Today, the Commission decided to refer Hungary to the Court of Justice of the European Union for contradicting the Unions position on intra-EU arbitrations under the Energy Charter Treaty.
In June 2024, the Union and 26 Member States signed a Declaration on the legal consequences of the Komstroy judgment. In it, the Court of Justice clarified the way to interpret the Energy Charter Treaty. The Court held that the arbitration clause of the Energy Charter Treaty is not applicable to disputes between a Member State and an investor from another Member State concerning an investment made by the latter in the first Member State. In other words, under Union law, within that framework, arbitration awards are invalid and as such unenforceable anywhere in the Union.
This Declaration complemented an agreement between the Union and its Member States which clarified, for the benefit of courts and arbitral tribunals, that the arbitration clause provided in the Energy Charter Treaty does not apply – and has never applied – in the relations between an EU investor and an EU country, or the Union. On the same day, Hungary adopted a unilateral declaration claiming that the Court of Justice judgment in Case C-741/19 - République de Moldavie (“the Komstroy judgment”) only applies for future intra-EU investor-State arbitration proceedings and that this effect for the future will only start once the Energy Charter Treaty has been amended. The Commission considers that such unilateral declaration contradicts both the decision of the Court and the Unions position vis-à-vis arbitration tribunals and courts of third countries.
According to the Commission, Hungary is also in breach of the duty of sincere cooperation enshrined in Article 4(3) of the Treaty of the European Union, as well as of Articles 19 TEU, 267 TFEU and 344 TFEU and the general principles of autonomy, primacy, effectiveness, and uniform application of Union law.
The Commission had initially sent a letter of formal notice in July 2024, followed by a reasoned opinion in March 2025. The Commissions concerns were not alleviated with the reply submitted by the Hungarian authorities to the reasoned opinion. The Commission has therefore decided to refer the case to the Court of Justice of the European Union.
Background
The Commission has been engaged with the Member States for years to clarify the legal context for disputes under the Energy Charter Treaty. In October 2022, the Commission sent a Communication to the Council, the European Parliament and the Member States setting out its intention to open negotiations on an agreement between the Union, Euratom and the Member States in relation to the interpretation of the Energy Charter Treaty that would include, in particular, a confirmation that the Energy Charter Treaty does not apply intra-EU and therefore, it cannot serve as a basis for arbitration proceedings.
The Union joined the Energy Charter Treaty with partner countries around the world as part of its external energy policy. The offer to arbitrate disputes contained in that Treaty was never intended to supplant the system of judicial protection set up under the EU Treaties. In its Komstroy judgment, the Court of Justice recognised that this was the only proper way to interpret the Energy Charter Treaty. The EU has notified its withdrawal from the Energy Charter Treaty in June 2024.
For More Information
Infringement decisions database and infringements map and graphs
July 2025 infringements package
Infringement procedure Hungary (INFR(2024)2206)