(1) Arguments of the parties

95 The Commission maintains, in the first place, that the inscription of privately financed higher education services in Hungary's schedule of specific commitments and, as regards the establishment of a commercial presence, referred to in Article I(2)(c) of the GATS (‘mode of supply 3’), the entry of the word ‘none’ in the column relating to ‘limitations on national treatment’ referred to in Article XVII of that agreement mean that there is no qualification in respect of that commitment and, therefore, that Hungary has undertaken a full commitment in that respect.

96 In the second place, the Commission submits that the condition mentioned by Hungary in the column relating to ‘limitations on market access’ referred to in Article XVI of the GATS, according to which the ‘establishment of schools is subject to licence from the central authorities’, cannot be considered to relate also to the rule on national treatment under Article XX(2) of the GATS.

97 In that regard, the Commission submits first of all that that condition is worded in such vague and general terms that it enables the obtaining of that licence to be made subject to any specific condition, contrary to the terms of Article XX(1)(a) and (b) of the GATS. Such a condition in relation to the obtaining of a prior licence is, moreover, capable of undermining the purpose of entering into commitments under Articles XVI and XVII of the GATS that is set out in the second paragraph of the preamble to the GATS and consists in the ‘expansion of [trade in services] under conditions of transparency and progressive liberalisation’. In addition, even on the assumption that that condition, inscribed in the column relating to ‘limitations on market access’, does indeed apply to national treatment, the condition as formulated cannot encompass the specific requirement under Article 76(1)(a) of the Law on higher education that the binding application of an international treaty on fundamental support for activities that may be undertaken by a foreign higher education institution in Hungary, concluded between the Government of Hungary and the government of the State in which that institution has its seat, must have been recognised by the parties.

98 Next, the Commission submits that, in accordance with the Guidelines for the Scheduling of Specific Commitments under the General Agreement on Trade in Services (GATS), adopted by the WTO's Council for Trade in Services on 23 March 2001 (S/L/92), the authorisation requirements cannot be regarded as limitations on market access under Article XVI of the GATS. Consequently, Hungary cannot shelter behind the requirement of a prior licence in order to rule out any breach of the principle of national treatment.

99 Last, the Commission submits that that requirement is not a measure that falls within the scope of Article XVI of the GATS. Article XVI(2) of that agreement contains an exhaustive list of the limitations falling within the scope of that article. That requirement does not, however, appear in that list, nor does it resemble any of the measures that are listed.

100 The Commission concludes from this that, in the case of mode of supply 3, Hungary has committed itself to applying to service providers from third country members of the WTO treatment no less favourable than that which Hungary accords to its domestic providers.

101 Hungary contends that, in accordance with Article XX(2) of the GATS, the condition which it inscribed in the column relating to ‘limitations on market access’, mentioned in paragraph 96 of the present judgment, also has effect with respect to the national treatment obligation.

102 Hungary further submits that formulating that condition in general terms permits it to maintain a ‘discretionary licence system’ the details of which it can freely adjust, if necessary by restricting the establishment of foreign providers, including by requiring the prior conclusion of an international treaty.

(2) Findings of the Court

103 First of all, according to Article XVII(1) of the GATS, each member of the WTO is required, in the sectors inscribed in its schedule of specific commitments and subject to any conditions and qualifications set out therein, to accord to services and service suppliers of any other member of the WTO treatment no less favourable than that it accords to its own like services and service suppliers.

104 Next, in accordance with Article XVI(1) of the GATS, with respect to market access through the modes of supply identified in Article I of the GATS, each member of the WTO is required to accord services and service suppliers of any other member of the WTO treatment no less favourable than that provided for under the terms, limitations and conditions agreed and specified in its schedule of specific commitments.

105 Last, Article XX(1) of the GATS states that each member of the WTO is required to set out in a schedule the specific commitments it undertakes under Part III of the GATS, which includes Articles XVI and XVII. With respect to sectors where such commitments are undertaken, each schedule must specify the terms, limitations and conditions on market access and the conditions and qualifications on national treatment. Those schedules of specific commitments are an integral part of the GATS.

106 It is apparent, therefore, from Articles XVI, XVII and XX of the GATS that a WTO member's own schedule of specific commitments specifies the commitments which that member has undertaken by sector and by mode of supply. Such a schedule specifies, in particular, the terms, limitations and conditions relating to ‘limitations on market access’ and the conditions and qualifications relating to ‘limitations on national treatment’. That information is set out in two separate columns.

107 Furthermore, in accordance with Article XX(2) of the GATS, measures that are inconsistent with both Articles XVI and XVII of the GATS must, in the interests of simplification, be inscribed only in the column relating to ‘limitations on market access’ of the schedule of specific commitments of the member concerned, that single inscription being then regarded as providing an implicit condition or qualification in respect of national treatment (see the WTO panel report of 16 July 2012 entitled ‘China – Certain measures affecting electronic payment services’ (WT/DS 413/R), adopted by the DSB on 31 August 2012, paragraph 7.658).

108 It follows that a condition that is formally inscribed only under Article XVI of the GATS allows for derogation from the national treatment obligation provided for in Article XVII only where the type of measures that it introduces is inconsistent with both the obligation provided for in Article XVI and that provided for in Article XVII of the GATS (see the WTO panel report of 16 July 2012 entitled ‘China – Certain measures affecting electronic payment services’ (WT/DS 413/R), adopted by the DSB on 31 August 2012, paragraph 7.658).

109 In the present case, the schedule of specific commitments adopted by Hungary (GATS/SC/40 of 15 April 1994) includes, in the column relating to ‘limitations on market access’, in respect of higher education services supplied by means of a commercial presence, the condition that the establishment of schools is subject to licence from the central authorities.

110 The column relating to ‘limitations on national treatment’ contains the word ‘none’ in respect of the subsector of higher education services.

111 In those circumstances, it is necessary to determine whether or not the condition relating to prior licence, referred to in paragraph 109 of the present judgment, inscribed in the column relating to ‘limitations on market access’, is equally applicable to the national treatment obligation provided for in Article XVII of the GATS.

112 In that regard, it is apparent from the effect of the simplifying rule in Article XX(2) of the GATS, as explained in paragraph 108 of the present judgment, that a condition can be covered by that rule and, therefore, apply equally to Article XVII of the GATS only if it is discriminatory in nature.

113 It must be noted that, as is apparent from the actual wording of the condition relating to prior licence, the condition is intended to cover all educational institutions, regardless of their origin, and therefore does not have any discriminatory element. Consequently, the rule laid down in Article XX(2) of the GATS cannot be applied in the present case. It follows that that condition does not enable Hungary to claim a derogation from the national treatment obligation provided for in Article XVII of the GATS.

114 Having regard to the foregoing considerations, it must be concluded that the Commission is fully entitled to maintain that Hungary's inscription of privately financed higher education services in its schedule of specific commitments and, with respect to mode of supply 3, the entry of the word ‘none’ in the column relating to ‘limitations on national treatment’ mean that there is no qualification on Hungary's commitments under Article XVII of the GATS in respect of those services.

(1) Arguments of the parties

115 The Commission submits that, in so far as higher education institutions that have their seat in a member country of the WTO other than those of the EEA may supply higher education services in Hungary only if the State in which they have their seat has entered into an international treaty with the Government of Hungary beforehand, the Hungarian legislation accords those service providers less favourable treatment than that enjoyed by like Hungarian providers or those established in an EEA State, contrary to the national treatment obligation provided for in Article XVII of the GATS.

116 Referring to the wording of the Law on higher education, the Commission adds that the Government of Hungary has a discretion as regards the content of that treaty and the decision to enter into negotiations with a view to concluding it. Consequently, it would be open to that government to refuse, even on arbitrary grounds, to conclude such a treaty even though the State in which the service provider has its seat would be prepared to do so.

117 Hungary contends that the primary objective of the requirement of a prior international treaty is to intensify diplomatic efforts in relation to cultural policy. The Government of Hungary has, it maintains, repeatedly declared its readiness to enter into negotiations and makes every effort to ensure that they are brought to a conclusion. The fact that two treaties were signed – one with the State of Maryland (United States) and the other with the People's Republic of China – after the Law on higher education was amended is proof, in its submission, that the measure adopted is not a condition that is impossible to fulfil.

(2) Findings of the Court

118 As a preliminary point, it must be noted that the requirement of a prior international treaty, which calls for the conclusion of an agreement between Hungary and another State which is not a member of the EEA, can in any event affect only certain foreign providers. In so far as that requirement imposes on those foreign providers an additional condition for the supply of higher education services in Hungary compared to those applicable to providers of like services that are established in Hungary or in another Member State of the EEA, it introduces formally different treatment of those categories of providers, within the meaning of Article XVII(3) of the GATS.

119 In accordance with that provision, it is necessary therefore to determine whether, by introducing formally different treatment, the requirement of a prior international treaty modifies the conditions of competition in favour of providers of higher education services established in Hungary, or of the services that they supply.

120 In that regard, it must be noted that that requirement, as formulated in Article 76(1)(a) of the Law on higher education, means that Hungary has a discretion both as to whether it is appropriate to conclude such a treaty and as regards its content. In those circumstances, the opportunity for higher education institutions having their seat in a member country of the WTO other than those of the EEA to carry out their activities in Hungary is entirely in the discretion of the Hungarian authorities.

121 This results in competitive disadvantages for service suppliers having their seat in a Member State of the WTO that is not a member of the EEA, with the result that the requirement of a prior international treaty does modify the conditions of competition in favour of Hungarian providers, contrary to Article XVII of the GATS.

(1) Arguments of the parties

122 Hungary contends that the requirement of a prior international treaty is necessary for the purposes of maintaining public order and preventing deceptive practices. In its submission, that requirement serves to ensure that the State in which the seat of the institution concerned is situated considers that provider to be ‘reliable’ and supports the institution's future activities in Hungary. The requirement also serves to ensure that the institution concerned complies with the legislation of the State in which it has its seat and which may in some circumstances require certain conditions to be met as a prerequisite to being able to carry on an activity in Hungary.

123 Hungary also contends that there is no alternative, compatible with WTO rules, that would enable the Hungarian legislature's objectives to be attained.

124 In particular, contrary to what is advocated by the Commission, it would be unrealistic to apply the relevant national legislation to the foreign higher education institutions concerned in the same way as to Hungarian institutions.

125 The Commission maintains that the requirement of a prior international treaty cannot be justified on the basis of any of the exceptions permitted by the GATS, in particular those provided for in Article XIV(a) and (c)(i) and (ii) thereof.

126 In that respect, according to the Commission, Hungary has, more specifically, failed to provide any evidence to support its assertion that that requirement contributes to the maintaining of public order, nor has it explained, in that context, the nature of the genuine and sufficiently serious threat allegedly posed to one of the fundamental interests of Hungarian society, or, moreover, clarified how that requirement might be necessary for the purpose of attaining the objective of maintaining public order, assuming that objective to be established, and why there is, in that case, no alternative that would be less restrictive.

127 The Commission further maintains that, because of Hungary's discretion to enter into negotiations with the State in which a foreign higher education institution has its seat, the requirement does not in any event meet the condition laid down in Article XIV of the GATS, according to which measures that might be justifiable in the light of that article must not be ‘applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on trade in services’.

(2) Findings of the Court

128 In the first place, it should be noted that Article XIV of the GATS provides in particular, in paragraph (a) and in paragraph (c)(i), that nothing in that agreement is to be construed to prevent the adoption or enforcement of measures necessary, on the one hand, to protect public morals or to maintain public order, and, on the other, to secure compliance with laws or regulations which are not inconsistent with the provisions of that agreement, including those relating to the prevention of deceptive and fraudulent practices or to deal with the effects of a default on services contracts.

129 In those circumstances, it must be noted that both of the objectives invoked by Hungary, namely, first, maintaining public order and, second, the prevention of deceptive practices, are indeed referred to in the GATS.

130 In the second place, as regards the examination as to whether the requirement of a prior international treaty is justified in the light of the objective of maintaining public order, it is clear from footnote 5, under Article XIV(a) of the GATS, that ‘the public order exception may be invoked only where a genuine and sufficiently serious threat is posed to one of the fundamental interests of society’.

131 Hungary has not, however, put forward any arguments that might establish, in a specific and detailed manner, how the exercise, within its territory, of higher education teaching activities by institutions that have their seat in a State that is not a member of the EEA would constitute, in the absence of such a treaty, a genuine and sufficiently serious threat affecting a fundamental interest of Hungarian society.

132 Therefore, it must be concluded that the requirement of a prior international treaty cannot be justified by Hungary's arguments concerning the maintaining of public order.

133 In the third place, as regards the objective of preventing deceptive practices, it is apparent from Hungary's arguments on this point, summarised in paragraph 122 of the present judgment, that Hungary seems to consider the prior conclusion of an international treaty to be necessary for the purpose of obtaining a guarantee from the third country concerned that the foreign higher education institution concerned is reliable, and thereby preventing any risks from arising in that respect.

134 Those arguments cannot, however, justify the requirement of a prior international treaty.

135 Article XIV of the GATS provides that the exceptions listed cannot be applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail, or a disguised restriction on trade in services.

136 First, it should be noted that, as the Advocate General essentially stated in points 119 and 120 of her Opinion, the requirement of a prior international treaty enables Hungary arbitrarily to prevent an institution from entering its market or from carrying on its activities in that market, since the conclusion of such a treaty and, therefore, the fulfilment of that requirement ultimately depend solely on the political will of that Member State. The requirement is in that respect fundamentally distinguishable from a condition requiring the reliability of a foreign education institution to be evidenced by a unilateral declaration of the government of the third country in which that institution has its seat.

137 Second, in so far as it applies to foreign higher education institutions already present on the Hungarian market, the requirement of a prior international treaty is not, in any event, proportionate, since the objective of preventing deceptive practices could be more effectively met by monitoring the activities of such institutions in Hungary and, if necessary, prohibiting the continuation of only those activities in respect of which it could be established that they had adopted such practices.

138 In those circumstances, the requirement of a prior international treaty cannot be justified by Hungary's arguments based on the prevention of deceptive practices.

139 Having regard to the foregoing considerations, it must be held that, by adopting the measure provided for in Article 76(1)(a) of the Law on higher education, Hungary has failed to fulfil its obligations under Article XVII of the GATS.

(1) Modification of the conditions of competition to the benefit of like national providers

(i) Arguments of the parties

142 The Commission maintains that the requirement that the institution concerned provide education in the State where it has its seat modifies the conditions of competition to the benefit of national providers and, therefore, that it is contrary to the national treatment obligation with which Hungary is required to comply fully under Article XVII of the GATS.

143 More specifically, the Commission submits that the GATS does not require that, in order to be recognised as a provider enjoying the rights guaranteed by that agreement, the provider must supply services in the country of origin. Therefore, in so far as that requirement would have the effect of preventing foreign service providers from initially establishing an institution in Hungary, it is discriminatory in relation to such providers.

144 Hungary refers, mutatis mutandis, to the arguments expounded in relation to the requirement of a prior international treaty.

(ii) Findings of the Court

145 As a preliminary point, it should be borne in mind that, as is apparent from paragraph 114 of the present judgment, Hungary is committed, under Article XVII of the GATS, to ensuring full national treatment as regards the commercial presence of providers of higher education services.

146 It must be noted that the requirement that the institution concerned provide education in the State where it has its seat specifically covers providers which have their seat abroad.

147 It is therefore necessary to determine whether, by introducing this formally different treatment, the requirement that the institution concerned provide education in the State where it has its seat modifies the conditions of competition to the benefit of Hungarian providers or the services that they supply, as compared to suppliers of like services that have their seat in any third country member of the WTO or to the services that they supply.

148 It should be noted in that regard that providers of higher education services that have their seat in a third country member of the WTO and wish to establish themselves in Hungary are required first to establish an institution in that third country and to genuinely offer higher education in that country.

149 This results in a competitive disadvantage for the foreign suppliers of services concerned, and therefore the requirement that the institution concerned provide education in the State where it has its seat modifies the conditions of competition to the benefit of like Hungarian providers.

(2) Whether there is justification

(i) Arguments of the parties

150 In order to justify such a modification of the conditions of competition, Hungary relies, first, on the objective of maintaining public order and, second, on that relating to the prevention of deceptive practices.

151 The Commission maintains that the requirement that the institution concerned provide education in the State where it has its seat cannot be justified on the basis of either of those objectives. It claims, more specifically, that Hungary has failed to provide any evidence to support its assertion that that requirement contributes to the maintaining of public order, nor has it explained the nature of the genuine and sufficiently serious threat posed to one of the fundamental interests of Hungarian society, or, moreover, clarified how that requirement might be necessary for the purpose of attaining the objective of maintaining public order, assuming that objective to be established, and why there is, in that case, no alternative that would be less restrictive.

(ii) Findings of the Court

152 As is apparent from paragraphs 128 and 129 of the present judgment, both of the objectives invoked by Hungary, namely, first, maintaining public order and, second, the prevention of deceptive practices, are referred to, respectively, in Article XIV(a) and in Article XIV(c)(i) of the GATS.

153 Hungary refers in that regard, without further substantiation, to its arguments in relation to the requirement of a prior international treaty.

154 It must be observed that, in so doing, Hungary has not put forward any arguments that might establish, in a specific and detailed manner, how the exercise, within its territory, of higher education teaching activities by institutions that have their seat in a State that is not a member of the EEA constitutes, in the event that those institutions do not offer education or training in the State in which they have their seat, a genuine and sufficiently serious threat affecting a fundamental interest of Hungarian society enabling Hungary to rely on the justification of maintaining public order.

155 Likewise, by thus confining itself to referring to its arguments in relation to the requirement of a prior international treaty, Hungary has not provided any specific evidence that might demonstrate why the requirement that the institution concerned provide education in the State where it has its seat is necessary in order to prevent deceptive practices.

156 Consequently, it must be concluded that, by adopting the measure provided for in Article 76(1)(b) of the Law on higher education, Hungary has, in so far as that provision applies to higher education institutions which have their seat in a third country member of the WTO, failed to fulfil its obligations under Article XVII of the GATS.

(1) Applicability of Article 49 TFEU

(i) Arguments of the parties

157 Hungary contends, principally, that education and training offered by educational institutions financed largely by private funds cannot be characterised as an ‘economic activity’ within the meaning of the FEU Treaty if, as in the case of the CEU, it is the service provider itself which finances the teaching activities. It follows, in its submission, that Article 49 TFEU is not applicable in the present case.

158 The Commission maintains, on the contrary, that higher education services supplied by private institutions for remuneration constitute ‘services’ within the meaning of the FEU Treaty. Consequently, private institutions carrying out teaching and scientific research activities in Hungary on a stable and continuous basis are justified in relying on the right to the freedom of establishment, under Article 49 TFEU.

(ii) Findings of the Court

159 Article 49(1) TFEU provides that, within the framework of the provisions in Chapter 2 of Title IV in Part Three of the FEU Treaty, restrictions on the freedom of establishment of nationals of a Member State in the territory of another Member State are to be prohibited.

160 It must first of all be noted in that regard that the Court has ruled that the provision for remuneration of higher education courses is an economic activity falling within Chapter 2 when that activity is carried on by a national of one Member State in another Member State on a stable and continuous basis from a principal or secondary establishment in the latter Member State (judgment of 13 November 2003, Neri, C-153/02, EU:C:2003:614, paragraph 39).

161 In the present case, Article 76(1)(b) of the Law on higher education is applicable to higher education institutions, without any distinction being made as to whether the courses leading to a qualification that are offered by those institutions are offered for remuneration or not.

162 Next, the Court has ruled that freedom of establishment extends to a situation in which a company formed in accordance with the legislation of one Member State, where it has its registered office, wishes to set up a branch in another Member State, even where that company was formed, in the first Member State, solely for the purpose of establishing itself in the second, where its main, or indeed entire, business is to be conducted (judgment of 25 October 2017, Polbud – Wykonawstwo, C-106/16, EU:C:2017:804, paragraph 38).

163 Consequently, Article 49 TFEU covers the requirement that the institution concerned provide education in the State where it has its seat in so far as that requirement applies to a higher education institution that has its seat in a Member State other than Hungary and offers education or training for remuneration in Hungary.

(2) Whether there is a restriction

(i) Arguments of the parties

164 According to the Commission, the requirement that the higher education institutions concerned must, under Article 76(1)(b) of the Law on higher education, satisfy specific conditions in the Member State in which they have their seat in order to be able to establish another institution in Hungary constitutes a restriction on the freedom of establishment within the meaning of Article 49 TFEU.

165 In particular, a Member State cannot deny the advantages of the freedom of establishment to a legal entity on the ground that that entity does not carry on any economic activity in the Member State in which it was formed.

166 Hungary contends, in the alternative, that the requirement that the institution concerned provide education in the State where it has its seat does not restrict the freedom of establishment. The requirement is linked to the exercise of an activity, and not to the formation of companies. In particular, it does not prevent a foreign higher education institution from setting up, for example, as a secondary establishment, a branch in Hungary. Nor does it limit the choice of legal form of the establishment; it merely lays down, in the case of service providers already established in Hungary through a secondary establishment, a condition relating to the exercise of higher education teaching activities.

(ii) Findings of the Court

167 In accordance with the case-law of the Court, any measure which prohibits, impedes or renders less attractive the exercise of the freedom of establishment must be regarded as a restriction on that freedom (judgment of 6 September 2012, Commission v Portugal, C-38/10, EU:C:2012:521, paragraph 26).

168 In the present case, Article 76(1)(b) of the Law on higher education requires that the suppliers of services concerned who wish to supply higher education services in Hungary through a stable institution must genuinely offer higher education in the State in which they have their seat.

169 Such a requirement is liable to render less attractive the exercise of the freedom of establishment in Hungary for nationals of another Member State who wish to establish themselves in Hungary in order to supply higher education services in that country.

170 Consequently, the requirement that the institution concerned provide education in the State where it has its seat constitutes a restriction on the freedom of establishment, within the meaning of Article 49 TFEU.

(3) Whether there is justification

(i) Arguments of the parties

171 Hungary contends first of all that the requirement that the institution concerned provide education in the State where it has its seat is necessary for the purposes of maintaining public order and preventing deceptive practices. That requirement is, in its submission, also necessary in order to safeguard the quality of the education offered by the institutions concerned in Hungary, particularly as the qualifications which they issue are official documents producing legal effects.

172 Hungary goes on to claim that that requirement is a means of appropriately ensuring that those objectives are observed, in that the competent authority is thus able to satisfy itself that there is a genuine and lawful activity in the country in which the service provider has its seat, and does so with the aim of ensuring that university education in Hungary is of a high quality.

173 However, Hungary observes that, in practice, its authorities merely examine the higher education teaching activity, the qualifications already issued, the education or training attested by those qualifications, that is to say, the teaching conditions and programme, and the qualifications of the teaching staff delivering that education.

174 Last, there is no measure that is less restrictive, since the objective of ensuring high standards of higher education can only be met by examining the activity carried on in the State in which the institution has its seat. In any event, in so far as higher education has not been harmonised at EU level, the Member States have significant latitude in that regard.

175 The Commission maintains first of all that the requirement that the institution concerned provide education in the State where it has its seat is not capable of meeting any of the objectives invoked by Hungary. It submits that Hungary has not put forward any convincing arguments as to why that requirement is justified and proportionate with regard to those objectives, nor has it indicated the nature of the abuses that that requirement would serve to prevent.

176 The Commission claims, in particular, that that requirement is inappropriate in that the quality of the education offered in the State in which the institution concerned has its seat does not provide any indication of the quality of the service supplied in Hungary. Furthermore, if its objective was really to prevent fraud and abuses, Hungary should have adopted specific rules in that respect.

177 Last, according to the Commission, the requirement that the institution concerned provide education in the State where it has its seat is disproportionate. The exchange of information with quality assurance agencies and/or accreditation agencies of the State in which the education institution concerned has its seat, as advocated in the Council's conclusions of 20 May 2014 on quality assurance supporting education and training (OJ 2014 C 183, p. 30), and enhanced cooperation within the EEA between higher education authorities are less restrictive alternatives.

(ii) Findings of the Court

178 As the Court has consistently held, a restriction on the freedom of establishment is permissible only if, in the first place, it is justified by an overriding reason in the public interest and, in the second place, it observes the principle of proportionality, which means that it is suitable for securing, in a consistent and systematic manner, the attainment of the objective pursued and does not go beyond what is necessary in order to attain it (judgment of 23 February 2016, Commission v Hungary, C-179/14, EU:C:2016:108, paragraph 166).

179 Moreover, it is for the Member State concerned to demonstrate that those cumulative conditions are met (judgment of 18 June 2020, Commission v Hungary (Transparency of associations), C-78/18, EU:C:2020:476, paragraph 77).

180 In the present case, Hungary relies, in the first place, on the need to maintain public order.

181 It must be borne in mind first of all in that regard that, in the context of the fundamental freedoms guaranteed by the Treaties, reasons of public policy may be relied on only if there is a genuine, present and sufficiently serious threat to a fundamental interest of society (judgment of 19 June 2008, Commission v Luxembourg, C-319/06, EU:C:2008:350, paragraph 50).

182 Hungary merely states that the requirement that the institution concerned provide education in the State where it has its seat enables the competent authority to satisfy itself that there is a genuine and lawful activity in the country in which the service provider concerned has its seat. As has been noted in paragraph 154 of the present judgment, Hungary has not put forward any arguments that might establish, in a specific and detailed manner, how the exercise, within its territory, of higher education teaching activities by such institutions constitutes, should that requirement not be met, a genuine, present and sufficiently serious threat affecting a fundamental interest of Hungarian society.

183 Accordingly, it must be concluded that the existence of such a threat has not been established in the present case.

184 In the second place, Hungary invokes the objective of preventing deceptive practices. Without further substantiating its reasoning, Hungary seems to consider that access of foreign higher education institutions to the Hungarian market entails a risk of such practices developing.

185 In relying on a general presumption, Hungary fails to demonstrate, notwithstanding the burden of proof which it bears, as noted in paragraph 179 of the present judgment, what the precise nature of such a risk is, and how the requirement that the institution concerned provide education in the State where it has its seat would obviate that risk.

186 In any event, as the Advocate General essentially noted in point 185 of her Opinion, Hungary has not explained why the objective of preventing deceptive practices could not be attained if a supplier that was not already providing higher education in the Member State in which it had its seat were permitted to establish by any other means that it complies with the legislation of that State and that it is, moreover, reliable.

187 In the third place, the objective, invoked by Hungary, of ensuring high standards in the quality of higher education is indeed capable of justifying restrictions on the freedom of establishment (see, to that effect, judgment of 13 November 2003, Neri, C-153/02, EU:C:2003:614, paragraph 46).

188 It should, however, be noted that the requirement that the institution concerned provide education in the State where it has its seat does not include any details as to the standard required as regards the quality of the education offered by the foreign institution in the Member State in which it has its seat, nor does it prejudge, moreover, in any respect the quality of the education that will be provided in Hungary, with the result that it is not in any event capable of guaranteeing that that objective will be attained.

189 It follows from the foregoing considerations that the requirement that the institution concerned provide education in the State where it has its seat cannot be justified by Hungary's arguments based on maintaining public order, nor on those based on overriding reasons in the public interest relating to the prevention of deceptive practices and the need to ensure the good quality of higher education.

190 Consequently, it must be concluded that, by adopting the measure provided for in Article 76(1)(b) of the Law on higher education, Hungary has, in so far as that provision applies to higher education institutions which have their seat in another Member State, failed to fulfil its obligations under Article 49 TFEU.

(1) Applicability of Directive 2006/123

(i) Arguments of the parties

191 Hungary contends that education or training offered by educational institutions financed largely by private funds cannot be characterised as an ‘economic activity’ within the meaning of Article 4(1) of Directive 2006/123 if, as in the case of the CEU, it is the service provider itself which finances the teaching activities. Consequently, that directive is not applicable in the present case.

192 The Commission maintains that, in accordance with Article 2 of Directive 2006/123, and also Article 4(1) thereof, which refers to the definition of services included in the FEU Treaty, the scope of that directive includes teaching activities and training courses that are financed essentially by private contributions. Consequently, private institutions carrying out teaching and scientific research activities in Hungary on a temporary basis are justified in relying on the right to the freedom to provide services under that directive.

(ii) Findings of the Court

193 In accordance with Article 2(1) of Directive 2006/123, the directive is to apply to services supplied by providers established in a Member State.

194 In accordance with Article 4(1) of that directive, ‘service’ means any self-employed economic activity, normally provided for remuneration, as referred to in Article 57 TFEU.

195 In the present case, Article 76(1)(b) of the Law on higher education concerns in general terms education services that may be provided by foreign higher education institutions in Hungary and, therefore, also the provision of education or training courses for remuneration. Such provision constitutes an ‘economic activity’ within the meaning of Article 4(1) of Directive 2006/123. Accordingly, that directive is applicable in the present case.

(2) Whether there is a restriction

(i) Arguments of the parties

196 The Commission maintains that, in so far as the requirement that the institution concerned provide education in the State where it has its seat also covers higher education institutions which intend to supply cross-border services in Hungary, the requirement constitutes a restriction on the freedom to provide services, guaranteed in Article 16 of Directive 2006/123. In the alternative, the Commission maintains that that requirement infringes Article 56 TFEU.

197 Hungary contests those arguments.

(ii) Findings of the Court

198 As a preliminary point, it should be noted that, in accordance with the second subparagraph of Article 16(1) of Directive 2006/123, the Member State in which the service is provided is to ensure, in particular, free exercise of a service activity within its territory.

199 In the present case, Article 76(1)(b) of the Law on higher education requires that the institutions concerned offer higher education in the State in which they have their seat.

200 When considered in the light of Directive 2006/123, such a requirement is, in so far as it imposes an additional condition on service providers that have their seat in another Member State, capable of restricting the right of such providers to the free exercise of higher education teaching activities in Hungary, if they wish first to carry on their activity in Hungary rather than in the Member State in which they have their seat, or if they plan to carry on such an activity only in Hungary.

(3) Whether there is justification

(i) Arguments of the parties

201 Hungary contends that the requirement that the institution concerned provide education in the Member State where it has its seat is necessary for the purposes of maintaining public order. In that regard, Hungary refers, mutatis mutandis, to its arguments in relation to the plea alleging infringement of Article 49 TFEU.

202 The Commission submits that Hungary has not demonstrated that the education services supplied on a temporary basis by higher education institutions established in a Member State had an effect on public order in Hungary, as nevertheless required by Article 16(3) of Directive 2006/123.

(ii) Findings of the Court

203 Under Article 16(3) of Directive 2006/123, the Member State to which the provider moves may impose requirements with regard to the provision of a service activity where these are justified, inter alia, for reasons of public policy and public security, and in accordance with paragraph 1 of Article 16.

204 It must, however, be recalled that, as is apparent from the case-law cited in paragraph 181 of the present judgment, to which reference is made in recital 41 of Directive 2006/123, reasons of public policy and public security presuppose, in particular, that there is a genuine, present and sufficiently serious threat affecting a fundamental interest of society. As has been noted in paragraphs 154 and 182 of the present judgment, Hungary has not put forward any arguments that might establish, in a specific and detailed manner, how the exercise, within its territory, of higher education teaching activities by institutions that have their seat in another Member State constitute, should the requirement that the institution concerned provide education in the State where it has its seat not be met, a genuine, present and sufficiently serious threat affecting a fundamental interest of Hungarian society.

205 Accordingly, it must be held that that requirement cannot be justified in the light of Article 16(3) of Directive 2006/123.

206 It follows from the foregoing that, by adopting the measure provided for in Article 76(1)(b) of the Law on higher education, Hungary has, in so far as that provision applies to higher education institutions which have their seat in another Member State, failed to fulfil its obligations under Article 16 of Directive 2006/123. Consequently, there is no need to examine whether Hungary has infringed Article 56 TFEU, which the Commission raised only in the alternative.

207 Having regard to the foregoing considerations, it must be held that, by adopting the measure provided for in Article 76(1)(b) of the Law on higher education, Hungary has failed, in so far as that provision applies to higher education institutions which have their seat in a third country member of the WTO, to fulfil its obligations under Article XVII of the GATS and, in so far as the provision applies to higher education institutions having their seat in another Member State, to fulfil its obligations under Article 49 TFEU and Article 16 of Directive 2006/123.