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Battle in the house? – The European Parliament initiates proceedings against the European Commission

Tension between Hungary and Poland and the European Parliament has considerable increased in the past years. The Parliament has been speaking up against these countries openly and was pressuring the Commission to take measures against these Member States. Roberta Metsola’s European Parliament had been threatening the European Commission for some time over the funds of Hungary and it seems that these promises are now being kept.

In December 2022, the European Commission froze Hungary’s funds based on the 2021 Rule of Law Conditionality Regulations, allowing the entity to withhold fund for budgetary protection. Due to this decision, Hungary’s budgetary commitments in cohesion funds and Recovery and Resilience Funds, accounting for around € 16.9 billion, now adding up to approximately €22 billion. The European Commission prescribed the fulfillment of super-milestones.

The Treaty on the European Union (TEU) Article 7 has been the center of attention in the past years, especially against Poland and Hungary. It states that in case of a direct risk of a serious breach of TEU Article 2’s values by a Member State, that risk will be determined after consultation and hearing of the concerned Member State. Recommendations and observations from both sides were made, however, the political mood did not seem to settle.

The regulation on a general regime of conditionality for the protection of the Union budget or more known as the Rule of law conditionality regulation was passed on 16 December 2020 by the European Parliament and the Council. Its preamble point (17) and Article 5 prescribes with detail the implementation of measures in the event of breech of rule of law principles, including the suspension of commitments and payments guaranteed to the concerned Member State.

The Commission constructed a list of targets for Hungary to achieve under the recovery and resilience plan (RRP for short). In December 2022, the original plan was extended with additional measures and thus contained 38 measures with 111 milestones. From these targets, 27 milestones are called the ‘super milestones”. A super milestone refers to targets that must be met to receive funds and payment from the European Union. A similar, but shorter list of measures was prescribed to Poland in middle 2022, before Hungary.

The requirements from these milestones, according to the European Commission’s judgment, were recognized and met. Namely, there were reforms taken to ensure judicial independence under the EU Charter. However, according to Parliament, the other issues are still unaddressed and need further reform. Due to the partial fulfillment, from the frozen funds, € 10,2 billion were allocated from the previously mentioned cohesion funds to Hungary.

On March 14, 2024, after the meeting with the political family leaders, Roberta Metsola, the European Parliament’s president has handed over the legal action threatening the European Commission with a lawsuit. According to Article 51 of the Protocol on the Statute of the Court of Justice of the European Union, the Court has jurisdiction in cases when one or more institutions of the European Union initiate proceedings against another institution as well. According to Article 19 of the same protocol, the institution shall be represented by an appointed agent who might be assisted by a lawyer before the Court.

The Parliament’s president has the right to submit the legal action to the European Court of Justice to decide the legal dispute. The European Court of Justice’s jurisdiction is secured based on Articles 268 and 340 of the TFEU. The promise of the president included a final deadline, 25 March 2024, for the lawsuit to be submitted to the Court (ECJ) which the European Court of Justice confirmed on Tuesday, 26 March 2024. Both EU institutions confirmed the existence of the legal dispute before the Court.

Some argue that the Parliament’s timing is beyond suspicious as the European Parliament is about to be reelected early June 2024. That can suggest political motivation from the MEPs to win over votes in the election from their country’s citizens and to signal power to the Commission and the European voters as well. Putting pressure on Ursula von der Leyen could be a further motivator as she is up for reelection as well as her 5-year mandate is soon to be over and intends to run for a second term, as all previous Commission presidents so far.

The case was backed by all big European Union parties and party families, including the EPP (European People’s Party), which is von der Leyen’s party family. The EPP, however, tried to highlight that the Commission’s president had not acted alone, and that the commissioners from other party families and parties had also accepted and supported the fund’s release to Hungary. With that, they intended to protect von der Leyen and show support despite turning against her in the vote.

Many MEPs claimed on several platforms, that their motivation is purely based on the desire to receive some clarity in the issue of rule of law and conditionality against Hungary and are not politically motivated. The legal and political battle between the Union and Hungary has been lasting for many years already and it consumed a lot of energy of the Commission, especially of the president, and derailed the Commission to perform other, more urgent matters and tasks.

The Commission argues the release of the funds with the fact that in Hungary, reforms were implemented to strengthen judicial independence and political interference in the courts was mitigates as well, in line with the above-mentioned super milestones imposed by Brussels in 2022 in the RRP. The Parliament judges the Commission’s timing as the release was accepted one day before the European Union leaders’ summit and suspect a political “horse-trading” (as labelled on some media platforms) for lifting the veto against Ukraine.

This cannot be considered the first time, that the Parliament intends to turn to the Court in Luxembourg to force the commission’s hand and place pressure on the EU institution and Ursula von der Leyen. On October 2021, under the presidency of David Sassoli, the Parliament filed a lawsuit against the executive for its failure to apply a novel mechanism for conditionality as the Commission refrained from the usage of legal actions and first tried to settle such disputes with consultations. However, the Parliament highlighted that von der Leyen’s words are not consistent with her actions when it comes to enforcing rule of law conditionality. In this lawsuit, the Parliament’s complaint was rather general and only indirect aimed at Poland and Hungary. However, this time, the lawsuit explicitly refers to Hungary’s funds’ release as a cause of action.

MEPs desire the frozen funds to remain blocked, and that the release of these payments must be treated as a single, integral package, without fractional payments for partial achievements. However, the Commission is still withholding € 12 billion from Hungary’s allocated share of cohesion funds and majority of its € 10,4 billion RRP payments.

This power battle between the European Parliament and the Commission has been ongoing for years, and now, the current lawsuit is submitted before the Court by the Parliament. It is still questionable whether the Court, in case of a submission, would rule before the upcoming elections or it will be a longer procedure and will continue with the new Parliament and a new President.

Dorina BOSITS is a law student at the Széchenyi István University of Győr, Hungary, and an international finance and accounting graduate of the University of Applied Sciences of Wiener Neustadt, Austria. The main area of her research includes freedom of speech, digitalization, data protection, and financial law. She is a student at the Law School of MCC and a member of ELSA Győr.

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