EU Court rejects Hungary's lawsuit against use of revenues from Russian assets for Ukraine

The General Court of the European Union has rejected Hungary's lawsuit against the decision to allocate revenues from frozen Russian state assets to military support for Ukraine. This concerns the first tranche, from which approximately €1.4 billion was earmarked to support the Ukrainian Armed Forces through the European Peace Facility.

The Court delivered its judgment on 9 September in Case T-457/24 Hungary v European Peace Facility and Council. Thus, Budapest's attempt to annul the decision on the allocation of funds has failed.

The dispute concerned the decision of the European Peace Facility Committee of 21 June 2024. It determined the allocation of funds for military assistance measures for the Armed Forces of Ukraine from extraordinary revenues generated by frozen Russian assets.

Hungary challenged its exclusion from voting

Hungary filed the lawsuit in August 2024. Budapest sought to annul the decision of the European Peace Facility Committee, as well as the part of the meeting minutes recording its adoption.

The Hungarian side argued that the established rules were violated during the vote. In particular, Budapest contested the conclusion that Hungary was not a member state contributing to the relevant mechanism, and therefore should not participate in the vote.

Hungary believed that it had thus been deprived of its voting rights without proper legal grounds, and that the principle of equality of EU member states had been violated. The General Court did not accept these arguments and dismissed the action.

First €1.5 billion transferred to Ukraine back in 2024

The mechanism for using revenues from frozen Russian assets was approved by the EU Council in May 2024. It concerns not the confiscation of the Central Bank of Russia's assets themselves, but the extraordinary profits accumulating in European depositories due to their freezing.

In July 2024, the EU received its first contribution of €1.5 billion. Of this, 90% – approximately €1.4 billion – was channelled through the European Peace Facility for Ukraine's military needs, while the remaining 10% went through the Ukraine Facility for the country's reconstruction.

The funds for military assistance were primarily intended for the procurement of air defence systems, artillery ammunition, as well as orders placed directly with the Ukrainian defence industry.

The General Court's ruling means that the challenged decision on the distribution of the first tranche of revenues from frozen Russian assets remains in force.

Source: Court of Justice of the European Union, EUR-Lex, European Commission