08.04.2026

Money makes money… but not under all circumstances. The rate of statutory penalty interest, in light of High Court of Cassation and Justice Decision No. 28/2026

Interest is an essential element of any civil and commercial dispute and can have a significant influence on the total amount the debtor may be required to pay.

Government Ordinance No. 13/2011 on statutory interest and penalty interest for monetary obligations, as well as on the regulation of certain financial and fiscal measures in the banking sector (hereinafter "GO No. 13/2011”) makes a clear distinction between two main types of interest. Art. 1(2) provides that "The interest owed by the debtor of an obligation to pay a sum of money by a certain date, calculated for the period prior to the maturity date of the obligation, is referred to as remunerative interest.” Article 1(3) provides that "Interest owed by the debtor of a monetary obligation for failure to perform the obligation upon maturity is referred to as penalty interest.” Art. 1489(2) of the Civil Code regulates the mechanism of compound interest, whereby interest may in turn generate interest, thus allowing for its capitalization under the conditions provided by law or by agreement of the parties.

On February 9, 2026, the High Court of Cassation and Justice (Panel for the Resolution of Legal Issues) issued an important decision—Decision No. 28/2026—clarifying the legal regime governing the capitalization of interest, in the interpretation of Art. 1489(2), second sentence, of the Civil Code, in relation to Art. 8 of Government Ordinance No. 13/2011. (2), second sentence, of the Civil Code, in relation to Article 8 of Government Ordinance No. 13/2011.

I.                        The Context of Decision No. 28/2026

The legal regime governing interest is subject to a complex regulatory framework, involving both provisions of the Civil Code and rules from special legislation—primarily Government Ordinance No. 13/2011. Thus, on the one hand, Article 1489(2) of the Civil Code provides that interest due generates further interest, but only when the law or the contract so provides or, in the absence thereof, when such interest is claimed in court. However, the scope of the article is not clearly defined, as it does not specify whether it applies to both compensatory and penalty interest. On the other hand, Article 8(3) of Government Ordinance No. 13/2011 provides that compensatory interest may be capitalized.

The High Court of Cassation and Justice’s intervention comes in a context where, although the rules in question have been in force since 2011, few court decisions have been identified in judicial practice that resolve this issue, and the legal question remains novel. At the same time, the opinions expressed by the experts consulted by the ICCJ were divergent, highlighting the need to prevent inconsistent case law.

II.                     The Solution Adopted by the ICCJ

Essentially, the High Court of Cassation and Justice resolved two issues: (i)that penalty interest cannot be capitalized under the law, and (ii) that compensatory interest, arising either from loan agreements or from other types of contracts, may be capitalized even in the absence of an express clause to that effect.

With regard to penalty interest, the law provides that, in the absence of any agreement to the contrary, the creditor is entitled to statutory penalty interest, calculated differently depending on the type of legal relationship. For example, the current penalty interest rate is 14.5% per annum in transactions between professionals. The High Court of Cassation and Justice’s first conclusion is that Article 1489(2) of the Civil Code, which permits the capitalization of interest, refers exclusively to compensatory interest. In other words, when seeking payment of penalty interest in court, the creditor cannot rely on this provision to claim its capitalization.

To reach this conclusion, the High Court noted that Article 1489 of the Civil Code is located in the chapter on payment, a concept that presupposes the voluntary performance of an obligation. Thus, while compensatory interest falls under this concept, relating to the very conduct of the contractual relationship, penalty interest constitutes a form of civil liability, an institution regulated in a separate chapter. In the same vein, the High Court of Cassation and Justice emphasized that only compensatory interest can have a genuine due date for payment, thereby reinforcing the conclusion that the legislature intended only compensatory interest to fall within the scope of Article 1489 of the Civil Code.

With regard to remunerative interest, the High Court’s second conclusion clarifies the scope of application of Article 8(3) of Government Ordinance No. 13/2011. Thus, it was ruled that interest may be capitalized both in the case of loan agreements and in the case of any other contracts involving civil fruits, such as a deposit agreement. Thus, when the debtor fails to pay the interest on time, the law allows the creditor to claim late payment penalties on it, even in the absence of an express provision to that effect.

III.                  Practical Implications of Decision No. 28/2026

The ruling issued by the High Court concerns exclusively the application of the legal regime governing penalty and compensatory interest. However, the rules in question are supplementary in nature, meaning that they may be validly derogated from by agreement of the parties, provided that applicable mandatory provisions, such as those set forth in consumer protection legislation, are observed.

Thus, Decision No. 28/2026 has the following consequences:

(i)  As a general rule, the creditor will not be able to claim the capitalization of penalty interest. The parties are, however, permitted to derogate from this rule through a penalty clause.

 (ii) In both loan agreements and other contracts involving civil fruits, the creditor may request the capitalization of interest under the law, effective from the due date. At the same time, the parties may exclude this consequence through a limitation of liability clause.

An article by Mara Colțan - mcoltan@stoica-asociatii.ro – and Iulian Chetreanu - ichetreanu@stoica-asociatii.ro - Junior Lawyers - STOICA & ASOCIAȚII.