This is an HTML version of an attachment to the Freedom of Information request 'CLS Opinion re proposed general rule of law deficiencies mechanism'.


  
 
 
 

Council of the 
 
 

 European Union 
   
 
Brussels, 25 October 2018 
(OR. en) 
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Interinstitutional File: 
 
 
2018/0136(COD) 
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JUR 522 

CADREFIN 305 
 
 
RESPR 43 
POLGEN 198 
FIN 833 
CODEC 1808 
 
OPINION OF THE LEGAL SERVICE1 
Subject: 
Proposal for a Regulation of the European Parliament and of the Council 
on the protection of the Union´s budget in case of generalised deficiencies 
as regards the rule of law in the Member States 
  Compatibility with the EU Treaties 
 
 
DOCUMENT PARTIALLY ACCESSIBLE TO THE PUBLIC (10.12.2018) 
 
I. 
INTRODUCTION 
1. 
During the meeting of the Ad Hoc Working Party on the Multiannual Financial Framework 
(MFF) of 4 September 2018, delegations raised various issues of compatibility with the 
Treaties of the Commission proposal for the establishment of a mechanism on the protection 
of the Union´s budget in case of generalised deficiencies as regards the rule of law in the 
Member States ("the proposal").2 DELETED 
                                                 
1 
This document contains legal advice protected under Article 4(2) of Regulation (EC) No 
1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public 
access to European Parliament, Council and Commission documents, and not released by 
the Council of the European Union to the public. The Council reserves all its rights in law as 
regards any unauthorised publication. 
2 
Proposal of 2 May 2018 for a Regulation of the European Parliament and of the Council on 
the protection of the Union´s budget in case of generalised deficiencies as regards the rule of 
law in the Member States, COM(2018) 324 final, doc. 8356/18. 
 
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compatibility of the proposed mechanism with Article 7 of the TEU, the choice of 
Article 322(1)(a) TFEU as an appropriate legal basis and the legality of the procedure for the 
adoption of measures under the mechanism. This opinion responds to that request. 
II.  LEGAL AND FACTUAL BACKGROUND  
2. 
The Commission proposal is based on the premise that respect of the rule of law is an 
essential precondition to comply with the principles of sound financial management, in 
accordance with which the budget shall be implemented as provided for in Article 
310(5)TFEU,3 as well as to guarantee the effective protection of the financial interests of the 
Union (recitals 4 and 11). Thus generalised deficiencies as regards of the rule of law in the 
Member States entail the risk of financial losses which justify the adoption of measures for 
the protection of the Union´s budget (Article 1). 
3. 
Article 3 of the proposal establishes in broad terms the triggering conditions for the adoption 
of the measures: 
"Appropriate measures shall be taken where a generalised deficiency as regards the 
rule of law in a Member State affects or risks affecting the principles of sound 
financial management or the protection of the financial interests of the Union"
4. 
The provision further provides a list of possible situations in which the malfunctioning of 
public authorities in a Member State affects the sound and efficient implementation of the 
Union budget (Article 3(1) of the proposal). Additionally, Article 3(2) of the proposal 
provides a list of possible examples of generalised deficiencies as regards the rule of law. 
                                                 
3  
Cf. also Article 2(59) of the Financial Regulation: "‘sound financial management’ means 
implementation of the budget in accordance with the principles of economy, efficiency and 
effectiveness" and Article 6; Several other provisions of the Financial Regulation further 
detail and refer to this principle. 
 
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5. 
Measures to be adopted are defined in Article 4. They vary depending on the method of 
implementation of the budget in a specific case. In case of direct or indirect management, 
measures can be adopted only where a government entity is the recipient of the funding and 
can consist either in a suspension of payments or in the suspension or termination of a legal 
commitment or in the prohibition to enter into new legal commitments. In case of shared 
management a wider number of options are envisaged, including the suspension of the 
approvals of programmes, a reduction of commitments, the transfer of funding to other 
programmes and a reduction of pre-financing. 
6. 
Article 4(2) of the proposal aims at protecting the position of the individuals who are the final 
recipients or beneficiaries of the funds and to that effect clarifies that the imposition of 
appropriate measures shall not exonerate Member States from their obligation to make the 
relative payments. 
7. 
The conditions for the determination of the specific measures to be adopted in a given case 
are defined in Article 4(3) of the proposal, according to which: 
the measures taken shall be proportionate to the nature, gravity and scope of the 
generalised deficiency as regards of the rule of law. They shall, insofar as possible, 
target the Union actions affected or potentially affected by that deficiency". 
8. 
Finally, Article 5 of the proposal sets out the procedural framework for the adoption of the 
measures by means of an implementing act of the Council on the basis of a Commission 
proposal. The Commission shall submit its proposal after having given the concerned Member 
State the possibility to express its observations on the reasons why the Commission considers 
that a generalised deficiency as regards the rule of law might exist, and after having taken 
them into account. The decision is deemed to be adopted unless the Council decides, by 
qualified majority, to reject the Commission's proposal within one month ("reversed qualified 
majority"). The Council can also amend the Commission´s proposal by qualified majority 
(Article 5(8)). The same procedure applies for the lifting of measures in case the generalised 
deficiency as regards the rule of law has been remedied or has ceased to exist (Article 6). 
 
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III.  LEGAL ANALYSIS 
 
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