Republic of Austria v European Commission.

JurisdictionEuropean Union
Date30 November 2022
CourtGeneral Court (European Union)

Provisional text


30 November 2022 (*)

(State aid – Nuclear industry – Aid planned by Hungary for the development of two new nuclear reactors at the Paks site – Decision declaring the aid compatible with the internal market subject to compliance with certain commitments – Article 107(3)(c) TFEU – Compliance of the aid with EU law other than State aid law – Inextricable link – Promotion of nuclear energy – First paragraph of Article 192 of the Euratom Treaty – Principle of protection of the environment, ‘polluter pays’ principle, precautionary principle and principle of sustainability – Determination of the economic activity concerned – Market failure – Distortion of competition – Proportionality of the aid – Need for State intervention – Determination of the aid elements – Public procurement procedure – Obligation to state reasons)

In Case T‑101/18,

Republic of Austria, represented by J. Schmoll, F. Koppensteiner, M. Klamert and T. Ziniel, acting as Agents, and by H. Kristoferitsch, lawyer,


supported by

Grand Duchy of Luxembourg, represented by A. Germeaux and T. Schell, acting as Agents, and by P. Kinsch, lawyer,



European Commission, represented by K. Blanck, K. Herrmann and P. Němečková, acting as Agents,


supported by

Czech Republic, represented by M. Smolek, J. Vláčil, T. Müller, J. Pavliš and L. Halajová, acting as Agents,


French Republic, represented by E. de Moustier and P. Dodeller, acting as Agents,


Hungary, represented by M. Fehér, acting as Agent, and by P. Nagy, N. Gràcia Malfeito, B. Karsai, lawyers, and C. Bellamy KC,


Republic of Poland, represented by B. Majczyna, acting as Agent,


Slovak Republic, represented by S. Ondrášiková, acting as Agent,

and by

United Kingdom of Great Britain and Northern Ireland, represented by F. Shibli, L. Baxter and S. McCrory, acting as Agents, and by T. Johnston, Barrister,


THE GENERAL COURT (Third Chamber),

composed, at the time of the deliberations, of M. van der Woude, President, G. De Baere and G. Steinfatt (Rapporteur), Judges,

Registrar: A. Juhász-Tóth, Administrator,

having regard to the written part of the procedure,

further to the hearing on 10 March 2022,

gives the following

Judgment (1)

1 By its action under Article 263 TFEU, the Republic of Austria seeks the annulment of Commission Decision (EU) 2017/2112 of 6 March 2017 on the measure/aid scheme/State aid SA.38454 – 2015/C (ex 2015/N) which Hungary is planning to implement for supporting the development of two new nuclear reactors at Paks II nuclear power station (OJ 2017 L 317, p. 45; ‘the contested decision’).

Background to the dispute and the contested decision

2 On 22 May 2015, Hungary notified the European Commission, under document C(2017) 1486, of a measure to provide a financial contribution for the development of two new nuclear reactors (units 5 and 6) at the Paks nuclear power station site in Hungary, where four nuclear reactors are already in operation. The beneficiary of the notified measure is MVM Paks II Nuclear Power Plant Development Private Company Limited by Shares (‘the Paks II company’), which is intended to become the owner and operating company of the two new nuclear reactors. The Paks II company is wholly owned by the Hungarian State, to which the shares in that company, originally held in full by the electricity trader and power producer Magyar Villamos Művek Zártkörűen Működő Részvénytársaság (‘the MVM Group’), were transferred in November 2014.

3 On 23 November 2015, the Commission decided to initiate the formal investigation procedure, under Article 108(2) TFEU, in respect of the notified measure (OJ 2016 C 8, p. 2; ‘the opening decision’).

4 On 6 March 2017, the Commission adopted the contested decision.

5 The measure notified by Hungary is described in Section 2 of the contested decision. The measure concerns the development in Hungary of two Russian VVER 1200 (V491) Generation III+ nuclear reactors (units 5 and 6), equipped with water-cooling and water-moderating technology and installed capacity of at least 1 000 megawatts (MW) per unit. Their construction is fully financed by the Hungarian State for the benefit of the Paks II company, which will own and operate the new reactors. Four nuclear reactors are already in operation on that site. Those reactors belong in full to the MVM Group, which is owned by the Hungarian State. The installed capacity of the four existing Russian VVER-440 (V213) units at the plant totals 2 000 MW. Those reactors are due to be shut down progressively by 2037 in order to be replaced by the two new reactors, expected to become operational in 2025 and 2026 respectively.

6 In accordance with an intergovernmental agreement on cooperation on the peaceful use of nuclear energy concluded on 14 January 2014 by the Russian Federation and the Hungarian Government, the two countries are to cooperate, within the framework of a nuclear programme, in the maintenance and further development of the current Paks nuclear power station. According to that agreement, the Russian Federation and Hungary both designate one experienced State-owned and State-controlled organisation which is financially and technically responsible for fulfilling its obligations as contractor or owner in respect of the design, construction, commissioning and decommissioning of two new reactors 5 and 6 with VVER-type reactors. The Russian Federation appointed the Joint-Stock Company Nizhny Novgorod Engineering Company Atomenergoproekt (‘JSC NIAEP’), which will construct the new reactors, and Hungary designated the Paks II company to own and operate them. For that purpose, JSC NIAEP and the Paks II company signed an agreement on 9 December 2014 relating to a contract for the engineering, procurement and construction of the two new reactors 5 and 6 to be built on the site of the Paks nuclear power station.

7 In the intergovernmental agreement, the Russian Federation undertook to provide Hungary with a state loan to finance the development of the new nuclear reactors at the Paks nuclear power station. That loan is governed by the Financing Intergovernmental Agreement of 28 March 2014 and provides a revolving credit facility of EUR 10 billion which is limited to the sole use of the design, construction and commissioning of the new reactors 5 and 6 at the Paks nuclear power plant. Hungary will provide an additional amount of EUR 2.5 billion from its own budget in order to finance those investments.

8 Hungary will not transfer the funds required to pay the purchase price for the two new nuclear reactors to accounts belonging to the Paks II company. Most of those funds will be held by Vnesheconombank (the Bank for Development and Foreign Economic Affairs of Russia). For each milestone event that is considered to be fulfilled, the Paks II company will file a request with the Bank for Development and Foreign Economic Affairs of Russia to pay 80% of the amount due directly to JSC NIAEP. It will also submit a request to the Government Debt Management Agency of Hungary to pay the remaining 20%.

9 In the contested decision, the Commission found that the notified measure constituted State aid within the meaning of Article 107(1) TFEU and that Articles 107 and 108 TFEU were applicable even if the investment at issue fell within the scope of the Euratom Treaty. As regards the direct award of the construction work for the two new reactors to JSC NIAEP, the Commission found that that could not create an additional distortion of competition and trade on the relevant market, namely the electricity market. Hungary’s compliance with public procurement law was examined by means of a separate procedure. The Commission considered that the measure at issue, aimed at promoting nuclear energy, pursued an objective of common interest enshrined in the Euratom Treaty, while also contributing to security of electricity supply, and that all potential distortions were limited and offset by the identified common objective pursued, which was to be attained in a proportionate manner, in particular taking into account the confirmations made by Hungary during the procedure. The Commission found that the measure at issue, as amended by Hungary on 28 July 2016 and subject to the conditions set out in Article 3 of the contested decision, was compatible with the internal market under Article 107(3)(c) TFEU. Article 3 of the contested decision requires Hungary to take a number of measures in order to ensure that the Paks II company complies with certain obligations and restrictions as regards, in particular, its strategy for investment or reinvestment, the operation of an auction platform and its legal and structural independence.

Forms of order sought

10 The Republic of Austria, supported by the Grand Duchy of Luxembourg, claims that the Court should:

– annul the contested decision;

– order the Commission to pay the costs.

11 The Commission, supported by the Czech Republic and the Slovak Republic, contends that the Court should:

– dismiss the action;

– order the Republic of Austria to pay the costs.

12 The French Republic, Hungary, the Republic of Poland and the United Kingdom of Great Britain and Northern Ireland contend that the Court should dismiss the action.


13 The Republic of Austria puts forward 10 pleas in law in support of its action. By the first plea, it argues that a public procurement procedure should have been initiated for the award of the work on the construction of the two new reactors at the Paks nuclear power plant. The second plea alleges misapplication of Article 107(3)(c) TFEU in that the construction and commissioning of the two new reactors do not concern the attainment of an objective of common interest. The third plea claims misapplication of Article 107(3)(c) TFEU, on the basis, first, of an incorrect delineation of ‘economic activities’ and, second, on the basis...

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