The European Court of Justice (ECJ) has struck down the European Commission’s approval for Hungary’s nuclear deal with Russia’s Rosatom, citing insufficient scrutiny of procurement rules.

The case centers on Budapest’s 2014 agreement with Rosatom to construct two new reactors at the Paks Nuclear Power Plant, a project that has faced repeated delays and is now expected to be completed in the early 2030s.

In its ruling, the Luxembourg-based court said the European Commission failed to justify its decision when it allowed Hungary to finance the €12.5 billion project through state subsidies. Judges stressed that Brussels should have examined whether awarding the contract without a public tender complied with EU procurement law.

“The Commission should have ascertained whether that direct award, made without a public tender procedure, complies with EU public procurement rules,” the ruling stated, noting that the reasoning provided was “not sufficiently explained.”

Hungary’s energy ties with Russia

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Hungary’s pursuit of the Paks II project highlights its heavy reliance on Russian energy. Moscow currently supplies about 75% of Hungary’s natural gas, 60–80% of its oil, and the entirety of its nuclear fuel.

While other Central and Eastern European states have modernized their Soviet-era nuclear plants with Western technology, Hungary has chosen to maintain its cooperation with Russia. Orban’s government has argued that diversifying away from Moscow would cause utility costs to “double or quadruple.”

Rosatom is leading the Paks II project but has brought in several Western subcontractors, including French and German firms. Still, the core of the project remains Russian, with two VVER-1200 reactors being manufactured in Nizhny Novgorod. Rosatom aims to begin pouring concrete for the first reactor in November 2025.

Government, commission reactions

Budapest quickly downplayed the ECJ’s decision, insisting it does not derail the project. EU Affairs Minister Janos Boka explained to reporters that “the court did not say the project failed to meet public procurement rules, only that its reasoning was not satisfactory. Another procedure had already confirmed compliance, but this was not cited in the Commission’s decision.”

He added that there is “no legal reason not to continue the Paks investment at its current pace.” The European Commission, however, said it would “carefully study the judgment and reflect on next steps.”

Rosatom’s status amid sanctions

Rosatom remains largely untouched by Western sanctions, unlike Russia’s oil and gas industries. The European Commission has explicitly excluded nuclear energy from its sanctions packages, leaving countries like Hungary free to deepen cooperation with Moscow.

In 2024, EU member states imported over €700 million worth of uranium products from Russia, accounting for 23% of total imports. For reactors of the VVER type, like those in Hungary, Russia supplied 81% of fuel assemblies.

Hungary successfully secured exemptions for Paks II in the EU’s 14th sanctions package, while the US lifted its own restrictions on the project in mid-2025.