–Laszlo S. Szabo, EU and financial analyst
The European Union (EU) can ensure compliance with its values, principles and rules through three legal mechanisms. The strongest option, the Article 7 TEU procedure is long and tedious. Infringement procedures can only target concrete concerns. As these two did not seem to be sufficient, a specific Rule of Law mechanism was created. This gives direct rights to the European Council but the decision can be challenged before the European Court of Justice (CJEU), which can annul it. Cases dealing with these mechanisms clearly demonstrate that each of them is subject to limitations.
The EU’s dedicated Rule of Law mechanism was intended to target systemic weaknesses in the Rule of Law, specifically as experienced in Poland and Hungary. As mentioned, the Treaties already included a tool to target violations of the fundamental values and principles enshrined in the Treaties. If a Member State seriously and persistently breaches these values and principles, then the rights of that State can be suspended pursuant to Article 7 TEU. One of these rights are voting rights, but the Treaty also enables the suspension of other rights. As this is a very strong measure, it is subject to equally strong guarantees and consists of several steps. Analysis of the weaknesses of the measure and also statements by researchers to the press indicate that even non-concerned Member States worry that the procedure could be used against them in the future and are therefore reluctant to act quickly.
In Poland, the government changed before the Union reached the beginning of the last stage of the Article 7 procedure. Hungary succeeded in delaying the process by suing the European Parliament for a vote regarding one of its resolutions of September 12, 2018: the judgment in this case (C-650/18), dismissing the application, was handed down only on June 3, 2021.
In Hungary, building an “illiberal” system was accompanied by a significant economic appropriation of the assets of the country by oligarchs close to the system, including the son-in-law and a childhood friend and neighbour of the Prime Minister. They and other oligarchs with ties to politicians of the ruling party occupied the main economic positions, trying – and sometimes succeeding – to drive international companies out and taking over a lot of Hungarian-owned companies. The main methods used in this regard consisted of buying out owners, introducing taxes discriminating against the players they wanted to expropriate, putting the burden of fixed prices not enabling rentable production or services onto economic players. Some of these measures were also the subject to CJEU cases, with mixed results.
There is, however, another link between the state favouring its own oligarchs and the EU: these oligarchs often enriched themselves by public contracts financed from EU funds at inflated prices, without competition or even based on manipulated award criteria. When the European Commission tried to stop this practice, reports by the EU anti-fraud office (OLAF) were largely ignored and, as a last resort, EU money was replaced by local funds. This for instance happened when a series of street lighting projects almost exclusively awarded to the company of the son-in-law of the Prime Minister was found to be irregular by OLAF: the EU funding application was withdrawn. This means, according to EU rules, that the funds would then not be lost but remain available for use in other projects.
This practice enticed the EU to explore ways to address the systematic weaknesses that enabled government-sponsored fraud with EU funds. This was deemed necessary, as the traditional infringement procedure was not considered to be effective in this regard. That procedure involves a lengthy preparation, and does not envisage any deadlines for the actions taken by the two EU institutions involved – the European Commission and the CJEU. Moreover, if the CJEU judgment is not complied with, sanctions can be applied only after another judicial procedure.
There was a perceived need for preventive action with immediate effect in the face of Rule of Law concerns, and this led to the adoption of the Rule of Law (also called Conditionality) mechanism, which enables the European Council to directly block the allocation of EU cohesion funds to a Member State. The discussions preparing the mechanism between the European Commission, the Council and the European Parliament and the subsequent cases before the Court of Justice (Cases C-156/21 Hungary v Parliament and Council and C-157/21 Poland v Parliament and Council), where Poland and Hungary challenged the mechanism, resulted in the first limitation: only those Rule of Law deficiencies that have a direct impact on the protection of the EU budget, i.e. those which prevent the detection, investigation or sanctioning of fraud with EU funds, can be penalised through a suspension of cohesion funds.
This limitation clearly came to the fore in the first case involving a challenge to a concrete decision taken by the Council of Ministers under the Rule of Law mechanism (T-115/23), where several universities, including the University of Debrecen, petitioned the General Court (one of the courts that make up the CJEU) to annul that decision, which denied these universities funding for participation in the Erasmus universities’ exchange programme.
During the hearing on 9 September 2025, one of the hotly disputed questions was whether the nomination of government-linked political actors to the governing councils or boards of the universities, with management of the latter transferred from the State to those governing councils or boards, can indeed have a negative influence on the regularity and fairness of spending the EU funds related to the Erasmus programme. This question was the consequence of the limitation mentioned earlier: regardless of the seriousness of breaches of the Rule of Law, access to EU funds can only be suspended when these deficiencies have an impact on the protection of the financial interests of the Union, perpetrating or enabling fraud without the possibility to prevent or remedy its effects. The argument of the European Commission was that the members of these boards can use their influence in a way that EU funds are used to the benefit of cronies and thus irregularly.
Further limitations were visible in high-profile infringement cases brought by the Commission before the CJEU, alleging that certain Hungarian laws were in conflict with European values and principles laid down in Article 2 TEU or violated fundamental rights as protected under the EU’s Charter of Fundamental Rights. During the hearings in these cases, it was established that a breach of Article 2 of the TEU alone cannot give rise to an infringement procedure: the Member States must have infringed concrete provisions of the Treaties or European legal instruments. Reliance on the Charter of Fundamental Rights is subject to the limitation that it can be used only when Member States apply European law.
In the infringement proceedings currently pending before the CJEU, the pertinent issues are as follows. The Hungarian government has argued that the Court has no jurisdiction or that the country is not obliged to observe the Charter as the content of the laws falls outside the scope of EU law. This is alleged to be the case with the so-called law against pedophilia, concerning criminal prosecution, and the so-called sovereignty law, dealing with national security. The use of this argument for domains only indirectly concerned by national security was, however, already rejected in a previous case before the CJEU (C-33/22).
While in the earlier mentioned cases involving universities, European values (freedom of education and research) are invoked in support of the Hungarian government, EU rules enshrining these values are allegedly not applicable in these two cases. The Hungarian government has also argued that there is no reason to believe that these laws limit any freedoms. A question, asked by the president of the Court in the hearing shed light on the hypocrisy of this argument: whether the office has ever investigated or reported about an organization financed or influenced from abroad which presented an opinion favourable for the government.
What is at stake in these cases? The law on the protection of minors and against pedophilia is mainly targeting the LGBT community, mixing pedophilia with homosexuality and transsexuality and imposing limitations on publishing and displaying these. The sovereignty law created a state office which has wide ranging rights to investigate and publish its report about organisations influencing the political debate when they are financed or influenced from abroad. The law does not make a distinction between EU Member States and third countries and does not enable judicial redress before the allegations are published.
There are further smaller cases in progress, one merits mention here: the first time was an individual decision of a Member State authority and not a legal act challenged before the European Court of Justice: the decision to deprive a leading opposition radio station, Klubrádió, of its surface broadcast frequency, based only on minor infringements. The advocate general found justified the CJEU rule on the compatibility of an individual decisions with EU values but expressed doubts whether the impact of the decision is sufficiently grave on the freedom of information. Judgments in this and the other outstanding cases – where the advocate general sided with the Commission –, will show how the different measures to uphold the Rule of Law prove to be effective. It can, however, already be concluded that while the overall Article 7 procedure is long and cumbersome, the infringement procedure and the Rule of Law mechanism can be used only in the case of concrete infringements and only with a thorough justification, elaborating the rules infringed and the possible consequences in detail.
Suggested citation: Laszlo S. Szabo, EU Tools to Enforce the Rule of Law are Struggling with Self-Imposed Limitations, Int’l J. Const. L. Blog, Nov. 4, 2025, at: http://www.iconnectblog.com/eu-tools-to-enforce-the-rule-of-law-are-struggling-with-self-imposed-limitations/