Top court: EU can withhold funds from Hungary and Poland

Brussels: The European Union's highest court ruled on Wednesday that the 27-nation bloc can suspend support payments to member states if they breach rule of law principles, and dismissed a challenge by Hungary and Poland.

The right-wing governments of both nations had argued that such action lacked a proper legal basis. Both nations, large recipients of EU funds, have come under increasing criticism over the past few years for veering away from the Western principles of the respect for democratic values in their nations.

The Court dismisses the actions brought by Hungary and Poland in their entirety, the European Court of Justice said in a statement.

The ruling was hotly anticipated by many who had accused the two nations of democratic backsliding and had seen the linkage measure as the EU's most potent weapon to prevent a democratic legitimacy rift deepening within the bloc.

When it comes to democratic principles, the European Union must be able to defend those values, within the limits of its powers, the court said.

The EU's executive Commission said it would await Wednesday's ruling before committing on whether to withhold funds but its president Ursula von der Leyen immediately welcomed the ruling. The Commission will defend the Union's budget against breaches of the principles of the rule of law. We will act with determination, von der Leyen promised.

Hungary's reaction was swift. Justice Minister Judit Varga slammed the ruling on her Facebook page, calling it a political judgement and proof that the EU was

abusing its power.