Hungarian Oil Contract Cleared by EU Court

     (CN) – Hungary’s decision to keep mining fees level for oil company MOL – based on a prior contract – when it raised rates was not illegal state aid, the EU high court ruled Thursday.
     The European Commission ordered Hungary to claw back a combined $120 million in fees MOL should have paid, finding the combination of a 2005 contract that extended mining rights on 12 oilfields and not raising mining fees paid by MOL when a new law took effect illegally favored MOL over its competitors.
     MOL sued to annul the commission’s order. In 2013, the European General Court held that there was no evidence the company had been treated more favorably than its competitors and canceled the clawback order.
     The commission appealed to the European Court of Justice, which agreed with the lower court’s decision and dismissed the appeal on Thursday.
     In a 10-page opinion, the Luxembourg-based court rejected the commission’s argument that the lower court incorrectly interpreted the requirement that state aid must give a selective advantage to the beneficiary in order to be deemed illegal.
     Just because national authorities enjoy some latitude in determining rates and contract extensions does not necessarily indicate illegal selective advantage, the high court found.
     Furthermore, Hungarian authorities also had discretion to negotiate with and enter into the 2005 contract with MOL that fixed the mining-fee rates – particularly since that nation’s mining law gave all interested companies the opportunity to negotiate their own deals, the court found.
     And the increase in mining fees which took effect in 2008 had nothing to do with MOL or its contract with Hungary, but was instead due to a surge in international oil prices, the court concluded.

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