In the future, the European Union can withhold funds if a member state violates the rule of law and thereby affects the EU budget.

This is what the European Court of Justice (ECJ) decided on Thursday, dismissing the lawsuits filed by Hungary and Poland against the corresponding ordinance.

The European Parliament and the Council were responsible for the enactment of the "conditionality mechanism", which does not circumvent the EU rule of law procedure, according to the judges in Luxembourg.

Marlene Grunert

Editor in Politics.

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Thomas Gutschker

Political correspondent for the European Union, NATO and the Benelux countries based in Brussels.

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The new mechanism provides that EU money can be withheld if a member state breaches the rule of law.

However, not every violation is enough, it must affect the use of EU funds.

The ECJ also emphasized this on Thursday.

The violation of the rule of law must “sufficiently directly affect or seriously threaten to affect the budget of the Union or the protection of its financial interests”, according to the statement from the Court of Justice.

The regulation underlying the mechanism is therefore a "budget rule".

Parliament and the Council are responsible for them.

This is also how the EU Advocate General Manuel Campos Sánchez-Bordona saw it in his Opinion.



Poland and Hungary always argued that there was no legal basis for the regulation.

It also circumvents the rule of law mechanism in Article 7 of the EU Treaty.

The procedure regulated there is a political instrument of the Council, which can use it to react to serious violations of all values ​​of the Union.

The mechanism provides for various stages - even voting rights can be revoked.

However, Article 7 requires unanimity and has therefore been hopeless for some time.

According to the ECJ, the rule of law procedure and the new budgetary mechanism have “clearly defined” objects.

Unlike Article 7, the new regulation is not about violations of the rule of law as such, but about protecting the budget.

Here, too, the Court followed the opinion of the Advocate General, who had emphasized the differences between the two procedures - not only with regard to the connection between the violation of the rule of law and the budget.

He also referred to earlier judgments of the ECJ.

The Court of Justice has repeatedly clarified that breaches of Union values ​​have consequences, even without recourse to Article 7.

Now it's the Commission's turn

The regulation, which the Court of Justice ruled on Thursday, was passed in December 2020 after laborious negotiations.

At the time, the Commission assured Poland and Hungary that it would wait for the judgment of the ECJ before triggering the mechanism.

The European Parliament then sued the Commission for inaction - a procedure that was also remarkable because at least Warsaw can hardly be accused of corruption.

At least that's how the competent EU authority OLAF sees it.

With regard to Hungary, the Commission has meanwhile considered making use of the new mechanism even before the ECJ ruling.

In the end, she waited for the decision.