Hungary’s president, Baka András, has declined to sign legislation on the protection of state-linked assets and state-backed financing, sending the law to the Constitutional Court for preliminary review instead, Index and Economx reported.
Parliament adopted the law on 3 November. In his reasoning, the president said several provisions could breach the right to property and the principle of legal certainty, in particular rules on changing the managers of investment funds and on the protection of minority shareholders. He also objected to the way the law was passed – in just 26 hours, he said, and without social or professional consultation.
Why the president acted
Normakontroll, or preliminary constitutional review, is the route a Hungarian head of state can take when signing a bill would mean promulgating rules of doubtful constitutionality. It suspends the law’s entry into force until the court rules. The president warned that interventions of this kind could also shake investor confidence in Hungary’s financial system – a notable argument at a time when the country has been courting foreign investment in banking, energy and manufacturing.
A politically sensitive file
Hungarian media have dubbed the legislation ‘lex MBH’, a reference to the state-linked bank MBH, because of provisions covering state-backed financing. The bill’s supporters present it as a defence of public assets; its critics describe it as a mechanism that gives the state discretionary power over private capital. The exact scope of the law, and the identity of the parties it would affect, has been reported differently across Hungarian outlets.
The Constitutional Court now has to decide whether to review the substance of the legislation. Its options range from rejecting the president’s concerns to striking down parts of the law, and its decision will be closely watched by investors holding Hungarian assets. The Daily Lens has asked the Sándor Palace and the Constitutional Court for comment and will update if either responds.
Under Hungarian procedure, a referral for preliminary constitutional review suspends the law’s entry into force until the Constitutional Court rules. Hungarian outlets reported on Monday that the referral had been received.
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