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: New tools: rule of law conditionality

The decisions of the Commission and of the EP have therefore given new centrality to Article 7. At the same time, EU institutions, as well as the academic debate, have also attempted to find alternative solutions, implicitly acknowledging the difficulties that are inherent in reaching a final unanimous decision under Article 7(2) and (3). Poland and Hungary have in fact often pledged to help each other, vetoing any possible decision under Article 7(2) TEU.

The European Parliament presented a proposal that still focused by and large on prevention: in its ‘Democracy, Rule of Law, and Fundamental Rights Pact’, it called for the introduction of a detailed monitoring framework that would serve to verify Member States’ respect for all Article 2 TEU values. On the contrary, the Commission has concentrated on possible new sanctions. Most importantly, in spring 2018, it issued a proposal for a Regulation on ‘Rule of Law Conditionality’.

The proposed Regulation is based on Article 322(1 )(a) TFEU, according to which the Parliament and the Council can adopt ‘the financial rules which determine in particular the procedure to be adopted for establishing and implementing the budget and for presenting and auditing accounts’, and it would allow the Commission to propose the suspension of EU funding in case of ‘generalised deficencies’[1] in the rule of law system of a Member State. The measures suggested by the Commission include ‘the suspension of payments when the budget is implemented through ‘direct or indirect management’ and the suspension or reduction of commitments and payments under 'shared management’. The proposal of the Commission would be then sent to the Council, which would be called to decide under the principle of reverse qualified majority, meaning that a qualified majority would be necessary to reject or amend the proposal. The Commission also included in the system a clause protecting individual beneficiaries of EU funds, in order to avoid that they are unfairly affected by a suspension of EU funding.

Even before the Commission’s proposal, the suspension of EU funding for those Member States breaching the rule of law had been long discussed as a possible new tool for protecting EU values. The Commission ultimately opted for a new procedure that would create a separate sanctions’ regime. It is precisely in this respect that the proposed regulation raises some doubts relating to its compatibility with the Treaties. Is it possible to adopt sanctions for breaches of the rule of law outside the procedures of Article 7? The Legal Service of the Council, in an Opinion not yet public, has expressed doubts. The EP, on the other hand, has endorsed the Commission’s proposal. Irrespectively, the Commission’s initiative shows a clear change of perspective: since prevention has not sufficed to address the current crises, Brussels is attempting to design new sanctioning tools with a view to enhance the EU oversight scheme.

: Reviving ‘old’ tools: the infringement procedure

Finally, the Commission, backed by the Court, is trying to give new boost and bite to a traditional instrument, i.e. the infringement procedure, and use it to contribute to protect the common values of the Union. Firstly, as illustrated more in detail in another chapter in this volume, the Court has allowed the imposition of penalty payments ex Article 260 TFEU in case of non-compliance with an interim order of the Court delivered on the basis of Article 279 TFEU.[2] This happened in a case concerning Poland, though not related to the constitutional backsliding phenomenon. In this manner, the Commission and the Court can make use of an already existing sanctioning tool in a new and creative manner.

Secondly, the Commission has recently read its mandate to launch infringement actions in a broader manner. In the ‘Portuguese judges’ decision, the CJEU found, on the basis of the second paragraph of Article 19(1) TEU, that the Member States are obliged to ensure the judicial independence of all national courts potentially called to apply or interpret Union law. Building on this judgment, the Commission has begun relying on Article 19 TEU in infringement actions. The first action launched on this basis tackled the reform of the Polish Supreme Court. The action was quickly brought before the Court of Justice and decided in June 2019. After two interim orders in which it had already asked Polish authorities to suspend the reform and restore the preexisting situation, the Court of Justice eventually acknowledged an infringement of Article 19 TEU. The Court found another infringement in second action, concerning the reforms of the ordinary courts’ system, decided in November 2019." Generally, the broad interpretation of Article 19 TEU allows the Commission to take into consideration and possibly bring before the Court any judicial reform that has the effect of undermining the independence of national courts.

Lastly, after a period of reluctance, the Commission is now starting infringement actions also on the basis of the Charter of Fundamental Rights. Most notably, this happened in a string of procedures against Hungary, concerning for example the ‘Higher Education law’ that has forced the Central European University to relocate to Vienna, and on measures restricting NGOs funding opportunities.[3]

Compared to the earlier actions started after the adoption of the 2012 Hungarian constitutional reforms, the new procedures seem much more promising. Firstly, relying on Article 19 TEU or the Charter as an infringement ground makes more difficult for the Member State to engage in forms of symbolic or creative compliance: the national government must not only prove compliance with technical EU rules, but also remedy the structural breaches to judicial independence or fundamental rights. Secondly, breaches of Article 19 TEU or of the Charter could lead the Court to determine a higher coefficient in the case of an Article 260 TFEU proceeding. Third and more generally, these grounds add some political pathos to what can otherwise be perceived as an ordinary and ultimately fairly technical procedure. All considered, these new developments may significantly bolster the EU capacity to enforce its basic values and sanction possible breaches also through an ordinary instrument such as the infringement procedure, read in a creative and expansive manner.

  • [1] b‘ According to Article 2 of the draft Regulation, there would a generalized deficiency when ‘a widespread or recurrent practice or omission, or measure by public authorities ... affects the rule of law’. 2 “The reverse qualified majority system has been borrowed from Stability and Growth Pact system, see Regulation 1173/2001 on the effective enforcement of budgetary surveillance in the euro area. See F. Costamagna and A. Miglio’s chapter in this volume. 3 See Article 4(2) of the draft Regulation. 4 ,0 For early proposals, see K.L. Scheppele, ‘Enforcing the basic principles of EU law through systemic infringement actions’, in Closa, and Kochenov, supra note 9; J.W. Müller, ‘Should the EU Protect Democracy and the Rule of Law inside Member States?’ (2015) European Law Journal 21, 141; and then G. Halmai, ‘The Possibility and Desirability of Rule of Law Conditionality’ (2019) Hague Journal of the Rule of Law 11, 171. 5 For a discussion, K.L. Scheppele, L. Pech, and D.R. Kelemen, ‘Never Missing an Opportunity to Miss an Opportunity: The Council Legal Service Opinion on the Commission’s EU budget-related rule of law mechanism’, Verfassungsblog, 12 November 2018, 6 European Parliament, Legislative resolution on the proposal for a regulation of the European Parliament and of the Council on the protection of the Union's budget in case of generalised deficiencies as regards the rule of law in the Member States, 4 April 2019.
  • [2] 2 CJEU, C-M/16 Associagdo Sindicaldos Juizes Portugueses ECLI:EU:C: 2018:117. 3 '5 For a more detailed analysis, see M. Bonelli, M. Claes, ‘Judicial serendipity: how Portuguese judges came to the rescue of the Polish judiciary’, (2018) European Constitutional Law Review 14, 622. 4 '6CJEU, C-619/18 Commission v. Poland ECLI:EU:C:2019:531. 5 CJEU, C-192/18 Commission v. Poland ECLI:EU:C:2019:924. 6 A. Lazowski, ‘Decoding a Legal Enigma: the Charter of Fundamental Rights of the European Union and infringement proceedings’, ERA Forum (2013).
  • [3] See CJEU, Commission v. Hungary, C-66/18 (CEU) & C-78/18 (NGOs) (both pending). 2 See also M. Schmidt, P. Bogdanowicz, ‘The Infringement Procedure in the Rule of Law Crisis: How to Make Effective Use of Article 258 TFEU’ (2018) Common Market Law Review 55, 1061. 3 See however the promising judicial steps taken by the Court of Justice, most notably in CJEU, C-619/18 Commission v. Poland ECLI:EU:C:2019:531 and C-192/18 Commission v. Poland ECLI:EU:C:2019:924.
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