European Parliament sues Commission over the release of €10.2 billion in frozen funds to Hungary

The move, anticipated on Monday evening, was rubber-stamped on Thursday morning by the Parliament’s president, Roberta Metsola, during a meeting with the leaders of the political groups. Metsola has the final authority to launch legal action against other institutions before the European Court of Justice.

The deadline for submission is 25 March.

With the lawsuit, the hemicycle piles pressure on Ursula von der Leyen as she seeks a second term at the helm of the Commission and vows to stand firm on the rule of law, a sensitive issue that has absorbed considerable energy of her first mandate.

Von der Leyen’s family, the European People’s Party (EPP), did not oppose Thursday’s vote but, in a statement, put the blame on the entire College of Commissioners, rather than on the president herself. 

“We want to make sure that taxpayers’ money has been treated in accordance with the Treaties. This is not a political issue for the EPP, this is not an election issue – we only want to have legal clarity,” said MEP Petri Sarvamaa.

The ire of lawmakers stems from the decision taken by the Commission in December that unblocked €10.2 billion in cohesion funds for Hungary, which the country had been unable to access due to persistent deficiencies in the rule of law.

The executive argued the release was justified because Budapest had in May last year passed a reform to strengthen judicial independence and mitigate political interference in the courts, in line with four “super milestones” that Brussels had imposed.

Lawmakers, echoing the concerns expressed by civil society, challenged the reasoning and said the overhaul was not up to the task. They also complained the money had been unfrozen one day before a crucial summit of EU leaders in which Prime Minister Viktor Orbán had threatened to veto key agreements on Ukraine.

In a scorching resolution broadly approved in January, MEPs raised the prospect of legal action and stressed that “in no way can the EU give in to blackmail and trade the strategic interests of the EU and its allies by renouncing its values.”

“Hungary does not meet the standard of judicial independence set out in the (EU treaties) as the measures adopted do not ensure sufficient safeguards against political influence and can be either circumvented or inadequately applied,” they wrote.

Days later, MEPs grilled Commissioners Didier Reynders (Justice), Nicolas Schmit (Jobs) and Johannes Hahn (Budget) for striking what they said was a backroom deal with Orbán to ensure the lifting of his veto in exchange for the €10.2 billion. They also complained the validation of the judicial reform was rushed and the executive should have waited to see results on the ground before releasing the cash.

The three Commissioners stood their ground and insisted Hungary had provided sufficient evidence to demonstrate compliance with the four “super milestones,” which included measures to strengthen the National Judicial Council, a self-governing supervisory board, and crack down on political meddling inside the Supreme Court.

A similar argument was voiced on Thursday by a spokesperson, who said the Commission was “under a legal obligation” to partially release the money because Hungary had demonstrated “the independence of its judiciary.”

“The Commission recalls that when taking such a decision it is bound by strict timelines and conditions set out in the applicable Union legislation,” a spokesperson said, in reaction to the Parliament’s lawsuit. “The Commission considers it acted in full compliance with EU law and will defend its decision before the EU court.”

As of today, Brussels is still withholding nearly €12 billion from Hungary’s allocated share of cohesion funds and most of its €10.4-billion recovery and resilience plan, a situation that Orbán has repeatedly denounced as “financial blackmail.”

Each envelope is subject to different sets of conditions that require legislative changes in fields like LGBTQ+ rights, asylum policy, public procurement and anti-corruption. Commission officials have said that little to no progress has been made in this regard.

In their January resolution, MEPs warned the funds that remain blocked “must be treated as a single, integral package, and that no payments should be made even if progress is made in one or more areas but deficiencies still persist in another.”

This is not the first time the Parliament has resorted to the high court in Luxembourg to force the Commission’s hand. In October 2021, the hemicycle filed a lawsuit against the executive for its “failure to apply” a novel mechanism that linked payments of EU funds to respect for the bloc’s fundamental rights.

This piece has been updated with more information about the lawsuit.