In an earlier post, we set out our concerns about the decline of the rule of law in the EU with particular reference to the two Member States where the problem is most acute and indeed systemic.  First of all, we showed how the harmful effects of such persistent unlawful action are not confined to the Member States concerned, because the principle of mutual recognition is undermined and because the ensuing corruption (which is especially evident in Hungary) is almost bound to have a negative impact on the EU’s budget.

Next, we concentrated on two recent and unprecedented developments, namely the Commission’s proposal to the Council to take action under Article 7(1) of the Treaty on European Union and the Court’s Order to Poland to put an immediate end to logging in the primeval forest of Białowieża, failing which it would be required to pay a fine of €100,000 per day.

In the present post, which is likewise based on our very recent article in the Cahiers de droit européen (see the bibliography below), we shall focus on the steps – other than recourse to Article 7 TEU – which the EU can usefully take to exert pressure on these regimes to observe the principles of democracy, the rule of law and respect for human rights, as they are required to do by Article 2 TEU.

As with the earlier post, we cannot summarise here all the points which feature in our article.

1) The Suspension of EU Subsidies

First of all, the most effective course of action would be to impose sanctions which affect the recalcitrant Member States where it really hurts, by suspending EU subsidies.  This is far from a new idea: it had been suggested as a last resort in a letter sent in 2013 to President Barroso from the Danish, Dutch, Finnish and German governments requesting the creation of a mechanism to ensure respect for the values enshrined in Article 2 TEU ; and it was revived by the German government in May 2017.  Moreover, the concept of “conditionality” has featured in the relevant legislation for some time.  An example can be found in Article 6 of 1303/2013, the general regulation on the Structural Funds, which reads: “Operations supported by the ESI Funds shall comply with applicable Union law and the national law relating to its application.”  The only novel element would be that compliance with the rule of law would be expressly specified as forming part of “applicable Union law”.

Poland is the largest beneficiary of EU funds; and per head of population Hungary is one of the major beneficiaries. Perhaps the most pernicious aspect of this entire problem is that the governments of these two countries derive a considerable part of their popularity from the massive largesse of the EU, when at the very same time they defy its core values.

Consequently, the Commission’s decision last month to explore the possibility of going down this path  is most welcome.  Also, the timing is opportune, as the legislation on the Structural Funds including Regulation 1303/2013 is due for revision for the Multiannual Financial Framework for the period beginning in 2021.

Some might regard such a mechanism as an abuse of procedure on the basis that it would circumvent the high thresholds required for sanctions under Article 7(3) TEU.  In our submission, such a view is unfounded for two reasons: a Commission decision suspending subsidies would be subject to a robust review by the Court of Justice, whereas the Court is expressly precluded by Article 269 TFEU from ruling on the substance of measures taken pursuant to Article 7 TEU; and such a Commission decision would by definition be confined to subsidies, whereas Article 7(3) TEU empowers the Council to suspend any rights of a Member State under the Treaties.

Moreover, the freedom of the press is essential if fraud and corruption involving EU expenditure is to be exposed. By the same token, in the absence of independent courts, the prospects of securing the conviction of the perpetrators of such crimes are significantly reduced.  Consequently, to make the grant of subsidies conditional on respect for the rule of law is wholly warranted.

A few days ago, it was announced that Commissioner Jourova has begun a quest for an appropriate definition of the concept of the rule of law . In fact, she need look no further than the Commission’s own “New EU Framework to strengthen the rule of law”, which contains an excellent definition that is largely inspired by that of the Venice Commission of the Council of Europe.

In contrast, what steps should be taken to determine that a Member State is in breach of the principle of the rule of law before subsidies are suspended? For the Commission to make such a finding by itself would seem unwise and inappropriate, as there is a general need in this highly sensitive area to ensure a high degree of legitimacy, as von Bogdandy and Ioannidis have emphasised (all the literature referred to here is set out in the bibliography below).  Ideally, a finding should first be made by another institution of the EU such as the Court (see below).  In addition, the Commission could rely on a host of existing findings by other international organisations such as various institutions of the Council of Europe, including the Venice Commission  and the European Court of Human Rights as well as the OSCE .

2) Infringement Proceedings for Breach of the Values Enshrined in Article 2 TEU

Some years ago, Commissioner Reding suggested that infringement proceedings might be brought pursuant to Article 258 TFEU for breach of Article 2 TEU. Again, it could be objected that this would circumvent Article 7 TEU; but in our submission this doubt should be dispelled on the same grounds mutatis mutandis as those discussed above.  Kochenov, Pech and Platon have argued that the concept of the rule of law and indeed the other values enshrined in Article 2 are too vague to be the subject of infringement proceedings.  On this view, such proceedings are precluded by the principle of legal certainty.  The fact is that the Court has never hesitated to apply concepts which are to some extent open-ended.

Having said that, an isolated incident cannot amount to a breach of the rule of law.  Such a breach can only arise where a Member State commits systemic violations of human rights and democracy over some time. It is reasonable to consider that two years suffice, just as the European Parliament has taken the view that a breach lasting that long is “persistent” for the purposes of Article 7(2) TEU (see Article 10.3 of its draft inter-institutional agreement).

In addition, the Commission could rely on Articles 19(1) TEU and 47 of the Charter, two provisions which it is currently invoking in its proceedings against Poland with respect to its reform of the judiciary.

Quite apart from that, we believe that if, in infringement proceedings based on provisions other than Article 2 TEU, the Court could be persuaded to declare that the rule of law (or any other principle mentioned in Article 2) is at stake – just as it did in its interim order in the Białowieża forest case (see our earlier post). This could be used by the Commission as a basis for a decision to suspend EU subsidies, at least if the infringement is particularly grave and far-reaching in scope or if there is already a series of rulings to this effect.

3) More Effective Use of the Commission’s Powers under Article 258 TFEU

Regardless of any other steps which it might take, Commission would be well advised to develop a more speedy and effective strategy as regards infringement proceedings against  Member States that infringe Article 2 TEU.

One can only welcome the fact that the Commission has brought and is continuing to bring a number of high-profile proceedings on human rights issues against Hungary and, more recently, Poland.  These include inter alia the Commission’s decisions to lodge applications before the Court against the former for its laws restricting the right of non-governmental organisations to receive donations from abroad and discriminating against the Central European University  as well as against Poland for its reform of the judiciary in a manner calculated to undermine its independence.

If successful, proceedings involving serious violations of human rights and the rule of law will make it easier for the Commission to suspend the grant of subsidies, as suggested above. .

What is more, should the Member State concerned fail to comply with such judgments, it will of course expose itself to fines and/or periodic penalties in accordance with Article 260 TFEU.  Consequently, even as regards other areas of the law, the Commission should be more robust in pursuing infringements committed by recalcitrant Member States. There is evidence that that institution has begun to follow that approach.

Although the level of fines imposed in the past appears derisory in comparison with the funds granted by the EU, there is no reason why it should not increase in the future. If periodic penalties were also imposed, the pressure to comply would be significantly increased.

Numerous authors, including Varju and Papp, have complained that, even where infringement proceedings were brought successfully, the Commission acted too late. The most glaring example concerns the celebrated ruling in which the Court found that a statute reducing the retirement age of judges was in breach of the EU’s anti-discrimination legislation : many judges who had been forced to retire in the meantime, including many in senior positions, were unable to return to their posts, because they had been filled by other individuals more compliant with government policy.  That was despite the fact that the procedure before the Court had been expedited. Had the Commission sought and obtained an order granting interim measures, including the payment of periodic penalties, this unfortunate result could have been avoided.

Accordingly, there is a glaring need for the Commission to act with greater speed, both during the administrative phase and the judicial phase of the proceedings.  However, it is also obvious that the Court must be more willing to grant the interim relief requested and to have recourse to the expedited procedure than it has.

In this regard, the Białowieża case is enormously encouraging: not only did the Commission seek interim relief and the award of a fine in the event of non-compliance, but the Court endorsed that novel approach.  One can only hope that this will not be an isolated case and that both institutions will cast off their traditional sluggish procedures so as to uphold the rule of law to greater effect against regimes which make a mockery of the values enshrined in Article 2 TEU.

Michel Waelbroeck is Emeritus Professor at the Université Libre de Bruxelles, honorary advocate, Emeritus member of the Institute of International Law

Peter Oliver is Visiting Professor at the ULB, member of the Bars of England and Wales (Monckton Chambers) and Brussels

(Highly) Selective Bibliography

C. Closa and D. Kochenov (eds.) Reinforcing Rule of Law Oversight in the European Union (Cambridge University Press, 2016)

D. Kochenov, L. Pech and S. Platon « Ni panacée ni gadget : le ‘nouveau cadre de l’Union européenne pour renforcer l’État de droit’ » 2015 RTDEur. 689

D. Kochenov, A. Magen and L. Pech « Introduction : the Great Rule of Law Debate in the EU, 54 Journal of Common Market Studies 1045

A. Magen «Cracks in the Foundations : Understanding the Great Rule of Law Debate in the EU » 54 Journal of Common Market Studies 1050

D. Kochenov and L. Pech,  “Better Late than Never 54 ? On the European Commission’s Rule of Law Framework and its First Activation, 54 Journal of Common Market Studies 1062

L. Pech and K. Lane Scheppele “Illiberalism within: Rule of Law Backsliding in the EU” 2017 Cambridge Yearbook of European Legal Studies

M. Varju et M. Papp « The crisis, national particularism and EU law : what can we learn from the Hungarian case ? » 53 CMLRev. 1647 (2016)

A. von Bogdandy and M. Ioannidis « Systemic Deficiency in the Rule of Law: What it is, What has been Done, What can be done » » 51 CMLRev. 59 (2014), 75

A. von Bogdandy et P. Sonnevend (eds.) Constitutional Crisis in the European Constitutional Area – Theory, Law and Politics in Hungary and Romania (Hart Publishing, 2015)

M. Waelbroeck and P. Oliver “La crise de l’Etat de droit dans l’Union européenne : que faire?” 2017 Cahiers  de droit européen 299