EP votes in favour of potential lawsuit against EC over Hungarian judicial reform worth billions of euros

The European Parliament voted in favour of a resolution about Hungary and the frozen EU funds on Thursday. 345 voted in favour of the proposal, 104 against and 29 abstained.

According to data from MEPWatch, the groups were almost totally split between the two sides: the centre-right EPP, the socialists, the liberals, the greens and the far-left supported the final proposal, while the conservative-eurosceptic ECR and the far-right ID opposed it. Among the Hungarians, the two Momentum MEPs and István Ujhelyi, (formerly with the MSZP and currently working for his own Esély Közösség), were in favour, while the Fidesz MEPs and Márton Gyöngyösi from Jobbik were against the proposal. The others (DK, three members of Fidesz and KDNP and György Hölvényi of the People's Party) did not vote – but they didn't do so for the amendments and several other votes of the day either, so they were likely absent.

According to the EP, Orbán may have violated a fundamental legal principle of the EU

MEPs voted on the document (the draft of which may be found here) in response to the European Commission's approval of the Hungarian government's judicial reform last December, which was previously cited as the reason for almost completely blocking payments for Hungary from the EU's catch-up funding budget. Although part of the cohesion funds is still being withheld due to other conditions, almost half of the €22 billion, to be exact, €10.2 billion (roughly 3,900 billion forints), have been made available. The money is paid out by the EU in exchange for invoices for pre-financed developments, and as of the beginning of this year, the Hungarian government has drawn down €445 million (about 170 billion forints).

During the Wednesday debate on the draft resolution, the most recent and the upcoming EU summit was also discussed. Last December's decision about making part of the funds available came just one day before the year's last meeting of heads of state and government. During the debate on the proposal, many MEPs suggested that the approval was a trade-off for the European Commission's decision allowing Ukraine to begin accession negotiations, and that Viktor Orbán might make a smilar threat at the next summit in February, having already vetoed an increase in the EU budget and further aid for Ukraine. At the same time, Hungarian governing parties spoke of ideological blackmail and a political circus staged as part of the campaign for the June EP elections.

The resolution condemns Viktor Orbán's "complete disregard and violation of the EU's strategic interests in blocking the decision on the fundamental review of the Multiannual Financial Framework, including the aid package for Ukraine". According to the text, "such actions violate" the principle of loyal cooperation enshrined in the EU's quasi-constitution, the founding treaties. (The Hungarian Prime Minister himself has previously admitted that linking an increase in the EU budget with the frozen Hungarian funds would "border on the edge of legality".) The text adopted by the EP states that "the EU must not give in to blackmail in any way, and it must not bargain on the strategic interests of the EU and its allies by surrendering its values in exchange".

They would sue over the approval of the judicial reform

The document is not a piece of legislation, but it could have practical consequences. One of them is the beginning of preparing a lawsuit at the EU Court of Justice.

The EP is instructing its own legal affairs committee to "take the necessary steps as soon as possible" to analyze the Commission's decision to release €10.2 billion.

The investigation is being launched in order to

"bring an action before the Court of Justice of the European Union to examine the legality of the decision".

The European Commission argued, both immediately after the decision was announced and during Wednesday's debate, that it would have instead been irregular if it had not decided to approve the reforms,

with Justice Commissioner Didier Reynders even saying that without the approval, the Hungarian government could have been the one to sue.

The Hungarian government adopted the necessary legislation in May and finalized the conditions in June, after which the European Commission asked for clarifications in two more rounds. In the second one, the last requested legislative measure was published in the Hungarian Official Gazette the day before the December EU summit, which was one of the conditions for the Commission's approval. According to Didier Reynders' explanation in December, the Hungarian government was therefore to blame for the timing, as in his opinion, the last piece of legislation was adopted faster than usual.

According to the EP resolution, "the measures required for unlocking EU funding should be treated as a single, coherent package and payments should not be made even if progress has been made in one or more areas", but there are shortcomings elsewhere. The problem with the EP's opinion may be that the blocking is triggered by a number of separate procedures and instruments where the conditions do not fully overlap.

The European Parliament "remains committed" to "ensuring that EU funds reach the Hungarian population, including through direct funding provided to local and regional authorities and the civil society, as soon as the conditions are met, and stresses that the sole responsibility for the current situation lies with the Hungarian authorities".

The Liberals’ no-confidence motion has failed

The resolution, however, would like the European Commission to continue to use all means at its disposal, and also "expects swift action" due to the recently adopted Sovereignty Protection Law. While the EP has no direct role concerning blocked EU funding – only the European Commission and in some cases member states do – Hungarian government politicians have regularly complained about pressure from the MEPs. The EP could even table a motion of no-confidence, and if Commission President Ursula von der Leyen wants to stay in office after the June EP elections, she will need a majority.

Two amendments to the proposal have also been tabled, with one of them calling for a motion of no-confidence. One of the MEPs submitting this on behalf of the Liberals was (Hungarian opposition party) Momentum's Katalin Cseh. The motion "points out that if the release of funds for Hungary is repeatedly used, especially in the context of the negotiations at the next European Council summit on 1 February 2024", it would "withdraw confidence". The amendment did not pass.

They would move the Article 7 procedure to the next phase

The resolution calls on Member States to determine that Hungary is in serious and persistent breach of EU values under the second paragraph of the "Article 7" procedure.

The European Parliament initiated the first phase of this procedure in 2018. Despite occasional hearings, member states have so far not decided whether to halt the procedure or to move it forward, so Hungary is still in the first phase of the procedure. At this stage, it is possible for four-fifths of the EU ministers to declare that there is a clear risk of Hungary being in serious breach of core EU values. Prior to this, they may make recommendations, but they have not even got that far. Thursday’s resolution "deeply regrets" that Member States have failed to "make meaningful progress" and calls for recommendations and action.

The second phase of the Article 7 procedure can be triggered either by a third of the Member States or the European Commission "with the EP's agreement", meaning that at the most, the current resolution means that the Parliament's nod is a given, but the body cannot decide whether to initiate it. Article 7 of the EU Treaty does not specify that the previous stage must be completed before the second one is launched. But the latter may result in certain rights of the country in question "deriving from the application of the EU Treaties" being suspended, "including the voting rights of the representative of the government of the Member State in question in the Council". For this to happen, Member States (except for the country in question) must first unanimously establish that there has been a breach of fundamental values and then decide on the penalty by a two-thirds majority.

They don't want to see Orbán leading EU summits

What makes the situation even more interesting is that the Council, which will be discussing the issue and which is made up of ministers of Member States, will be chaired by Hungary for six months starting in July. Following a resolution from last summer, the EP "is once again raising the question as to whether the Hungarian government – given its failure to comply with EU law", its core values and "the principle of loyal cooperation" – will be able to credibly fulfill this role in 2024.

The order of the Council presidency was previously set and could only be changed by the member states themselves. A far-left MEP's amendment would have called on them to do so "in order to suspend the Hungarian presidency", but the amendment, like the one mentioned above, failed to secure a majority.

The stakes are further raised by the fact that Charles Michel, who heads the European Council, has decided to run in the June EP elections and will have to leave his current post before his mandate expires in November. The resolution "recalls that in certain cases, the President of the European Council may be replaced by a member of the European Council representing the Member State holding the six-month Council Presidency at the time". In other words, Viktor Orbán may have to step in temporarily at the helm of the EU's highest political body. The EP "is calling on the Council to find appropriate solutions to mitigate these risks as soon as possible". According to the text, the EP "may take appropriate measures if no such solution is found", but it is not specified what exactly these would be. In the text, the EP also calls on the Council President and Member States to "immediately launch the reforms which are underway, in order to put an end to the abuse of the right to veto and to blackmail in the European Council and other European institutions".