CJEU dismisses conditionality mechanism challenges by Hungary, Poland

"That [conditionality] mechanism was adopted on an appropriate legal basis, is compatible with the procedure laid down in Article 7 TEU and respects, in particular, the limits of the powers conferred on the European Union and the principle of legal certainty," the CJEU said in a press release on the ruling.

 Hungary and Poland argued in the cases that the EU Treaties do not provide a legal foundation for the mechanism, while its establishment circumvents the Article 7 procedure that can strip member states of EU voting rights. They also said the EU had exceeded its powers and pointed to a breach of the principle of legal certainty as the mechanism neither defines the concept of the rule of law nor its principles.

Hungary and Poland supported each other's actions in both cases.

In its communication on the decision, the CJEU said the conditionality mechanism "is capable of falling within the power conferred by the Treaties on the European Union to establish 'financial rules' relating to the implementation of the Union budget", adding that "the regulation does not circumvent the procedure laid down in Article 7 TEU and respects the limits of the powers conferred on the European Union".

Addressing the issue of the definition of the rule of law, the CJEU said the principles set out in the conditionality mechanism regulation, as "constituent elements" of the concept of the rule of law, have been "developed extensively" in its case law.

"Those principles have their source in common values which are also recognized and applied by the member states in their own legal systems and...they stem from a concept of 'the rule of law' which the Member States share and to which they adhere, as a value common to their constitutional traditions," the CJEU said.

"Consequently, the court finds that the member states are in a position to determine with sufficient precision the essential content and the requirements flowing from each of those principles," it added.

Von der Leyen welcomes decision, Varge claims Brussels abuses its power

In a statement issued after the CJEU rulings, European Commission President Ursula von der Leyen welcomed the decisions and said the EC will now "analyse carefully" the reasoning of the judgments and their possible impact on further steps regarding the conditionality mechanism regulation.

"Taking into account these judgments, we will adopt in the following weeks guidelines providing further clarity about how we apply the mechanism in practice," she said.

Von der Leyen said the EC has been monitoring the situation in all member states since the regulation on the conditionality mechanism came into force "and we are assessing in depth certain cases".

"Where the conditions of the regulation are fulfilled, we will act with determination," she added.

In a post on Facebook, Minister of Justice Judit Varga claimed the CJEU ruling was "politically motivated" by recently approved Hungarian legislation that codifies the right of parents to take charge of their children's sexual education.

She called the decision "living proof that Brussels is abusing its power" and said "the bureaucratic elite does not want to accept the free choice and opinion of the Hungarian people", referring to a national referendum on issues addressed by the legislation scheduled to coincide with general elections on April 3.