This paper aims at analyzing and understanding the political conflict between the EU and member states Hungary and Poland that has increased in recent years. Though this paper's focus will be on the different understanding and application of democracy, its meaning and values. By understanding the different approach to democracy, through liberal democracy and illiberal democracy, one may understand the conflict better and its implication for European integration. This paper analyses the democratic development in Hungary and Poland, the theories behind their development and its response from the EU. The importance of understanding the core values of democracy and understanding of it, be it liberal democracy or illiberal democracy, is not to be underestimated. Only by understanding these differences in core values can we understand the conflict of Rule of Law between the EU and its illiberal member states. This paper concludes that the negative democratic development in these states and their governments' public philosophical and political narratives for their reforms are not in coordination with neither reality nor public opinion. It also finds that the development of illiberal democracies within the EU is a threat to future European integration and the normative legitimacy of the EU in internal and foreign matters.