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2020. July 17.

Decision 3284/2020. on the International Investment Bank

Decision number: II/1231/2019.
Subject of the case:

Posterior norm control aimed at establishing the lack of conformity with the Fundamental Law and annulling items 5.2 to 5.4, item 6.1, item 6.4 and item 11.1 of the Agreement between the International Investment Bank and the Government of Hungary on the International Investment Bank’s registered office in Hungary laid down in Section 3 of the Act XI of 2019 (International Investment Bank)

The Constitutional Court rejected the motion for norm control aimed at establishing the conflict with the Fundamental Law and the annulment of certain provisions of the Act of Parliament on the Promulgation of the Agreement between the International Investment Bank and the Government of Hungary on the Headquarters in Hungary of the International Investment Bank. The bilateral international treaty concluded between the Hungarian Government and the International Investment Bank, promulgated in an Act of Parliament, grants rights, privileges and immunities to the Bank as an international organization, as well as its managers and employees in connection with the establishment of the Bank’s headquarters in Hungary. According to the petitioners, one of the challenged points of the Agreement recognizes the Bank’s rights as a financial institution to an extent which goes well beyond the development and investment banking function, and the Act of Parliament allows the Bank to perform a wide range of financial services on the basis of the Act of Parliament itself and the Agreement as a promulgated international treaty, without being authorized by the competent authority, the Hungarian National Bank. According to the petitioners, the rules of immunity promulgated by the challenged provisions of the law deprive persons entering into a legal relationship with the Bank of the right to turn to court and to seek legal redress. The legal provision also excludes the Bank, due to its absolute immunity, from the detection of criminal offenses committed in connection with its possible operation, which also leads to completely ignoring the requirements of the European Union. The Constitutional Court ruled that the immunity granted to international organizations may indeed restrict the right to turn to court, however, such restriction shall be limited to what is strictly necessary for the protection of another fundamental right or constitutional value and proportionate to the aim pursued. In the present case, there is an ad hoc waiver in connection with participation in an international organization in respect of any subsequent labour or other legal disputes. It is not usually labour law as such that is transferred to the jurisdiction of an international tribunal to be set up, but (as is customary in international case law) an international organization provides appropriate alternative dispute resolution before the forums provided by its statutes, the dispute resolutions bodies operating alongside the chambers of industry present in the member states. Based on the regulations, the Constitutional Court held that the statutes do not preclude the designation of a Hungarian alternative dispute resolution forum: the Permanent Arbitration Court attached to the Hungarian Chamber of Commerce and Industry. Furthermore, according to the assessment of the Constitutional Court, the scope of the listed exemptions remains in the realm of functional immunity rather than being absolute; the performance of the Bank’s tasks is not limited by the fact that Hungary grants a right to immunity, as a classic instrument under international law, to an international organization. Furthermore, in relation to the detection of criminal offenses, the Constitutional Court also emphasized that there are certain rules of guarantee (for example, that a member of the Bank is required to waive any privileges or immunities granted to a person delegated to the Board of Directors or his deputy in cases where the member considers that these privileges or immunities may hinder the course of the judicial procedure), which will enable the competent authorities to prosecute an official of the Bank effectively. The Constitutional Court therefore found that the challenged provisions of the law did not conflict with the Fundamental Law, therefore it rejected the norm control motion submitted by a quarter of the Members of Parliament.