In a ruling that was awaited for months, the European Court of Justice ruled on Wednesday that the European Commission may impose constitutional conditions on the payment of EU subsidies. Although the verdict comes as no surprise, it increases political pressure on Brussels to quickly start with actual financial sanctions.
With the ruling, the Court sweeps all objections raised by Poland and Hungary to block the new instrument. At the beginning of last year, the two Member States filed a lawsuit against the new so-called ‘conditionality mechanism’, which gives the European Commission the possibility to stop EU funds if guarantees under the rule of law are lacking. EU countries decided in 2020 after difficult negotiations that Brussels should be able to use such financial sanctions. But both Hungary and Poland strongly resist: both countries have been repeatedly reprimanded in recent years by both the Commission and the Court for violations of the rule of law and fear of losing money.
That chance increases sharply after Wednesday. Until now, the European Commission has always indicated that it was waiting for a ruling from ‘Luxembourg’ before it would start using the new instrument. Now that the Court has given the green light, the pressure on Brussels to really stop EU funds is growing. The European Parliament in particular will increase this pressure, but various Member States will also see this as a signal to really act harder now. The Netherlands too: Prime Minister Mark Rutte has repeatedly emphasized to the House of Representatives that the Commission must act quickly as soon as there is a judgment from Luxembourg.
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But whether the Commission will actually act quickly now remains to be seen. The decision comes at a politically sensitive time. In a month and a half, Hungary will go to the polls and in Brussels there is a growing fear that any action will be seen as interference in the election battle. In recent weeks, Poland also seemed willing to backtrack on certain measures that jeopardized the independence of its judiciary. Punishing Warsaw quickly now, according to some in Brussels, could disrupt that ‘positive process’.
All objections rejected
During the session in Luxembourg in October, lawyers from Poland and Hungary argued, among other things, that the test would lead to legal uncertainty, because it would be unclear beforehand which conditions EU countries must meet. The ‘rule of law’ is insufficiently defined to attach such conditions to it, the two member states argued. With the new option, Brussels would also interfere in the judicial process of EU Member States through the budget.
The Court rejected all those objections one by one on Wednesday. According to the judges, the new instrument is sufficiently specific to protect the EU’s financial interests and aims to “protect the Union budget against (…) violations of the rule of law, and not to punish himself.”
In its ruling, the Court also emphasizes that having a functioning rule of law is not only a requirement upon accession to the EU, but remains a permanent obligation for Member States. Also because, according to the Court, dividing money through the joint budget is about European solidarity and is therefore ‘based on (…) mutual trust that the common resources entered in the budget will be used in a responsible manner’.
The Court also dismisses the argument that the concept of ‘rule of law’ is insufficiently defined and that Member States do not know what is expected of them. According to the judges, these are ‘common values which are also recognized and applied by the Member States in their own legal systems’ which, moreover, ‘result from a conception of the ‘rule of law’ shared and endorsed by the Member States as a value common to their constitutional traditions. to have”.