A German Investor's Hungarian Agricultural Land Investment: Domestic Remedies and Intra-EU Treaty Arbitration

We advised a German investor in connection with a substantial agricultural land investment in Hungary. The investment originated in the 1990s, when agricultural land was acquired through a corporate structure. Following subsequent legislative changes affecting land ownership, additional land holdings were acquired through a trustee arrangement intended to preserve and develop the investment over the long term.

Under the parties’ agreement, the land was to be sold once Hungary’s accession to the European Union enabled direct ownership by EU citizens, with the proceeds intended to be contributed to a joint venture. The trustee subsequently disposed of the land and retained the sale proceeds, resulting in complex disputes concerning ownership rights, contractual obligations and available remedies.

Following unsuccessful proceedings before the Hungarian courts, which declined to award damages under the applicable domestic legal framework, we examined the availability of protection under the bilateral investment treaty between Germany and Hungary and assessed the possibility of investor-state arbitration under the ICSID framework.

A central aspect of the mandate was the interaction between international investment law and European Union law. In particular, we analysed the consequences of the Court of Justice of the European Union’s jurisprudence concerning intra-EU investment arbitration, including the Achmea line of decisions, under which arbitration clauses contained in bilateral investment treaties between EU Member States have been regarded as incompatible with EU law. The matter therefore required a detailed assessment not only of treaty protection and investor status, but also of the practical availability of treaty-based remedies within the evolving European legal framework.