GENEVA
The European Commission on Thursday said that it has referred Hungary to the Court of Justice of the European Union for refusing to comply with a key EU ruling on investor-state arbitration under the Energy Charter Treaty.
The move follows Hungary's rejection of the bloc's interpretation of the 2021 Komstroy ruling, in which the court ruled that the treaty’s arbitration clause does not apply to disputes between an investor from one EU country and another EU member state. The ruling confirmed that such arbitration awards are invalid and cannot be enforced within the EU.
While 26 EU countries backed a joint declaration in June 2024 aligning with the judgment, Hungary issued a unilateral statement claiming the ruling only applies to future arbitration cases – and only once the treaty is amended. The commission said in a statement that this contradicts the court's decision and the EU's legal position.
According to the commission, Hungary violated several EU treaty obligations, including the duty of sincere cooperation and the principles of primacy and uniform application of EU law.
The commission first raised concerns in July 2024 and sent a formal warning this March. After Hungary's response failed to address the issues, the commission escalated the case to the Court of Justice of the European Union.
The EU formally withdrew from the Energy Charter Treaty in June 2024, saying it was incompatible with the bloc's legal order.