This document was prepared by Professors Alberto Alemanno, John Morijn, Laurent Pech and Daniel Sarmiento, members of The Good Lobby Profs, a non-profit initiative acting as a rapid response mechanism to uphold the rule of law across the continent. It counts on 60+ academics who constantly monitor the respect of the rule of law and provide pro bono expert analysis, support as well as engage in (good) lobbying activities with the view of promoting, defending and strengthening respect for democracy, the rule of law and human rights. For more information https://www.thegoodlobby.eu/thegoodlobbyprofs/ Contact email: email@example.com
In parallel to the adoption of the pandemic-recovery fund – the Next Generation EU – the Union introduced, for the first time, a conditionality mechanism, making the disbursement of EU funds tied to respect for rule of law standards. This instrument, generally referred to as the Rule of Law Conditionality Regulation, has been in force since 1 January 2021 but is yet to be used. Under this Regulation, the Commission has the power to propose to the Council that the release of any EU funds (both the regular EU budget and EU COVID-funding) to a Member State is halted in a situation where rule of law problems “affect or risk affecting” the sound financial management of EU funds. It is therefore an instrument that can be both reactive (“affect”) as well as preventive (“risk affecting”). The Commission has so far refused to use this instrument notwithstanding the European Parliament’s call to do so in light of the findings of a study demonstrating that the situation in Hungary warrants the immediate activation of the Regulation.
However, Regulation 2020/2092 is not the only rule of law conditionality mechanism in force at EU level. The Commission and the Council have additional and more immediate options to give rule of law considerations a central place especially with regard to the situation in Hungary and Poland, the two countries currently subject to the Article 7(1) TEU procedure. They can do so by making proper use of Regulation 2021/241 (the Recovery & Resilience Facility Regulation), which governs the approval of EU COVID-funding specifically.
This Regulation makes the approval of EU COVID-funding conditional upon Member States showing that their National Recovery and Resilience Plans comply with various economic and environmental benchmarks, including country-specific recommendations adopted in the context of the European Semester. In particular, the national plan must demonstrate that:
In case (a) Member State(s) consider(s) that there are serious deviations from the satisfactory fulfilment of targets, they can refer the matter to the next European Council (recital 52, and annex 2 providing an overview of relevant Regulation 2021/141 wording).
The Commission has postponed the approval of the national plans submitted by Poland and Hungary, which are both currently subject to the Article 7(1) TEU procedure with Poland also subject to the full monitoring procedure of the Parliamentary assembly of the Council of Europe over the functioning of its democratic institutions and the rule of law. One must recall in this context that the Council adopted 2019 and 2020 country-specific recommendations for these two Member States which reflect both the Commission and the Council’s serious and persistent concerns regarding corruption and judicial independence (see annex 1).
Since the EU legislator has intended to connect COVID-funds release to compliance with the rule of law, it is important to understand whether and how this ‘other’ rule of law conditionality needs to be triggered. In other words, how much discretion does the Commission have under the Recovery & Resilience Facility Regulation, and does that extend both to the issue of addressing corruption and respecting judicial independence? Assuming the Commission has discretion in this respect, are there other legal, strategic, and political reasons to use approval of National Recovery and Resilience Plans as a means to enforce the rule of law?
Below are six reasons why EU institutions should only approve the Hungarian and Polish National Recovery and Resilience Plans, and any future EU COVID funds instalments, after the authorities of these two countries stop actively breaching the rule of law in its different components as outlined in Regulation 2020/2092; meaningfully address the recommendations addressed to them under different EU instruments such as Article 7(1) TEU procedure and the European Semester; and comply, promptly and in good faith, with their EU legal obligations, in particular their obligation to comply with orders and judgments of the European Court of Justice:
The Recovery & Resilience Facility Regulation gives the Commission some discretion in assessing whether country-specific recommendations are fully met in National Recovery and Resilience Plans (“contribute to effectively address all or a significant subset of challenges). The Hungarian and Polish country-specific recommendations deal both with corruption and judicial independence. Under the assessment criteria provided by the Recovery & Resilience Facility Regulation regarding corruption, the Commission can only assess it to be either satisfactory or unsatisfactory. This reasonably means that a Recovery and Resilience Plan should only be approved once it is established that any and all issues with regard to fighting corruption are solved. In other words, the Commission and Council should only be able to approve the Hungarian Recovery and Resilience Plan once Hungary, like all other Member States, has put in place a fully functioning system to fight corruption. There is no discretion here. Corruption needs to be durably solved before any EU COVID-funding is made available.
Serious and persistent problems with judicial independence are mentioned in the country-specific recommendations both for Hungary and Poland in addition inter alia to the two Article 7(1) TEU proposals originating respectively from the European Parliament and the European Commission. This raises one key question: Can the Commission, within the aforementioned apparent discretion in dealing with country-specific recommendations that the Recovery & Resilience Facility Regulation offers, propose the approval of a national recovery and resilience plan, and the Council greenlight it, before Hungarian and Polish authorities fully address these problems and effectively restore judicial independence?
One of the primary tasks of the Commission, as Guardian of the Treaties, is to ensure the application of the Treaties, which means inter alia a duty to ensure that Member States comply with judgments of the European Court of Justice in any area of Union policy. When it comes to the rule of law, the Court of Justice, in a string of recent cases, has repeatedly held that EU primary law (in particular, Article 2 TEU, Article 19 TEU, Article 47 Charter of Fundamental Rights) imposes inter alia on Member States a strict obligation to respect, ensure as well as maintain the independence of their courts which also necessarily implies another obligation for the EU, and especially the Commission, to proactively defend the independence of the national judiciaries and the rule of law via infringement actions and all available other means.
EU secondary law, such as the Recovery & Resilience Facility Regulation, must be understood, interpreted, and applied in the light of EU primary law, as interpreted by the Court of Justice. Failing to proactively acting to protect judicial independence when interpreting and applying the Recovery & Resilience Facility Regulation, which demands taking account of the country-specific recommendation which in the case of Hungary and Poland evidence the most serious and durable problems with respect to judicial independence, could therefore amount to a violation of EU law by the Commission and the Council.
Specifically with regard to violations of the rule of law in Poland since the end of 2015, more than 80 legal actions have been lodged with the European Court of Justice (ECJ) and the European Court of Human Rights (ECtHR) with every single infringement action decided to date by the ECJ establishing the most serious violations of EU judicial independence requirements and every single complaint decided by the ECtHR to date similarly establishing the most serious violations of ECHR right to an independent tribunal established by law. The situation has continuously worsened since 2015 culminating recently in the formal nullification of past and future ECJ orders regarding judicial independence matters on account of their alleged “unconstitutionality” as well the formal nullification of one ECtHR judgment regarding the unlawful composition of Poland’s “Constitutional Tribunal” by the unlawfully composed “Constitutional Tribunal”.
The Commission has rightly and regularly expressed its most serious concerns, most recently in relation to the ongoing process of legal Polexit from EU judicial independence rule of law requirements. In the face of manifest and repeated violations of the most recent order and judgment of the ECJ regarding the new disciplinary regime for judges and “muzzle law” adopted by current Polish authorities, the Commission is now assessing whether or not to apply to the ECJ to request the imposition of a daily penalty payment regarding the ECJ order in Case C-204/21 R. In the press release about its reply to the Commission, the Polish government has continued to refuse to recognise the authority of the ECJ and has not given any evidence of its intent to comply with either the ECJ order of 14 July 2021 in Case C-204/21 R or the ECJ judgment of 15 July 2021 in Case C-791/19 . In that regard it is important to point out that, next to the Court of Justice, the European Court of Human Rights has also recently established the flagrant and deliberate violations of ECHR basic rule of law requirements by the Polish authorities by holding that the current “Constitutional Tribunal” of Poland is unlawfully composed; that the 2016-17 mass dismissal of the senior leadership of ordinary courts was completely arbitrary and that the so-called “Disciplinary Chamber” never was a tribunal established by law. The ECtHR’s reasoning regarding the “Disciplinary Chamber” also indicates that all of the judicial appointments made by the new National Council of the Judiciary since 2018 are inherently deficient due to manifest fundamental procedural irregularities which have marred and continue to mar these appointments.
Agreeing to release EU COVID-funding in these conditions would raise the most serious issues about the current Commission’s judgment and understanding of its EU primary law duty to ensure the application of the Treaties and oversee the application of EU law under the control of the ECJ. And even if the Commission were to ignore its own repeated diagnosis regarding the systemic violations of judicial independence requirements in Poland and all of the evidence of the structural and worsening breakdown in the rule of law in Poland, it is submitted that the Council should not approve the Commission’s eventual proposal. Member States should also consider using their option to refer the matter to the European Council in a situation where the Commission would fall for empty promises of future compliance with ECJ orders and judgments rather than confronting the reality of continuing and worsening deterioration of the rule of law situation in Poland. Any such action by the current Commission would be tantamount to undermining the position and authority of the ECJ and being complicit in the systemic violation of EU judicial independence requirements as established by the ECJ in violation of the Commission’s duties under the Treaties.
There are additional legal grounds requiring the Commission to take a firm line on both the rule of law issue of corruption and judicial independence when deciding on the release of EU COVID-funds. Regulation 2021/141 repeatedly explicitly mentions Regulation 2020/2042, the Rule of Law Conditionality Regulation. This is evidence of the EU legislator’s intent to make sure that that rule of law considerations, both of a preventive and reactive nature, are fully taken into account when the release of COVID funding is to be decided.
Were the Commission to approve the release of EU COVID-funding in a situation where evidence of state sponsored corruption and violation of judicial independence is overwhelming, the Commission’s own capacity and credibility would be seriously undermined, in particular when it comes to addressing corruption with all (other) EU funds as well as with problems with judicial independence in Hungary and Poland that ultimately risk affecting the sound financial management of the EU budget. This is all the more so since the European Parliament has already given the Commission all the evidence it needs to intervene in Hungary, while the Commission’s own diagnosis regarding the rule of law situation in Poland (i.e. the executive and legislative powers can now interfere at will throughout the entire structure and output of the justice system) also manifestly warrants the immediate activation of the Rule of Law Conditionality Regulation at a time where furthermore both ECJ but also ECtHR rule of law related orders and judgments are openly ignored and in some cases, have been formally nullified in obvious breach of both EU and ECHR legal obligations of Poland.
An additional scenario that EU decision-makers must take into account is the likelihood that the approval of EU-COVID funding for Hungary and/or Poland could be challenged in European courts. The Council decision approving the programmes, and subsequent implementation actions by the European Commission based on that, could become the object of an annulment action before the General Court of the European Union pursuant to Article 263 TFEU. This might in turn lead to the adoption of interim measures suspending the enforcement of the Commission and Council acts, with the inherent legal and financial uncertainty associated with this scenario.
Lastly, apart from there being a variety of legal obligations to halt EU COVID-funding to Hungary and Poland until they durably address corruption and judicial independence issues, it would also be bad economic and environmental policy and bad politics to release EU COVID-funds to any Member State with an extensive track record of systematically undermining all national checks and balances and/or extensive track record of corruption and misuse of EU funds. Any EU-financed investment would be insecure until the preconditions for a system complying with minimum rule of law requirements are fully in place. Acting on this in the context of Regulation 2021/141 which offers clear and immediate financial leverage over these Member States would also be more effective than in the context of Article 7(1) TEU discussions, slow infringement procedures and labour-intensive procedures under Regulation 2020/2092.
Considering the above, the Commission and Council must only unlock EU COVID-funding to Hungary and Poland once the rule of law problems identified inter alia in the European Semester country-specific recommendations are addressed meaningfully and in good faith. In addition, the Commission ought to make immediate use of its powers under the Rule of Law Conditionality Regulation against Poland and Hungary, including to use its potential with regard to the non-COVID related, regular EU funds, such as Structural Funds. Sound financial management and economic governance can only occur when rule of law standards are fully met across the board and ECJ orders and judgments promptly complied with. The economic and environmental goals of the Recovery and Resilience Facility will not be met without a forceful defence of the rule of law in all the Member States.
This document was prepared by Professors Alberto Alemanno, John Morijn, Laurent Pech and Daniel Sarmiento, members of The Good Lobby Profs.
Contact email: firstname.lastname@example.org
PDF version of the document here: 6 reasons why the EU should use the approval of National Recovery and Resilience Plans to enforce the rule of law in Hungary and Poland
30 September 2021