European Commission Takes Hungary to EU Court Over Arbitration Ban Violation

The European Commission announced that it will bring a case against Hungary before the European Union Court of Justice, alleging a breach of the EU prohibition on investor-state arbitration. The Commission’s position is that Hungary, through its control over the oil company Mol and its subsidiaries, enabled the firm to launch arbitration against another EU member state and to pursue recognition of the award in a third-country court, actions the Commission deems incompatible with EU law.

It cites Mol’s use of the Energy Charter Treaty’s arbitration mechanism and the subsequent favorable ruling for the company as evidence of the violation. The Commission had previously issued a formal notice in December 2025 and issued a substantiating opinion in April 2026, concluding that Hungary had not rectified the alleged breach. Consequently, the matter has been escalated to the EU Court for a final ruling.