LUXEMBOURG (CN) — In a highly anticipated decision, the European Union’s top court has rejected an attempt by Hungary and Poland to block a rule tying financing to democratic principles.
In a pair of rulings Wednesday, the European Court of Justice held that the EU can refuse to send money to the Central European countries if they continue to curtail the independence of their court systems, with billions for both countries at stake.
Brussels has been at odds with Warsaw and Budapest for years, as their far-right, ultra-nationalist governments have gradually politicized their judicial systems and reduced the independence of their media. The pair vetoed the 1.8 trillion euro ($2 trillion) budget for 2021–2027, which included a rule-of-law mechanism that ties funding from the EU to the independence of member states' judiciaries and their anti-corruption measures.
EU budgets only require approval from 15 of the 27 countries representing at least 65% of the bloc’s 450 million citizens - a qualified majority - to pass. After the budget was approved, Hungary and Poland complained about the requirement to the Luxembourg-based court last year, which heard arguments in October.
“The sound financial management of the union budget and the financial interests of the union may be seriously compromised by breaches of the principles of the rule of law committed in a member state,” court President Koen Lenaerts said in a brief statement presenting the decision. The court sat with all 27 members, a rarity reserved for only exceptional cases.
The court wrote that “the rule of law – a value common to the European Union and the member states which forms part of the very foundations of the European Union and its legal order – is capable of constituting the basis of a conditionality mechanism covered by the concept of ‘financial rules.’”
Hungary and Poland have accused Brussels of using the budget as a political weapon. Budapest slammed the court's decision Wednesday.
“The decision is living proof that Brussels is abusing its power,” Hungarian Minister of Justice Judit Varga wrote on Twitter. During the October hearings, the two countries argued each member state has the right to design its national institutions as it sees fit and that the regulations aren’t clear.
“It’s a very good judgment that puts pressure on both governments,” said Jakub Jaraczewski, research coordinator at Democracy Reporting International, a Berlin-based nonprofit that promotes democracy.
While the Court of Justice ruling was being announced, Jaraczewski was also watching an ongoing hearing before the Polish Constitutional Court over the Treaty on the Functioning of the European Union, one of the foundational treaties of the EU. That court sparked a crisis last year when it declared that Poland's constitution trumped EU law.
What Brussels will do with Wednesday’s decision is not clear.
“It opens up a lot of questions about how the commission is going to use it,” Jaraczewski said.
In a statement, European Commission President Ursula von der Leyen said her office was studying the ruling and considering its next move. “Today's judgments confirm that we are on the right track,” she said.
“The commission will now analyze carefully the reasoning of the judgments and their possible impact on the further steps we will take under the regulation,” she said. “Taking into account these judgments, we will adopt in the following weeks guidelines providing further clarity about how we apply the mechanism in practice.”
The rulings in a dispute that has gone on for a year despite being fast-tracked by the court likely come too late for the EU to act before Hungarian parliamentary elections in April 2022. Prime Minister Viktor Orbán is fighting a close contest against a united opposition coalition. It’s more probable that any action taken by Brussels will play a role in Polish elections, which are slotted for 2023.
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