ECJ adviser backs rule-of-law measure in blow to Poland and Hungary

Court advised to dismiss challenge against law that lets EU block funds to states that curb judicial independence

EU authorities can cut funds to member states that are corrupt and curb independent courts, a senior adviser to the bloc’s top court has said.

In a setback for the nationalist governments of Poland and Hungary, a European court of justice senior lawyer said a law linking EU funds to respect for the rule of law was legally sound.

The opinion by an ECJ advocate general called on the court to dismiss a challenge from Hungary and Poland against a law that allows Brussels to block EU funds to member states that fail to guarantee independent courts or institutions that can investigate corruption without fear or favour. The court usually follows the opinion of its advocates general and is expected to issue a final verdict early next year.

The law was agreed in December 2020 because net contributors to the EU budget such as Germany and the Netherlands feared that Hungary and Poland were no longer able to guarantee correct spending of EU funds. The governments of the two central European states, which are net beneficiaries of EU funds, have increased executive control over their judicial systems while alleged corruption and conflicts of interest have been left unexamined.

The timing of the opinion is acutely sensitive as EU authorities are sitting on billion-euro coronavirus recovery plans for Hungary and Poland but will not release the cash because of long-running disputes on the rule of law.

A Polish government minister reacted angrily to the opinion. “This is robbery against the rule of law that they want to defend,” said Sebastian Kaleta, the deputy justice minister. “The opinion of the advocate general of the CJEU [court of justice] clearly aims to sanction an extra-treaty conditionality mechanism. It was naive to trust EU institutions that they would be capable of self-limiting.”

The chief spokesperson for the Hungarian government Zoltán Kovács said: “This is not a verdict, just an opinion. We hope that ECJ will base its judgement solely on legal arguments, it won’t follow the AG’s erroneous arguments.”

The ECJ advocate general dismissed these arguments, saying there was nothing to prevent the EU from defining the rule of law more precisely in a specific area such as implementing a budget. “The discretion of the EU institutions covers that legislative choice, which cannot be regarded as manifestly incorrect, since compliance with the principles of the rule of law may be vitally important for the sound operation of public finances and the proper implementation of the union budget,” the court said in a statement.

The advocate general noted there was a “sufficiently direct link” between the rule of law and budget, as the law did not cover any violation of the rule of law but only those that jeopardised the sound management of EU funds.

The opinion puts pressure on the European Commission to step up action against Poland and Hungary. Last month the commission wrote to both governments requesting information about measures to control judges and prosecutors. The letter to Poland asked for statistics on how many cases of fraud and conflict of interest in relation to the EU budget had been investigated, while raising numerous questions about the independence of the judiciary.

Addressing Hungary’s government, EU officials reported that they had seen “systemic deficiencies and weakness” in the management of EU funds and raised concerns that Hungarian authorities were failing to act on these problems.

The commission’s questions about conflict of interest follow longstanding reports that the prime minister Viktor Orbán’s friends and family have grown rich on overpriced EU-funded contracts.

The European Commission president, Ursula von der Leyen, has promised to defend the rule of law but is facing a growing tide of complaints that she has failed to act.

Responding to the opinion, Daniel Freund, a German Green MEP and longstanding transparency campaigner, said sanctions against Poland and Hungary should have been triggered months ago. “Dear @EU_Commission: do not delay it any further,” he tweeted.