EU General Court Dismisses Hungary’s Challenge to Use of Immobilized Russian Asset Proceeds for Ukraine

The European Union’s General Court on Wednesday dismissed Hungary’s challenge to the use of proceeds from immobilized Russian assets to support Ukraine’s armed forces, saying it lacks jurisdiction to review the decision because it falls within the bloc’s foreign-policy sphere.

The ruling, in case T-457/24, Hungary v European Peace Facility Committee and Council, is a procedural one rather than an endorsement of either side’s legal arguments. The court did not decide whether Hungary was right or wrong on the substance. Instead, it said the contested decision is tied to political and strategic choices under the EU’s Common Foreign and Security Policy, or CFSP, where judicial review is limited.

That matters because Hungary had asked the court to annul a June 21, 2024, decision by the European Peace Facility Committee that covered the first installment of proceeds generated by immobilized Russian assets. By rejecting the case on jurisdictional grounds, the court leaves in place the mechanism used to channel funds that the European Commission said had already been transferred in 2024.

According to CURIA Press Release No. 123/26, Hungary brought the action on Aug. 30, 2024, challenging both the EPF Committee decision, adopted by written procedure, and the minutes recording its adoption.

Hungary argued that the decision had been adopted unlawfully, including through a breach of voting rules. It also said the process failed to respect EU fundamental values and constitutional principles, including the rule of law, equality of member states and democratic functioning.

The General Court said, however, that its role stops short in this instance. It said, “The General Court finds that the EPF has legal capacity,” meaning acts of the European Peace Facility and its committee can in principle be challenged before EU judges.

But that did not open the door to review here. The court said it “does not have jurisdiction to examine the legality, including the external legality, of such a decision, since it is directly related to the political or strategic choices made in the context of the CFSP.”

The procedural background goes back to two Council decisions adopted on May 21, 2024: Decision (CFSP) 2024/1470 and Decision (CFSP) 2024/1471. Together, they created the legal framework for directing and allocating extraordinary revenues generated by immobilized Russian central bank assets.

The court said Hungary voted in favor of the first decision, which dealt with the direction of amounts, but constructively abstained on the second, which concerned allocation. The EPF Committee later concluded that, as a result, Hungary could not take part in the vote on the later allocation decision adopted in June 2024.

The European Peace Facility is an EU off-budget instrument created in 2021 under Council Decision (CFSP) 2021/509. It is used to finance actions under the EU’s foreign and security policy, including assistance measures for partner countries such as Ukraine.

This case concerns proceeds generated by immobilized Russian assets, not confiscation of the underlying Russian state assets themselves. In February 2024, the Council adopted measures requiring central securities depositories holding large amounts of immobilized Central Bank of Russia assets to set aside the extraordinary revenues from those holdings. The May 2024 decisions then set out how those proceeds could be used to support Ukraine.

In July 2024, the European Commission said the EU had made available a first transfer of 1.5 billion euros, or about $1.6 billion at the time, from those proceeds. Of that amount, 1.4 billion euros was allocated to the European Peace Facility for military support, with the rest going to the Ukraine Facility. The Commission also said in 2024 that about 210 billion euros of Russian central bank assets were immobilized in the EU, part of around 260 billion euros worldwide, and that those assets could generate 2.5 billion to 3 billion euros a year in revenues, depending on interest rates.

A further appeal, limited to points of law, may be brought before the Court of Justice of the European Union within two months and 10 days of notification of the General Court’s decision.