Hungary has launched a lawsuit against the EU over the use of billions of euros in interest accrued from frozen Russian sovereign assets to finance military support for Ukraine.

The lawsuit, formally filed as Case C-319/25 and accepted by the European Court of Justice on August 25, argues that Budapest’s voting rights in the European Peace Facility (EPF) were “illegally denied,” in violation of EU treaties and principles of equality. The case has been referred to the General Court.

Relations between Kyiv and Budapest have taken a sharp turn for the worse in the last month after the AFU launched a string of drone and missile strikes on the Druzhba oil pipeline that Hungary relies on for delivery of Russian oil. The court case against Ukraine is almost certainly in retribution for these attacks that sparked an angry war of words over the weekend. Both Hungary and Slovakia wrote to the European Commission (EC) calling for Brussels to put pressure on Kyiv to halt the attacks. Tellingly, US President Donald Trump has sided with his friend Hungarian Prime Minister Viktor Orban in the dispute, saying he was “very angry” with Ukraine for the attacks which have halted the flow of oil via Druzhba.

Formally the Hungarian legal challenge is directed at last year’s decision by the Council of the EU to channel the interest generated by Russia’s frozen central bank assets into defence assistance for Kyiv. The decision, implemented in February, earmarks 99.7% of these interest payments — estimated at €3–5bn ($3.5–5.8bn) annually — for Ukraine, according to reports.

The profits from the $300bn of central bank reserves frozen in the first week of the war in 2022 are being used to back a G7 $50bn loan to Ukraine, approved at a G7 summit in Italy last year. They back the Extraordinary Revenue Acceleration (ERA) programme that has been paying out roughly $1bn a month to Kyiv and has become an essential source of funding.

Hungary, long regarded as the EU’s most Kremlin-friendly government, has been a persistent outlier in Brussels, blocking several aid packages for Ukraine, resisting sanctions on Russia and slowing Kyiv’s EU accession talks. Budapest now seeks to annul the EPF decision, contending that the facility acted unlawfully by overriding Hungary’s veto despite its status as a non-contributing member state. It is also requesting that the EU cover legal costs.

At the start of Russia’s full-scale invasion in February 2022, western countries froze about $300bn in Russian sovereign assets, two-thirds of which were held in the EU. Since then, the bloc and its member states have provided $186bn in financial, military and humanitarian aid to Ukraine, including €12.8bn through the EPF.

The court process could take years to resolve. In the meantime, EU assistance is expected to continue through the newly established Ukraine Facility. Hungary had already filed a similar lawsuit in June 2024 challenging EPF support for Ukraine, which remains pending.

The Hungarian lawsuit comes on top of more problems for Ukraine with its EU allies. Despite being one of Ukraine’s most ardent military supporters, the more practical aspects of Kyiv’s relations with Warsaw continue to throw up problems.

In a bombshell announcement, Polish Deputy Prime Minister Wladyslaw Kosiniak-Kamysz said on August 26 that Poland would block Ukraine’s EU accession bid unless it recognises the WWII Volhynia killings as genocide, an incident that still rankles.

Poland has been a major source of weapons for Ukraine, but economic relations are much less cordial. Poland unilaterally banned the import of Ukrainian corn and grain after it wrecked the Polish grain market in 2023. At the same time Polish truckers have blockaded the border, complaining that cheaper Ukrainian truckers are putting them out of business. Ukraine’s exemption from EU agricultural and other duties expired in July and Poland was instrumental in seeing them fail to be renewed. That will cost the cash-strapped Kyiv tens of millions of euros in added costs this year.