The European Commission on Thursday referred Hungary to the European Court of Justice (ECJ) over the country’s Sovereignty Protection Act, alleging the law violates fundamental EU principles.

The Sovereignty Protection Act has been in force since December 2023.  The legislation established an independent Sovereignty Protection Office (SPO), with the power to investigate and penalize organizations or individuals benefitting from foreign funding that may influence public debate. Individuals convicted under this act face prison sentences of up to three years.

Although the Hungarian government said the act is intended to curb foreign political and electoral interference, the EU criticized the discretionary power granted to the SPO as overly broad, warning that these powers could be used in an intrusive manner during investigations. Critics are concerned that the act could disproportionately target civil society organizations, media outlets and journalists after the office initiated investigations against corruption watchdog Transparency International Hungary and non-profit journalism organization Átlátszó,

Following an assessment of the Sovereignty Protection Act, the European Commission launched an infringement procedure against Hungary in February 2024 for violating fundamental EU principles including democracy, the internal market fundamental freedoms and fundamental rights enshrined in the Charter of Fundamental Rights of the EU, such as the right to respect for private and family life, freedom of expression and assembly.

Under EU treaties, the European Commission can commence an infringement procedure against a Member State for failing to implement EU law. After requesting a response from Hungary twice to comply with EU law, the Commission has decided to move forward to the next step in the formal procedure–referring the matter to the ECJ. Being the judicial organ of the EU, the ECJ has the jurisdiction to settle legal disputes between national governments and EU institutions.

The legal action is the latest dispute between the EU and Hungary. Earlier this month the EU announced it would collect a 200 million euro fine from Hungary for migrant policy breaches, with Hungary threatening a lawsuit against the EU seeking border protection costs.