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Bypassing the courts: Orbán cabinet uses decree to deny near-bankrupt Budapest its lawful funds
The Hungarian government has moved to shut down Budapest’s ongoing legal battle against the so-called solidarity contribution by issuing a government decree under emergency powers. The decision, published late Tuesday in the official gazette, has triggered strong criticism from the capital’s leadership and renewed concerns about judicial independence in Hungary.
Emergency powers used to end a legal dispute
Citing the state of emergency linked to the war in Ukraine, the government published a decree in the Hungarian Gazette (Magyar Közlöny) declaring that the solidarity contribution imposed on local governments “cannot be the subject of legal dispute” and must be paid in full as required by law.
According to the decree, the legal basis of the contribution has already been examined multiple times by Hungary’s Constitutional Court. The government explicitly refers to recent rulings confirming that the mechanism is compatible with the Fundamental Law and does not violate municipal autonomy.
Constitutional court cited as final authority
The decree points to decisions of the Alkotmánybíróság, including a ruling from 2025 reaffirming an earlier 2024 judgment. In the government’s interpretation, the court made it clear that:
- the solidarity contribution is constitutional,
- similar systems exist in international practice, and
- local government rights are not infringed.
On this basis, the government argues that the consistent enforcement of the payment obligation is mandatory.
No legal remedy allowed
One of the most controversial elements of the decree is its procedural impact. It states that the calculation, collection and accounting of the solidarity contribution are merely technical steps in the execution of the central budget. As such, they do not qualify as administrative acts.
This means that:
- no administrative lawsuit can be launched against these measures, and
- no interim legal protection can be requested.
Crucially, the decree orders courts to apply these rules retroactively, including in cases that are already underway.
Budapest’s lawsuits effectively neutralised
This provision directly affects Budapest’s ongoing legal actions. Despite the capital having requested judicial protection, the decree instructs courts to discontinue such proceedings.
Budapest Mayor Karácsony Gergely had previously argued that even the filing of a legal challenge should suspend the government’s ability to withdraw funds from the city’s accounts. The new regulation explicitly overrides that position.
Mayor Karácsony: “a direct attack on the rule of law”
In a strongly worded Facebook post, Karácsony described the decree as an unprecedented low point in Hungary’s democratic backsliding.
He said that while the government has dismantled constitutional safeguards repeatedly over the past 16 years, he could not recall another instance where emergency powers were used explicitly to block an ongoing court case.
According to the mayor, the decree:
- has retroactive effect, and
- explicitly orders courts to terminate pending lawsuits.
In his view, this is tantamount to an admission that Budapest would otherwise have won its cases, and that the money deducted from the city should be returned to residents.
Karácsony warned that a dangerous precedent has now been set: if a court appears likely to rule against the government, the executive can simply intervene by decree and shut the case down.
A long-running legal battle
The dispute over the solidarity contribution has been ongoing for years. Budapest’s leadership has consistently argued that the levy is unfair and unlawful.
In 2023, the city sued over its annual payment obligation. In January 2024, the Budapest Metropolitan Court ruled that the government had unlawfully withdrawn HUF 28.3 billion (approximately EUR 72–73 million), plus HUF 6 billion (around EUR 15 million) in interest, from the capital’s accounts.
Although the State Treasury sought a review, Hungary’s supreme court, the Kúria, upheld the ruling in full. No further legal remedy was available.
Despite this, the money was never returned.
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Constitutional review did not end the dispute
The issue also reached the Constitutional Court, which ruled last week that the solidarity contribution as a legal institution is not unconstitutional.
However, according to Karácsony, the court did not meaningfully address the constitutional and international law concerns raised by the Budapest court. For this reason, the capital continued its legal efforts until the new decree rendered them moot.
What this means going forward
The government’s move goes far beyond a budgetary dispute. By using emergency legislation to override judicial proceedings, it raises fundamental questions about:
- separation of powers,
- legal certainty, and
- the enforceability of court judgments against the state.
As Karácsony concluded, the key question now is whether Hungary’s courts will be able, or willing, to resist what he described as a direct assault on the rule of law.
What is next?
This situation raises several serious concerns under both Hungarian constitutional law principles and broader European legal standards.
Misuse of Emergency Powers
Emergency powers are typically constrained by principles of necessity and proportionality—they should address the emergency itself, not unrelated domestic policy disputes. Using Ukraine-related emergency authority to resolve a fiscal disagreement with a municipal government stretches the concept of emergency powers beyond its legitimate scope. European constitutional traditions generally require a genuine nexus between the emergency and the measures taken.
Retroactive Interference with Pending Litigation
The retroactive application of the decree to ongoing court cases is particularly problematic. The principle of legal certainty—a core element of the rule of law recognized by the European Court of Justice and the European Court of Human Rights—generally prohibits retroactive laws that alter the legal position of parties in pending proceedings. When the executive branch directs courts to dismiss cases using newly created rules that didn’t exist when the cases were filed, it effectively denies litigants the benefit of the law as it stood when they sought judicial protection.
Separation of Powers and Judicial Independence
The decree essentially orders courts to reach a predetermined outcome (dismissal) rather than adjudicate disputes independently. This represents a direct intrusion by the executive into the judicial function. Under Article 6 of the European Convention on Human Rights and EU Treaty provisions, independent courts must be able to resolve disputes without executive interference.
Right to Effective Remedy
By declaring that collection measures are “merely technical” and not administrative acts, the decree eliminates judicial review entirely. This conflicts with the right to an effective remedy under Article 13 ECHR and Article 47 of the EU Charter of Fundamental Rights.
Non-Enforcement of Final Judgments
The article notes that despite the Kúria’s final judgment ordering repayment, the funds were never returned. Non-compliance with final court judgments by state authorities is itself a rule-of-law violation—courts’ decisions must be binding on the executive.
From a European legal perspective, this pattern—combining emergency power overreach, retroactivity, executive interference with courts, and non-enforcement of judgments—aligns with what the European Commission and European Parliament have repeatedly flagged as systemic rule-of-law deficiencies in Hungary under Article 7 TEU proceedings and the Conditionality Regulation framework.