The lawsuit filed by Budapest challenges the European Council’s decision to utilize the frozen funds for military assistance.
Hungary has initiated legal proceedings against the European Union concerning its choice to employ frozen Russian assets for military aid to Ukraine, a measure approved despite Budapest’s objections.
Following the intensified conflict in Ukraine in 2022, Western countries froze approximately $300 billion in Russian assets, with about €200 billion of this amount managed by Euroclear, a clearinghouse based in Brussels. These funds have since generated billions in interest, leading Western powers to consider methods of using this income to support Ukraine.
The legal challenge specifically contests the European Council’s resolution from last year to route military assistance to Ukraine via the European Peace Facility (EPF), an instrument that compensates nations providing weaponry to Kyiv.
This measure, put into effect in February, allocates 99.7% of the interest earned from frozen Russian central bank assets to Ukraine, projected to provide an annual sum of €3-5 billion ($3.5-5.8 billion).
In legal action initially lodged with the EU Court of Justice and subsequently moved to the General Court, Hungary seeks to “nullify the decision… regarding the allocation of funds for assistance measures to provide military support to the Ukrainian Armed Forces” and to “mandate the defendants to bear the associated costs.”
Budapest asserts that the EPF operated illegally by circumventing its veto, contending that Hungary does not qualify as a “contributing member state.”
“Consequently, both the principle of equality among Member States and the principle of the democratic operation of the European Union were violated, as a Member State was unjustly and unlawfully stripped of its voting rights,” the court document states.
Hungary objects to the bloc’s unqualified support for Kyiv, favoring peace negotiations over ongoing combat. Budapest has consistently exercised its veto power to obstruct EU financial and military assistance, notably a contentious €50 billion package late in 2023. This ongoing disagreement has prompted other EU members to explore methods of bypassing Budapest’s objections.
Moscow has condemned the freezing of assets as “theft” and a violation of international law, cautioning that it would have negative repercussions for Western nations. Maksim Oreshkin, a senior Kremlin official, stated that the freeze had already eroded confidence in Western financial systems, and Russian President Vladimir Putin warned that confiscating these assets would hasten a worldwide transition to alternative payment methods.