July infringement package – key decisions on energy

In its regular package of infringement decisions, the European Commission pursues legal action against Member States for failing to comply with their obligations under EU law. These decisions, covering various sectors and EU policy areas, aim to ensure the proper application of EU law for the benefit of citizens and businesses.

In the list of July infringements, there is 1 energy-related letter of formal notice. 

The Commission urges Hungary not to undermine the Union's position on intra-EU arbitrations under the Energy Charter Treaty and to abide by the case law of the Court of Justice

The European Commission decided to open an infringement procedure by sending a letter of formal notice to Hungary (INFR(2024)2206) for undermining the Union's position on the international stage with regard to the prohibition of intra-EU investor-State arbitrations related to the Energy Charter Treaty (ECT), and for contradicting the case law of the Court of Justice of the European Union.

On 26 June 2024, the Union and 26 Member States signed a Declaration on the legal consequences of the Komstroy judgment, in which the Court of Justice held that the arbitration clause of the ECT  is not applicable to disputes between a Member State and an investor from another Member State concerning an investment made by the latter in the first Member State. This Declaration complemented an agreement concluded on the same day clarifying the Union's long settled position that the arbitration clause provided in the Energy Charter Treaty does not apply – and has never applied – in the relations between an EU investor and an EU country, or the Union. On the same day, Hungary adopted a unilateral declaration claiming that the Komstroy judgment only applies for future intra-EU investor-State arbitration proceedings. Its unilateral declaration further claims that this effect for the future will only start once the Energy Charter Treaty has been amended.

The Commission finds that Hungary's unilateral declaration contradicts the decision of the Court of Justice, as well as the Union's position vis-à-vis arbitration tribunals and courts of third countries. In addition, the Commission finds that by openly expressing a unilateral, different position, Hungary is in breach of the duty of sincere cooperation enshrined in Article 4(3) of the Treaty of the European Union, which requires Member States to abstain from undermining the Union position on the international stage. Furthermore, by contradicting an interpretation given by the Court, Hungary seems to disrespect the final, authoritative and binding nature of judgments of the Court of Justice. These principles are enshrined in Article 19 of the Treaty of the European Union and Article 267 and 344 of the Treaty on the Functioning of the European Union, as well as the general principles of autonomy, primacy, effectiveness, and uniform application of Union law.

The Commission has therefore decided to send Hungary a letter of formal notice. Hungary now has two months to respond and address the shortcomings raised by the Commission. In the absence of a satisfactory response, the Commission may decide to issue a reasoned opinion.

For more information on the EU infringement procedure, see the full press release and Q&A. For more detail on the history of a case, you can consult the infringement decisions' register.