The European Commission adopted on 29 February two legal acts that will pave the way for Poland to access up to EUR 137 billion in EU funding. These acts relate to the rule of law reforms that Poland has adopted and the more recent and immediate steps that it has taken to address the milestones to strengthen judicial independence.
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POLAND’S RECOVERY AND RESILIENCE PLAN
How did the Commission assess Poland’s first payment request?
On 15 December 2023, Poland submitted to the Commission its first payment request for the disbursement of 6.3 billion (2.7 billion in grants and 3.6 billion in loans net of pre-financing) under the Recovery and Resilience Facility (RRF).
Following its assessment of the payment request, the Commission has preliminarily concluded that Poland has satisfactorily fulfilled the 37 milestones and one target set out in the Council Implementing Decision for the first payment request.
The request covers important steps in the delivery of five investments and 25 reforms that will drive positive change for both citizens and businesses in Poland impacting key areas such as resilience and competitiveness of the economy, green energy, digital transformation, health and clean mobility.
The payment request also includes measures related to strengthening important aspects of the independence of the Polish judiciary and the use of Arachne, an IT tool that supports Member States’ audit and control systems (so-called “super milestones”).
Flagship measures in this payment request include:
- Update of the National Air Protection Programme: The updated National Air Protection Programme lays down comprehensive and coordinated measures and policies that public authorities at various levels in Poland will now implement to improve the air quality in Poland. Under the Programme public subsidies for coal-fired heat sources will no longer be possible.
- Reform to improve the labour market situation of parents by increasing access to childcare for children up to the age of three: Poland implemented a reform increasing access to childcare for children up to the age of three. A uniform Programme, “Maluch Plus”, has been set up, combining various national and EU funds (RRF, European Social Fund+, state budget), implementing a single coherent financing management system for the creation and functioning of childcare facilities.
- Support for farmers: Worth 1.4 billion, one of the biggest measures in the Polish plan concerns investment in the agricultural sector. Support is already flowing to thousands of farmers and fishermen, as well as SMEs in the agricultural sector, to help them expand and modernise their production and enter new markets.
Where does Poland stand in terms of the implementation of the Recovery Resilience Facility?
The Council approved Poland’s original recovery and resilience plan worth 35.4 billion on 17 June 2022. On 8 December 2023, the Council approved Poland’s revised recovery and resilience plan worth 59.8 billion (i.e. 34.5 billion in RRF loans and 25.3 billion in RRF grants), covering 55 reforms and 56 investments, which also includes a REPowerEU chapter.
In December 2023, Poland received 5.1 billion in loans and grants, as part of pre-financing relating to the REPowerEU funds under the RRF.
Poland submitted its first payment request on 15 December 2023 for 6.3 billion in grants and loans (net of pre-financing). Once confirmed by Member States, today’s Commission decision endorsing the preliminary assessment of Poland’s first payment request, which also covers the satisfactory fulfilment of the three “super milestones”, paves the way for the disbursement of up to 59.8 billion in RRF funds until the end of 2026 (25.3 billion in grants and 34.5 billion in loans), i.e.:
- the disbursement of Poland’s first payment request of 6.3 billion, as well as
- further disbursements of the overall RRF funds Poland is entitled to, conditional upon the satisfactory fulfilment of the milestones and targets outlined in its plan.
When can Poland expect to receive the first payment?
The Commission has now sent its positive preliminary assessment of Poland’s fulfilment of the milestones and targets required for the disbursement of the first payment request for 6.3 billion to the Economic and Financial Committee (EFC), which has four weeks to deliver its opinion.
The payment to Poland can take place following the EFC’s opinion, and the adoption of the payment decision by the Commission.
As for all Member States, the Commission has also shared its positive preliminary assessment with the European Parliament.
What were the three “super milestones” Poland had to implement in a satisfactory manner to pave the way for the disbursement of the first payment request?
The Polish plan contains specific safeguards to ensure the effective protection of the EU’s financial interests. These so-called “super milestones”, which had to be completed before any payment following a payment request could take place, consist of:
- Two milestones aimed at strengthening important aspects of the independence of the Polish judiciary, requiring the entry into force of a reform of the disciplinary regime for judges in accordance with EU law requirements, ensuring that:
- the Disciplinary Chamber of the Supreme Court is abolished and replaced by another Supreme Court Chamber meeting the EU law requirements of an independent and impartial court established by law;
- the disciplinary regime is reformed, and safeguards are in place so that judges no longer face a risk of disciplinary liability for the content of their judgments or for applying EU law; and
- all judges affected by the rulings of the Disciplinary Chamber have the right to have their case reviewed by a new Supreme Court Chamber within a clear timeframe and on the basis of the new regime.
- One milestone committing Poland to use Arachne, an IT tool that supports Member States’ audit and control systems and which therefore ensures the necessary safeguards against fraud, by enabling them to collect data on final recipients of funds, contractors, subcontractors and beneficial owners and make this available upon request.
How have the two “super milestones” related to strengthening important aspects of the independence of the Polish judiciary been satisfactorily fulfilled?
The Commission has found that Poland has satisfactorily fulfilled the two “super milestones” relating to strengthening important aspects of the independence of the Polish judiciary.
In particular:
- On ensuring the Disciplinary Chamber of the Supreme Court is abolished and replaced by another Chamber, meeting the EU law requirements of an independent and impartial court established by law (Article 19 of the Treaty on European Union – TEU): the Commission found that the Law passed by Poland in June 2022 (“June 2022 law”) abolished the Disciplinary Chamber of the Supreme Court and replaced it by the Professional Liability Chamber, which constitutes an independent and impartial court established by law.
- On ensuring that the disciplinary regime is reformed and safeguards are in place so that judges no longer face a risk of disciplinary liability for the content of their judgments or for applying EU law: in addition to the June 2022 law, the Polish government has adopted several additional measures, in particular an Order of the Minister of Justice of February 2024 setting out the framework for the appointment of ad-hoc disciplinary commissioners, which allows to discontinue unjustified disciplinary proceedings.
- On ensuring all judges affected by the rulings of the Disciplinary Chamber have the right to have their case reviewed by a new Supreme Chamber within a clear timeframe and on the basis of the new regime: the Commission found that the June 2022 law addressed this. All those judges who had been wrongly suspended have been reinstated.
Poland also formally recognised the primacy of Union law and jurisprudence of the European Court of Justice of the EU (CJEU) in the Action Plan on the ‘Rule of Law in Poland’ presented to the General Affairs Council on 20 February 2024. In the Action Plan presented by Poland, there is a clear affirmation of its commitment to the respect of the primacy of Union law and of the jurisprudence of the Court of Justice of the EU (CJEU). This includes the CJEU judgement of 5 June 2023 (case C-204/21) declaring certain provisions of the Polish law on disciplinary offences of judges to be in violation of EU law, which requires all national authorities, and in particular, all national courts, to disapply these provisions.
In addition, recent Polish case law, relating to decisions after July 2022, shows that Polish judges can effectively conduct such verification without incurring the risk of disciplinary action. Furthermore, the Polish authorities explicitly committed to monitor, in the context of the recovery plan’s implementation, the effective application of procedures allowing to verify whether a judge is independent, impartial and established by law, in line with Article 19 TEU. Under this formal commitment, Poland is obliged to, if necessary, take corrective measures to ensure that this right is maintained.
How do the milestones and targets achieved by Poland so far effectively support the green transition?
The green transition is supported by specific investments and reforms covered by the first payment request, including the update of the National Air Protection Programme and improving the conditions for the development of renewable energy.
The updated National Air Protection Programme lays down comprehensive and coordinated measures and policies that public authorities at various levels in Poland will now implement to improve the air quality in Poland. The Programme puts an end to public subsidies for coal-fired heat sources. Poland also implemented a reform that will facilitate the development of onshore wind farms. The reform empowers local authorities to construct wind turbines in a larger number of areas in Poland, while ensuring close public participation in the permitting process.
Furthermore, a reform supports investments in the construction of buildings with a higher energy efficiency standard for low and average-income households by increasing the rate of co-financing.
In addition, the reform of water management in agriculture and rural areas will contribute to increasing the resilience of agriculture to drought and improving flood prevention.
How do the milestones and targets achieved by Poland so far effectively contribute to the digital transition?
The first payment request includes several measures supporting the digital transition, notably aiming to reduce the administrative burden for broadband investment. Furthermore, the conditions for the development of mobile networks have been improved through the removal of administrative barriers to 5G deployment and by taking into account the EU Connectivity Toolbox, which lays out a set of best practices for deploying 5G and fast broadband.
How do the milestones and targets achieved by Poland so far contribute to improving Poland’s economic and social situation, and its resilience?
Social and economic resilience in Poland is supported by several investments and reforms in the first payment request in areas such as the labour market, the business environment and the agricultural sector.
The completion of the reforms strengthening the independence of the judiciary are expected to contribute to a more investment-friendly climate.
Worth 1.4 billion, one of the biggest measures in the Polish plan concerns investment in the agricultural sector. Support is already flowing to thousands of farmers and fishermen, as well as SMEs in the agricultural sector, to help them expand and modernise their production and enter new markets.
To improve the situation of parents on the labour market, Poland implemented a reform increasing access to childcare for children up to the age of three. A uniform Programme “Maluch Plus” has been set up, combining various national and EU funds (RRP, ESF+, state budget), implementing a single coherent financing management system for the creation and functioning of childcare facilities.
HORIZONTAL ENABLING CONDITIONS
What is the horizontal enabling condition on the EU Charter of Fundamental Rights?
As set out by the EU’s Common Provisions Regulation (CPR) – the rules applicable to eight EU Funds – enabling conditions are prerequisites, which Member States must fulfil to ensure the effective and efficient implementation of the Cohesion Policy, European Maritime, Fisheries and Aquaculture, and Home Affairs Funds.
There are 4 horizontal enabling conditions in the areas of public procurement, state aid, compliance with the EU Charter of Fundamental Rights, and the application of the United Nations Convention on Persons with Disabilities. There are also 16 thematic enabling conditions that apply to specific areas and sectors.
In order to have all related expenditure reimbursed, Member States must fulfil all enabling conditions relevant to the Funds and the programmes concerned. The conditions must be respected throughout the entire programming period. If this is not the case, the only expenditure that may be reimbursed relates to (i) technical assistance and (ii) operations which would contribute to the fulfilment of an unfulfilled enabling condition.
The horizontal enabling condition on the EU Charter of Fundamental Rights concerns all 8 Funds (European Regional Development Fund (ERDF); European Social Fund Plus (ESF+); Cohesion Fund (CF); Just Transition Fund (JTF); European Maritime, Fisheries and Aquaculture Fund (EMFAF); Asylum and Migration Fund (AMIF); Internal Security Fund (ISF); and the Border Management and Visa Instrument (BMVI)), and all investment areas. It requires Member States to establish effective mechanisms so that the implementation of their programmes complies with the Charter. It requires a complaint mechanism to be in place and clear arrangements for reporting to a Monitoring Committee.
Why was Poland previously deemed non-compliant with the horizontal enabling condition on the EU Charter of Fundamental Rights?
In Autumn 2022, Poland itself informed the Commission that it did not fulfil the horizontal enabling condition on the EU Charter of Fundamental Rights. The Commission and Poland have engaged in extensive dialogue to address the issues identified by the Polish government.
Which reforms introduced by Poland led the Commission to conclude that Poland now meets the horizontal enabling condition on the Charter?
On 17 January 2024, Poland officially notified the Commission that it considers having fulfilled the horizontal enabling condition related to the Charter.
After a thorough assessment, the Commission concluded that Poland has implemented the necessary measures to ensure compliance with the EU Charter of Fundamental Rights when implementing the EU Funds. To address the deficiencies identified under this horizontal enabling condition, Poland has introduced several measures:
- Poland has established effective institutional and procedural arrangements to ensure compliance with the Charter in all stages of programming and implementation of the Cohesion Policy, European Maritime, Fisheries and Aquaculture, and Home Affairs funds programmes. Roles and responsibilities are clearly defined for bodies such as the Human Rights Ombudsman and Charter coordinators. An effective complaints mechanism and reporting arrangements have also been put in place; and
- Poland addressed judicial independence issues by reforming the disciplinary regime for judges. In addition, Polish courts can initiate verification procedures to assess whether a judge meets the Article 19 TEU requirements relating to judicial independence.
How much Cohesion Policy, European Maritime, Fisheries and Aquaculture, and Home Affairs funding will become available as a result of the fulfilment of the enabling condition on the Charter?
Following the Commission’s positive decision on the horizontal enabling condition on the EU Charter, the Commission may start reimbursing Poland for investments under the 20212027 Cohesion Policy, the European Maritime, Fisheries and Aquaculture, and Home Affairs funds. In total, these funds add up to 76.5 billion.
Until now, Poland could only receive a small pre-financing for these programmes and reimbursements for the technical assistance.
When can we expect the first reimbursements?
To make reimbursements, the Commission must first receive payment applications from Poland. Before submission to the Commission, the Polish authorities must check the legality and regularity of these applications.
When receiving a claim, the Commission assesses whether all payment conditions are met and, if so, will pay within 60 days from the date of receipt of the payment claim.
The Commission estimates that reimbursements in the order of 600 million will be made in the weeks to come.
What happens if Poland no longer respects the horizontal enabling condition on the Charter?
Member States must ensure the fulfilment of all enabling conditions throughout the entire duration of the programming period. As with all Member States, the Commission will closely and continuously monitor Poland’s application of the measures put in place, primarily through monitoring committees, stakeholders’ interaction, annual performance review meetings and reports, and audits.
If at any point of time, there is evidence to suggest that the enabling condition is no longer fulfilled, a thorough re-assessment will take place and, if the Commission concludes that Poland no longer fulfils the horizontal enabling condition on the Charter, no reimbursement will be made by the Commission until the enabling condition is once again fulfilled.
The only expenditure that may be reimbursed relates to (i) technical assistance and (ii) to operations which would contribute to the fulfilment of this horizonal enabling condition.
Article 7 procedure
What is the Article 7 Procedure?
The Procedure laid down under Article 7 of the Treaty on European Union (TEU) aims at ensuring that all EU Member States respect the common values of the EU, including the Rule of Law. It provides two legal possibilities in such a situation: a preventive mechanism in case of a “clear risk of a serious breach of the [Union’s] values” (Article 7(1) TEU) and a sanctioning mechanism in the case of “the existence of a serious and persistent breach” of the Union’s values, including the Rule of Law (Article 7(2) and Article 7(3) TEU).
The preventive mechanism allows the Council to give the EU Member State concerned a warning where there is a risk of a serious breach has materialised. The sanctioning mechanism allows the Council to act if a serious and persistent breach continues to exist. This may include the suspension of certain rights deriving from the application of the Treaties to the EU country in question, including the voting rights of that country in the Council. In such a case, the ‘serious breach’ must have persisted for some time.
The Article 7 Procedure can be triggered by one third of the Member States, by the European Parliament (in case of the preventive mechanism of Article 7(1) TEU) or by the European Commission).
To determine that there is a clear risk of serious breach of the rule of law, the Council, after obtaining the consent of the European Parliament, must act with a decision of 4/5 of its members, and must reach the same threshold if it wishes to address recommendations to the Member State concerned. The Council must hear the Member States concerned before adopting such a decision.
To determine the existence of a serious and persistent breach of the rule of law, the European Council must act by unanimity, after obtaining the consent of the European Parliament. The Member State concerned must first be invited to offer its observations.
To sanction a Member State for a serious and persistent breach of the rule of law, the Council must act by qualified majority. To revoke or amend these sanctions the Council must also act by qualified majority.
In accordance with Article 354 TFEU, the Member of the European Council or of the Council representing the Member State in question shall not take part in the vote, and the Member State concerned shall not be counted in the calculation of the majorities for these determinations.
Why did the Commission launch the Article 7 procedure for Poland?
On 20 December 2017, the Commission triggered the Article 7 TEU procedure regarding Poland by adopting a Reasoned Proposal to that end.
Since December 2015, in a period of two years, the Polish authorities had adopted more than 13 laws affecting the entire structure of the justice system in Poland, impacting notably the Constitutional Tribunal, the Supreme Court, the ordinary courts, the National Council for the Judiciary, the prosecution service and the National School of Judiciary.
The common pattern of these reforms was that the executive and legislative branches were systematically enabled to politically interfere in the composition, powers, administration and functioning of the judicial branch.
The Commission’s Reasoned Proposal sets out the Commission’s concerns, recalling the numerous contacts that took place with the Polish authorities to try to identify a solution, and invited the Council to find that there is a clear risk of a serious breach of the rule of law.
The concerns expressed in the Commission’s Reasoned Proposal relate specifically to the lack of an independent and legitimate review by the Constitutional Tribunal and threats to the independence of the judiciary.
What does the Article 7 procedure have to do with EU funds?
Respect for the rule of law is of key importance for a correct application of the rules regarding the disbursement of EU funds. In particular, the rule of law ensures an effective investigation and prosecution of offences affecting the financial interests of the Union, as well as an effective judicial protection by independent and impartial courts.
What are the remaining rule of law issues with Poland?
On many occasions, the Commission has made clear its serious concerns about the rule of law situation in Poland, most recently in its Rule of Law Report from July 2023.
The new Polish government has clearly expressed its willingness to address the long-standing rule of law concerns and committed to working on the basis of the Commission’s recommendations. To that effect, the Polish authorities have presented an Action Plan to the General Affairs Council on 20 February 2024, to address the issues raised by the Commission in the ongoing Art. 7.1 procedure. While the Art. 7.1 procedure is as such not related to the two decisions taken today, the Action Plan demonstrates the broader commitment by Poland to restore the independence of its judiciary and sets out a clear pathway to get there.
When will you put the Article 7 procedure to an end?
The Commission welcomes the commitment of the Polish government to address the serious rule of law concerns set out in the Commission’s Reasoned Proposal triggering the Article 7 TEU procedure.
On 20 February 2024, Poland put forward an Action Plan to that end. The Commission is working with the Polish authorities and stands ready to support them in the implementation of this Plan, with a view to restoring the rule of law and strengthening judicial independence.
Rule of Law Conditionality Mechanism
Poland’s Recovery and Resilience plan
Plan overview, full plan and all other related documents
Source: European Commission
