Europe’s highest court has struck down the European Commission’s green light for Hungarian state funding of the Paks II nuclear project, handing Austria a major victory in its years-long legal fight.
The Court of Justice of the European Union ruled that Brussels failed to properly scrutinize whether the financing arrangement aligned with EU procurement law. That omission, the court said, invalidates the Commission’s 2017 approval of Hungary’s state aid package for the two-reactor expansion.
Hungary had locked in a construction schedule with Rosatom, Russia’s state nuclear firm, two years ago. Moscow expects to hand over the new units early next decade.
The ruling reverses a 2022 decision by a lower EU court that had sided with the Commission. Austria, which has long opposed nuclear power, first challenged the aid in 2018, arguing it violated competition rules. After losing that round, Vienna appealed to the bloc’s top tribunal.
Central to the court’s reasoning: the Commission checked the deal against state aid rules but never examined public procurement compliance. Because Hungary awarded the contract directly to Rosatom, that oversight mattered. The direct award formed a key part of the state aid package, so the Commission should have reviewed it as well.
Meanwhile, the Paks plant sits roughly 100 kilometers south of Budapest and has operated since 1982. Its four existing reactors supply about half of Hungary’s electricity needs. Rosatom’s contract covers construction of two additional units.
The case lands amid broader friction over Hungarian-Russian energy ties. Prime Minister Viktor Orbán maintains close relations with Vladimir Putin and has repeatedly pushed the EU to lift sanctions imposed after Russia’s invasion of Ukraine. Budapest continues to pursue Russian fossil fuel imports even as the bloc works to sever that dependence.
The ruling now forces the Commission to revisit the Paks II aid decision, potentially unraveling the project’s financing foundation. Hungary may seek alternative legal routes or renegotiate terms, while Austria’s win could embolden further challenges to nuclear subsidies elsewhere in the EU.
