The General Court of the European Union has dismissed a lawsuit brought by Hungary over using interest from frozen Russian assets to assist Ukraine.
The ruling, published on the court website on Wednesday, 9 September, rejected the action in full and ordered Hungary to pay all legal costs.
The legal action was filed by the previous government of Viktor Orban to overturn a decision made on 21 June 2024 by the committee of the European Peace Facility. That decision approved a first tranche of military assistance for the Armed Forces of Ukraine.
Orban's government argued in its suit that Hungary had abstained during the adoption of the initial framework decision. The government said the committee subsequently decided that countries abstaining from the framework vote had no right to vote when specific decisions on allocating the funds were made.
Money from the first tranche was earmarked for urgent purchases of ammunition, artillery, and air defence systems, as well as military products manufactured by Ukraine's domestic defence industry.
Jurisdiction and Common Policy
Judges dismissed Hungary's lawsuit in its entirety due to a lack of jurisdiction. The court determined that the contested decision fell under the EU's Common Foreign and Security Policy, an area explicitly excluded from judicial review by European Union justice bodies.
The General Court, based in Luxembourg, is one of the constituent judicial bodies of the Court of Justice of the European Union. Under treaties governing the bloc, measures taken within the framework of the Common Foreign and Security Policy lie outside the jurisdiction of European courts, keeping foreign policy decisions under member state and executive authority.
The European Peace Facility is an off-budget instrument created by the European Union to fund foreign military and defence initiatives. Because its operations are governed by foreign policy rules, committee decisions on allocating resources are shielded from standard court challenges.
Frozen Assets and Financial Aid
Since 2024, the European Union has approved five separate tranches of financial assistance derived from interest earned on cash balances originating from frozen assets of the Central Bank of Russia. Those assets are stored in European financial depositaries.
Since the initial asset freeze, those cash balances have generated 8 billion euros in windfall profits. Central securities depositaries such as Euroclear hold the immobilized reserves, which accumulate interest in cash accounts as underlying coupon payments and principal investments mature.
Following the start of the full-scale invasion of Ukraine, Western nations froze approximately 300 billion dollars in assets belonging to the Russian Central Bank, with the vast majority held inside Europe.
Discussions remain ongoing among member countries of the European Union and the G7 group of industrialised nations regarding whether the frozen principal funds or the ongoing profits can be used to support Ukraine and fund its reconstruction.
