The European Commission says it is launching legal action against Poland over plans to give politicians more power to sack and appoint judges.
The Commission said Poland would be stripped of its EU voting rights if it went ahead with proposals to force all Supreme Court judges into retirement.
Warsaw hit out at EU "blackmail".
Poland's president has vetoed two of the most controversial bills, but the government wants to press on with them, despite mass street protests.
The European Commission's Vice-President, Frans Timmermans, said the reforms would have a "very significant negative impact on the independence of the Polish judiciary".
He welcomed a decision by Polish President Andrzej Duda on Monday to veto some of the laws, including the one that would have overhauled the Supreme Court.
But he said the Commission would launch immediate action to strip Poland of its voting rights if Warsaw went ahead with it anyway.
Such a penalty, known as Article 7, requires the agreement of all EU member states, and Hungary says it will back Poland.
A more realistic sanction at this stage is the threat of hefty fines imposed by the European Court of Justice, says the BBC's Adam Easton in Warsaw.
Mr Timmermans said the Commission would sue Poland for breaking EU rules on judicial independence and on gender discrimination - because the legislation sets different retirement ages for male and female judges.
But a government spokesman said he did not have enough knowledge of the draft bills to criticise them.
"We will not tolerate any blackmail from EU officials, especially blackmails that are not based on facts."
Earlier this week Poland's Prime Minister Beata Szydlo vowed to press on with the reforms, saying the government would not "yield to pressure from the street and from abroad".
It came after President Duda vetoed two laws and called for them to be amended, but approved a third.
"I'm absolutely a supporter of this reform, but a wise reform," said President Duda, an ally of the ruling Law and Justice party.
- The first reform requires all Supreme Court judges to step down and gives the justice minister the power to decide who should stay on
- The second gives politicians control over who sits on the National Judiciary Council which nominates Supreme Court judges
- The third gives the justice minister the right to select and dismiss judges in lower courts. Until now, the minister had to have his nominations approved by the judiciary
In theory, the Polish parliament could now challenge the president's veto if the Law and Justice party can get enough support for the legislation in parliament.
A more likely step would be to spend the next weeks redrafting the two bills that the president has turned down and seek his approval.
Poland will have one month to respond to the Commission's legal action.