On February 16, 2022, the Court of Justice of the European Union dismissed an action brought by Hungary and Poland challenging an EU regulation making disbursement of funding to the EU member states conditional on certain requirements, including respect for the rule of law. Specifically, the two states challenged the legal basis for the regulation. According to a press release from the Court, in dismissing the claims, the Court found that: “the regulation is intended to protect the Union budget from effects resulting, in a sufficiently direct way, from breaches of the principles of the rule of law and not to penalise those breaches as such”; and since “compliance is a condition for the enjoyment of all the rights deriving from the application of the Treaties to a Member State, the European Union must be able to defend those values.” The Court also found that “the regulation [did] not circumvent the procedure laid down in Article 7 TEU and respects the limits of the powers conferred on the European Union.”