European Union's top court rejected a challenge by Poland and Hungary. (Representational)
The EU's top court on Wednesday rejected a challenge by Poland and Hungary to a mechanism allowing Brussels to slash funding to member states that flout democratic standards.
The European Court of Justice ruled that the mechanism "is intended to protect the Union budget from effects resulting... from breaches of the principles of the rule of law" and was thus allowed under EU treaties.
The judgment exposes Poland and Hungary -- seen as democratic backsliders in the 27-nation bloc -- to the risk of seeing money cut from the billions in EU funding they receive.
The court said that, as EU member states sign up to respect the bloc's "common values... such as the rule of law and solidarity", the European Union "must be able to defend those values".
The EU's budget -- which covers seven-year stretches and amounts to two trillion euros ($2.3 trillion) for 2021-2027, including 800 billion euros in coronavirus recovery spending -- "is one of the principal instruments for giving practical effect" to EU solidarity, the court said.
As such, the conditionality mechanism, making budget spending conditional on adhering to EU democratic standards, complies with EU treaties, it said.
It added, however, that for the mechanism to be used it required "a genuine link be established between a breach of a principle of the rule of law and an effect or serious risk of effect on the sound financial management of the Union or the financial interests of the Union".
That was a message to the guardian of the EU treaties -- the European Commission -- that it must show iron-clad evidence if it sought to invoke the mechanism.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)