Rule of Law Conditionality Regulation
Germany, holding the presidency of the Council, suggested a compromise on the rule of law conditionality regulation proposed by the Commission and European Parliament in September 2020.[1] Although the regulation could be adopted by the Council by a qualified majority, Hungary and Poland threatened to veto the Own Resources Decision, which defines how the MFF and NGEU are financed.[9] Particularly for the executive branch that possesses direct decision-making influence, rule of law denotes "prohibition of arbitrariness",[8] so as to prevent partiality and corruption.For the judiciary, it requires "effective judicial protection, including access to justice, by independent and impartial courts; also as regards to fundamental rights; and non-discrimination and equality before the law".[1] The European Parliament adopted a resolution on 25 March 2021 in which it stressed "that the application of the Rule of Law Conditionality Regulation cannot be subject to the adoption of guidelines", urging "the Commission to avoid any further delay in its application" and "to keep Parliament regularly informed about all ongoing investigations into breaches of the principles of the rule of law which could affect, or seriously risk affecting, the sound financial management of the Union budget in a sufficiently direct way".[19][20] The Advocate General wrote in his Opinion that since the goal was proper management of the Union's budget and not protecting rule of law as a sanction mechanism, Article 322(1)(a) TFEU is an appropriate legal basis for achieving this goal: "...the Regulation is not intended to protect the rule of law by means of a sanction mechanism similar to Article 7 TEU, but rather to establish a financial conditionality instrument to safeguard that value of the European Union..."[19] Therefore, the Conditionality Regulation establishes this difference since there needs to be the existence of a direct link between the rule of law and sound financial management by a Member State with the goal of safeguarding the Union's budget.[19] The ECJ ultimately dismissed both countries complaints, found that the Regulation has an appropriate legal basis, and noted that the Union did not exceed its competences conferred on itself by the Treaties.