Commission says no to Hungary for failure to address rule of law concerns

On 15 December 2022, the Council, on a proposal by the Commission, adopted an implementing decision setting measures to protect the Union budget from breaches of the principles of the rule of law in Hungary.

These breaches related to the areas of public procurement, prosecutorial action, conflict of interest, the fight against corruption and the public interest trusts.

The two measures adopted by the Council were

• (i) a suspension of 55% of budgetary commitments for three Cohesion Policy programmes over the 2021-2027 period and
• (ii) a prohibition for the Commission to enter into new legal commitments with public interest trusts and entities maintained by them for EU funding implemented under direct or indirect management.

On 2 December 2024, Hungary formally notified the Commission about specific legislative amendments regarding public interest trusts and entities maintained by them. With this notification, Hungary requested the Commission to propose the Council to adapt or lift the measure on public interest trusts adopted by the Council in 2022.

With today's decision, the Commission found that

the legislative amendments do not adequately address the outstanding concerns on conflicts of interests in the boards of public interest trusts. On that basis, the Commission concluded that the measure on public interests trusts and entities maintained by them should remain in place.

The Commission added that it had clearly outlined adaptations that would be needed to sufficiently remedy the situation.

The other Council measure suspending part of cohesion funds also remains in place, as Hungary did not notify any remedy to address the related issues.

Hungary can at any time adopt and notify new remedies to demonstrate to the Commission that the measures adopted by the Council should be adapted or lifted.

The Hungarian Recovery and Resilience Plan (RRP) contains a number of ‘super-milestones' corresponding to the remedial measures under the budget general regime of conditionality. Therefore, no RRP disbursement following a payment request is possible until Hungary addresses all rule of law concerns under the conditionality regime, the Commission concluded.

Cover photo: EU