Op-Ed: “Rule of law-conditionality as interpreted by EU leaders” by Aleksejs Dimitrovs
On 10 December, the European Council finally agreed that the European Parliament and the Council of the European Union should immediately adopt the package of budgetary instruments, including the Multiannual Financial Framework Regulation (MFF) and the Own Resources Decision (ORD). In that way, Hungary and Poland agreed not to further block the adoption of the MFF and ORD, which they had been doing due to concerns about the draft Regulation on a general regime of conditionality for the protection of the Union budget, or the ‘rule of law-conditionality’ mechanism, as provisionally agreed by the co-legislators on 5 November.
The leaders have confirmed they support the provisional agreement on the Regulation – the negotiations will not be reopened. Nevertheless, in order to overcome the veto, the European Council included in its Conclusions a number of comments about it. Some of them arise from the text of the agreement. For example, there is a reminder that the objective of the Regulation is to protect the Union budget, including Next Generation EU, its sound financial management and the Union’s financial interests – as in recital 5 (although the Conclusions only list fraud, corruption and conflict of interest as possible threats, omitting other breaches of the law). The reference to objective, fair, impartial and fact-based application recalls the language of recital 12. The subsidiary character of the new instrument is mentioned in recital 10a. The need to demonstrate the causal link between the breaches of the rule of law and the negative consequences on the Union’s financial interests or the sound financial management of the Union budget is established in Article 3(1). The dialogue with the Member State concerned is described in Article 5, the Commission’s responsibility for autonomous assessment in Article 5(2) and recital 12, there is a review of the measures adopted in Article 6(2), and discussion in the European Council in recital 17a.
The European Council also says that the triggering factors set out in the Regulation are to be read and applied as a closed list of homogeneous elements, and the Regulation does not relate to generalised deficiencies. Indeed, the reference to generalised deficiencies disappeared from the text during the negotiations. Nevertheless, the triggering factors remain almost the same as in the initial proposal by the Commission, and while the list of possible links with financial interests is indeed closed in Article 3(2), the list of examples of the breaches of the rule of law in Article 2a is not exhaustive and is quite general in nature. Anyway, as the text of the agreement remains untouched, this is a matter of semantic discussion on whether the European Council accurately describes the agreement reached.
Still, two points of the conclusions go beyond the text of the agreement. The European Council insists that the measures will apply only in relation to budgetary commitments starting under the new Multiannual Financial Framework, including Next Generation EU. There is no such limitation in the Regulation, and the list of measures mentioned in Article 4(1) is quite wide. In any event, given possible delays in application and the procedure before the measures are actually applied, this point appears to be stating the obvious.
Another point is much more controversial. The European Council states that the Commission will not propose measures under the Regulation until it adopts the guidelines on application in close consultation with the Member States. Moreover, should an action for annulment be introduced with regard to the Regulation, the guidelines will be finalised after the judgment of the Court of Justice.
In accordance with Article 8, the Regulation shall apply from 1 January 2021. No guidelines or any other implementing measures are mentioned in the text as a precondition for application. Moreover – since there is no reference to implementing acts which by definition are adopted in consultation with the Member States, there is hardly any legal ground to work on the interpretation, de facto involving only one of the co-legislators. The Regulation is sufficiently clear to apply as it stands.
Pre-emption of the possible annulment action also looks strange. In accordance with Article 278 TFEU, actions brought before the Court of Justice of the European Union shall not have suspensory effect. The Court may, however, order that application of the contested act be suspended. It is hardly wise for the European Council to decide on behalf of the Court of Justice.
Finally, the whole construction looks questionable from the constitutional perspective. In accordance with Article 15(1) TEU, the European Council shall not exercise legislative functions. The Conclusions of the European Council cannot be used to interpret a legal act, especially if they contradict the text of this legal act. Also, in accordance with Article 17(1) TEU, the Commission shall ensure the application of the Treaties, and of measures adopted by the institutions pursuant to them. The European Council’s promise that the Commission will adopt a declaration with a commitment not to apply a legal act for some time seems ridiculous as well. For the Commission it would be appropriate not to follow this line.
Unfortunately, making commitments on behalf of other institutions might be contagious – now some Commission representatives seem to promise that the Court of Justice will deal with a potential case in expedited procedure (prerogative of the CJEU President in accordance with Article 133 of the Rules of Procedure). Political anxiety is understandable, but it is time to recall the division of powers as enshrined in the Treaties.
Aleksejs Dimitrovs is legal advisor for the Greens/EFA Group in the European Parliament. The usual disclaimer applies.