The European Court of Justice ruled on Thursday that Hungary’s Law on the Transparency of Organisations Supported from Abroad (Transparency Law) infringed upon European Union (EU) law.

In 2017, Hungary adopted a rule that organizations had to register with the Hungarian courts as “an organization in receipt of support from abroad” when donations sent to them from other EU Member States exceeded a certain threshold. The organizations had to indicate this in all publications. The organizations were also required to indicate the names of donors whose support reached or exceed HUF 500,000. The donors’ names were then published on a freely accessible public electronic platform.

The European Commission brought an action against Hungary, alleging that the law infringed the Treaty on the Functioning of the European Union (TFEU) and the Charter.

On Thursday, the European Court of Justice held that, regarding the organizations and the people supporting them, Hungary had introduced “discriminatory and unjustified restrictions” by imposing registration, declaration, and publication obligations.

The court held that the law constituted “a restrictive measure of a discriminatory nature.” The measures were enacted to create a “climate of distrust” towards organizations that received support from abroad. The public disclosure of information also discouraged organizations from providing support. Altogether, the registration, declaration, publication, and penalties restricted the free movement of capital.

The court found that the measures provided for by the Transparency Law limited the right to freedom of association. The law also infringed upon the right to respect for private and family life. The Transparency Law ultimately was not justified by any of Hungary’s general interest objectives.

Hungary did not show why its chosen measures were necessary to increase transparency with association financing, as they applied indiscriminately to all organizations falling within the scope of the law. The court concluded that the restrictions were not justified and that Hungary had failed to fulfill its obligations under TFEU.