The Energy Charter Treaty is at the heart of a new legal clash between the European Commission and Hungary, after Brussels decided on 1 October 2026 to refer Hungary to the Court of Justice of the European Union. The case, registered as INFR(2025)2204, concerns the oil and gas company MOL and an arbitration that the Commission says should never have happened between two EU member states.

The Commission’s argument starts with settled case law. In the Komstroy judgment, Case C-741/19, the Court of Justice held that Articles 267 and 344 of the Treaty on the Functioning of the European Union prevent an international agreement from letting an investor from one member state take a dispute over an investment in another member state to an arbitral tribunal. That reasoning applies to Article 26 of the Energy Charter Treaty, which many investors have used to bring claims against governments. Brussels has long argued that such intra-EU arbitration undermines the autonomy of EU law and the role of national courts.

What makes this file unusual is that the Commission is not suing Hungary over a state decision but over the conduct of a company. It considers that the Hungarian state effectively controls MOL and its subsidiaries, even though they are private entities, so their actions can be attributed to Hungary. Under established case law, a member state can be held responsible under Article 258 for entities under its supervision or effective control, for bodies entrusted with public-interest tasks, and for any entity whose conduct reflects or carries out state policy.

The Commission points to two acts. First, MOL brought an investor-state arbitration against another member state under Article 26 of the Energy Charter Treaty. Second, after obtaining an award, MOL asked a court outside the Union to recognise and enforce it. The Commission says EU law required MOL not to enforce the award because it conflicts with EU law, and that Hungary failed to prevent the breach. The Commission’s announcement does not give the value of the award or name the other state.

The procedure has moved steadily. The Commission sent Hungary a letter of formal notice in December 2025 and a reasoned opinion in April 2026, each time allowing two months for a reply. In those earlier documents it described the facts slightly differently, saying that a company controlled by MOL had started the new arbitration while MOL itself sought enforcement abroad. Having concluded that Hungary remains in breach, the Commission has now taken the final step open to it.

The outcome matters beyond Budapest. Investors and governments that rely on the Energy Charter Treaty are watching how far the Court will let the Commission stretch state responsibility to private firms with state links. A ruling for the Commission would warn companies that using the Energy Charter Treaty against another member state can expose their home government to infringement action. A ruling against it would leave a gap that arbitration lawyers would be keen to exploit under the Energy Charter Treaty.

For now, the case moves to Luxembourg, where judges will decide whether Hungary did enough to stop one of its leading companies from pursuing a route that EU law has closed. Whatever the verdict, the Energy Charter Treaty dispute will shape how Europe balances investor protection against the primacy of its own legal order.