Earlier this year, Poland was ordered to suspend a controversial disciplinary chamber, but has not yet done so.
It is the latest development in a bitter feud with the EU over changes that are seen as weakening the independence of Polish courts.
The hefty penalty was immediately denounced as “blackmail” by Polish government spokesman Piotr Muller.
Some fear the escalating situation could put Poland’s membership in the EU at risk.
Earlier this month, Poland’s constitutional court ruled that Polish law supersedes EU law when there is a conflict between the two – angering European leaders by, in effect, rejecting the primacy of EU law.
How the row unfolded
The disciplinary chamber of Poland’s Supreme Court was set up in 2018 to penalise top judges where necessary – the government said it was needed to fight corruption. But critics argue it is being used to punish independent judges because it has the power to sanction the content of their rulings.
In July, the European Court of Justice (ECJ) ordered it to be shut down as it was neither sufficiently independent nor impartial. Prime Minister Mateusz Morawiecki said Brussels was making demands with a “gun to our head” and insisted that EU institutions have no right to tell Poland how to organise its judiciary. He did agree to dismantle the chamber, however, but never gave a date.
BBC Warsaw correspondent Adam Easton says the Supreme Court has stopped scheduling new cases for the chamber, but it has continued hearing cases that are already scheduled.
One significant factor in the row is that the European Commission is yet to approve €57bn (£48bn; $66bn) of Covid-19 recovery funds earmarked for Poland, and may not do so until this dispute is settled.
An opinion poll on Tuesday suggested that 40.8% of Poles believed their government should concede defeat and end the row, while another 32.5% said it should compromise.
The vice-president said the fine was being imposed to deter Poland from further delaying the shut down of the chamber and said it was necessary to “avoid serious and irreparable harm to the legal order of the European Union”.
Poland’s Deputy Justice Minister Sebastian Kaleta said the ruling “completely disregards and ignores the Polish constitution and the rulings of the Polish constitutional tribunal”.
Poland’s leader told the European Parliament this month it was “unacceptable to talk about financial penalties” and he accused the EU of overstepping its powers.
His conservative-nationalist government has already been ordered by the ECJ to pay €500,000 a day for failing to shut down temporarily the enormous Turow coal mine and power plant close to the German and Czech borders. Poland has refused to pay that fine because it argues the plant heats and provides water to local homes.