What lies behind Orbán's lawsuit defending frozen Russian assets

Since the beginning of Russia’s full-scale invasion, Hungary has blocked several aid packages, resisted sanctions against Moscow and slowed down Kyiv’s EU accession negotiations. This time, however, Viktor Orbán’s government has concentrated its efforts on the fate of Russian assets.

The matter concerns reserves of the Russian Central Bank – worth more than $200 billion – frozen in European depositories, which generate $3–5 billion in annual income. In 2024, EU leaders decided to channel 99.7% of this revenue to the European Peace Facility (EPF) to support Ukraine.

Budapest, widely regarded as the most Kremlin-friendly government within the EU, has been obstructing Brussels’ efforts to support Ukraine since the beginning of Russia’s full-scale invasion. It has blocked several aid packages, resisted sanctions against Moscow, and slowed down Kyiv’s EU accession negotiations.

Read more about Orbán’s government’s demands and the dangers of this lawsuit in the article by Sofiia Kosarevych of Dnistryanskyi Center: Orbán fights for a veto: will he succeed in blocking Ukraine's financing scheme.

What is Hungary demanding?

First, Budapest is contesting the decision of the European Peace Facility’s (EPF) steering committee of 26 February 2025. That decision directed almost the entire second tranche of income derived from the management of the frozen assets of the Central Bank of the Russian Federation to support Ukraine, particularly military assistance.

A procedural peculiarity was included: Hungary was deemed not to qualify as a "Contributing Member State." As a result, Orbán’s representatives could neither take part in the vote nor exercise a veto. The rationale was that, since Hungary had not contributed financially to this tranche, it could not participate in decisions on its use.

Hungary’s counterargument is that membership in the Council of the EU and participation in CFSP mechanisms automatically entitle it to a say in voting, regardless of whether it has made a financial contribution to a particular tranche.

Budapest therefore claims it was deprived of its voting rights without sufficient legal grounds. In its view, this violates basic institutional guarantees and undermines the balance of decision-making in EU security policy.

Formally, Hungary’s lawsuit challenges only the decision of the EPF Committee of 26 February. In reality, however, it has the potential to undermine the entire framework for using the proceeds of frozen Russian assets to support Ukraine, which was established by the 2024 Regulation.

However, if the lawsuit is upheld, a series of problematic issues will immediately arise. Hungary’s lawsuit is more than a legal dispute. It strikes at the very principles of member state "sovereignty" within the framework of the Common Foreign and Security Policy (CFSP).

If the Court of Justice of the European Union rejects the claim, the European Peace Facility will gain additional legitimacy, and the practice of channeling proceeds from frozen Russian assets will be firmly established.

If, however, the lawsuit is upheld, the consequences will be far-reaching: not only would a precedent be set, but the very procedures for financing support for Ukraine would need to be reconsidered and restructured.

This will be a critical test of European unity, balancing the imperative of providing strategic assistance from the aggressor’s resources with the need to preserve trust, legality and democratic principles among member states.

At the same time, the case risks undermining broader efforts by Ukraine and its allies to advance the seizure and use of Russian assets worldwide.