EU court rejects action by Hungary and Poland against the rule of law conditioning European funds

The European Court of Justice announced on Wednesday that it had rejected Hungary’s and Poland’s actions against the conditional mechanism, which made the benefit of funding from the union budget conditional on compliance with member states’ state policies.

The CJEU states that this mechanism is adopted in accordance with applicable law and complies with the procedure set forth in Section 7 TEU, specifically the limits of the powers granted to the Union and the principle of legal commitment.

Effective January 1, the new regulation establishes a common ‘conditional’ mechanism for protecting the EU budget when member states violate the rule of law (lack of independence). Judiciary, corruption, etc.). , Which affects or is likely to affect the Union Budget.

At the request of the European Commission, the Regulatory Council allows actions such as the suspension of payments from the Union Budget or the suspension of approval of one or more projects funded from that budget.

Poland and Hungary, according to the AFP, are among the countries threatened by this ‘conditional’ mechanism due to ongoing conflicts over the rule of law with the EU, which filed a ruling in March with the CJEU seeking its repeal. Other matters, reasons, lack or inadequacy of the legal basis selected for the regulation, non-compliance with Section 7 of the Agreement and violation of the principle of legal commitment.

PNL MEP, Sigfried Muresan, after the CJEU’s decision, announced that the mechanism was in place and would no longer be used against anyone who violated the rule of law.

“The role of regulation is to protect the money of honest people from corrupt politicians who want to violate the rule of law. With this decision, we expect the EU mechanism not to procrastinate. We need to use more European funds over the years, and we need to know that this money is being protected.

The full report of the CJEU is given below:

“On 16 December 2020, Parliament and the Council adopted a regulation establishing the conditional rule to protect the Union Budget in the event of a breach of the rule of law in the 1 Member State. This regulation allows the Council to accept protections such as suspension2.

Hungary and Poland have each filed a lawsuit seeking the repeal of the ordinance. They base their actions on the grounds that they violate the procedure set out in Article 7 TEU3, violate the capabilities of the Union and violate the principle of legal commitment, as they do not have an appropriate legal basis in the EU and FEU agreements. In support of their arguments, Hungary and Poland cited the Council’s legal service’s confidentiality in the original proposal that led to the regulation, and despite the Council’s objections, the Court declared that the note was acceptable on the basis of its superficial public interest. Transparency of legislative procedure.

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In both cases, Hungary and Poland supported each other, while Belgium, Denmark, Germany, Ireland, Spain, France, Luxembourg, the Netherlands, Finland, Sweden and the Commission intervened in support of Parliament and the Council. At the request of Parliament, the court heard these cases in accordance with expedited procedure. These cases were said to be the cause of the entire panel of the court, taking into account their fundamental importance in clarifying the extent to which the Union can protect its budget and financial interests when it violates the rule of law in member countries.

With regard to the legal basis of the regulation, the court first found that the procedure provided in the regulation can be initiated only if there are reasonable grounds to consider violations of the policies in particular. Violations are likely to seriously affect or directly affect the firm financial management of the Union Budget or the protection of its financial interests. In addition, the measures taken under the regulation are about the implementation of the Union Budget and all of them will reduce funding.
The impact of such a defect or such serious risk.

So this regulation seeks to protect the union budget from damage
Adequately direct from the rule violations of the law, such violations can not be penalized.

In this regard, member states respect the common values ​​established by the Union, which are identified and shared by them, and define the identity of the Union as the common legal mandate of those States. Law and unity justify mutual trust between these states.

Since that adjustment is a condition for the exercise of all rights derived from the exercise of the treaties of the Member States, the Union may, within its jurisdiction, protect those values. In this regard, the Court states that, first, adherence to those values ​​cannot be reduced to the obligation of a State to join the Union and that it may violate its access. Furthermore, the Union Budget emphasizes that one of the key tools for the implementation of the basic principle of unity among the Member States in the policies and actions of the Union is the budget, and that the implementation of this policy through this budget is supported on the basis of their mutual trust. Responsible use of the general resources included in that budget.

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However, better financial management of the Union Budget and the financial interests of the Union may be seriously compromised as it violates the rule of law in a member country. Therefore, such violations may occur in the absence of a guarantee that the expenditure in the Union Budget will meet all the financial conditions set forth by Union Law. .

Therefore, the horizontal “conditional mechanism” established by the regulation stipulates the benefit of funding from the union budget to a member state in accordance with the rule of law, which may fall within the scope of implementation. Union Budget.

Second, the Court found that the procedure established by the regulation did not deviate from the procedure referred to in 7 TEU and respected the limits of powers vested in the Union.

The purpose of the procedure referred to in Section 7 TEU is to enable the Council to impose fines for serious and persistent violations of every common value established by the Union and defining its identity. The member state was involved in putting an end to these violations. On the other hand, this regulation seeks to protect the union budget only if the rule of law is violated in a member country.
Member country that can seriously affect or affect the proper implementation of this budget. As a result, the so-called Section 7 TEU process and the one established by the regulation pursue different objectives, each with a clearly unique meaning.

Furthermore, since the Regulatory Commission and the Council only allow the authorities of a member country to examine the circumstances and behaviors that are relevant, it is appropriate for the proper implementation of the Union Budget so that the powers vested in those institutions by that regulation do not go beyond the powers vested in the Union.

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Third, as far as the argument of Hungary and Poland is concerned, the Court emphasizes that the accusation violates the principle of legal commitment, in particular that this regulation does not define the ‘rule of law’ or its principles. As components of this concept, regulation is developed in detail in its case law, and these principles are based on the common values ​​adopted and used by member states in their legal systems and derived from the concept of “rule”. Of the law “. No member states o
They share a common value for their constitutional traditions.

Accordingly, the Court considers that the Member States are in a position to determine with sufficient accuracy the essential content and the requirements arising from each of those policies.

Further, the court held that the regulation must establish a genuine link between the security measures it provides, the risk of violating the rules of the law and the risk of defect or severe financial mismanagement. The union or its financial interests and such violation must be related to a circumstance or behavior that has led to the power of an member state and be appropriate for the proper implementation of the Union Budget.

The court pointed out that the concept of “serious risk” is enshrined in the Union Finance Act, and insists that the protections that can be taken must be strictly proportional to the impact of the breach found in the Union Budget. In particular, according to the court, such actions will only cover the extent necessary to achieve the purpose of protecting other acts and plans other than those affected by such violations.
Overall this budget. Finally, the Commission finds that the Commission, under the control of the EU Judiciary, must comply with strict procedural requirements and, including a number of consultations with the member states concerned, the Court concludes that it complies with the requirements of this regulatory policy. Legal confirmation.

In that case, the court rejects the actions of Hungary and Poland.

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