Judges in Luxembourg spent Tuesday hearing an appeal that asks a question the Union has largely avoided answering out loud. When a member state refuses to pay a fine imposed by the Court, may the Commission simply take the money from what it owes that state? Roughly 320 million euros in penalty payments hang on the reply, and so does the credibility of the enforcement system built around Article 279.
The dispute begins with judicial independence. Warsaw failed to suspend the disciplinary chamber of its Supreme Court after the Court ordered interim measures, and daily penalties accumulated. Poland did not transfer the sums. The Commission recovered them anyway, deducting each instalment from payments due to Poland out of the EU budget through a series of offsetting decisions. Poland challenged those decisions before the General Court and lost. Judgments delivered in February 2025 dismissed the actions, and the appeals in Joined Cases C-296/25 P and C-297/25 P followed.
The change of government in Warsaw did not close the file, which tells you the argument is institutional rather than partisan. Poland’s case rests on a procedural claim with wide reach. Penalties under interim measures, it argues, belong to the judicial procedure that produced them, so any contest over their calculation, duration or recovery should return to the Court that ordered them rather than being settled by an administrative act of the Commission and then reviewed as a budget matter. Offsetting, on this reading, lets the executive determine the scope of a judicial order.
The Commission answers that a penalty nobody collects is not a penalty. Financial sanctions in infringement procedure rely on voluntary payment, and when that fails, the Treaty gives the institution recovery tools that include set-off against sums owed. Remove the set-off and the Court’s ultimate leverage becomes advisory, enforceable only against governments already inclined to comply.
Both positions carry uncomfortable consequences. Accept Poland’s reading and every offsetting decision becomes litigable on judicial grounds, which could stall recovery for years and invite states to treat penalties as an opening bid. Accept the Commission’s and the institution acquires a quasi-automatic power to withhold budget transfers, a power that scholars writing on Verfassungsblog have described as the ultimate leverage in enforcing Union law. That leverage now overlaps with conditionality mechanisms, suspension of cohesion funds and recovery plan milestones, so a state in dispute can face several money-based instruments at once.
Timing sharpens the stakes. Cohesion programmes face closure deadlines, the next budget negotiation runs through the autumn, and several capitals already suspect that funding decisions carry political weight. A ruling that expands offsetting will feed that suspicion. A ruling that narrows it will hand governments a template for delay.
The Court has room to split the difference. It could uphold recovery while requiring the Commission to justify each deduction more fully, or it could route challenges over the underlying penalty back to the judicial procedure while leaving the offsetting mechanism intact. Either path would preserve enforcement and address the complaint that an executive body should not interpret a judicial order unilaterally.
Judgment will take months. Until then the question sits where it has quietly sat since 2021, which is whether the Union’s most forceful remedy against a defiant government is a legal instrument or an accounting one.
