Luxembourgh Times
rule of law

EU court to rule on budget weapon aimed at Poland, Hungary

Luxembourg-based Court of Justice to rule 16 February on whether member states must meet conditions to collect billions

ECJ buildings in Kirchberg

ECJ buildings in Kirchberg

Source: Bloomberg

The European Union’s top court will rule next month on the legality of a new tool that could ultimately see Poland and Hungary denied billions of euros of EU funding for failing to abide by the bloc’s democratic standards.

The EU Court of Justice in Luxembourg said on Twitter that it will rule on the validity of the so-called conditionality mechanism on 16 February. The two nations challenged the EU measures after facing a barrage of criticism for violating the EU’s rule of law.

Poland and Hungary already suffered a setback last month when an adviser to the top court said their challenges should be rejected and that the EU acted “on an appropriate legal basis.”

The EU has accused the populist governments in Warsaw and Budapest of illegal judicial revamps and refusing to adhere to the primacy of EU law, a key premise of the bloc’s founding treaty. The flow of billions of euros from Brussels has helped transform the two ex-communist economies, but the EU has become wary of funds being used by the governments to undermine democracy and to attack the bloc.

The commission, the bloc’s executive arm, may trigger the conditionality mechanism as soon as February, shortly after the EU court’s ruling, according to an official familiar with the plan.

The commission in November took the first informal step toward triggering the mechanism, demanding answers to accusations that funds provided by the bloc could have been subjected to corruption or fraud, or that the EU’s financial interests are at risk. Poland and Hungary had until this week to respond.

‘Endless Story’

EU Budget Commissioner Johannes Hahn told reporters in Brussels that the commission yet hasn’t received a response from Warsaw.

“We will certainly send a reminder to Poland asking them to provide us with the necessary information.”

“This is not an endless story, but our focus is on dialog, finding satisfying solutions,” said Hahn. “If we don’t receive an answer this is also an answer.”

While Hahn said he was “still confident that Poland is interested to settle this issue and to provide us with the necessary substantial reply,” the commission has also been giving the eastern European nation ultimatums to pay up millions in daily fines it’s been ordered by the EU court.

Poland was last week given 45 days to pay penalties that it’s racked up since the EU court ordered it to pay €1 million for each day it continues to ignore an order to halt a controversial chamber to discipline judges.

The EU is separately also preparing to withhold budget payments to Poland for refusing to comply with a €500,000 daily penalty for not shutting down its Turow lignite mine near the Czech border.

©2022 Bloomberg L.P.