Hungary and Poland’s legal challenge to the EU’s crackdown on rule of law breaches has suffered a serious setback after a legal opinion recommended their claim should be dismissed.

The EU’s advocate general found that the new rule of law conditionality mechanism, which seeks to protect the bloc’s budget from violations by member states, was legally sound and compatible with the EU treaties.

The conditionality mechanism was agreed by the EU last year as part of the budget deal that ushered in the bloc’s €800bn recovery fund. Poland and Hungary subsequently launched a legal challenge calling for the rules to be annulled, claiming they were not compatible with the treaty and breached principles of legal certainty.

The European Commission’s main concern regarding Poland centres on threats to the independence of the country’s judiciary by the ruling Law and Justice party, the subject of a long-running battle between Brussels and Warsaw.

Poland is under pressure from the EU to dismantle a controversial disciplinary chamber for judges that the European Court of Justice has found to be illegal. The Polish constitutional court in October found that parts of EU law were not compatible with the country’s constitution, raising the stakes further.

The commission has asked Budapest to provide clarification over “persistent” deficiencies and weaknesses in the country’s procurement rules that have stoked concern over corruption linked to the dispersal of EU funds.

Thursday’s recommendation by Manuel Campos Sánchez-Bordona, the advocate general, is not binding on the European Court of Justice, but it is an indication of where the court’s ultimate decision could go. The opinion, if affirmed by the court in the coming weeks, would remove a political roadblock to the commission beginning formal proceedings against either or both Hungary and Poland for jeopardising EU funds because of alleged rule of law violations.

That would put in question tens of billions of euros of EU funding to the countries.

The advocate general found that the new regulation did not clash with existing sanctions mechanisms under Article 7 of the EU treaty, and that it established a “sufficiently direct link” between rule of law breaches and the implementation of the EU budget.

Sebastian Kaleta, Poland’s deputy justice minister, hit back on Thursday, saying the opinion marked “one of the worst days in the history of the EU”, as he insisted that the proposed regulation was “against the treaties”. 

Assuming the ECJ follows the advocate general’s opinion, this should clear the way for the commission to commence formal proceedings under the conditionality mechanism. Brussels sent letters last month to both Poland and Hungary setting out a detailed list of questions on possible breaches to the rule of law, in an informal step in that direction.

Hungarian justice minister Judit Varga said on Facebook: “The opinion ignores the fact that the conditionality regulation suffers from a number of obvious legal errors, each of which already justify its annulment. Its legal basis is incorrect, it circumvents the treaties and it violates the fundamental requirements of the rule of law, in particular the principles of legal certainty and clarity.”

Poland’s Kaleta told the Financial Times that the advocate general’s opinion would allow “EU funds to be blocked on the basis of arbitrary and political decisions”.

He added: “As Poland we cannot accept that such a mechanism, in fact a political blackmail mechanism, may be used in a family of equal partners. From now on, the rule of equality between member states is dead.”