Hungary has launched a legal challenge against the EU Council and the European Peace Facility (EPF), contesting a decision to use profits from frozen Russian central bank assets to fund military aid for Ukraine, writes Portfolio.
The case, filed at the EU’s General Court in Luxembourg in July and officially registered on August 25, targets a 2024 Council decision and a 2025 EPF implementation measure. These would channel 99.7% of net income from the management of frozen Russian assets into the EPF, creating a potential annual revenue stream of €3–5 billion for Ukraine’s defense.
Hungary argues the process violated EU treaties and sidestepped its veto rights. It claims its vote was ignored on the grounds that it was “not a contributing member state,” effectively excluding it from the decision-making process. The Hungarian government is seeking annulment of both the EPF’s decision and the related protocol.
Photo: Wikimedia Commons
Budapest also contests the legal basis of the decision, saying it bypassed approval from the Political and Security Committee and failed to establish required administrative agreements. It argues that the process did not meet the legal standards for decision-making and that meeting records misrepresented Hungary’s role.
Roughly €200 billion in Russian central bank assets are frozen in the EU, mostly held by Belgium’s Euroclear. While the EU does not seize the funds themselves, it plans to use the interest and investment income—estimated at €2.5–5 billion annually—to support Ukraine.
The lawsuit reflects Hungary’s ongoing resistance to EU military and financial aid for Ukraine. Budapest has repeatedly vetoed Ukraine-related decisions, including a €50 billion aid package in late 2023. In response, other member states have sought ways to circumvent Hungary’s opposition.
Hungary has filed a lawsuit against the Council of the European Union and the European Peace Facility over a decision to grant Ukraine billions of euros in aid funded by interest from frozen Russian assets.https://t.co/S6Gw6WCNQh
— TVP World (@TVPWorld_com) August 27, 2025
The court has accepted the case on procedural grounds. A lengthy process will follow, including a written phase, possible Advocate General opinion, hearings, and a final ruling—which could take years. The decision could also be appealed to the European Court of Justice.
In the meantime, the contested decisions remain in force, allowing funds to continue flowing to Ukraine—unless Hungary successfully requests a suspension of implementation.
Though the lawsuit targets the earlier legal framework—which funneled all profits exclusively into military aid—the mechanism has since evolved. Now, a portion of the revenues also supports civilian reconstruction and humanitarian aid through the Ukraine Loan Cooperation Mechanism (ULCM).
Despite these changes, the case could set a major precedent. A Hungarian win might reinforce veto powers and require unanimity for similar future decisions. A loss, however, could make it easier for EU institutions to bypass individual member states in key foreign policy funding decisions.
Via Portfolio; Featured image: Pixabay
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