The European Parliament wants the Commission to activate a new budgetary mechanism to freeze EU funds to countries suspected of breaching EU law.
The European Parliament has decided to sue the European Commission after the executive's repeated refusal to activate a new conditionality mechanism that can freeze EU funds for member states suspected of breaching EU law.
The lawsuit was submitted on Friday by the Parliament's legal service before the European Court of Justice (ECJ), based in Luxembourg.
"We expect the European Commission to act in a consistent manner and live up to what President von der Leyen stated during our last plenary discussion on this subject. Words have to be turned into deeds," said the EU Parliament's president David Sassoli in a statement.
MEPs have for weeks threatened the Commission with the lawsuit in an attempt to pressure the executive into activating the mechanism against EU countries accused of democratic backsliding, such as Hungary and Poland. The regulation underpinning the scheme entered into force in January but no step has been officially taken to put it into practice.
Tensions began flaring up back in June, when the hemicycle voted 506 to 150, with 28 abstentions, in favour of a highly critical resolution to take the executive to the ECJ over "failure to act". Article 265 of the EU treaties empower the institutions to sue each other if they don't comply with their obligations.
The institutional row took a dramatic turn in early October when the Polish Constitutional Court issued a verdict defying the primacy of EU law inside the country, a legal principle established in 1964, long before the country joined the bloc.
In a majority ruling, the tribunal openly rejected two key articles of the EU treaties: Article 1, which establishes the conferral of competencies from member states to the institutions, and Article 19, which sets up the EU's Court of Justice. The judges said these provisions were incompatible with the Polish constitution, an unprecedented conclusion in the bloc's history.
The ruling sent shockwaves across the continent, with many MEPs calling on the Commission to take decisive action and reassert EU law primacy. The executive promised a firm response but didn't provide a specific answer and simply said it was analysing the court's legal reasoning.
Days later, Polish Prime Minister Mateusz Morawiecki appeared before lawmakers in a plenary session in Strasbourg and delivered a defiant speech, condemning the language of "blackmail" and "coercion".
"We cannot remain silent when our country – including in this Chamber – is attacked in an unfair and biased manner," he said. "Poland will not be intimidated."
The aggressive tone of the speech outraged lawmakers, who pointedly reminded the prime minister that Poland had chosen to join the European Union – and therefore accept all its rule – on its own volition. Similar reproaches were echoed later that week by heads of government during a EU summit.
It was at the end of that very summit when President von der Leyen confirmed her team will wait to trigger the mechanism until a pending legal case before the ECJ is resolved. The action was filed by Hungary and Poland – even if Warsaw no longer recognises the ECJ's absolute authority – in an attempt to discredit the regulation, which they had tried to prevent from passing in late 2020.
Although their chances of success are slim, the two countries have managed to delay the activation of the budgetary scheme, which, if applied, could hit both hard. Poland is by far the biggest recipient of EU funds, having received more than €18 billion in 2020.
Can the Parliament win the case?
The conditionality mechanism is supposed to be activated by the Commission, which has to build a case against a member state suspected of breaching EU law. The accused country can then reply to the executive and exchange information.
If the Commission believes the unlawful situation persists, it can formally issue a recommendation to freeze EU funds. The decision has to be approved by national ministers by a qualified majority (55% of member states representing at least 65% of the total EU population).
Potential punitive measures include a suspension of payments, termination of legal commitments, an early repayment of loans or a prohibition to enter new financial agreements. The measures can be later lifted if the disciplined country corrects the situation.
In total, the whole procedure can take up from five to nine months.
Besides the protracted duration, experts have raised the alarm over the regulation's narrow scope. According to mechanism's rules, EU law breaches have to affect the "sound financial management or the protection of the financial interests of the Union". This requirement would likely rule out the activation against, for instance, Hungary's anti-LGBT laws.
However, the unprecedented ruling from the Polish Constitutional Court could prove useful for building a strong case. Rejecting the primacy of EU law can have far-reaching consequences for companies and organisations in Poland that are meant to receive and process EU funds.
Additionally, there are multiple concerns regarding the country's judicial independence and the manner in which judges are appointed. This week, the ECJ ordered Warsaw to pay record daily fines of €1 million until the government agrees to dismantle a series of controversial judiciary reforms.
It's still unclear if the Parliament's lawsuit will succeed. When President Sassoli sent in June a letter to the Commission urging immediate action, President von der Leyen replied that MEPs had not put forward "clear and precise" cases that would merit the application of the conditionality mechanism.
The Parliament's legal services will now have to show the ECJ that there are indeed specific circumstances present in certain member states that are undermining the EU budget's integrity and therefore require triggering the scheme.
Lawmakers have said that if during the procedure the Commission were to change its mind and activate the mechanism, they would be willing to withdraw the lawsuit.
Bringing the legal action to an end could cause great reputational damage and public humiliation on both sides. If the Commission loses, it will have no choice but to obey the lawmakers' demands and activate the mechanism. President von der Leyen's credibility on rule of law will be severely diminished.
But if the executive wins, the Parliament will appear powerless and inefficient. As a result, its political leverage will plummet, leaving the hemicycle in a vulnerable position for the next political fight.