EU court upholds €320 million fine against Poland over judicial reform

The European Commission acted correctly when it deducted €320,200,000 from Poland’s allocated share of the EU budget over the controversial judicial reform introduced by the previous government, the General Court has ruled.

“In recovering the amounts payable, the Commission did not infringe EU law,” the judges in Luxembourg said on Wednesday.

The Commission, which oversees the common budget and approves regular payments, has an “offset mechanism” that it can use when a member state refuses to pay the fines imposed by the higher court, the European Court of Justice, for legal breaches.

In Poland’s case, fines worth €1 million per day were slapped in October after the nationalist government of Law and Justice (PiS) ignored an interim order to immediately suspend the effects of its judicial reform, which the Commission said endangered the separation of powers and brought the judiciary under political control.

The main point of contention was the disciplinary chamber of the Polish Supreme Court, which PiS empowered to punish magistrates according to the content of their rulings.

Warsaw offered concessions by adopting a new law in June 2022 but still refused to wire the required amount. In April 2023, the fine was reduced to €500,000 per day.

The showdown prompted the Commission to activate the “offset mechanism” and subtract the accumulated penalties from Poland’s share of the EU budget.

Poland, a large recipient of agricultural and cohesion funds, contested the deductions, saying the law of June 2022 merited a reprieve, and filed a complaint before the General Court to recover €320,200,000 in lost funds.

The daily fines were in place until June 2023, when the ECJ delivered its final judgment and struck down the reform in its entirety. The tribunal said it was “incompatible” with the right to access an “independent and impartial judiciary”.

On Wednesday, the General Court dismissed Poland’s request for a reimbursement and concluded the Commission acted lawfully when it triggered the “offset mechanism”.

“Inasmuch as Poland had not fully complied with its obligations, the Commission was obliged to ensure recovery of that amount in full,” the General Court said.

The ruling can still be appealed by the government of Prime Minister Donald Tusk, who, upon taking office in 2023, moved fast to undo the reform introduced by PiS. Tusk’s promise to restore the rule of law convinced Brussels to unfreeze €137 billion in cohesion and recovery funds, which were paralysed over the contentious overhaul.

“What is important is that the European Union acts in a consistent manner with all members states when it comes to rule-of-law issues, that we ourselves follow due process,” Michael McGrath, the European Commissioner for Democracy, Justice and the Rule of Law, said on Wednesday, hailing the “very good success rate” of court cases.

“Compliance with the rule of law is not à la carte, it is not an option extra. It is a fundamental part of European Union membership.”