The Advocate General of the Court of Justice of the European Union, Manuel Campos Sánchez-Bordona, ruled on Thursday 2 December that the actions brought by Hungary and Poland against the regime of conditionality for the protection of the Union budget in the event of a breach of the principles of the rule of law should be dismissed.
This regulation, the Advocate General continues (cases C-156/21 and C-157/21), was adopted on an adequate legal basis: it is compatible with Article 7 of the EU Treaty (TEU) and respects the principle of legal certainty.
Agreed in November 2020 in parallel with the negotiations on the 2021-2027 Multiannual Financial Framework (see EUROPE 12596/2), the regulation allows the EU Council, at the request of the European Commission, to adopt measures such as the suspension of payments from the Union budget or the suspension of approval of one or more programmes financed by the budget.
In March, Hungary and Poland requested the annulment of the regulation (see EUROPE 12689/12).
However, the Advocate General proposes that the Court should dismiss the actions seeking annulment brought by Hungary and Poland.
He underlines that the regulation does not aim to protect the rule of law through a sanction mechanism similar to that of Article 7 TEU, but to establish an instrument of financial conditionality in order to preserve this value of the Union. He further stresses that the regulation requires a sufficiently direct link between the breach of the rule of law and the implementation of the budget, with the result that it does not apply to all breaches of the rule of law, but only to those that have a direct link with the implementation of the budget.
According to Mr Campos Sánchez-Bordona, it is apparent from both the purpose and the content of the regulation that it constitutes financial regulation within the meaning of Article 322 TFEU(1) and that, consequently, that article could constitute an appropriate legal basis for the adoption of that regulation.
The Advocate General considers that Article 7 TEU does not preclude the protection of the rule of law by other instruments, provided that their essential characteristics differ from those specific to the protection guaranteed by that article. The Advocate General is of the opinion that the regulation is compatible with Article 7 TEU.
Finally, the Advocate General considers that, although the concept of the “rule of law” as a Union value is broad, the Union legislator is entitled to specify it in a specific substantive area, such as budget implementation, for the purpose of establishing a financial conditionality mechanism.
The judges of the Court have now begun deliberate on the case. The judgment will be delivered in January 2022, according to MEP Petri Sarvamaa (EPP, Finland).
The Commission continues its analysis. The European Commission has taken “good note” of the findings of this case. It recalled that administrative letters had been sent at the end of November to Warsaw and Budapest requesting more information and enabling it to complete the analysis launched at the beginning of the year when the regulation entered into force (see EUROPE 12837/14). “Countries have 2 months to respond and, in the light of the information provided by Hungary and Poland, we will be able to conclude our analysis”, said a spokesperson for the institution.
The European Council has made a political commitment that no formal action will be taken by the Commission to implement the regulation until the EU Court of Justice has ruled on the legality of the regulation (see EUROPE 12620/1).
But some MEPs, including Valérie Hayer (Renew Europe, France), believe that this “big defeat for the governments” concerned should prompt the Commission to freeze EU funds to these two countries “as soon as possible”.
Links to the conclusions on the Hungarian case (https://bit.ly/3G7sh04 ) and the Polish case (https://bit.ly/3EkucOv ). (Original version in French by Lionel Changeur)