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FALQs: The Rule of Law in the European Union

The following is a guest post by Lena Fleischmann, a foreign law intern working with Foreign Law Specialist Jenny Gesley at the Global Legal Research Directorate of the Law Library of Congress. It has been co-authored by Jenny Gesley. It is part of our Frequently Asked Legal Questions series. 

On July 13, 2022, the European Commission published its third annual Rule of Law Report under the rule of law mechanism, which addresses the rule of law in the European Union (EU) as a whole as well as in the individual member states. In addition, for the first time, specific recommendations for each member state were included. The rule of law is one of the EU’s fundamental values and there are several mechanisms in place to protect it. Since early 2021, an additional mechanism to protect the rule of law is in full effect. This FALQ examines what this and other mechanisms to protect the rule of law are, including how the EU is financially punishing violations of its core values.

The European Union flag in the European Parliament in Strasbourg. Photo by Flickr user European Parliament. June 11, 2013. Used under CC BY-NC-ND 2.0.

What is the Rule of Law Mechanism?

The rule of law mechanism was first introduced in 2014 to “ensure an effective and coherent protection of the rule of law in all member states” and to engage in an annual, structured dialogue between the EU institutions and the parliaments of member states in a more flexible way. The rule of law report presents positive and negative developments across the member states and national parliaments. The European Commission issues recommendations when there is a clear threat to the rule of law and monitors their implementation. It regularly informs the European Parliament and the Council of the European Union (Council) of the progress. This inter-institutional cooperation through the general rule of law mechanism aligns with the aim of the Council and the European Parliament to improve this type of cooperation.

How is the Rule of Law Defined in the EU Legal Order?

According to the first sentence of article 2 of the Treaty on European Union (TEU), the EU “is founded on the values of respect for human dignity, freedom, democracy, equality, the rule of law and the respect for human rights, including the rights of persons belonging to minorities.” The second sentence of this provision assumes that all of the EU member states respect and observe these values, as emphasized by the Court of Justice of the European Union (CJEU), meaning that the respect of law is the basis for common trust between the member states. The CJEU has stated that the “existence of effective judicial review designed to ensure compliance with EU law is of the essence of the rule of law.” The European Commission defined the rule of law in a communication of April 2019 as follows:

Under the rule of law, all public powers always act within the constraints set out by law, in accordance with the values of democracy and fundamental rights, and under the control of independent and impartial courts. The rule of law includes, among others, principles such as legality, implying a transparent, accountable, democratic and pluralistic process for enacting laws; legal certainty; prohibiting the arbitrary exercise of executive power; effective judicial protection by independent and impartial courts, effective judicial review including respect for fundamental rights; separation of powers; and equality before the law.

This rather broad definition was confirmed in another communication in July 2019.

What Existing Legal Mechanisms Are There to Protect the Rule of Law in the EU?

Another legal mechanism for protecting the rule of law are infringement proceedings against member states suspected of breaching the law according to article 258 of the Treaty on the Functioning of the European Union (TFEU). There have been several cases against Poland for its early retirement of ordinary judges and Supreme Court judges and against Hungary for its early retirement of judges.

In addition, article 7 TEU contains two mechanisms to enforce EU values in cases of systematic violations and to sanction member states. The preventive mechanism is laid out in article 7, paragraph 1 TEU and the sanctions mechanism in article 7, paragraph 2 TEU. However, these mechanisms require a high decision-making threshold in the Council (4/5 majority), European Council (unanimity), and in the European Parliament (2/3 majority), and rely heavily on member states’ willingness to take action. If there is only one state that blocks the procedure in the European Council, it is ineffective. Affected member states could also file an action against each step of the article 7 procedure before the CJEU. The procedure could thus take years, making article 7 TEU not a particularly effective instrument to solve conflicts within the EU.

Up until recently, the general rule of law framework had only been applied to Poland, whereas article 7 TEU had been triggered in relation to Poland and Hungary. In December 2017, the European Commission activated the above-mentioned preventive mechanism under article 7 TEU because of a clear risk of a serious breach of the rule of law by Poland. The European Parliament had earlier shared its concerns over the situation in Poland, addressing it in several of its resolutions between April 2016 and November 2017. In March 2018, it adopted another resolution by which it supported the Commission’s proposal for a council decision on the determination of a clear risk of a serious breach of the rule of law by the Republic of Poland. Not long after, the European Parliament called on the Council to trigger another article 7 proceeding, this time against Hungary. This resolution was preceded by numerous others adopted by the Parliament between March 2011 and May 2017, which mainly referred to concerns related to judicial independence, freedom of expression, corruption, rights of minorities, and the situation of migrants and refugees in Hungary.

What is the New 2021 Mechanism to Protect the Rule of Law?

The EU draws a great part of its legitimacy from the fact that its organs and member states respect the rule of law. However, the above indicated problems with certain member states demonstrated that the existing tools were insufficient to preserve its values. In 2021, the EU therefore decided to add an additional layer of protection, establishing that in cases when breaches of the law directly affect or seriously risk affecting the EU’s financial budget, these violations are also punishable financially (conditionality mechanism). It is different from the general rule of law mechanism. First, the European Commission must determine that a possible breach of the rule of law exists, and propose triggering the mechanism against a member state (Conditionality Mechanism, art. 4). After that, the European Council proposes measures to force compliance with EU values, such as suspending payments, against the member state in question (id. art. 5). On March 2, 2022, the European Commission published non-binding guidelines that explain how it will apply the conditionality mechanism.

What are Some Recent Developments?

In September 2021, the CJEU sentenced Poland to pay 500,000€ (about US$500,000) in damages to the Czech Republic for the unlawful operation of an open-cast lignite mine. Since Poland refused to pay this penalty, the European Commission announced that it would withhold payments from the EU budget to Poland. Furthermore, due to this refusal and other rule of law violations as mentioned above, it sent informal letters to Poland and Hungary threatening to activate the new 2021 mechanism for the first time. In October 2021, Poland and Hungary both filed an action to annul the new rule of law mechanism, alleging that the rule of law mechanism is incompatible with their laws, and urging the EU to respect their member states’ sovereignty by not intervening in what they regard as domestic matters. The European Commission decided not to activate the conditionality mechanism until the CJEU had issued its ruling. The European Parliament therefore filed an action for failure to act under article 265 TFEU against the European Commission. In February 2022, the CJEU affirmed the legality of the 2021 conditionality mechanism and ruled against Poland and Hungary. The Commission then activated the conditionality mechanism against Hungary in April 2022. The European Parliament therefore decided to withdraw its action against the Commission in June 2022.

Whether the willingness to compromise, especially by member states like Poland and Hungary, actually increases with the new rule of law mechanism remains to be seen.

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