NewsThe European Court of Justice (ECJ) rejected Poland and Hungary’s challenge Wednesday of the EU budget’s conditionality mechanism for disbursement of funding to the EU Member States, clearing the way for the European Commission (EC) to withhold payments to the two nations. The EU budget’s conditionality mechanism regulation permits the European Council to suspend payments from the Union budget to the Member States, which have violated the rule of law standards prescribed under EU law.
In dismissing the contentions brought forth by Poland and Hungary in their entirety, the ECJ listed out three notable observations. Firstly, compliance with the shared values of the Union, such as the principles of the rule of law enshrined in Article 2 of the Treaty of the European Union (TEU), is a condition precedent for the enjoyment of EU membership benefits and that a breach of such requirements by the Member States may compromise sound financial management of the Union budget.
Secondly, the Court distinguished the conditionality mechanism regulation from Article 7 TEU in both letter and spirit, noting that while the former regulation applies only when rule of law violations by the Member States affect proper implementation of the Union budget, the latter’s purpose is:
To allow the [European] Council to penalise serious and persistent breaches of each of the common values on which the European Union is founded and which define its identity, in particular with a view to compelling the Member State concerned to put an end to those breaches.
Lastly, as regards Poland and Hungary’s claim of the conditionality mechanism regulation violating the principle of legal certainty on the basis that the said regulation does not define the concept of “rule of law,” the Court rejected such claim and determined:
The principles set out in the regulation, as constituent elements of that concept… have their source in common values which are also recognised and applied by the Member States in their own legal systems and that they stem from a concept of ‘the rule of law’ which the Member States share and to which they adhere, as a value common to their constitutional traditions.
This ruling comes as the latest development in a protracted political row between Brussels and the two Member States on issues concerning rule of law and judicial independence. The EC has previously initiated infringement procedures against Poland in December 2021 in response to a Polish Constitutional Court ruling which gave primacy to Polish law over EU law. Earlier in July 2021, the ECJ had determined Poland’s creation of a disciplinary chamber for its Supreme Court Justices incompatible with EU law, subsequently fining the Member State 1 million euros per day until it complies with the ECJ’s July ruling.
The ECJ had similarly acted against Hungary last year, ruling in November that its criminalization of organization support for asylum seeks violated EU law and that it cannot discipline a national judge for seeking guidance from the CJEU on whether Hungarian law complied with EU law on the right to interpretation and information in criminal proceedings.
