LUXEMBOURG — The European Court of Justice issued a ruling on Thursday in a dispute over billions of euros in European Union funds frozen over concerns about the rule of law in Hungary. The case concerns Budapest's long-running clash with Brussels over judicial independence and anti-corruption safeguards.

The European Commission has withheld access to cohesion and recovery funds from Hungary since 2022, citing failures to address corruption risks and threats to judicial independence. Prime Minister Viktor Orbán's government has repeatedly challenged the measures, arguing that the conditionality mechanism infringes on national sovereignty.

The outcome carries weight beyond Hungary. Poland, Slovakia and other member states have watched the litigation closely as a test of how far Brussels can tie budget disbursements to democratic standards. A Commission spokesperson said the institution would respect and implement the court's decision.

The ruling comes as EU member states remain divided over relations with Budapest, including Hungary's repeated blocking of measures on Russia sanctions and Ukraine aid. Analysts at the Brussels-based Centre for European Policy Studies said a decision upholding the freeze would strengthen the Commission's leverage over recalcitrant governments.

Orbán's government has signalled it may seek further legal avenues if the ruling goes against it. Opposition figures in Budapest have urged compliance to unlock the frozen funds ahead of Hungary's economic pressures.