Rule of Law

Legal Defeat for Hungary and Poland

This morning, the European Court of Justice (ECJ) announced a landmark ruling, in which it rejected Hungary's and Poland's challenges to the rule of law conditionality in the allocation of EU funds. What does the ruling mean for the EU in general and the future of democracy and the rule of law in Hungary and Poland?

There are no appeals in the highest court of the European Union. However, this does not mean that Poland and Hungary will let their cases rest, because a considerable amount of money is at stake for both countries: the Conditionality Regulation ensures that violations of rule-of-law principles such as the separation of powers no longer go unpunished. If a violation is found, the EU Commission can propose withholding funds from the EU budget. In the case of Hungary, the sum of EU budget funds up to 2027 amounts to up to 22.5 billion euros; in Poland, even 75 billion euros. It is therefore not surprising that Hungary and Poland challenged the legality of the Conditionality Regulation before the ECJ in March 2021. Today's decision by the ECJ is likely to hit both governments where it hurts; in their wallet.

Orbán’s Illiberal Democracy and Duda’s Courtroom Gamble

Since coming into power in 2010, Viktor Orbán and his Fidesz party have become almost synonymous with our understanding of an “illiberal democracy”, as well as the nearly endearing term of “orbanisation”, when referring to EU countries developing autocratic tendencies. The 2021 Rule of Law Report by the European Commission highlights the systemic problems that have been thriving especially under the guise of the Covid-19 pandemic. Issues range from corruption and judiciary independence to the crackdown on media pluralism and Hungary is unfortunately ticking all the boxes, whilst showing no remorse. In Hungary, state agencies have been defying compliance with the judgments handed down by international courts like the ECJ, as well as their own domestic ones. More in-depth research into the extent of this phenomenon was conducted by the Hungarian Helsinki Committee, supported by the Friedrich Naumann Foundation. When it comes to media pluralism, Hungary has coined the term media capture over the past two years, as a study in cooperation with the International Press Institute found. His model of creating a government-friendly media environment and putting independent media at the margins has found a strong supporter and copycat in the ruling Law and Justice (PiS) party in Poland.

While Hungary’s clashes with the European Commission took place mostly in the public sphere, Poland made the news largely in court and with controversial legislation. As if serious human rights backsliding, through the implementation of the most restrictive reproductive rights in the EU, continuous attacks on the LGBT community and crackdown on freedom of speech, as reported by Amnesty International, was not enough, Poland’s government has been continuously eroding the independence of the judiciary and fighting the European Commission in court. The most prominent disputes concern the reform of a disciplinary chamber for judges that expelled government-critical judges, as well as the Polish Constitutional Court ruling against the primacy of EU law. In what seems to be the extension of an olive branch by Polish President Andrzej Duda (PiS), his party put forward a proposal to reform the controversial chamber, preventing disciplining judges based on their rulings. Even though this would finally be an array of light in the long and dark legal battle between Poland and the EU, caution is needed when assessing it. Brussels has welcomed the proposal, but at the same time called for Poland to address the wide array of further criticism’s it had voiced on the judiciary changes. It remains to be seen, whether Duda is using this move as a decoy, under growing fear of the effects of the security situation in Ukraine, to mend its relations with the EU, only to later reinstate the disciplinary chamber under a new name at a later point in time. The latest ECJ ruling is likely to trigger renewed tensions in the two countries' relations with the EU.

Hungary and Poland React

There are no appeals in the highest court of the European Union. That does however not mean that Poland and Hungary will give up right away, especially since both countries are seeking to access significant EU funding. Hungary is looking at 22.5 billion euros up until 2027 and Poland would even be eligible for up to 75 billion euros. While last week the German dpa agency reported Orbán suggesting that Hungary could leave the EU in a HUXIT, during a campaign rally in which he claimed the EU was waging “a holy war, a jihad” against his country, the Hungarian government denied these claims and called them “fake news”. Instead of leaving the bloc, Poland and Hungary are expected to take on the EU’s legal order as a whole, through questioning the role of the ECJ. In an official statement, Orbán announced that “Member states must not accept a situation in which political decisions are taken by the European Court of Justice, instead of the peoples and governments of the member states, (…) Wake up, Europe.“ This ambitious political strategy is not realistic, although it could buy them some more time and in Orbán’s case could leave the consequences of his actions to a new president, should he fail to be re-elected in April.

Meanwhile Polish liberal party leader Adam Szlapka (Nowoczesna), reiterates the importance that the ECJ ruling has for Polish citizens and the security situation of the country: “Poland must comply with ECJ verdicts. Not doing so equals a de facto Polexit, something that is against the will of the Polish people who support the integration and place of Poland in the center of Europe. Being against Europe today is not only stupid, it is also dangerous, bearing in mind the dramatic situation in Ukraine.” Taking into account President Andrzej Duda’s (PiS) recent move, to appease the conflict between Poland and the EU, it remains to be seen where the government will position itself in the wake of the ECJ ruling.

Citizens Weigh In On Dispute

Today’s ruling falls in line with the recommendations voiced by the second European Citizens’ Panel on democracy, values and rights, the rule of law and security, as part of the Conference on the Future of Europe (CoFoE). The CoFoE offers citizens all over Europe the chance to voice their opinions, concerns, and recommendations in a forum to debate Europe’s challenges and priorities. It goes to show that, against international criticism, citizens across Member States see the EU still as a values-based and driven institution and want it to find better ways to uphold these. The recommendations on rule of law include amending the Conditionality Regulation to make it applicable “to all breaches of the rule of law rather than only to breaches affecting the EU budget”. They highlight that the EU’s role should not just encompass the protection of its budget, but also prioritise the protection of its citizens. In direct relation to the EU’s troublemakers, they also raised the issue of media independence, promoting the development of minimum standards for assessment.

Von Der Leyen Under Pressure

All eyes are now on Commission Chief Ursula von der Leyen, who will face increasing pressure to act fast. The European Parliament has already clearly indicated that its patience is over, as it sued the Commission over its inactivity in this case back in October. “This Court decision is crystal clear: the rule of law mechanism is lawful and stands ready to be applied by the European Commission. This is a victory for this Parliament. We fought for this mechanism with unity and resolve. And it is a defeat for Orban, Morawieczki, and all those who try to undermine democratic institutions. The Commission should waste no second more, and apply the mechanism,” says Katalin Cseh (Hungary, Momentum).

The ruling also comes just weeks before lawmakers in Brussels are set to vote on a resolution to fight corrupt EU oligarchs. This proposal, brought forward by the parliament’s budget control committee, found that oligarchs and their influence had not only reached unprecedented reach over the past years, but also act like “states within states”, fuelling corruption and misuse of public funds in their countries. In the face of the slowly turning wheels in the Commission, the Parliament is seeking to establish itself as leading institution in tackling corruption and upholding the EU’s values, and will not accept slacking by the European Commission. 

Time is Ticking

Yet, critics voice concerns about the speed at which we can expect the Commission to act. While some suggest that the French presidency would like to see its term through without a prosecution that could potentially become a mess in the public media, others are cautious as to whether the Commission will act before the Hungarian elections, to not interfere with domestic politics. In addition, von der Leyen will need to score a qualified majority in the Council (min. 55% of EU countries), to execute the mechanism, so she is expected to take some time to prepare a solid case and gather support.

One thing is certain: von der Leyen will need to put her running shoes on and commit to delivering on the mechanism soon, because the world is watching. For years now, the EU has been slowly securing a position of moral authority on the global playing field and thus made itself indispensable as an international player. However, disputes like these have been showing cracks in our so stable seeming European home to the rest of the world, and autocratic leaders have been using these in their rhetoric to weaken the EU’s standing and influence. If we do not manage to reign in our own at home, we can hardly be expected to exert authority abroad. The upcoming weeks will therefore be crucial to show our EU citizens and the world that the European project is alive and kicking.