Brussels (The Brussels Morning Newspaper) – The EU Commission urges Hungary not to damage the Union’s position on intra-EU arbitrations under the Energy Charter Treaty and to abide by the case law of the Court of Justice.
Why is the EU Commission concerned about Hungary’s actions?
The European Commission chose to open an infringement procedure by transmitting a letter of formal notice to Hungary (INFR(2024)2206) for sabotaging the Union’s position on the international stage regarding the banning of intra-EU investor-State arbitrations linked to the Energy Charter Treaty (ECT), and for rejecting the case law of the Court of Justice of the European Union.
What is the Komstroy judgment about?
On 26 June 2024, the Union and 26 Member States inscribed a Declaration on the legal consequences of the Komstroy judgment, in which the Court of Justice maintained that the arbitration clause of the ECT does not involve disputes between a Member State and an investor from another Member State regarding an investment made by the latter in the first Member State.
This Declaration complemented a contract concluded on the same day explaining the Union’s long-settled position that the arbitration clause delivered in the Energy Charter Treaty does not apply – and has never been involved – in the relations between an EU investor and an EU country, or the Union.
How has Hungary responded to the Komstroy judgment?
On that exact day, Hungary assumed a unilateral declaration declaring that the Komstroy judgment only applies to prospective intra-EU investor-state arbitration proceedings. Its unilateral proclamation further claims that this development for the future will only start once the Energy Charter Treaty has been revised.
How has Hungary responded to the Komstroy judgment?
The EU Commission discovers that Hungary’s unilateral declaration rejects the decision of the Court of Justice, as well as the EU Union’s function vis-à-vis arbitration tribunals and courts of third countries. In addition, the EU Commission figured that by openly voicing a unilateral, different position, Hungary violates the duty of sincere cooperation consecrated in Article 4(3) of the Treaty of the European Union, which mandates Member States to abstain from damaging the EU Union position on the international stage.
What legal actions has the EU Commission taken against Hungary?
EU Commission states that by rejecting an interpretation given by the Court, Hungary seems to disdain the final, authoritative and binding character of the judgments of the Court of Justice. These principles are consecrated in Article 19 of the Treaty of the European Union and Articles 267 and 344 of the Treaty on the Functioning of the European Union, as well as the general principles of autonomy, primacy, effectiveness, and uniform application of Union law.
The EU Commission has therefore chosen to send Hungary a letter of formal notice. Hungary now has two months to answer and address the shortcomings presented by the Commission. In the absence of a sufficient response, the EU Commission may decide to administer a reasoned opinion.
