The EU Court of Justice has rejected the appeal of Hungary and Poland against the conditionality mechanism that links the disbursement of European funds to respect for the rule of law. Budapest and Warsaw called for the cancellation of the regulation that allows the EU to suspend payments from the European budget to member states where the rule of law is threatened. The European Commission, in charge of activating it, had agreed in agreement with the 27 to wait for the Court’s decision before taking action, despite the fact that the regulation entered into force in January 2021.
“I welcome these judgments, which follow the position defended by the Commission, Parliament, the Council and ten Member States in the procedure,” said Commission President Ursula von der Leyen commenting on the ruling of the EU Court which confirmed the validity of the cross compliance regulation. “The Commission has been monitoring the situation in all the Member States since the entry into force of the regulation and we are thoroughly evaluating some cases – she said – When the conditions of the regulation are met, we will act with determination. Today’s judgments confirm that we are on the right path “
Hungary and Poland had appealed to the Court of Justice asking for the annulment of the regulation adopted by Parliament and the Council establishing a conditionality regime for the protection of the Union budget in the event of violations of the principles of the State of law in the Member States. For this purpose, the regulation allows the Council, on a proposal from the Commission, to adopt protective measures such as the suspension of payments from the EU budget or the suspension of the approval of one or more programs to be funded by that budget. The appeals of Hungary and Poland were essentially based on the absence of an adequate legal basis in the Treaties and, among other things, on the overcoming of the limits of the Union’s competences, in addition to supporting the violation of the principle of legal certainty.
Among other things, the EU Court recalled that the Member States’ respect for the common values on which the Union is founded, which have been identified and shared by them, and which define the very identity of the Union as a legal order common to these states, including the rule of law and solidarity, justifies mutual trust between these states. Since this respect therefore constitutes a condition for the enjoyment of all the rights deriving from the application of the Treaties to a Member State, the Union must be able, within the limits of its powers, to defend these values. He also specified, on the one hand, that respect for these values cannot be reduced to an obligation which a candidate State is required to join in order to join the Union and from which it could escape following its accession. On the other hand, he stressed that the Union budget is one of the main instruments that make it possible to implement the fundamental principle of solidarity between Member States in the Union’s policies and actions. A horizontal conditionality mechanism, such as the one established by the regulation, which makes the benefit of funding from the Union budget subject to compliance by a Member State with the principles of the rule of law, can therefore, according to the courts, fall within the jurisdiction conferred by the Treaties to the Union, to establish “financial rules” relating to the implementation of the Union budget