21 February 2022

New European Court of Justice ruling strengthens EU rule of law toolbox, and philanthropy makes its voice heard

Why rule of law is of concern to us

The European Commission is determined to continue to act with determination when there are serious rule of law concerns in any Member State, including by using the conditionality related to accessing EU funding. On 16 February 2022, the EU Court of Justice (ECJ) issued a ruling dismissing the actions by Hungary and Poland against the rule of law conditionality.

The rule of law and civic space are inherently intertwined. Civil society plays an essential role as an integral part of the system of checks and balances supporting democratic systems based on the rule of law, and is instrumental in promoting and safeguarding the rule of law at European, national and local levels. Conversely, democratic societies with a strong rule of law contribute to a favourable enabling environment for philanthropy and wider civil society. Philea has been engaging and continues to engage around the rule of law policy with the perspective of rule of law concerns going hand in hand with closing civil society and philanthropy space. For instance, closing civil society space is often a first indication of a rule of law issue.

Let’s explore what the European Union has put in place as a comprehensive toolbox to ensure the protection of the rule of law. These include the rule of law conditionality mechanism; the annual rule of law report; and Article 7 legal procedures, among other mechanisms. More information on the European Commission toolbox to promote, prevent and respond to rule of law issues can be found in its 2019 blueprint for action.

The rule of law conditionality mechanism (Hungary, Poland and the ECJ)

When the European Commission introduced the new Multi-annual Financial Framework (MFF) for 2021-2027, alongside the Recovery and Resilience Facility (RRF) for the economic recovery of the Covid-19 pandemic 2021-2024, they linked the release of the funds to the Member States with a new conditionality mechanism tied with the rule of law – the so-called “rule of law conditionality”.

Since its adoption on 16 December 2020, Hungary and Poland have shown strong opposition to the regulation. On 11 March 2021, they challenged the regulation in the EU Court of Justice (ECJ). On 16 February 2022, the ECJ issued a ruling dismissing the actions by Hungary and Poland against the rule of law conditionality, which protects the European Union’s budget and ensures its implementation in line with the principles of sound financial management.

The European Commission President Ursula von der Leyen welcomes the ECJ judgments, which “follow the position that the Commission, the European Parliament, the Council and ten Member States defended in the procedure”. Also the European Parliament plenary discussed the ruling, and welcomed views of the French Presidency of the Council, represented by Clément Beaune, as well as Budget Commissioner Johannes Hahn. Commissioner Hahn reassured the plenary that when the conditions of the regulation have been fulfilled, the Commission will act with determination.

Philea together with wider civil society has published a report on the involvement of civil society organisations in the consultation processes, monitoring and implementation of the National Recovery and Resilience Plans. We consider it of importance that if the conditionality mechanism is triggered, final beneficiaries of the funds are not penalised.

Rule of law annual report by the European Commission

Philea submitted for a second time a contribution to the European Commission’s Rule of law Annual Report Consultation, and collaborated on a wider civil society contribution. In the consultation, we called on the European Commission inter alia to:

  • Plan in advance a systematic and regular involvement of civil society actors as part of the rule of law review cycle both at EU and national level at different stages of the process, including by involving them in the design of rule of law reporting structures, exchange on country specific recommendations, reporting consultations, country visits and by requesting civil society feedback on the information received from Member States and on the outcomes and findings of the report.
  • Give account of the role of civil society, as well as a free and safe civic space, as integral parts of the system of checks and balances supporting democratic systems based on the rule of law, and as instrumental in promoting and safeguarding the rule of law at European, national, and local levels.
  • Establish a clear link between the respect of the rule of law and the existence of enabling civic space in Member States.
  • Include systematically within the annual rule of law review a comprehensive assessment of civic space, including European philanthropy in each Member State. This assessment should be based on a uniform structure, using internationally accepted standards and a checklist of the information that needs to be collected/presented in the civil society chapter of the report.
  • Philanthropy must be enabled, and cross-border philanthropy must not be discriminated against and should flow freely. Foreign funding restrictions are not in line with the Free Flow of Capital. CSOs and philanthropic actors must enjoy a favourable tax environment also in cross-border contexts. 

Article 7 procedures in Poland

These developments need to be seen in light of the ongoing concerns regarding the rule of law and the separation of powers, fundamental rights, and primacy of EU law in Poland, in the framework of the ongoing “Article 7” procedures against Poland. A European Parliament delegation of ten MEPs from the LIBE and AFCO committees will be in Poland from 21 to 23 February to gather views from national authorities, members of the judiciary, civil society and the media.

Philea continues to monitor and engage around the rule of law toolbox of the European Union and stresses the important link of the rule of law policy to civil society and the philanthropy space in this context.


Hanna Hanses
Policy Manager