Poland, Hungary challenge 'rule of law conditionality' at EU court

Poland and Hungary have filed a complaint with the European Court of Justice against the EU's new rule of law mechanism that aims to discipline member states infringing upon European values and allows the withholding of EU funds assigned to them.

The rule of law mechanism will apply to systemic breaches of fundamental EU values, such as democracy or the independence of the judiciary, but only in the case when such violations affect or risk affecting the management of EU funds.

In order to be launched, the conditionality mechanism will require a qualified majority vote by all member states. The budget sanctions will apply to governments, but will not affect the final beneficiaries, such as students, researchers, companies and NGOs.

After a heated debate at an EU budget summit in late 2020, Poland and Hungary agreed to the inclusion of the mechanism in the 2021-2027 European budget, but won some concessions from the EU, including a statement that the funds may not be frozen arbitrarily and can only be withheld if damage or a serious risk to the EU budget is ascertained.

The Polish government spokesman, Piotr Mueller, said in a statement on Thursday that Poland had opposed the idea since 2018, when it was first put forward. He added that Poland's doubts were also shared by Hungary, which also filed a separate complaint with the CJEU.

"We believe that such solutions lack a legal basis in the Treaties, interfere with the competence of member states and infringe upon EU laws," Mueller wrote. "The payouts of EU budget funds should only depend on meeting objective and tangible conditions that are clearly derived from the law," he added.

"Poland recognises that the European Council conclusions require a legal control of the regulation," Mueller continued. "Our country stresses that the content of this regulation is in conflict with EU laws."

Mueller also said that the EU has no competence to define the notion of the "rule of law" or the related principles.

"Since the duties of member states with respect to the rule of law have not been clearly defined in the law, the assessment whether these principles are observed may not constitute a criterion for the payout of EU funds," Mueller said.

Poland and Hungary are the only two countries in the 27-member European bloc to oppose this clause. Both Warsaw and Budapest have been at odds with the European Commission over what the commission sees as attempts to undermine the rule of law in the two countries.

The new EUR 1.8 billion European budget includes a EUR 750 billion recovery scheme that is aimed to prop up European economies battered by the coronavirus crisis. Poland's share in the total money will amount to PLN 770 billion (EUR 170 billion), according to the Polish government's website.