Poland and Hungary have lost a major lawsuit over withholding EU subsidies from member states that erode the rule of law. EU countries may be cut if, for example, judges cannot do their work independently or if there is corruption, the highest European court ruled.

The so-called conditionality regime is intended to prevent EU money from falling into the wrong hands through corruption or favouritism.

EU leaders agreed in 2020 on the introduction of such a mechanism for EU money, with the Netherlands as one of the pioneers. However, the Polish and Hungarian leaders agreed on the condition that the EU court ruled on it.

The new rule has been in effect for more than a year but has not yet been implemented. However, the European Commission already reported to Poland and Hungary last autumn what it believes is wrong with their handling of the rules of democracy and the rule of law.

For example, Poland affects judges’ independence, and in Hungary, the commission finds conflicts of interest and corruption.