The European Commission has referred Hungary to the Court of Justice over what it describes as a continuing failure to prevent state-controlled companies from pursuing prohibited investor-state arbitration inside the European Union.
The dispute sits at the fault line between EU law and the Energy Charter Treaty. In its Komstroy judgment, the Court of Justice held that provisions allowing an investor from one member state to arbitrate against another member state are incompatible with the Union treaties because such tribunals stand outside the EU judicial system.
According to the Commission, Hungarian oil and gas group MOL nevertheless sought recognition and enforcement in a non-EU court of an intra-EU award made under the treaty. The Commission says Hungary thereby allowed a state-controlled company to circumvent obligations binding the member state under EU law.
Brussels opened the infringement procedure with a letter of formal notice in December 2025 and followed with a reasoned opinion in April. The referral means the preliminary administrative phase has ended without a resolution the Commission considers adequate. The Court of Justice will now determine whether Hungary has failed to fulfil its treaty obligations.
The case is not a ruling on the underlying commercial dispute or the validity of every Energy Charter award. Its immediate question is Hungary’s responsibility as a member state for conduct that the Commission says undermines the EU prohibition on intra-Union investor-state arbitration.
Official European Commission infringement decision
