ICSID orders Hungary to pay EUR 23 million in damages to French company for violating EU law

December 19, 2016

The World Bank’s International Centre for the Settlement of Investment Disputes has ordered Hungary to pay EUR 23 million (more than HUF 7 billion) in damages to the French voucher company Edenred for the unlawful reorganization of the Hungarian food voucher market in 2012, a violation of EU law, reports globenewswire.com.

The Washington, D.C.-based arbitration court issued a decision on December 13, more than three years after Edenred first filed suit. The company issued Ticket Express vouchers in Hungary through the end of 2011.

Two other lawsuits brought by French companies Sodexo and Le Cheque Déjeuner are also under way. All three companies’ lawsuits refer to a 1987 agreement guaranteeing the investments of French companies in Hungary.

According to a statement issued by Edenred, winning the lawsuit was an important step but the company still aims to collect the damages from the Hungarian state.

The Hungarian voucher market was completely restructured in 2012 after the second Orbán government created a state monopoly on food vouchers. Upon learning in 2011 of the government’s intention to establish a state monopoly as of January 1, 2012, numerous companies active in Hungary at the time strongly objected, including Edenred, Sodexo and Le Cheque Déjeuner,

Believing the measure violated EU law governing the freedom of services, the European Commission took the matter before the European Court of Justice in Luxembourg, which ruled in February that the SZÉP card system and the “Erzsébet food voucher” were incompatible with EU law.

Hungary is in the process of distributing some HUF 28 billion of Erzsébet vouchers to every one of its pensioners. It is not known whether the prime minister’s surprise announcement that all pensioners would receive a HUF 10,000 voucher is related to the World Bank’s December 13 decision.