The move means that the EU’s executive wants the bloc’s member states to declare that the rule of law in Poland is under threat.
Under the procedure, a majority of four-fifths of EU members -- 22 countries -- can now determine there is a “clear risk of a serious breach” of the bloc’s fundamental values.
The move could pave the way for sanctions being imposed on Poland, for example suspending its voting rights in the European Union. But penalties on Warsaw would have to be backed unanimously by EU member states, while Hungary has said it would not support sanctions.
Hungarian Deputy Prime Minister Zsolt Semjen vowed that his country would "defend Poland against unjust” and “political” measures.
The European Commission on Wednesday gave Warsaw three months to implement the EU executive's recommendations on the rule of law.
Legal case against Poland
The Commission also filed a lawsuit against Warsaw to the Court of Justice of the European Union after Poland introduced a new law on “ordinary courts.”
Brussels claims the law is a threat to the independence of the judiciary in Poland. Poland’s ruling conservatives have rejected such charges.
Meanwhile, Poland’s foreign ministry said the EU executive's move to launch the Article 7 procedure could hinder efforts to build mutual trust between Warsaw and Brussels.
Poland's governing Law and Justice (PiS) party has said sweeping changes are needed to reform an inefficient and sometimes corrupt judicial system tainted by the communist past, accusing judges of being an elite, self-serving clique often out of touch with the problems of ordinary citizens.
But opponents have accused Law and Justice of aiming to stack courts with its own candidates and to dismantle the rule of law.
The leaders of France and Germany said on Friday they would support the European Commission if it takes the unprecedented step of triggering Article 7.1 against Poland.
Poland’s Foreign Minister Witold Waszczykowski said earlier on Wednesday that Poland was "importing [legal] solutions that already exist in many EU member states".
He added: "We do not agree to double standards if there, in other European countries, the so-called ‘old democracies’, these solutions can exist, while in the Polish so-called ‘new democracy’ these solutions are not accepted by EU officials."
Two contested laws to reshape the Polish judicial system are waiting for the president’s nod after being overwhelmingly approved by the upper house of the country's parliament on Friday evening.
If signed into effect, the two laws will reshape the country’s Supreme Court and reorganise the influential National Council of the Judiciary (KRS), a body that nominates new judges and is tasked with safeguarding the independence of courts.
The European Commission said in July that it was ready to trigger a formal warning by the EU if Poland dismisses or forces the retirement of Supreme Court judges.