Top EU court adviser OKs budget plan tying funds to rule of law

LUXEMBOURG (CN) — An adviser to the European Union’s highest court has found that plans to tie funding to rule of law are permitted under the bloc's legal framework.

European Court of Justice Advocate General Manuel Campos Sánchez-Bordona wrote in two related nonbinding opinions Thursday that the so-called rule of law mechanism has a sound legal basis in EU law. 

Budapest and Warsaw complained to the Luxembourg-based court after the EU moved forward with a regulation blocking member states from receiving EU funds if they don't meet certain rule of law standards. The mechanism went into effect in January. Governments in both Central European countries have been widely criticized for overriding democratic principles, politicizing their judiciary systems and cracking down on independent media. 

At stake for Poland is 57 billion euros ($66 billion) in EU grants and cheap loans while Hungary could lose up to 7.2 billion euros ($8.3 billion) from the bloc's 800 billion euro ($925 billion) Covid-19 support package.

In addition, if the mechanism survives the legal challenge, it would apply to all funding going forward. That includes the EU’s considerable Common Agricultural Policy, the largest section of the union’s 160 billion euro ($189 billion) budget. A 2019 investigation by the New York Times found that this funding has been used to prop up Hungarian Prime Minister Viktor Orban and Polish Prime Minister Mateusz Morawiecki, among others, by enriching friends and punishing enemies. 

At hearings in October, lawyers for Hungary and Poland argued that each member state has the right to design its national institutions as it sees fit and that the regulations aren’t clear. The European Commission, Council of the EU, European Parliament and 10 other member states defended the rules, which they say are the only option for reigning in the increasingly authoritarian governments.

EU member states can be stripped of their voting rights under the so-called Article 7 procedure, but that process requires unanimous support and Poland and Hungary have promised to block any resolution targeting the other. Budgetary approval, meanwhile, requires only a qualified majority. 

In Thursday's advisory opinions, Campos Sánchez-Bordona found that the rule of law mechanism is similar to other, legally accepted avenues that the EU has to enforce regulations.

“The mechanism in Regulation 2020/2092 resembles other financial conditionality and budgetary implementation instruments," he wrote in the Hungary case.

Hungary and Poland both criticized the advocate general's findings. Sebastian Kaleta, Poland’s deputy justice minister, wrote it was “a naivety to trust EU institutions would be capable of self-restraint.” A senior Hungarian spokesperson, Zoltan Kovacs, called on the court to ignore the “erroneous arguments” of its adviser.

The Court of Justice has sided repeatedly against the two nations. In July, it found that Poland set up an illegal judicial disciplinary chamber to remove judges it doesn't like, and last month the court slammed Poland's justice minister for undermining the independence of judges. Earlier this year, the court upheld EU sanctions against Hungary for failing to meet democratic norms, and last month it held Hungary’s so-called Stop Soros law, which criminalized helping asylum seekers, is illegal. 

In November, the European Commission, the EU’s executive body, sent informal letters to both governments asking for information about the independence of the judiciary, rule of law and corruption as a first step to implementing the new regulations. Hungary and Poland have two months to respond.  

A final decision in the case is expected early next year. 

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