The European Court of Justice has declared a new rule on punishing violations of the rule of law in EU countries to be legal.
Judges in Luxembourg on Wednesday dismissed lawsuits from Hungary and Poland, clearing the way for the EU's so-called rule of law mechanism to be applied.
As a last step, countries can have their EU funds cut.
Specifically, it is about a “regulation on the conditionality of the rule of law”, which has been in force since the beginning of 2021.
Its purpose is to ensure that violations of the rule of law, such as the separation of powers, no longer go unpunished if they threaten to misuse EU funds in a country.
The EU Commission can then propose reducing the payment of funds from the EU budget.
Poland and Hungary see themselves as the focus of particular attention and have therefore complained to the ECJ.
The EU Commission under President Ursula von der Leyen wanted to wait until the verdict before triggering the mechanism.
It also provides for an agreement between the heads of state and government in the summer of 2020, with which the governments in Budapest and Warsaw were persuaded to give up their blockade on important EU budget decisions.
It is unclear whether and how quickly the EU Commission will trigger the mechanism.
On the one hand, it still has to finalize the guidelines for the application of the instrument, taking into account the judgement.
There are also political considerations.
Poland has recently given cautious signals of a rapprochement with Brussels.
In Hungary, parliamentary elections are due in early April.
Should the EU Commission trigger the rule of law mechanism beforehand, this could be understood as interference in the election campaign.