Professor Panos Koutrakos – Lexis®PSL EU Law – The European Court of Justice affirms the legality of mechanism that restricts access to EU budget for Member States that violate the rule of law (Hungary v Parliament and Council, Poland v Parliament and Council)
EU Law analysis: These judgments uphold the legality of the rule of law conditionality mechanism laid down in Regulation 2020/2092. Under the relevant rules, the Council may restrict access to the EU budget (for instance by suspending payments) where a Member State violates the rule of law in a manner that affects or seriously risks affecting the sound financial management of the EU budget or the protection of the financial interests of the EU in a sufficiently direct manner. Central to the judgments is the status of the rule of law as one of the founding values of the EU under Article 2 TEU. The judgments are of practical significance given the disputes about judicial independence in Poland (as well as the recent judgment of the Polish Constitutional Tribunal rejecting the primacy of EU law in relation to the organisation of the judiciary) and rule of law and corruption allegations in Hungary. In fact, the European Parliament has already launched an action against the Commission for failure to rely on the Regulation prior to the two judgments (Case C-657/21).