hungarian Law IX, as well as their students, teachers and researchers, are eligible for EU funds under the Erasmus+ and Horizon Europe programmes.
174Lastly, as regards the applicant’s argument that the Commission and the Council did not consider the possibility of reducing funding in proportion to the nature, duration, gravity and scope of the breaches, it should be observed that the contested provision was adopted with the aim of remedying breaches of a systemic nature. Thus, any proportional reductions in funding would not have protected the Union budget effectively.
175In any event, even if the alternatives proposed by the applicant were less onerous, it has not been shown that they would make it possible to achieve the objective set out in paragraph 159 above – namely to protect the Union budget against effects liable to result from breaches of the principles of the rule of law in a Member State – as effectively as the contested provision. It has thus not been established that the contested provision manifestly goes beyond what is necessary to achieve that objective.
176In the third place, as regards the proportionality of the contested provision, the applicant submits that that provision entails financial, professional and reputational consequences which are detrimental in the long term to the higher education institutions concerned.
177As is apparent from paragraph 171 above, of the five measures listed in Article 5(1)(a) of Regulation 2020/2092, the least onerous and the least disruptive to ongoing programmes, in the light of the objectives pursued, is the obligation not to enter into new legal commitments. It should also be pointed out that, in the context of Article 5(1) of that regulation, the Council does not have a broad discretion as to the choice and scope of the measures which may be adopted under the regulation, given that that article lists exhaustively the measures which may be adopted.
178In addition, the contested provision is not disproportionate, since its impact on the overall allocation of funds and on the final recipients or beneficiaries, towards whom Hungary is required to fulfil its obligations, is limited, as recalled in recital 62 of Implementing Decision 2022/2506.
179Accordingly, the plea alleging breach of the principle of proportionality must be rejected as unfounded.
The plea in law alleging breach of the right to operate on an undistorted market, enshrined in Article 16 of the Charter of Fundamental Rights, read in conjunction with Articles 101 to 108 TFEU
180The applicant submits that the contested provision infringes Article 16 of the Charter of Fundamental Rights, read in conjunction with Articles 101 to 108 TFEU, inasmuch as it restricts its right to engage in business on an undistorted market, restricts free competition and disproportionately impairs its competitive position in ongoing or future projects.
181The applicant argues, in particular, that the general exclusion of universities from direct EU funding amounts to a selective aid mechanism, since its competitors are eligible for EU funding from which it is now excluded, thereby distorting competition. The contested provision, it is claimed, distorts competition in so far as the exclusion from EU funding undermines a merit-based selection process conducted by the Commission’s independent experts, selectively excludes the applicant from receiving EU aid and has the effect of making funds awarded to the applicant available to competing universities. The contested provision also results in a collective boycott by competing and partner universities.
182The Council challenges the admissibility of this plea, stating that the applicant has not explained how the contested provision can be regarded as State aid or why it is incompatible with the internal market.
183As regards the merits of the plea, the Council, supported by the Parliament and the Commission, disputes the applicant’s arguments.
184As a preliminary point, as regards the plea of inadmissibility raised by the Council, it should be borne in mind that, under the first paragraph of Article 21 of the Statute of the Court of Justice of the European Union, which is applicable to the procedure before the General Court pursuant to the first paragraph of Article 53 thereof, and Article 76(d) of the Rules of Procedure, applications must state the subject matter of the dispute, the pleas in law and arguments relied on and a summary of those pleas in law.
185It is settled case-law that the Statute of the Court of Justice of the European Union and the Rules of Procedure do not require the applicant to cite in the application the articles on which it relies. It is sufficient for the facts, pleas in law and forms of order sought by the applicant to appear therein. Conversely, it is not sufficient to cite a provision of the FEU Treaty or of EU law in order for a plea to be admissible. Under Article 76(d) of the Rules of Procedure, the application must contain, inter alia, a summary of the pleas in law relied on. Furthermore, that summary must be sufficiently clear and precise to enable the defendant to prepare its defence and the Court to rule on the action, if necessary without any other supporting information. In order to ensure legal certainty and the sound administration of justice, if a plea is to be admissible, the essential points of fact and of law on which it is based must be indicated, at least in summary form, coherently and intelligibly in the application itself, so that the Court does not fail to rule on a complaint relevant to the outcome of the dispute. Any plea which is not adequately articulated in the application initiating the proceedings must be held to be inadmissible (see, to that effect and by analogy, judgment of 19 November 2024, Commission v Poland (Ability to stand for election and membership of a political party), C‑814/21, EU:C:2024:963, paragraph 60 and the case-law cited).
186In the present case, the plea alleging infringement of Article 16 of the Charter of Fundamental Rights and Articles 101 to 108 TFEU meets the requirements of Article 76(d) of the Rules of Procedure since, although the arguments put forward by the applicant are not particularly precise, its written pleadings show that it clearly maintains that the contested provision breaches its right to operate on an undistorted market, inasmuch as that provision restricts its right to engage in business on an undistorted market, restricts free competition and disproportionately impairs its competitive position in ongoing or future projects, to the benefit of its competitors.
187It follows that the plea is admissible.
188As regards the merits of the plea, the Court recalls that Article 16 of the Charter of Fundamental Rights, entitled ‘Freedom to conduct a business’, provides that the freedom to conduct a business in accordance with EU law and national laws and practices is to be recognised.
189The protection afforded by Article 16 of the Charter of Fundamental Rights includes, in particular, the freedom to pursue an economic or commercial activity, the freedom of contract and free competition (see judgments of 22 January 2013, Sky Österreich, C‑283/11, EU:C:2013:28, paragraph 42 and the case-law cited, and of 10 July 2025, INTERZERO and Others, C‑254/23, EU:C:2025:569, paragraph 140 and the case-law cited).
190In the present case, first, the Court finds that the contested provision respects the essence of the freedom to conduct a business. That provision does not prevent the exercise of the right to operate on an undistorted market, as such, since it does not preclude the trusts and entities concerned from continuing to carry out research and teaching activities for consideration on the market.
191As is apparent from Annex A.3 to the application, which is a list of FAQs published on the Commission’s ‘Funding and Tenders’ portal, even though entities affected by the contested provision, such as the applicant, can no longer receive EU funds, they can still participate in calls for EU funding, in particular within the framework of a consortium, as an associated partner not entitled to receive EU funding.
192Secondly, the applicant cannot plead that it has a vested right to the maintenance of advantages financed by the Union budget which it enjoyed at a given time. In those circumstances, the temporary reduction in funding from the Union budget in the event of systemic breaches of the principles of the rule of law cannot be regarded as a breach or restriction of the fundamental right to conduct a business (see, to that effect, judgment of 27 September 1979, Eridania-Zuccherifici nazionali and Società italiana per l’industria degli zuccheri, 230/78, EU:C:1979:216, paragraph 22).
193Thirdly, it must be stated that the applicant’s argument that the contested provision breaches the right to operate on an undistorted market because it establishes a selective aid mechanism in favour of its competitors rests on a flawed premiss. The contested provision cannot be regarded as a mechanism falling within the scope of Article 107 TFEU, since it is concerned with EU resources, and not State resources, managed directly or indirectly by the European Union, without there being any discretion on the part of the Member States.
194Fourthly, as regards the applicant’s argument that the contested provision results in a collective boycott by competing and partner universities, it should be borne in mind that the contested provision imposes a prohibition on entering into legal commitments with a public interest trust or an entity maintained by it only on the Commission, when it implements the Union budget under direct or indirect management.
195As regards the possible or potential effect of the prohibition on entering into legal commitments with a public interest trust or an entity maintained by it on the applicant’s other contractual relationships and collaborations with other universities or consortia, in the context of the Erasmus+ and Horizon Europe programmes, the applicant has not demonstrated, to the requisite standard of proof, that, as a result of the contested provision, its partners or competitors might possibly or potentially exclude it from any agreement, call for proposals, consortium or collaboration. It is apparent from Annex A.3 to the application, referred to in paragraph 191 above, that the applicant can continue to participate in consortia and does not, moreover, appear to have been excluded by its partners from all the partnerships in which it was previously involved or from all future partnerships.
196In any event, even if the contested provision were to have indirect repercussions on the applicant’s relations with other universities or consortia, the fact remains that it pursues an objective of public interest, as recalled above, and is proportionate to that objective.
197Therefore, the applicant’s argument that the contested provision entails a collective boycott must be rejected.
198Fifthly, having regard to the wording of Article 16 of the Charter of Fundamental Rights, the freedom to conduct a business may be subject to a broad range of interventions on the part of public authorities which may, in the public interest, limit the pursuit of economic activity. That circumstance is reflected, in particular, in the way in which EU legislation and national legislation and practices should be assessed in the light of the principle of proportionality under Article 52(1) of the Charter of Fundamental Rights (see judgment of 10 July 2025, INTERZERO and Others, C‑254/23, EU:C:2025:569, paragraph 141 and the case-law cited).
199Therefore, even if the contested provision were to be regarded as a restriction on the freedom to conduct a business, it is, as already stated above, provided for by law, justified and proportionate in the light of the public interest objective of protecting the Union budget against breaches of the principles of the rule of law in accordance with Regulation 2020/2092.
200In any event, as the Council rightly submitted, the application of those measures under Regulation 2020/2092 does not undermine free competition in the higher education sector. Indeed, the temporary exclusion from EU funding and programmes of stakeholders who, due to the existence of a systemic risk of conflicts of interest, pose a genuine risk to the regular and lawful use of EU funds, actually enhances free competition by making it possible to ensure that everyone adheres to the same rules, in particular the principles of the rule of law.
201It follows that the contested provision does not restrict the right to operate on an undistorted market, enshrined in Article 16 of the Charter of Fundamental Rights, read in conjunction with Articles 101 to 108 TFEU.
202Accordingly, the plea alleging breach of the right to operate on an undistorted market, enshrined in Article 16 of the Charter of Fundamental Rights, read in conjunction with Articles 101 to 108 TFEU, must be rejected as unfounded.
The plea in law alleging breach of the presumption of innocence and of the principles of equal treatment and non-discrimination
203The applicant submits that the contested provision discriminates against Hungarian higher education institutions maintained by a public interest trust, including itself, as compared with other Hungarian higher education institutions operating under a different legal form, other higher education institutions in other Member States and the other partners of the consortium of which it is a member.
204The applicant also submits that the contested provision breaches the presumption of innocence enshrined in Article 48 of the Charter.
205The Council, supported by the Commission, disputes those arguments.
206First, as regards the breach of the presumption of innocence, it should be borne in mind that Article 48 of the Charter of Fundamental Rights, entitled ‘Presumption of innocence and right of defence’, provides, in paragraph 1, that everyone who has been charged is to be presumed innocent until proved guilty according to law.
207In that regard, the Court has held that the purpose of Regulation 2020/2092 is to protect the Union budget against effects resulting from breaches of the principles of the rule of law in a Member State in a sufficiently direct way, and not to penalise such breaches (judgments of 16 February 2022, Hungary v Parliament and Council, C‑156/21, EU:C:2022:97, paragraph 119, and of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 137).
208In the present case, there is nothing in the file to indicate that the Commission alleged that the applicant was involved in the breach of the principles of the rule of law, for example, in cases of corruption, systemic fraud or particular conflicts of interest, or that the measures adopted had excluded the applicant from funding for primarily punitive purposes.
209Consequently, since Implementing Decision 2022/2506 does not impose any penalty as such, it cannot be regarded as a criminal charge (see, to that effect, ECtHR, 8 June 1976, Engel and Others v. the Netherlands, CE:ECHR:1976:0608JUD000510071, § 82, and ECtHR, 12 May 2017, Simeonovi v. Bulgaria, CE:ECHR:2017:0512JUD002198004, § 110).
210Accordingly, the complaint alleging breach of the presumption of innocence must be rejected as ineffective.
211Secondly, as regards the breach of the principles of equal treatment and non-discrimination, it follows from settled case-law that the principle of equal treatment, as a general principle of EU law, requires that comparable situations must not be treated differently and that different situations must not be treated in the same way, unless such treatment is objectively justified. A difference in treatment is justified if it is based on an objective and reasonable criterion, that is, if the difference relates to a legally permitted aim pursued by the legislation in question and is proportionate to the aim pursued by the treatment concerned (see judgment of 3 February 2021, Fussl Modestraße Mayr, C‑555/19, EU:C:2021:89, paragraph 95 and the case-law cited).
212The comparable nature of different situations is assessed in the light of all the elements that characterise them. Those elements must, in particular, be determined and assessed in the light of the subject matter and purpose of the act making the distinction in question. In addition, the principles and objectives of the field to which the act relates must be taken into consideration (see judgment of 3 February 2021, Fussl Modestraße Mayr, C‑555/19, EU:C:2021:89, paragraph 99 and the case-law cited).
213Since the applicant has pleaded breach of the principle of equal treatment, it falls to the applicant to identify precisely the comparable situations which it considers to have been treated differently or the different situations which it considers to have been treated in the same way (see, to that effect, judgment of 12 April 2013, Du Pont de Nemours (France) and Others v Commission, T‑31/07, not published, EU:T:2013:167, paragraph 311).
214In the present case, in the first place, the applicant submits that it is at a disadvantage as compared with Hungarian public higher education institutions which are not maintained by a public interest trust, because they are not covered by the contested provision.
215In that regard, it is apparent from recitals 11, 13, 29 and 43 of Implementing Decision 2022/2506 that the Hungarian regulatory framework does not prevent top-level officials and senior political executives from sitting on boards of public interest asset management foundations.
216It is, inter alia, that particularity, specific to the legislation applicable to public interest trusts and the entities maintained by them, which served as the basis for the adoption of the contested provision.
217However, the applicant has not demonstrated that Hungarian higher education institutions maintained by a public interest trust are in a comparable situation to that of Hungarian higher education institutions maintained by the State or operating under a different legal form.
218In the second place, as regards the applicant’s argument that Hungarian higher education institutions maintained by a public interest trust, including itself, are discriminated against as compared with higher education institutions in other Member States and the partners of the consortium of which it is a member, it must be stated that the applicant has not demonstrated that the possibility for top-level officials and senior political executives to sit on boards of public interest asset management foundations also existed in relation to higher education institutions in other Member States and the partners of the consortium of which it is a member.
219Consequently, the applicant has not demonstrated that Hungarian higher education institutions maintained by a public interest trust, including itself, are in a comparable situation to that of higher education institutions in other Member States and the partners of the consortium of which it is a member.
220In the light of the foregoing, the complaint alleging breach of the principle of equal treatment and non-discrimination must be rejected as unfounded.
The plea of illegality in respect of Regulation 2020/2092
221In the alternative, the applicant raises a plea of illegality in respect of Regulation 2020/2092, if that regulation were to be interpreted as permitting measures targeting a specific category of persons without providing for the possibility of individual exemptions. It claims that the lack of individual exemptions in that regulation breaches the principles of proportionality, equal treatment and non-discrimination, the presumption of innocence and the rights of the defence.
222The Council, supported by the Commission and the Parliament, disputes those arguments.
223Under Article 277 TFEU, any party may, in proceedings in which an act of general application adopted by an institution, body, office or agency of the European Union is at issue, plead the grounds specified in the second paragraph of Article 263 TFEU in order to invoke before the EU judicature the inapplicability of that act.
224Article 277 TFEU gives expression to a general principle conferring upon any party to proceedings the right to challenge incidentally, with a view to obtaining the annulment of a decision addressed to that party, the validity of acts of general application which form the legal basis of that decision (see judgment of 16 March 2023, Commission v Calhau Correia de Paiva, C‑511/21 P, EU:C:2023:208, paragraph 44 and the case-law cited). However, since the purpose of Article 277 TFEU is not to allow a party to contest the applicability of any act of general application in support of any action whatsoever, the general act the legality of which is called in question must be applicable, directly or indirectly, to the issue with which the action is concerned (see judgments of 16 March 2023, Commission v Calhau Correia de Paiva, C‑511/21 P, EU:C:2023:208, paragraph 45 and the case-law cited, and of 16 June 2021, Krajowa Izba Gospodarcza Chłodnictwa i Klimatyzacji v Commission, T‑126/19, EU:T:2021:360, paragraph 33 and the case-law cited). Thus, it has been held that, in an action for annulment brought against a decision, the provisions of an act of general application that constitute the basis of that decision or that have a direct legal connection with that decision may legitimately form the subject matter of a plea of illegality (see, to that effect, judgment of 16 March 2023, Commission v Calhau Correia de Paiva, C‑511/21 P, EU:C:2023:208, paragraph 46 and the case-law cited).
225According to the case-law, it follows from Article 5(1) of Regulation 2020/2092 that that provision sets out exhaustively the ‘appropriate measures’ which may be adopted and which all relate to the implementation of the Union budget (judgments of 16 February 2022, Hungary v Parliament and Council, C‑156/21, EU:C:2022:97, paragraph 135, and of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 153).
226Under Article 5(1) of Regulation 2020/2092, which is the legal basis for Implementing Decision 2022/2506, the appropriate measures to be adopted are, in essence, suspension of payments; suspension of the implementation of legal commitments; suspension of the disbursement of instalments; suspension of economic advantages under guaranteed instruments; suspension of the approval of programmes or commitments; termination of legal commitments; prohibition on entering into new legal commitments or new agreements; early repayment of guaranteed loans; reduction of economic advantages under guaranteed instruments; reduction of commitments; reduction of pre-financing; and interruption of payment deadlines.
227Moreover, as stated in paragraph 156 above, it is apparent from Article 5(3) of Regulation 2020/2092 that appropriate measures must be proportionate, that is, limited to what is strictly necessary in the light of the actual or potential impact of breaches of the principles of the rule of law on the financial management of the Union budget or the financial interests of the Union. In addition, the nature, duration, gravity and scope of the breaches of the principles of the rule of law must be duly taken into account. It follows that the measures taken must be strictly proportionate to the impact of the breaches of the principles of the rule of law found on the Union budget or on the protection of the financial interests of the Union.
228In that context, Regulation 2020/2092 allows the Commission and the Council to take account of the legitimate interests of the entities concerned, when exercising their discretion in connection with the adoption of the necessary measures and conducting their analysis of proportionality. Thus, although that regulation sets out exhaustively the type of ‘appropriate measures’ that may be adopted by the Council, it does not rule out the possibility of providing for individual or block exemptions in those measures.
229The plea of illegality must therefore be rejected as unfounded and, therefore, the action must be dismissed in its entirety.
Costs
230Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to bear its own costs and to pay those incurred by the Council, in accordance with the form of order sought by the Council, with the exception of the costs incurred in connection with the plea of inadmissibility rejected by order of 4 April 2024, Dunaújvárosi Egyetem v Council and Commission (T‑140/23, not published, EU:T:2024:210), which must be borne by the Council.
231Under Article 138(1) of the Rules of Procedure, Hungary, the Parliament and the Commission must bear their own costs.
Operative part
On those grounds,THE GENERAL COURT (Intermediate Chamber)hereby:
1.Dismisses the action;
2.Orders Dunaújvárosi Egyetem to bear its own costs and to pay those incurred by the Council of the European Union, with the exception of the costs incurred in connection with the plea of inadmissibility rejected by order of 4 April 2024, Dunaújvárosi Egyetem v Council and Commission (T‑140/23, not published, EU:T:2024:210), which shall be borne by the Council;
3.Orders Hungary, the European Parliament and the European Commission to bear their own costs.
Delivered in open court in Luxembourg on 30 September 2026.
Source: EUR-Lex, © European Union, 1998-2026. Reuse authorised under Decision 2011/833/EU.