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
Date: 2018-05-02
Institutions: European Commission, Secretariat-General
Subjects: EU Member State, budget policy, budgetary resources, democracy, distribution of EU funding, financial management, general budget (EU), implementation of the budget, rule of law

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   EUROPEAN COMMISSION  Brussels, 2.5.2018  COM(2018) 324 final 2018/0136 (COD)  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  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons and objectives  

As  explained  in  the  Communication  from  the  Commission  from  February  2018  "A  new, 
modern Multiannual Financial Framework for a European Union that delivers efficiently on 
its priorities post-2020"1, the Union is a community of law and its values constitute the very 
basis  of  its  existence.  They  permeate  its  entire  legal  and  institutional  structure  and  all  its 
policies and programmes. Respect for these values must therefore be ensured throughout all 
Union  policies.  This  includes  the  EU  budget,  where  respect  for  fundamental  values  is  an 
essential precondition for sound financial management and effective EU funding. Respect for 
the  rule  of  law  is  important  for  European  citizens,  as  well  as  for  business  initiatives, 
innovation  and  investment.  The  European  economy  flourishes  most  where  the  legal  and 
institutional framework adheres fully to the common values of the Union. 

The potential of the EU budget can only be fully unleashed if the economic, regulatory and 
administrative  environment  in  the  Member  States  is  supportive.  Under  the  current 
Multiannual Financial Framework, all Member States  and beneficiaries are  already required 
to  show that the regulatory  framework for financial management is  robust,  that the relevant 
EU  regulation  is  being  implemented  correctly,  and  that  the  necessary  administrative  and 
institutional capacity exists to make EU funding a success. In addition, policy conditionality 
can  foster  the  cooperation  between  Member  States  in  areas  where  economies  of  scale  or 
externalities  are  significant.  New  provisions  were  also  introduced  under  the  Multiannual 
Financial Framework 2014 – 2020 to avoid situations where the effectiveness of EU funding 
is undermined by unsound economic and fiscal policies.  

Effective  respect  for  the  rule  of  law  is  a  prerequisite  for  confidence  that  EU  spending  in 
Member  States  is  sufficiently  protected.  As  explained  in  the  Communication  from  the 
Commission from 2014 "A new EU Framework to strengthen the Rule of Law",2 the rule of 
law  is  the  backbone  of  any  modern  constitutional  democracy.  It  is  one  of  the  founding 
principles  stemming  from  the  common  constitutional  traditions  of  all  the  Member  States  of 
the European Union. As such, it is one of the main values upon which the Union is based, as 
recalled  by  Article  2  of  the  Treaty  on  European  Union,  as  well  as  by  the  Preambles  to  the 
Treaty and to the Charter of Fundamental Rights. It ensures that actions by the state take place 
under an effective and reliable legal framework, that they can be scrutinised and challenged if 
needed, and that effective redress can follow.  

The different constitutions and judicial systems of the EU Member States are in principle well 
designed  to  ensure  the  rule  of  law  and  equipped  with  in-built  safeguards  to  protect  citizens 
against any threat to the rule of law. However, a number of recent events have demonstrated 
generalised weaknesses in national checks and balances and have shown how a lack of respect 
for the rule of law can become a matter of serious and common concern within the European 
Union. The result has been a clear request from institutions such as the European Parliament 
as well as from the public at large for the EU to take actions to protect the rule of law. 

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2 

COM(2018) 98 final. 
COM(2014) 158 final. 

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Such action has been taken with the available tools and results have been achieved. However, 
considering  the  link  between  the  respect  for  the  rule  of  law  and  mutual  trust  and  financial 
solidarity  amongst  Member  States  of  the  European  Union,  and  that  control  mechanisms 
cannot  be  effective  unless  supported  by  an  effective  application  of  administrative  and  legal 
control  and  remedies  in  the  case  of  wrongdoing,  existing  obligations  to  ensure  effective 
control systems should be supplemented by measures to ensure respect of the rule of law.  

In  order  to  protect  the  Union's  financial  interests  from  the  risk  of  financial  loss  caused  by 
generalised  deficiencies  as  regards  the  rule  of  law  in  a  Member  State,  the  European  Union 
should be granted the possibility to adopt appropriate measures in such cases. This should be 
on the basis on a Council decision following a proposal from the Commission. The decision 
shall be deemed to have been adopted by the Council, unless it decides, by qualified majority, 
to reject the Commission proposal within one month of its adoption by the Commission. The 
European Parliament should also be fully involved at all stages.  

Measures  need  to  be  adopted  in  full  respect  of  the  principles  of  transparency  and 
proportionality.  It  is  also  important  to  ensure  that  the  consequences  of  measures  have  a 
sufficient connection with the aim of the funding. This also points to the need to ensure that 
the  consequences  fall  on  those  responsible  for  identified  shortcomings.  It  should  therefore 
reflect  the  fact  the  individual  beneficiaries  of  EU  funding,  such  as  Erasmus  students, 
researchers or civil society organisations, cannot be considered responsible for such breaches. 

This proposal establishes the rules necessary for the protection of the Union’s budget in case 
of  generalised  deficiencies  as  regards  the  rule  of  law  in  the  Member  States.  It  could  be 
integrated  into  the  Financial  Regulation,  which  is  based  on  the  same  legal  basis,  at  the 
occasion of its future revision.  

• 

Consistency with existing policy provisions 

The proposal will contribute to ensuring the respect for the rule of law in all Member States in 
accordance with Article 2 TEU and to protecting the budget of the Union. 

• 

Consistency with other Union policies 

By  contributing  to  ensuring  respect  for  the  rule  of  law  and  proper  implementation  of  the 
budget  of  the  Union  the  proposal  will  come  in  support  of  all  other  Union  policies,  notably 
when the use of Union funds is concerned. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The proposal is based on Article 322(1)(a) of the Treaty on the Functioning of the European 
Union and Article 106a of the Treaty establishing the European Atomic Energy Community. 

• 

Subsidiarity (for non-exclusive competence)  

Financial  rules  governing  the  Union  budget  under  Article  322  of  the  Treaty  on  the 
Functioning of the EU could not be adopted at the level of the Member States. 

 • 

Proportionality 

The proposal envisages measures proportionate to the generalised deficiencies as regards the 
rule of law, including the suspension, and reduction of funding under existing commitments, 
or  the  prohibition  to  conclude  new  commitments  with  specific  categories  of  recipients. 

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Proportionality  will  be  ensured  in  particular  by  taking  into  account  the  seriousness  of  the 
situation,  the  time  which  has  elapsed  since  the  relevant  conduct,  its  duration  and  its 
recurrence,  the  intention  and  the  degree  of  collaboration  of  the  Member  State  in  putting  an 
end  to  the  violation  of  the  rule  of  law  and  the  effects  of  that  deficiency  on  the  respective 
Union funds.  

• 

Choice of the instrument 

Considering  that  the  objective  is  to  contribute  to  the  proper  implementation  of  the  general 
budget  of  the  Union;  the  proposal  takes  the  form  of  a  self-standing  Regulation  based  on 
Article 322 TFEU, the same legal base as the Financial Regulation.3 

3. 

• 

RESULTS  OF  RETROSPECTIVE  EVALUATIONS,  STAKEHOLDER 
CONSULTATIONS AND IMPACT ASSESSMENTS 

Retrospective evaluations/fitness checks of existing legislation 

There  is  no  comparable  current  programme.  There  is  however  experience  gathered  from  
addressing at European Union level issues concerning the rule of law in Member States. This 
has  demonstrated that, whilst  some tools exist, they are not  specifically designed to address 
situations  where  the  implementation  of  Union  funds  could  be  put  at  risk  by  deficiencies  as 
regards the rule of law. 

• 

Stakeholder consultations 

No specific stakeholder consultation has taken place, but the subject matter has been widely 
debated, including at the European Parliament and the Council. 

• 

External expertise 

External sources, in particular the Council of Europe, have been considered when designing 
the current rules. The use of external expertise from the Council of Europe is also envisaged, 
where appropriate, when implementing the proposed measures. 

• 

Impact assessment 

No impact assessment has been carried out as the measure has as its sole objective to avoid 
that the Union budget is harmed by situations where a generalised deficiency as regards the 
rule of law in a Member State affects or risks affecting the sound financial management and 
the  protection  of  the  financial  interests  of  the  Union.  The  options  were  therefore  to  either 
maintain the status quo, with no specific financial procedure in case of problems relating to 
the rule of law and potentially affecting the sound management of Union funds, or to develop 
such a procedure.  

• 

Fundamental rights 

By increasing the current level of protection against deficiencies as regards  the rule of law, 
the proposal will have a positive impact on fundamental rights 

3 

Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 
2012  on  the  financial  rules  applicable  to  the  general  budget  of  the  Union  and  repealing  Council 
Regulation (EC, Euratom) No 1605/2002, OJ L 298, 26.10.2012, p. 1–96. 

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4. 

BUDGETARY IMPLICATIONS 

By  increasing  the  protection  against  possible  practices,  omissions  or  measures  of  public 
authorities which affect the rule of law in that Member State and which affect or risk affecting 
its capacity to implement its budgetary obligations, the proposal will have a positive impact 
on the sound financial management of the general budget of the Union.  

5. 

• 

OTHER ELEMENTS 

Implementation plans and monitoring, evaluation and reporting arrangements 

The Commission will assess the situation in the Member State concerned in order to decide 
whether a lifting of measures can be proposed. 

• 

Detailed explanation of the specific provisions of the proposal 

The  proposal  draws  upon  the  Communication  from  the  Commission  from  2014  "A  new 
European Union Framework to strengthen the Rule of Law",4 and the Communication from 
the Commission from February 2018 "A new, modern Multiannual Financial Framework for a 
European Union that delivers efficiently on its priorities post-2020"5 as well as standards and 
principles developed by the Council of Europe. 

Article  1  explains  the  subject  matter  and  the  need  to  protect  the  Union  budget  against 
generalised deficiencies as regards the rule of law in a Member State, which could affect or 
risk affecting the sound financial management and the protection of the financial interests of 
the Union. 

Article 2 sets out the definitions.  

Article 3 details the measures to be taken to address a situation of generalised deficiencies as 
regards the rule of law. It explains what particular functions of the state might be affected and 
negatively impact the sound financial management of Union funds.  

Article  4  lists  the  type  of  measure  that  can  be  taken  and  clarifies  that  these  should  be 
addressed to Member States as recipients of the Union funds. 

Article 5 sets out the procedures that should be followed by the Commission when proposing 
measures to the Council, who should decide in accordance with a reversed qualified majority 
vote. 

Article  6  sets  out  the  procedure  to  lift  measures  when  the  situation  it  targeted  has  been 
addressed in a given Member State, and the consequences of the lifting in terms of budgetary 
terms. 

Article 7 concerns the information provided to the European Parliament. 

Article 8 contains the final provisions. 

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COM(2014) 158 final. 
COM(2018) 98 final 

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2018/0136 (COD) 

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 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 322(1)(a) thereof,   

Having  regard  to  the  Treaty  establishing  the  European  Atomic  Energy  Community,  and  in 
particular Article 106a thereof, 

Having regard to the proposal from the European Commission, 

After transmission of the draft legislative act to the national parliaments, 
Having regard to the opinion of the Court of Auditors6, 

Acting in accordance with the ordinary legislative procedure  

Whereas: 

(1) 

(2) 

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The  rule  of  law  is  one  of  the  essential  values  upon  which  the  Union  is  founded.  As 
recalled by Article 2 of the Treaty on European Union, these values are common to the 
Member States. 

The  rule  of  law  requires  that  all  public  powers  act  within  the  constraints  set  out  by 
law,  in  accordance  with  the  values  of  democracy  and  fundamental  rights,  and  under 
the  control  of  independent  and  impartial  courts.  It  requires,  in  particular,  that  the 
principles  of  legality7,  legal  certainty8,  prohibition  of  arbitrariness  of  the  executive 
powers9,  separation  of  powers10,  and  effective  judicial  protection  by  independent 
courts11 are respected12. 

the  Court  of  Justice  of  29  April  2004,  CAS  Succhi  di  Frutta,  C-496/99 

[…] 
Judgment  of 
PECLI:EU:C:2004:236, paragraph 63. 
Judgment of the Court of Justice of 12 November 1981, Amministrazione delle finanze dello Stato v Srl 
Meridionale  Industria  Salumi  and  others  Ditta  Italo  Orlandi  &  Figlio  and  Ditta  Vincenzo  Divella  v 
Amministrazione  delle  finanze  dello  Stato.  Joined  cases  212  to  217/80,  ECLI:EU:C:1981:270, 
paragraph 10. 
Judgment  of  the  Court  of  Justice  of  21  September  1989,  Hoechst,  Joined  cases  46/87  and  227/88, 
ECLI:EU:C:1989:337, paragraph 19. 
Judgment of the Court of Justice of 10 November 2016, Kovalkovas,  C-477/16, ECLI:EU:C:2016:861, 
paragraph  36;  Judgment  of  the  Court  of  Justice  of  10  November  2016,  PPU  Poltorak,  C-452/16, 
ECLI:EU:C:2016:858,  paragraph  35;  and  Judgment  of  the  Court  of  Justice  of  22  December  2010, 
DEB,C-279/09, ECLI:EU:C:2010:811, paragraph 58.  
Judgment  of  the  Court of  Justice  of 27 February 2018, Associação Sindical dos  Juízes  Portugueses  v 
Tribunal de Contas C-64/16,  ECLI:EU:C:2018:117, paragraphs 31, 40-41. 

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(3) 

The rule of law is a prerequisite for the protection of the other fundamental values on 
which  the  Union  is  founded,  such  as  freedom,  democracy,  equality  and  respect  for 
human  rights.  Respect  for  the  rule  of  law  is  intrinsically  linked  to  respect  for 
democracy  and  for  fundamental  rights:  there  can  be  no  democracy  and  respect  for 
fundamental rights without respect for the rule of law and vice versa. 

(4)  Whenever the Member States implement the Union’s budget, and whatever method of 
implementation  they  use,  respect  for  the  rule  of  law  is  an  essential  precondition  to 
comply with the principles of sound financial management enshrined in Article 317 of 
the Treaty on the Functioning of the European Union.    

(5) 

(6) 

(7) 

(8) 

(9) 

Sound  financial  management  can  only  be  ensured  by  the  Member  States  if  public 
authorities  act  in  accordance  with  the  law,  and  if  breaches  thereof  are  effectively 
pursued  by  investigative  and  prosecution  services,  and  if  decisions  of  public 
authorities can be subject to effective judicial review by independent courts and by the 
Court of Justice of the European Union.  

Judicial  bodies  should  act  independently  and  impartially  and  investigation  and 
prosecution services should be able to properly execute their function. They should be 
endowed with sufficient resources and procedures to act effectively and in full respect 
of  the  right  to  a  fair  trial.  These  conditions  are  required  as  a  minimum  guarantee 
against  unlawful  and  arbitrary  decisions  by  public  authorities  that  could  harm  the 
financial interests of the Union.  

The independence of the judiciary presupposes, in particular, that the body concerned 
is able to exercise its judicial functions wholly autonomously, without being subject to 
any  hierarchical  constraint  or  subordinated  to  any  other  body,  and  without  taking 
orders or instructions from any source whatsoever, and that it is thus protected against 
external  interventions  or  pressure  liable  to  impair  the  independent  judgment  of  its 
members  and  to  influence  their  decisions.  The  guarantees  of  independence  and 
impartiality require rules, particularly as regards the composition of the body and the 
appointment,  length  of  service  and  the  grounds  for  rejection  and  dismissal  of  its 
members,  in  order  to  dismiss  any  reasonable  doubt  in  the  minds  of  individuals  as  to 
the imperviousness of that body to external factors and its neutrality with respect to the 
interests before it.  

Respect for the rule of law is not only important for citizens of the Union, but also for 
business initiatives, innovation, investment and the proper functioning of the internal 
market, which will flourish most where a solid legal and institutional framework is in 
place.  

Article 19 TEU, which gives concrete expression to the value of the rule of law stated 
in Article 2 TEU, requires the Member States to provide effective judicial protection 
in the fields covered by Union law, including those relating to the implementation of 
the Union’s budget. The very existence of effective judicial review designed to ensure 
compliance with Union law is the essence of the rule of law and requires independent 
courts13. Maintaining the independence of the courts is essential, as confirmed by the 
second  subparagraph  of  Article  47  of  the  Charter  of  Fundamental  Rights  of  the 
European Union14. This is true, in particular, for the judicial review of the validity of 

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Communication  from  the  Commission  "A  new  EU  Framework  to  strengthen  the  Rule  of  Law", 
COM(2014) 158 final, Annex I. 
Case C-64/16, para 32-36.  
Case C-64/16, para 40-41. 

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the measures, contracts or other instruments giving rise to public expenditure or debts, 
inter alia in the context of public procurement procedures which may also be brought 
before the courts. 

(10)  There is hence a clear relationship between respect for the  rule of law and an efficient 
implementation  of  the  Union  budget  in  accordance  with  the  principles  of  sound 
financial management. 

(11)  Generalised deficiencies in the Member States as regards the rule of law which affect 
in particular the proper functioning of public authorities and effective judicial review, 
can seriously harm the financial interests of the Union.  

(12)  The identification of a generalised deficiency requires a qualitative assessment by the 
Commission.  That  assessment  could  be  based  on  the  information  from  all  available 
sources and recognized institutions, including judgments of the Court of Justice of the 
European  Union,  reports  of 
the  Court  of  Auditors,  and  conclusions  and 
recommendations  of  relevant  international  organisations  and  networks,  such  as  the 
bodies  of  the  Council  of  Europe  and  the  European  networks  of  supreme  courts  and 
councils for the judiciary. 

(13)  The possible measures to be adopted in the event of generalised deficiencies and the 
procedure to be followed to adopt them should be determined. Those measures should 
include the suspension of payments and of commitments, a reduction of funding under 
existing  commitments,  and  a  prohibition  to  conclude  new  commitments  with 
recipients. 

(14)  The  principle  of  proportionality  should  apply  when  determining  the  measures  to  be 
adopted,  in  particular  taking  into  account  the  seriousness  of  the  situation,  the  time 
which  has  elapsed  since  the  relevant  conduct  started,  its  duration  and  its  recurrence, 
the intention, and the degree of cooperation of the Member State concerned in putting 
an end to the generalised deficiency as regards the rule of law, and the effects of that 
deficiency on the respective Union funds.  

(15) 

In  order  to  ensure  uniform  implementation  of  this  Regulation  and  in  view  of  the 
importance  of  the  financial  effects  of  measures  being  imposed  pursuant  to  this 
Regulation,  implementing  powers  should  be  conferred  on  the  Council  which  should 
act  on  the  basis  of  a  Commission  proposal.  To  facilitate  the  adoption  of  decisions 
which  are  required  to  protect  the  financial  interests  of  the  Union,  reversed  qualified 
majority voting should be used.  

(16)  Before  proposing  the  adoption  of  any  measure  pursuant  to  this  Regulation,  the 
Commission  should  inform  the  Member  State  concerned  why  it  considers  that  a 
generalised deficiency regarding the rule of law might exist in that Member State. The 
Member State should be allowed to submit its observations. The Commission and the 
Council should take those observations into account. 

(17)  The  Council  should  lift  measures  with  suspensive  effect  on  a  proposal  from  the 
Commission,  if  the  situation  leading  to  the  imposition  of  those  measures  has  been 
sufficiently remedied.  

(18)  The  Commission  should  keep  the  European  Parliament  informed  of  any  measures 

proposed and adopted pursuant to this Regulation,  

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HAVE ADOPTED THIS REGULATION: 

Article 1 
Subject matter 

This Regulation establishes the rules necessary for the protection of the Union’s budget in the 
case of generalised deficiencies as regards the rule of law in the Member States. 

For the purposes of this Regulation, the following definitions apply:  

Article 2 
Definitions 

(a) 

(b) 

(c) 

1. 

'the  rule  of  law'  refers  to  the  Union  value  enshrined  in  Article  2  of  the  Treaty  on 
European  Union  which  includes  the  principles  of  legality,  implying  a  transparent, 
accountable,  democratic  and  pluralistic  process  for  enacting  laws;  legal  certainty; 
prohibition of arbitrariness of the executive powers; effective judicial protection by 
independent  courts,  including  of  fundamental  rights;  separation  of  powers  and 
equality before the law; 

'generalised  deficiency  as  regards  the  rule  of  law'  means  a  widespread  or  recurrent 
practice or omission, or measure by public authorities which affects the rule of law;  

'government entity' means all public authorities at all levels of government, including 
national, regional and local authorities, as well as Member State organisations within 
the  meaning  of  [point  42  of  Article  2]  of  Regulation  (EU,  Euratom)  No  […]  (the 
‘Financial Regulation’). 

Article 3 
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,  in 
particular: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

the  proper  functioning  of  the  authorities  of  that  Member  State  implementing 
the  Union  budget,  in  particular  in  the  context  of  public  procurement  or  grant 
procedures, and when carrying out monitoring and controls; 

the  proper  functioning  of  investigation  and  public  prosecution  services  in 
relation to the prosecution of fraud, corruption or other breaches of Union law 
relating to the implementation of the Union budget;  

the effective judicial review by independent courts of actions or omissions by 
the authorities  referred to in  points (a) and b); 

the prevention and sanctioning of fraud, corruption or other breaches of Union 
law relating to the implementation of the Union budget, and the imposition of 
effective  and  dissuasive  penalties  on  recipients  by  national  courts  or  by 
administrative authorities; 

the recovery of funds unduly paid; 

the effective and timely cooperation with the European Anti-fraud Office and 
with  the  European  Public  Prosecutor’s  Office  in  their  investigations  or 

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prosecutions pursuant to their respective legal acts and to the principle of loyal 
cooperation. 

2. 

The  following  may,  in  particular,  be  considered  generalised  deficiencies  as  regards 
the rule of law, 

(a) 

(b) 

(c) 

endangering the independence of judiciary; 

failing  to  prevent,  correct  and  sanction  arbitrary  or  unlawful  decisions  by 
public  authorities,  including  by  law  enforcement  authorities,  withholding 
financial  and  human  resources  affecting  their  proper  functioning  or  failing  to 
ensure the absence of conflicts of interests;  

limiting the availability and effectiveness of legal remedies, including through 
restrictive  procedural  rules,  lack  of  implementation  of  judgments,  or  limiting 
the effective investigation, prosecution or sanctioning of breaches of law. 

Article 4 
Content of measures 

1. 

One or more of the following appropriate measures may be adopted 

(a)  where  the  Commission  implements  the  Union’s  budget  in  direct  or  indirect 
management  pursuant  to  points  (a)  and  (c)  of  Article  62  of  the  Financial 
Regulation, and where a government entity is the recipient: 

(1) 

a  suspension  of  payments  or  of  the  implementation  of  the  legal 
commitment or a termination of the legal commitment pursuant to Article 
[131(3)] of the Financial Regulation; 

(2) 

a prohibition to enter into new legal commitments;    

(b)  where  the  Commission  implements  the  Union’s  budget  in  shared  management 

pursuant to [point (b) of Article 62] of the Financial Regulation: 

(1) 

(2) 

(3) 

(4) 

(5) 

(6) 

a  suspension  of  the  approval  of  one  or  more  programmes  or  an 
amendment thereof; 

a suspension of commitments; 

a  reduction  of  commitments,  including  through  financial  corrections  or 
transfers to other spending programmes; 

a reduction of pre-financing; 

an interruption of payment deadlines; 

a suspension of payments. 

2. 

3. 

Unless  the  decision  adopting  the  measures  provides  otherwise,  the  imposition  of 
appropriate measures shall not affect the obligation of government entities referred to 
in point (a) of paragraph 1 or of Member States referred to in point (b) of paragraph 1 
to implement the programme or fund affected by the measure, and in particular the 
obligation to make payments to final recipients or beneficiaries. 

The  measures  taken  shall  be  proportionate  to  the  nature,  gravity  and  scope  of  the 
generalised  deficiency  as  regards  the  rule  of  law.  They  shall,  insofar  as  possible, 
target the Union actions affected or potentially affected by that deficiency. 

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1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

1. 

2. 

3. 

Article 5 
Procedure 

Where  the  Commission  finds  that  it  has  reasonable  grounds  to  believe  that  the 
conditions  of  Article  3  are  fulfilled,  it  shall  send  a  written  notification  to  that 
Member State, setting out the grounds on which it based its finding 

The Commission may take into account all relevant information, including decisions 
of the Court of Justice of the European Union, reports of the Court of Auditors, and 
conclusions and recommendations of relevant international organisations.   

The Commission may request any additional information required for its assessment, 
both before and after having made a finding pursuant to paragraph 1. 

The  Member  State  concerned  shall provide  all  required  information  and  may  make 
observations within a time limit specified by the Commission, which shall not be less 
than  1  month  from  the  date  of  notification  of  the  finding.  In  its  observations,  the 
Member State may propose the adoption of remedial measures.  

The  Commission  shall  take  into  account  the  information  received  and  any 
observations made by the Member State concerned, as well as the adequacy of any 
proposed remedial measures, when deciding whether or not to submit a proposal for 
a decision on the appropriate measures.  

Where the Commission considers that the generalised deficiency as regards the rule 
of  law  is  established,  it  shall  submit  a  proposal  for  an  implementing  act  on  the 
appropriate measures to the Council. 

The decision shall be deemed to have been adopted by the Council, unless it decides, 
by  qualified  majority,  to  reject  the  Commission  proposal  within  one  month  of  its 
adoption by the Commission.  

The Council, acting by a qualified majority, may amend the Commission’s proposal 
and adopt the amended text as a Council decision. 

Article 6 
Lifting of measures 

The Member State concerned may, at any time, submit to the Commission evidence 
to show that the generalised deficiency as regards the rule of law has been remedied 
or has ceased to exist. 

The Commission shall assess the situation in the Member State concerned. Once the 
generalised deficiencies as regards the rule of law which on the grounds of which the 
appropriate measures were adopted cease to exist in full or in part, the Commission 
shall submit to the Council a proposal for a decision lifting those measures in full or 
in part. The procedure set out in paragraphs 2, 4, 5, 6 and 7 of Article 5 shall apply. 

Where  measures  concerning  the  suspension  of  the  approval  of  one  or  more 
programmes or amendments thereof referred to in point (i) of Article 4(2)(b) or the 
suspension  of  commitments  referred  to  in  point  (ii)  of  Article  4(2)(b)  are  lifted, 
amounts corresponding to the suspended commitments shall be entered in the budget 
subject  to  Article  7  of  Council  Regulation  (EU,  Euratom)  No  XXXX  (MFF 
Regulation).  Suspended  commitments  of  year  n  may  not  be  entered  in  the  budget 
beyond year n+2. 

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Article 7 
Information of the European Parliament  

The  Commission  shall  immediately  inform  the  European  Parliament  of  any  measures 
proposed or adopted pursuant to Articles 4 and 5 

Article 8 
Entry into force 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. It shall apply from 1 January 2021. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, 

For the European Parliament 
The President 

For the Council 
The President  

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