Poland, Hungary Test EU Rule-of-Law Regulation at Top Court

Poland and Hungary challenged the European Union’s new tool targeting rule-of-law violations at the bloc’s top court, with Warsaw arguing that the regulation is incompatible with the EU’s treaties.

“The EU has no competence to define the concept of ‘the rule of law’ or to lay down the conditions for assessing compliance with underlying principles,” the Polish government said in a statement on Thursday.

The appeal at the EU’s Court of Justice in Luxembourg comes three months after EU leaders passed a historic 1.8 trillion-euro ($2.2 trillion) budget and stimulus package. It included a provision that would penalize member states that fail to adhere to democratic standards. Poland and Hungary opposed the move but eventually signed on to the deal.

The new rule-of-law mechanism represents a sea change for the bloc in that it’s the first time the European Commission, the EU’s executive arm, would be able to withhold budget distributions to member states over rule-of-law issues. And since the EU’s massive coronavirus recovery fund is part of the budget, it means Poland could lose out on 23.9 billion euros of stimulus grants and Hungary 7.2 billion euros.

The EU’s executive has repeatedly sued Poland’s government for what it sees as breaches in the bloc’s democratic standards from more than five years of judicial overhauls, which it says undermined the independence of judges from politicians.

EU leaders in December agreed that the mechanism to sanction countries for undermining the rule of law won’t be employed until the entire regulation has been given the green light by the Luxembourg-based court. Rulings in such direct actions can take on average 19 months, but it would be shorter if the governments request a fast-track procedure and the court allowed it.

“Although the rule of law is a common value of member states, its content cannot be shaped by arbitrary decisions and without respect for national identities and the diversity of their legal systems and traditions,” according to the Polish statement.

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