Protection of the Rule of Law and ‘Competence Creep’ via the Budget. The Court of Justice on the Legality of the Conditionality Regulation

On 16 February 2022, the Court of Justice delivered the long-awaited judgments in cases C-156/21, Hungary v Parliament and Council, and C-157/21, Poland v Parliament and Council, concerning the legality of the rule of law conditionality regime established by Regulation (EU, Euratom) 2020/2092. Among other aspects, for the very first time the Court was confronted with the competence issues arising from the use of spending conditionality as an alternative enforcement mechanism of EU law. In particular, the Court was asked to examine, first, whether the contested regulation was grounded on an appropriate legal basis and, second, whether it circumvented the key procedure for the enforcement of EU values established by the Treaties, i.e. Article 7 TEU. The case note focuses on these issues against the broader theme of ‘competence creep’ via conditionality. The piece argues that, beyond giving a much-needed boost to the EU’s political action in defence of EU values by unlocking Regulation 2020/2092, the Court has set a rigorous, yet reasonable, test for assessing the legality of spending conditionality clauses pursuing EU law enforcement functions.