Bad Rules Come From Bad Habits

Michael Hedges February 25, 2011 - Follow on Twitter

Legal process can be arduous when claims cross borders. Broadcasters and publishers continue to struggle against governments intent on imposing control and political favoritism. International venues established by treaties often afford claimants a neutral hearing.

The Hungarian Supreme Court rendered at last (February 23) decisions on appeals by foreign investors in radio broadcasting challenging the legality of license renewal procedures. Emmis International, owned by US-based Emmis Communications, and Accession Mezzanine Capital (AMC), based in Vienna, Austria, operated for several years national commercial radio channels Slager Radio and Danubius Radio, respectively. License renewal bids for both were rejected in November 2009 by the media regulator. Licenses were awarded to competing applicants with dubious credentials.

Both Emmis and AMC sued the regulator citing improper conduct in the renewal process. Both sought, originally, reversal of the regulator’s decisions. The cases attracted considerable international attention; reflecting international investors point of view both the Economist and the Financial Times were damningly critical. But political winds within Hungary were blowing in the opposite direction; with a populist edge, newly installed Prime Minister Viktor Orban criticized foreign investors – and foreigners generally - for a variety of ills. Municipal and appeals courts generally agreed that the license renewal process skirted legality but refused to apply a remedy in favor of the litigants.

The next stop for the complaint would be the Hungarian Supreme Court, which cast a split decision. The appeal by Emmis International was essentially thrown out based on the succeeding applicant being legally qualified to participate in the license tender process. Emmis International had earlier notified the court that it wouldn’t participate further in appeals through the Hungarian legal system, which they considered biased.

For AMC, the decision was different, slightly. The Supreme Court found that the succeeding applicant for the Danubius Radio license was, indeed, unqualified, upholding the appeals court finding from July 2010. But, like earlier court decisions, the Supreme Court said it is powerless to reverse the regulators decision. The media regulator that facilitated the license renewal process in 2009 no longer exists. It was replaced last year by a new agency in a sweeping series of new media laws. Legal representatives of neither Emmis International nor AMC attended the Supreme Court proceedings, outcomes largely being as expected.

“We are disappointed but not surprised with the court ruling,” said an Emmis Communications spokesperson to US media newsletter RBR (February 23). “We had already realized that changes to the Hungarian Media law this fall eliminated any remedy we may have had through the Hungarian courts.  Earlier this month we informed the Hungarian Supreme Court that we were not appearing in the case before them and were focusing our full time and attention to pursuing our claims in international arbitration.  We look forward to presenting our claims before a fair and impartial international arbitration tribunal that has the prospect of giving us a remedy.” 

Forward, by all appearances, will be through the highly regarded International Center for Settlement of Investment Disputes (ICSID), an arbitrator organized through the World Bank. To date specific claims by Emmis Communications or AMC have not been filed with the ICSID. The list of cases adjudicated by this tribunal includes a veritable who’s who of national governments with little historical regard for rule of law, from Venezuela to Zimbabwe. Hungary’s government, sadly, is beginning to fit that same picture.

As it would happen, the Hungarian Justice Ministry submitted to the Parliament (February 23) changes to the controversial Media Act that drew the ire of broadcasters, publishers, press freedom advocates and the European Commission (EC) just as Hungary assumed the European Union Presidency in January. The EC demanded certain changes related to registration of on-demand media, large fines for news coverage judged by a politically appointed agency and generally falling short of EU rules.

The revision no longer requires registration of on-demand “non-commercial” media nor media broadcast or published outside of Hungary. “Fair and balanced” news coverage will only be required of “linear” media, such as radio and television. The new media laws created a single State agency under political control to produce all news programming for Hungarian public radio and television. The Hungarian Parliament is expected to vote on changes to the Media Act in mid-March.

See also in ftm Knowledge

Media Laws – New and Revised

Policy makers and politicians are writing and rewiting media laws and rules at a breakneck pace. As broadcasters and publishers grapple with changes brought about by digital development, new business models and financial distress, the new media is feeling rules tightening around it. From licensing and public broadcasting to privacy, piracy and copyright this ftm Knowledge file Media Laws – New and Revised summarizes new laws and revised laws from a media perspective. 135 pages PDF (December 2010)

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