The rule of law is one of the founding values of the European Union.
Respect for the rule of law is also key for the sound financial management of the Union budget and the effective use of the Union funding.
As of 2021, the Union budget has an additional layer of protection in cases when breaches of the rule of law principles affect or risk affecting the EU financial interests. This is thanks to a general regime of conditionality for the protection of the EU budget – also known as a "conditionality regulation" – that has been is in force since January 2021.
This new conditionality regime allows the EU to take measures – for example suspension of payments or financial corrections – to protect the budget. At the same time, the final recipients and beneficiaries of Union funds should continue to receive their payments, directly by the Member States concerned.
Objective and scope
Measures under the conditionality regulation can only be proposed if the Commission finds out that breaches of the rule of law principles directly affect or seriously risk affecting the sound financial management of the Union budget or of the financial interests of the Union in a sufficiently direct way.
The instrument complements other tools and procedures to protect the EU budget, for example checks and audits or financial corrections, or investigations by the EU's anti-fraud office OLAF. The Commission will only recur to the regulation if the other Union budget protection tools cannot be used more effectively.
The general regime of conditionality is different from the European Rule of Law mechanism (with the annual Rule of Law report at its core) whose goal is to promote the rule of law.
Under the conditionality regulation, the Commission will propose appropriate and proportionate measures to the Council in case rule of law breaches in a given Member State threaten the EU financial interests. The Council will then take a final decision on the proposal of measures.
In any case, the final recipients and beneficiaries of Union funding remain entitled to receive their payments. To that end, the Member States concerned should continue to make these payments. In other words, if you are a final recipient or beneficiary of EU funding, you should continue to receive financial support from the Member State independently from the measures imposed under the conditionality regulation.
To clarify a number of elements related to the functioning of the conditionality regulation, the Commission has prepared a set of guidelines. These explain in detail how the Commission will apply the conditionality regulation, including how the rights of the final recipients and beneficiaries of EU funding will be protected. The guidelines have been prepared through a comprehensive process, including consultations with the European Parliament and EU Member States. They also take into account the judgements of the European Court of Justice in cases C-156/21 and C-157/21 released on 16 February 2022.
The guidelines are available online here:
2 MARCH 2022
Guidelines on the application of the conditionality regulation