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Hungary: New Legislation on State Supervision of Entities of Strategic Importance

Hungary: New Legislation on State Supervision of Entities of Strategic Importance

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Government Decree No. 230/2022 passed on 28 June 2022 introduced a new regime which enables the Hungarian Government to place certain entities under the supervision of the Hungarian State. Such entities shall have a significant or dominant position in the energy industry, in particular in the following sectors having strategic and national security importance: (i) electricity, (ii) natural gas, (iii) crude oil, (iv) district heating and (v) mining. The legislation expressly mentions two entities, i.e. FGSZ Natural Gas Transmission Private Company Limited by Shares and the Hungarian Hydrocarbon Stockpiling Association.

The person vested with the supervisory rights on behalf of the Hungarian State may take the following actions vis-á-vis the entity:

(i) review the financial standing of the entity;
(ii) approve the commitments of the entity;
(iii) decide on matters which fall into the competence of the supreme decision-making body of the entity; and
(iv) take all measures that are necessary to maintain the viability of the entity and to ensure the effective exercise of the supervision of the Hungarian State.

The purpose of the new legislation is to ensure the security of supply; however, it remains silent on various issues which are to be crystallized by the practice. Among others, liability issues are ambiguous; it appears that the Hungarian State may only be held liable under very limited circumstances in case of damages caused by the person vested with the supervisory rights.

By Akos Mates-Lanyi, Counsel, and Esztella Cseh, Associate, Noerr