Management and Enforcement Theories for Compliance with the Rule of Law

Abstract

Following the contemporary debate surrounding two alternative perspectives on compliance – enforcement and management – this article suggests an analysis through the lens of the rule of law crisis. Specifically, the financial and techno-managerial strategy developed by the EU for the indirect protection of the rule of law relies on mechanisms that combine characteristics from both the enforcement and management approaches. This article will identify these mechanisms, namely the European Semester, the Conditionality regulation, the European Structural Investment Funds and the Recovery and Resilience Facility, in order to determine their nature, features, and tools for ensuring compliance with the rule of law. The hypothesis of this article relies on the idea that the EU’s tools are characterised by a mismatch between the causes of the identified problems and the chosen solutions. Considering that the deployment of the above measures has not re-established compliance, the EU strategy toes between inducing rule conformity on the one hand and deterring rule of law violations on the other. However, it seems that only the former can restore the rule of law, as the latter is considered ill-equipped to reverse or at least halt instances of backsliding. This mismatch explains why the Justice Scoreboard, the Framework, and the Review Cycle with its Annual Report have not made any difference, and more generally, why management strategies are unfit for dealing with deliberate backsliding.¹

I. Introduction

In the face of the systemic violations of the rule of law by certain Member States, the EU institutions may have recourse to Article 7 TEU, though it has not been effective in combating the decline of the rule of law. Due to the specific voting procedures, those Member States concerned by the Article 7 procedure have found themselves in a position to protect one another and thereby prevent any sanctions.

In addition to Article 7 TEU, a number of other mechanisms have been progressively implemented by the EU institutions to address rule of law issues in Member States. For example, after the creation in 2007 of the Cooperation and Verification Mechanism for Bulgaria and Romania, the Commission in 2014, established a Rule of Law Framework aimed at preventing emerging threats to the Rule of Law that could potentially escalate to the point where Article 7 TEU must be triggered (COM(2014) 158 final). Specifically, it has provided an avenue for dialogue with the concerned Member States that is structured via opinions and recommendations from the Commission. In addition, since 2016, the Council has organised a Rule of Law Dialogue annually. This dialogue is currently divided into two political discussions: a horizontal discussion regarding general rule of law developments in the EU, and country-specific discussions covering key developments in the Member States. However, Article 7 TEU, the CVM, the Rule of Law Framework, and the Rule of Law Dialogue in the Council, as well as the various resolutions adopted by the European Parliament, have not led to any decisive results that would have hampered the decline of the rule of law.

In light of the ineffectiveness of the rule of law’s political protection mechanisms, the CJEU has been invoked and identified serious rule of law problems in Hungary and Poland in relation to, inter alia, the independence of the judiciary, the situation of migrants, refugees and asylum standards, the financing of NGOs, and respect for academic freedom. ² It has also recently signaled that it is inclined to use certain provisions – in particular Article 19 TEU – that do not directly touch on the rule of law in order to link the principles contained therein to said rule of law. However, these condemnations have failed to stem the crisis.

The EU has since launched a new strategy which relies on financial and techno-managerial mechanisms that would complete and strengthen the existing political and judicial mechanisms, although these mechanisms were not specifically designed nor envisioned to protect the rule of law, namely the European Semester, the European and Structural Investment Funds (“the ESIF”), the Multiannual Financial Framework (“the MFF”) and the protection of the EU’s financial interests. These mechanisms mainly pertain to the Economic and Monetary Union, cohesion policy and European fiscal policy, and rely on techno-managerial mechanisms (indicators and scoreboards, benchmarking, peer reviews, national reform programmes, etc.). Their use to indirectly protect the rule of law in Member States was first urged by the Commission; indeed, in April and July 2019, the Commission published two communications on the rule of law (COM(2019) 163 final; COM(2019) 343 final) where it notably stressed the role that the European Semester could play, as well as that of the ESIF. The Juncker Commission also put forward the concept of a Rule of Law Mechanism which would eventually lead to the adoption of an annual Rule of Law Report – published for the first time on 30 September 2020 (COM(2020) 580 final) – along with the necessity to create, as a part of the MFF, a mechanism to protect the EU’s budget when generalised deficiencies regarding the rule of law in Member States affect or risk affecting that budget. The Commission’s approach has more recently been approved by the European Council following the COVID-19 pandemic, and was subsequently fully integrated into the 2021–2027 MFF and European recovery plan – also known as Next Generation EU.

The analysis of these new techno-managerial instruments is important, and involves devices which, given their non-legal nature, were in danger of slipping under the legal radar. ³ In our view however, this instrument-based analysis ⁴ remains incomplete because it does not take sufficient account of the role assigned to the compliance of these instruments (especially the techno-managerial ones).

With this in mind, this article seeks to refine the instrument-based analysis by taking into account the compliance dimension. ⁵ This analysis seems all the more relevant given that the EU’s new strategy for the indirect protection of the rule of law relies on instruments that combine characteristics from both enforcement and management approaches. Classifying the instruments for the indirect protection of the rule of law through the lens of management and enforcement is not an easy task but nevertheless must take into consideration the different manifestations of the rule of law.

This article is divided into three main parts. Following the introduction (I), the first section will involve mapping and classifying the instruments of indirect protection through the lens of enforcement/management (II). Then, on this basis, an analysis of the effects will be undertaken, taking into account not only the instruments individually but additionally what has been the cumulative effect of the new strategy (III). Finally, an analysis of the advantages and potential for reconceptualising European responses to the crisis of the rule of law will be undertaken, as well as an identification of the risks of conflating these notions (IV) before the concluding remarks (V).

II. Mapping and classification

The new EU strategy to combat rule of law backsliding in some Member States involves a mix and match of instruments intended to combine enforcement and management methods to ensure compliance. This section aims to offer a thorough mapping of the aforementioned instruments in order to provide a concise classification of their nature. When it comes to rule of law backsliding, some legal scholars emphasise the questionable nature of the production of soft law ⁶ that tends to replace and compete with the traditional enforcement method of infringement proceedings. Be that as it may, there is a disagreement among the actors involved as to how to break the current deadlock. In spite of the rich literature and legal scholarship on the nature and reform of the enforcement mechanisms ⁷ – and for some, the reform of the Union as such ⁸ – the new EU strategy combines elements of enforcement and management theories in order to ensure compliance. Indeed, the rule of law crisis highlights the controversial progress in integration linked to efforts to establish the internal market by the end of 1992, which involved addressing theoretical disagreements concerning the specific forms of compliance with EU law. Compliance according to political scientists is evaluated according to the transposition of EU directives into national law, or the extent to which transposition is achieved by looking into infringement proceedings that challenge the adequacy of domestic measures. ⁹ Nevertheless, when it comes to the rule of law, measuring compliance is much more difficult and heterogeneous as the multiplication of infringement proceedings combined with a proved lack of national judiciaries paves the way for complementary mechanisms for the protection of the rule of law, and therefore compliance with the value of Article 2 TEU.

The launch of the new EU strategy for the indirect protection of the rule of law is the result of the new NGEU financial package, that for the first time has embedded several other instruments in the European semester through the monitoring of Member States. These instruments for the indirect protection of the rule of law are: the Recovery and Resilience Facility (RRF), the Common Provisions regulation (CPR) and the Rule of Law Conditionality regulation. This interlocking of the above mechanisms calls for a thorough understanding of the theories of management and enforcement, ¹⁰ as these two approaches can be helpful in shedding light on the systemic deficiencies of the monitoring of rule of law protection in several Member States. Moreover, the traditional road to compliance can be the result of the above two alternatives, or alternatively cumulative perspectives for compliance. It is a fact that the role of national courts in ensuring compliance with European law has been undermined as a consequence of the lack of judicial independence in Hungary and Poland. This has led the EU institutions to look elsewhere for ensuring the behavioral conformity of such states with the EU’s legal rules. However, the concept of compliance does not necessarily imply a cause-and-effect relationship between a rule and behaviour: ¹¹ it remains agnostic about causality ¹² and focuses only on whether a behaviour aligns with a given rule. ¹³

The concept of compliance – while related – is dissimilar to the concept of enforcement as the latter refers to mechanism-based processes “by which the law is made effective ¹⁴ ” and by which actors are compelled to comply with the law. Within this article, enforcement refers to mechanisms which foresee legal sanctions and can be applied to the violator with a view to ensuring compliance, whereas management pertains to inducing rule conformity through monitoring and dialogue. Therefore, the mapping of the above mechanisms will be apprehended through the lens of the theoretical framework of enforcement and management strategies as competing, cooperative, or rather “coopetitive” tools (II.1) These instruments do share common characteristics such as monitoring and sanctions and work as part of a more tactical strategy for compliance (II.2). However, the overlapping mechanisms for compliance have led to several mismatches questioning the extensive use of the “carrot” and the rare use of the “stick” for the protection of the rule of law (II.3).

II.1. EU enforcement and management tools: From competing strategies for achieving compliance to allies for ensuring the rule of law

The techno-managerial strategy developed by the EU for the indirect protection of the rule of law relies on instruments that combine characteristics from both the enforcement and management approaches. The two perspectives of these approaches are considered to be the most effective means of addressing non-compliance, but are traditionally perceived as competing theories both in theory and in practice. ¹⁵ Nevertheless, J. Tallberg challenges the conception of enforcement and management as competing strategies for achieving compliance and suggests that the combination of the two is most effective. ¹⁶ He contends that the two strategies are complementary and mutually reinforcing, rather than discrete alternatives. Compliance systems that offer both forms of instruments tend to be particularly effective in ensuring rule conformance, whereas systems that rely on only one of the strategies often suffer are hampered in identifiable ways. Interestingly, the EU strategy for the indirect protection of the rule of law seems to fall under the above observation. Be that as it may, the mapping and classification of those instruments will contribute to the analysis by demonstrating this twinning of cooperative and coercive instruments in a “management-enforcement ladder”. ¹⁷

While J. Tallberg considers the two approaches to be two sides of the same coin when it comes to ensuring compliance, S. Priebus disputes this notion by transposing it to the strategy for addressing the rule of law crisis. She argues that the multiplication of instruments – the Justice Scoreboard, the Rule of Law Framework and the Rule of Law Mechanism Rule of Law conditionality – for the protection of the rule of law has not restored compliance. ¹⁸ More specifically, drawing on the two alternatives in compliance studies – the management and enforcement approaches – she pleads that, with the exception of Rule of Law conditionality, the Commission’s tools are characterised by a mismatch between the causes of the identified problems and the chosen solutions. Instead of sanctioning voluntary noncompliance, they rely on soft measures which are recommended ¹⁹ in cases of involuntary noncompliance, but which are not suitable in cases of deliberate noncompliance. ²⁰ It is worth mentioning that while J. Tallberg identifies several different reasons for noncompliance when defending the combination of the enforcement-management ladder, ²¹ S. Priebus advances the concept of deliberate noncompliance, emphasising enforcement instruments as the sole and singular effective means. In order to better understand these different visions, we will classify here the instruments of the EU strategy.

II.2. Classification of the instruments for the indirect protection of the rule of law

The design and operation of the EU’s system for inducing compliance with the rule of law focuses on a method combining both mechanisms. At the same time, this method challenges the antithetical positioning of enforcement and management strategies in contemporary discourse: monitoring, sanctions, capacity building, rule interpretation, and social pressure coexist as a means for ensuring states comply. The EU’s new strategy for the protection of the rule of law is a notable example of the symbiotic existence of the above elements, such as preventive capacity building, forms of monitoring, a legal system that permits cases to be brought against non-compliant states and deterrent sanctions as a final measure if states refuse to accept the rulings of the legal system. ²² As mentioned previously, for the classification of the above instruments, two analytical dimensions – namely, prevention and dialogue – will describe the management dimension, whereas the sanctions will describe the logic underlying the enforcement.

a. European semester

At the level of violation prevention, the EU institutions seek to compensate for capacity deficiencies and provide positive inducements through a range of management measures. In this respect, the European Semester, established in 2011, constitutes an annual cycle of economic policy coordination within the European Union that incorporates several dimensions of the rule of law. Its initiation was triggered by the 2007 economic crisis which demonstrated that the states had not made the best decisions vis-à-vis the economic sector. Its role consisted of improving economic policy coordination within the Union and ensuring the implementation of the EU’s economic rules at the supranational level, and has now evolved to take into consideration several rule of law dimensions included within the national reform plans and country-specific recommendations. The Council discusses these recommendations, amends them if deemed appropriate, and adopts them. The European Semester was conceived as an instrument for the coordination of policies to ensure sound public finances, to prevent excessive macro-economic imbalances and to support structural reforms, ²³ and it has now become not only the EU’s annual cycle of economic policy guidance and surveillance, ²⁴ but also an instrument of rule of law monitoring and surveillance. These elements provide enough material to qualify the European Semester as an instrument for inducing and ensuring rule-conforming behavior. Therefore, it falls under the management approach which embraces a problem-solving pathway based on capacity building, rule interpretation, and transparency through the country-specific recommendations.

The classification of the European Semester among the management instruments relies not only on the recommendations that create an incentive-based logic for the Member States to comply but also on the use of specific tools such as the EU Justice Scoreboard and the Structural Reform Support Programme – which became the technical Support Instrument – in order to monitor structural reforms in the states. More specifically, the EU Justice Scoreboard, ²⁵ introduced in 2013, provides information on the Member States’ judicial systems states, including the assessment of the reforms and efficiency of each justice system. ²⁶ The annual EU Justice Scoreboard looks at a range of indicators to assess the independence, quality and efficiency of national justice systems and is complemented by country specific assessments, presented in the Country Reports, which enable to make a deeper analysis based on the national legal and institutional context. ²⁷ This tool serves the specific aim of monitoring compliance with the rule of law and guiding investment as the European Semester is complemented by the EU Justice Scoreboard, and has proven to be a good framework to develop country-knowledge relating to rule of law. ²⁸ Furthermore, the Structural Reform Support Programme launched in 2017 assisted the Member States with reforms based on their demands in all sectors, including those related to the rule of law, such as public administration, the judicial system, and the fight against corruption and supporting them in designing and implementing institutional, administrative and growth-enhancing reforms. ²⁹ The mere fact that the use of this tool is dependent on requests from the Member States confirms the management approach to capacity building and incentives related directly to the EU’s strategic priorities.

Akin to the European Semester, the current long-term EU budget (also known as the Multiannual Financial Framework, or MFF) running from 2021 to 2027 and the Next Generation EU instrument supporting the recovery plan for Europe include the new EU budget structure, funding programmes, per-Member State allocations, and data on spending and revenue. ³⁰ Based on the link between the rule of law and sound management of EU funds, the 2021–2027 MFF drives the dialogue surrounding the protection of rule of law in the EU’s funding programming decisions. The strategic use of EU funds in strengthening the rule of law is supported by the recommendations for structural reforms within the European Semester; ³¹ therefore, two funding instruments, namely the RRF and the CPR have been embedded in the European Semester.

The European Semester marked a turning point in the indirect protection of the rule of law. While it has played a role in promoting the rule of law since its inception, this role was accentuated by the implementation of the European recovery plan, Next Generation EU, following the Covid-19 pandemic. ³² Therefore, the Commission presented the European Semester as “an important early warning and preventive framework” for “dealing with problems of the rule of law in the Member States before it is necessary to resort to Article 7”. ³³ In the wake of the Covid-19 pandemic, the importance of the European Semester has grown, as the main instrument for implementing the recovery plan, the RRF, is closely linked to the European Semester in several respects. As an economic and budgetary instrument, the European Semester focuses on aspects of the rule of law that impact the business environment, particularly issues related to efficient and high-quality judicial systems, effective anti-corruption frameworks, fraud, and conflicts of interest. ³⁴ Many country-specific recommendations addressing rule of law issues were included in the RRF assessment plans.

For example, the European Semester’s 2022 country-specific recommendation addressed to Poland focused on enhancing the investment climate, particularly by safeguarding judicial independence. It also emphasised the need for effective public consultations and the involvement of social partners in the policy-making process. ³⁵ The Council’s implementation decision approving Poland’s recovery and resilience plan reiterates the 2022 and earlier country-specific recommendations, highlighting challenges related to the investment climate, particularly concerning the Polish judicial system, decision-making, law-making processes, and the strengthening of the independence and impartiality of courts. According to the Council’s implementation decision, these reforms address all or a significant subset of the challenges identified in the country-specific recommendations. ³⁶

The commitments of the Member States reveal the European Semester’s impact on the protection of the rule of law, despite its soft law nature. This nature, relying on monitoring and dialogue, is crucial for Member States when drawing up their national policies. Indeed, Member States must take these recommendations into account, especially those relating to the rule of law. ³⁷ Even though the European Semester’s country-specific recommendations were strengthened with the RRF, it is still classified as a management instrument that becomes de facto binding through the RRF. From coordinating and monitoring national policies, it has evolved into an instrument for allocating European funds. ³⁸

b. Common provisions regulation

Managing EU resources and the ESIF in particular can be quite interesting in identifying and addressing rule of law deficiencies. Specifically, the Commission possesses implementing powers that bear some resemblance to actual enforcement powers. However, the logic underlying the procedural arrangements of the ESIF includes compliance assessments which can entail genuine consequences, such as the loss of privileges. Under ESIF management, the Commission may make Member State entitlement to resources conditional. However, strictly speaking, conditionality does not serve an enforcement purpose ³⁹ but rather applies the system which is within the Commission’s powers of implementation. ⁴⁰ According to S. Andersen “Conditionality appears to substantiate some of the assumptions behind coercion and incentive-based enforcement theories. The funds are however established with a view to tackle structural problems and essentially constitute managerial instruments. ⁴¹ ” Indeed, the CPR includes a monitoring and evaluation period wherein technical assistance actions are deemed necessary at the initiative of the Commission. ⁴² Conversely, according to Articles 96 and 97 of the same regulation, interruption of the payment deadline and suspension of payment is foreseen if inter alia the Member State has failed to take the necessary action to remedy the situation giving rise to an interruption under Article 96 or there is a serious deficiency. ⁴³ Be that as it may, the reduction and suspension of payments are management measures ⁴⁴ and are intended to remedy situations where EU funds have been distributed without the conditions for receiving them having been fulfilled. There is the view however that corrections possess a penal nature ⁴⁵ where conditionality may indirectly bring about an incremental normalisation of sanction-type powers on the part of the Commission. ⁴⁶ In this regard, the Commission’s operational role in defining the substantive conditions for structural funds may effectively turn conditionality into a new means of enforcement. ⁴⁷

Under the 2021–2027 CPR, Member States must fulfil so-called horizontal and thematic enabling conditions in the implementation of cohesion policy programmes; ⁴⁸ one of the enabling conditions requires compliance with the EU Charter of Fundamental Rights. When preparing their programmes, the Member States have to assess whether the enabling conditions are fulfilled, and if the Commission does not agree with their assessment, it cannot reimburse expenditures related to the parts of the programme concerned until the conditions are fulfilled. Member States must thus ensure that these conditions remain fulfilled throughout the entire programming period. ⁴⁹ If the Commission identifies a serious deficiency in the effective functioning of this system or the irregular spending of these funds in a Member State, it is authorised under the CPR to suspend the payments of these funds to said Member State or to recover it from them via the imposition of financial corrections, thereby leading to the possibility of a definitive loss of the EU funds by this Member State. It is claimed that systemic violations of the rule of law by a Member State that, for example, that undermine its judicial independence, could be classified as a serious deficiency in the effective functioning of the management and control system. ⁵⁰

c. RFF

Regarding the RFF – the new funding possibility created following the COVID crisis and which is intended to address various structural deficiencies – rule of law issues can halt the disbursement of the monies and therefore hamper the post-COVID recovery. ⁵¹ The “interlocking” of the RRF with the European Semester stems from the country-specific recommendations and reform plans that make the Commission negotiate transitional arrangements with Member States to adjust or to reform behavioral requirements. Within the framework of the RRF, it was also decided to introduce a “dialogue for recovery and resilience” that may cover Member States’ recovery and resilience plans and their assessment, the state of the Union’s recovery, resilience and adjustment capacity, or the payment, suspension and termination procedures pursued under the RRF. ⁵² The dialogue must, however, be conducted on the basis of the table for recovery and resilience, the indicators of which do not include rule of law issues. While the RRF incorporates a dialogue and monitoring process connected to the country-specific recommendations, it also entails sanctions in the form of the suspension of funding according to Article 22 of the RRF regulation. ⁵³ Considering that the RRF uses an ensemble of different features and tools for ensuring compliance with the rule of law, its nature has been much debated and falls under both the enforcement and management strategies.

More specifically, the monitoring and sanction mechanisms within the RRF have surprisingly been incorporated within a unique instrument. Considering that the RRF has a strong performance-based monitoring system, ⁵⁴ it is providing important financial support for the implementation of key reforms and investments, entailing a fiscal and reform impulse financed by the Union. ⁵⁵ However, the sanctions contained within the RRF regulation follow a different logic compared to the Rule of Law Conditionality regulation.

d. Rule of law conditionality regulation

More unambiguously, the Rule of Law Conditionality regulation is conceived as an enforcement instrument imposing sanctions when violations of the rule of law with an impact on EU financial interests are detected. The Rule of Law Conditionality regulation 2020/2092 on a general regime of conditionality for the protection of the EU budget entails the possible suspension or reduction of EU funding in a situation where breaches of the principles of the rule of law in a Member State affect or seriously risk affecting the sound financial management of the Union budget or the protection of the financial interests of the EU in a sufficiently direct manner. ⁵⁶ The decision relies upon the Commission on a case-by-case basis, with the Council’s agreement by a qualified majority. The Rule of Law Conditionality regulation clearly represents a purely enforcement instrument stressing a coercive strategy of monitoring and sanctions. The rationale behind the design of this instrument can be traced back to the revision of the Multiannual Financial Framework, when the Commission issued a proposal in 2018 regarding using the EU budget as a tool “in case of generalized deficiencies as regards the rule of law in the Member States. ⁵⁷ ” According to the proposal, once such deficiencies are detected, the Commission has the right to initiate the procedure, with this mechanism having two functions. Firstly, it would constitute a punishment for the government implementing reforms not in line with the EU values. Secondly, at the same time it would serve as a measure of security for the EU itself, protecting its financial interests.

The enforcement approach underpinning the Rule of Law Conditionality regulation is anchored in the idea that states are rational actors who will perform a cost-benefit analysis regarding alternative behavioral choices when making compliance decisions. ⁵⁸ Expressly, they may opt for flouting the rule when confronted with an incentive structure in which the benefits of non-compliance exceed the costs of detection. ⁵⁹ Therefore, the compliance issues are better remedied by increasing the likelihood of detection and associated penalties through monitoring and the threat of sanctions. ^60,61 The former because it increases transparency and exposes possible defectors, the latter because sanctions raise the costs of flouting the law and make non-compliance a less attractive option.

In summary, we find different instruments for ensuring compliance, such as the European Semester, the CPR, the RRF and the Rule of Law Conditionality regulation. As well, the European Semester allows for dialogue and monitoring where the Commission defines its priorities, establishes the relevant indicators, produces the country reports and is the recipient of the Member States’ national reform programmes. The European Semester’s country-specific recommendations were only strengthened with the RRF, and while these two instruments could be considered together, the above classification order follows a typology based on a continuum from “pure management” to “pure enforcement.”

The RRF integrates both indicators, dialogue, and monitoring, encompassing a reform plan approved by both the Commission and the Council, along with sanction measures. The management and incentive perspective are much more obvious here as the RRF could be interpreted as an example of “coercive Europeanization” by other means, ⁶² “which uses the strictness of the performance monitoring mechanisms associated with the performance-based conditionality to enforced change into member states. ⁶³ ” Put differently, if the traditional means of enforcement to induce compliance – once violations have occurred – is the infringement procedure under Article 258 TFEU, it has now been strengthened and completed with the Rule of Law Conditionality regulation. Indeed, the proliferation and relative ineffectiveness of infringement proceedings regarding rule of law violations, coupled with the impasse of the Article 7 TEU procedure reinforce the convergent integration of the originally competing “foes” of management and enforcement theories.

The conceptualisation of the above instruments through the lens of management and enforcement theories does not, however, encompass the entire argument presented in this analysis. Specifically, regarding the indirect protection of the rule of law, the management and enforcement definition incorporates two additional aspects that require further emphasis. On the one hand, Member States can influence the measures to various degrees. In the case of the European Semester, the recommended measures are based on the country’s suggestions and are therefore more managerial compared to the Rule of Law Conditionality regulation, where only the Commission and the Council can decide on the measures. ⁶⁴ On the other hand, the primary aim of the European Semester, the RRF, and the CPR is not the protection of the rule of law, contrary to the Rule of Law Conditionality regulation.

II.3. Synergies and mismatches of the mechanisms for compliance: carrot or stick?

It is drawn from the above that the conditionalities – as sanctions – relate to the rule of law under the CPR, the RRF and the Conditionality regulation. Nevertheless, only the latter is a purely enforcement mechanism that has recently been triggered against Hungary as a solution of last resort. Political scientists provide different explanations for why states fail to comply with their international and EU obligations which has led to different remedies for the problem. ⁶⁵ If we focus on the managerialist approach which argues that non-compliance is typically non-volitional and often the outcome of administrative or financial incapacities, whereas sanctioning mechanisms may not always be effective, ⁶⁶ there is a debate on whether rule of law violations should be addressed as non-volitional. ⁶⁷

The use of different forms of conditionality in the above instruments can ensure compliance with certain norms which had been left unenforced. However, only the Rule of Law Conditionality regulation can go further as an enforcement mechanism. Until now, the EU has preferably made use of the prospect of benefits (“carrot”) rather than the threat of sanctions (“stick”), which is why the debate surrounding whether there is a gap between the objectives to be attained and the strategy adopted for the attainment of these objectives is admissible. The combined use of the above mechanisms and the controversially limited use of sanctions can be explained by the fact that most treaties in operation today require only modest changes in state behavior, hence why country-specific recommendations tend to codify existing behavior, rather than impose far-reaching adjustment requirements, and therefore confront states with few incentives to defect. However, if states were to negotiate agreements that require more profound behavioral changes, then enforcement would be imperative for ensuring compliance.

According to the management approach, non-compliance, when it occurs, is not the result of deliberate decisions to violate treaties, but rather an effect of capacity limitations and rule ambiguity. By consequence, non-compliance is best addressed through a problem-solving strategy of capacity building, rule interpretation, and transparency, rather than through coercive enforcement. Managerial theorists further suggest that non-compliance may be inadvertent. ⁶⁸

For several reasons, treaty language is often unclear and imprecise, which leads to their misinterpretation by states. Inadvertent non-compliance may also result from the uncertainty involved in selecting the policy strategies required to meet a certain treaty target, for instance. According to Abram Chayes and Antonia Handler Chayes: “If we are correct that the principal source of noncompliance is not willful disobedience but the lack of capability or clarity or priority, then coercive enforcement is as misguided as it is costly. ⁶⁹ ” It is accordingly relevant to assert that the effectiveness of these instruments depends substantially on their actual use, while their design and underlying ideas concerning how best to address rule of law problems set limits on what they can achieve.

The deepening of the rule of law crisis followed by an expansion of said crisis ⁷⁰ has made it all the more obvious why these efforts fail. According to S. Priebus, the actual problem is not that the EU lacks the adequate tools to address this situation, but rather that the EU institutions lack the will to use the instruments available more forcefully. ⁷¹ If this is the case, and noncompliance is as deliberate as suggested in the literature, then the enforcement mechanism may be the most effective instrument by far. According to S. Priebus, while the Commission acknowledges that the dismantling of the rule of law in some states is “the result of deliberate policy choices, ⁷² ” it has mainly not reacted with instruments involving sanctions, as suggested by the enforcement approach. Instead, the new tools predominantly rely on prevention and dialogue, mechanisms recommended by management theorists who assume that noncompliance is involuntary. Put differently, although the Commission has correctly identified the origins of noncompliance, it has not drawn the correct conclusions concerning the remedies to such breaches of the rule of law. ⁷³

III. Analysis of the effects

The classification of the above instruments through the lens of the management and enforcement theories provides a suitable basis for assessing the effects of the EU’s rule of law strategy. While both approaches can be seen as allies for ensuring compliance with the rule of law, ⁷⁴ these instruments share the characteristic of a cumulative effect and have various implication on the EU constitutional system. Their use relies on a suite of tools such as monitoring, dialogue, rule of law reports, annual data gathering exercises, (rarely) combined with a logical and clearly complementary enforcement mechanism (the triggering of Conditionality regulation) for a more thorough protection of the rule of law. Be that as it may, the interlocking of these mechanisms can be puzzling as to whether, which and when each instrument is followed by sanctions.

The democratisation of the monitoring and dialogue processes regarding the rule of law have not been accompanied by clear-cut criteria as to whether the enforcement mechanisms should follow. However, the one and only instance in which the Rule of Law Conditionality regulation was triggered against Hungary on 27 April 2022 is the logical continuity of several years of monitoring and dialogue vis-à-vis rule of law concerns that eventually evolved into serious or systemic rule of law violations. In terms of a last resort enforcement logic, pursuant to Article 6 of the 2020/2092 regulation, the Commission set out the factual elements and specific grounds for adopting measures to protect the EU’s financial interests due to rule-of-law violations in Hungary. ⁷⁵ Specifically, on 18 September 2022 the European Commission recommended withholding 65% of the funding allocated to Hungary for three operational cohesion policy programmes (€7.5 billion in total) in order to “ensure the protection of the financial interests of the EU against breaches of the principles of the rule of law in Hungary” as part of the conditionality mechanism procedure initiated in April. ⁷⁶ The proportion of frozen funds was ultimately lowered to 6.3 billion euros (55%). ⁷⁷ Nevertheless, while recommending the freezing of EU funds under the Rule of Law Conditionality mechanism, the European Commission gave a formal green light to Hungary’s recovery plan. However, the disbursement of the recovery money was linked to 27 “super milestones” aimed at strengthening the independence of the judiciary, auditing rules and control over how EU funds are used. ⁷⁸ This triggering of the Conditionality regulation can be seen as the ultimate enforcement solution that completes and reinforces the years of monitoring and dialogue to ensure compliance by imposing economic sanctions. Furthermore, the frozen funds following the CPR (Hungary) and the funds in grants which have not yet paid out (Hungary and Poland) following the RFF create a cumulative effect of this new EU strategy (III.1).

III.1. The cumulative effect of the new EU rule of law strategy

The sanctions form integral part of one characteristic of the new EU strategy, namely the cumulative effect, as a result of the interlocking of the different instruments. More specifically, and before the triggering of the above enforcement mechanism, the embedment of the RRF in the European Semester, the RRF’s references ⁷⁹ to the Rule of Law Conditionality regulation and CPR lead to a bewildering array of legal sources for the protection of the rule of law. Furthermore, the conditionalities contained in three instruments – the RRF, Rule of Law Conditionality regulation and CPR – build a robust management network that can lead to sanctions based on the European Semester cycle.

In the wake of the COVID-19 pandemic, the importance of the European Semester has become even greater with the RRF to which it is closely linked. While the purpose of the RRF is to provide financial support for reforms and investments undertaken by Member States to promote economic, social and territorial cohesion, Member States are held accountable for their progress in implementing these plans within the framework of the European Semester. The macroeconomic conditionality contained in the RFF confirms the interconnected nature of the European Semester and RFF. In order to benefit from its financing, Member States must comply with the specific recommendations addressed to them as part of the European Semester; therefore, the national plans for recovery and resilience presented by the Member States detailing their reform and investment programme have to be “consistent with the country-specific challenges and priorities identified as part of the European Semester, ⁸⁰ ” in particular with the recommendations made during the recent cycles. Subsequently, there is an assessment performed by the European Commission, before approval by a Council implementing decision. In this assessment, the Commission verifies that the plans contribute “effectively to addressing all or a significant part of the challenges identified in the relevant country recommendations. ⁸¹ ” Therefore, under the RRF, payments will be linked to performance, with the Commission authorising disbursements based on the satisfactory fulfilment of a group of milestones and targets reflecting progress on several reforms and investments of the plan. For each payment request, Member States will provide a “management declaration” that the funds were used for their intended purpose. ⁸²

The embedment of the RFF in the European Semester is only one part of the cumulative effect for the indirect protection of the rule of law. What is more, the European Semester and the RFF are connected to the Conditionality regulation and the CPR ⁸³ as well. The EU Budget and access to funds is linked to the European Semester (involving the achievement of reforms in key areas like employment, health, the environment, etc.) and respect for the rule of law (possibility to suspend, reduce or restrict access to funding in case of fraud or deficiencies in the judicial system). ⁸⁴

IV. Analysis of the advantages and potential for reconceptualising European responses to the rule of law crisis: a complex apparatus for compliance

Legal scholars make the assumption that the Commission’s tools are characterised by a mismatch between the causes of the identified problems and the chosen solutions. ⁸⁵ They suggest that the deployment of the above instruments has not restored compliance and that the EU strategy toes between inducing rule conformity on the one hand and deterring rule of law violations on the other. There is the notion that management tools are ill-equipped to reverse or at least halt instances of backsliding, with this mismatch serving to explain why the Justice Scoreboard, ⁸⁶ the Framework, and the Review Cycle with its Annual Report have not made any difference, and more generally, why management strategies are unfit to deal with deliberate backsliding. ⁸⁷ It is thus argued, from a theoretical perspective, that the Commission’s new rule of law instruments are ill-equipped to deal with serious noncompliance precisely because of this inherent mismatch between the causes of the problems identified and the solutions chosen, as mentioned previously. ⁸⁸ While the Commission acknowledges that the dismantling of the rule of law in some states is “the result of deliberate policy choices, ⁸⁹ ” it has mainly not reacted with instruments entailing sanctions, as suggested by the enforcement approach – with the only exception of the triggering of the Rule of Law Conditionality regulation against Hungary. Thus, involuntary noncompliance can be addressed through soft measures of sanctioning, yet deliberate noncompliance, such as the rule of law violations, is not suitable for the management approach. S. Priebus insists on the fact that the new tools predominantly rely on prevention and dialogue, mechanisms which are recommended by management theorists who assume that noncompliance is involuntary. ⁹⁰

Be that as it may, the launch of the new EU strategy for the indirect protection of the rule of law has been proven to be the most powerful means of ensuring compliance. Moreover, while compliance is typically associated with coercion-based means of enforcement, ⁹¹ the Commission has developed its own combined strategy wherein the sanctions are the ultimate and rarest solution. The proliferation of management instruments however has involved the possibility of imposing sanctions, yet nevertheless the sanctions resulting from the triggering of the Conditionality regulation have addressed only rule of law violations in Hungary and not in Poland. Furthermore, the triggering of the regulation as well the increased number of infringement proceedings relies on the discretion of the Commission. The management instruments such as the European Semester and the RFF confirm the idea that compliance by the addressees of EU law and policies cannot be confined within the strict boundaries of coercive means of enforcement. ⁹² On the contrary, compliance increasingly involves steering and governing instruments, which seek to accommodate the behaviours of national public powers and private parties with existing EU law and policy targets. ⁹³ The EU strategy further makes use of a more complex and articulated set of instruments, combining a variety of traditional techniques based upon coercion and authority, with non-coercive, non-authoritative instruments (such as incentives or non-binding measures).

While the management and enforcement approaches can theoretically be perceived as foes concerning the road to compliance – in this case non-binding incentive methods vs. coercive means of enforcement –, and while they are qualitatively different, methodologically they can be considered as allies in the maximisation of compliance. As E. Chiti puts it, “in this context, the notion of compliance is used to denote not only an outcome, but also a process – and in particular the whole of ongoing negotiations, political and legal processes, and institutional change that are involved in the execution of EU law and policies and are functionally orientated to give EU law and policies full effectiveness. ⁹⁴ ” Accordingly, compliance does not refer to the simple result of obedience, but to the overall process through which obedience is gradually developed. ⁹⁵ Having said that, the alternative management and enforcement approaches do not automatically nullify themselves, but compete within the specific process of re-establishing the rule of law. This does not necessarily lead to a conflation of the two approaches; inversely, they provide a solid nexus for the maximisation of compliance.

The assumption of a potential mismatch between the causes of the identified problems and the chosen solutions lies more clearly within the Commission’s communication on European Semester’s Spring package which contains one singular mention of the rule of law. ⁹⁶ While the Communication of the Commission insists on the need for ambitious reforms at improving the business environment, administrative capacities and institutional resilience for additional investments, the rule of law issues and/or violations are seemingly addressed through the need for “continued efforts to strengthen the Rule of Law, in particular independent, quality and efficient justice systems and well-functioning anti-corruption frameworks (…), for the soundness of Member States’ institutional resilience and a good business environment. ⁹⁷ ” From this perspective, strengthening the rule of law is one objective among numerous others within the economic governance coordination framework. Despite the incremental influence of the European Semester and its transformation into a de facto binding instrument, rule of law is negotiated through the lens of economic policy goals. ⁹⁸

The criticisms previously addressed at the European Semester have focused on its nature as “a legally and politically unconstrained expert regime ⁹⁹ ” accompanied by the empowerment of the executive branch at the expense of national parliaments, and at the European level with a similar side-lining of the European Parliament regarding economic governance. ¹⁰⁰ Considering that rule of law dimensions have been incorporated into the Semester’s cycle, there is a difficulty in assessing concisely how and to which extent the ex ante guidance resolves a problem, and more particularly a flagrant rule of law violation, already present within a considerable period of time. Therefore, the mismatch in this case scrutinises the appropriateness of a management instrument such as the European Semester for the objective pursued, namely the re-establishment of the rule of law. In this perspective, Member States are gradually internalising the new procedure. The management approach related to incentives has shifted towards designing country-specific recommendations focusing on what national policies should aim to achieve rather than prescribing what exact policies should be pursued.

V. Conclusion

The potential for reconceiving of and reconsidering the above European management and enforcement responses to the crisis surrounding the rule of law lies on a specific characteristic of the above instruments. More specifically, the management approach through the European Semester tends to equally present rule of law breaches of a different nature, and is an approach that risks trivialising the most serious breaches of the rule of law. Instead, the Commission can seek “to differentiate its reporting by distinguishing between systemic breaches of the rule of law and individual, isolated breaches, ¹⁰¹ ” and such a differentiation could be the fundamental element of a concrete and precise triggering of enforcement mechanisms when all previous management tools had not worked effectively. ¹⁰²

Moreover, the absence of continuity and precise follow-ups over the years could not furnish an adequate, complete and effective rule of law monitoring. ¹⁰³ The pitfall of the country-specific recommendations consists of a sole identification of rule of law concerns with no identification of specific deadlines for implementation. Should the Commission fail to follow the procedures it has foreseen, beyond the deadline given to a Member State for implementing such recommendations, it should justify its failure to act. In the current state of affairs, no assessment can be made regarding improvement in compliance with the rule of law, as well as implementation at a national level. Be that as it may, there are still differences in the use of management and enforcement mechanisms, and the euphemistic language and similar treatment of Member States facing serious rule of law violations with those who are only facing sporadic instances of rule of law violations is an inherent part of the management approach. However, when the quantitative differences are getting larger and more persistent over time, and at some point becoming qualitative differences, ¹⁰⁴ in this respect justify the enforcement mechanisms.

D. Kochenov and P. Bard argue for shifting the focus of the discussion from the enforcement of the rule of law to the reform of the Union as such as a long-term solution. ¹⁰⁵ The purported powerlessness of the EU is a consequence of a combination of the actual difficulties – both conceptual and practical – related to the enforcement of EU values. ¹⁰⁶ Additionally, and equally importantly, it is related to the systematic misrepresentation of the Union’s capacity by the Member States and those institutions unwilling to act, as a clear consensus on any forceful means for dealing with backsliding in the rule of law is apparently lacking. The reimagining of other tools in place such as the broader appeal in the backsliding under Articles 258 TFEU or 259 TFEU, ¹⁰⁷ as evidenced by the infringement proceedings pursued against Poland in the context of its destruction of the Supreme Court, which build on the newly found effet utile and EU law scope-shaping significance of Article 19(1) TEU, ¹⁰⁸ are explanatory of the new configurations. While scholars anticipated this development ¹⁰⁹ which infuses Article 258 TFEU with clear new potential, it is important to exercise due caution in interpreting it too broadly.

In a way, the alternative theories of compliance reshape the new frontiers of EU funding. They illustrate the relationship between budget and rule of law while guiding how this relationship should be governed, dismissing the idea of being seen as a set of clear-cut legal obligations that must be routinely enforced. ¹¹⁰ As Claire Kilpatrick and Joanne Scott put it “While the Commission could enforce obligations, it rarely does so as this could disrupt long-term repeat player relations between the Commission and the Member States.” ¹¹¹ In this sense, the new EU strategy for the indirect protection of the rule of law through the management and enforcement theories draws the line between the new frontiers of EU funding while at the same time being perceived as both legally ingenious or legally inappropriate. ¹¹² The bewildering array of rule of law instruments, both in genesis and implementation, questions whether the EU has over-stepped a normative frontier, or whether it has made an imaginative use of available legal pathways in creating new EU funding streams while negotiating rule of law deficiencies.