A Hungarian Bank Heist

On March 6, 2026, an incident seemingly ripped from a poorly written crime thriller created the premises for new diplomatic friction between Hungary and Ukraine. Hungarian authorities intercepted two Ukrainian armored transport vehicles travelling from Austria to Ukraine. The transporters reportedly carried $75 million in cash as well as nine kilograms of gold belonging to Ukrainian state-owned lender Oschadbank. The Hungarian government linked these funds to an alleged money laundering scheme and proceeded to seize them. Ukraine, for its part, was quick to condemn Hungary’s actions. Kyiv also asked the European Union to provide a legal assessment of the situation, and Oschadbank itself announced its intention to pursue legal action. Given Ukraine’s prolific use of international adjudicatory bodies in recent years – particularly since Russia’s full-scale invasion of 2022 – a case against Hungary before an international tribunal does not seem far-fetched. This blog post assesses the potential legal grounds for such an action and the legal fora to which Ukraine and Oschadbank could turn.

The Background

The case falls amidst heightened diplomatic tensions between Hungary and Ukraine regarding the cessation of oil transit through the southern branch of the Druzhba pipeline, as well as Hungary’s fast approaching parliamentary elections. While this post focuses on the seizure of the funds, it is important to consider that Hungary also detained the Ukrainian transport crew, which consisted of seven Oschadbank employees, for more than twenty-four hours. During that time, Hungarian authorities allegedly denied Ukrainian consular staff access to the detainees and subjected them to physical abuse. While the employees were eventually released and the vehicles returned, Hungary is still withholding both the gold and the cash. Fidesz – Hungary’s governing party – also introduced a bill that would allow the government to keep these assets frozen for up to 60 days while the investigation is ongoing. In response, Ukrainian foreign minister Andrii Sybiha took to X, accusing Hungary of “state terrorism and racketeering”, “stealing money”, and “hostage-taking”. In another post, Sybiha explicitly denounced the actions as illegal, alleging that Hungary was “falling down a spiral of lawlessness”.

Are the Seized Funds Protected by State Immunity?

While plausible at first glance, Sybiha’s accusation that Hungary was “stealing money” from state-owned Oschadbank is problematic from an international law perspective, as there is no customary right to property specifically for states (see Tzeng). In lieu of such a right, states must turn to other legal rules to vindicate their property interests. One of the rules that are usually cited in this context is the principle of state immunity. The Democratic Republic of Timor-Leste, for example, relied primarily on state immunity when it sought legal redress before the International Court of Justice (ICJ) against the seizure of some documents and data carriers by Australia (see Memorial of Timor-Leste, para. 5.18). In 2022, when Russia’s central bank assets were frozen in response to its aggression against Ukraine, state immunity was likewise discussed as a possible legal bar to this measure. In this context, some authors claimed that state immunity only prohibits judicial actions targeting foreign state-owned assets, while others maintained that it extends to legislative and executive actions with the same effect. The Russian central bank recently brought an action for annulment against the indefinite prolongation of the asset freeze before the Court of Justice of the European Union, claiming, inter alia, violations of state immunity (for an analysis of the Russian action for annulment, see here).

In addition, a legal challenge to Hungary’s actions based on this principle would likely fail for a number of other reasons. For one, state immunity from measures of constraint does not apply to property that is in use for “other than government non-commercial purposes”, as stipulated by Article 19 lit. c of the U.N. Convention on the Jurisdictional Immunities of States and Their Property (UNCJISP). The ICJ seemed to recognize the customary character of this provision in Jurisdictional Immunities (Germany v. Italy), paras. 116-118. Russia’s frozen central bank assets most likely constitute, at least in part, foreign exchange reserves. Such reserves are generally considered to be in use for governmental purposes. Oschadbank, conversely, is not Ukraine’s central bank and is not responsible for managing the country’s foreign exchange reserves (a function that, under the applicable Ukrainian legislation, falls upon the National Bank of Ukraine). Therefore, the cash and gold seized by Hungary are likely in use for commercial banking operations and, as such, are not covered by state immunity from measures of constraint. Oschadbank itself admitted as much in its statement on the matter, according to which the funds were meant to be used “in circulation and saturation of the cash market in Ukraine.” Even under a broad interpretation of state immunity, Hungary’s seizure of the Oschadbank funds would therefore not necessarily qualify as illegal.

U.N. Criminal Conventions as a Basis for Jurisdiction?

Another obstacle to a claim against Hungary is the lack of a jurisdictional title that could be used to bring a possible violation of state immunity before the ICJ. Equatorial Guinea faced a similar problem a few years ago when it sought to challenge France’s seizure of certain assets, including a mansion in Paris and some luxury vehicles, as part of a money laundering investigation. In that case, Equatorial Guinea invoked Article 4 of the U.N. Convention on Transnational Organized Crime (the Palermo Convention), which stipulates that states shall carry out their obligations under the Convention “in a manner consistent with the principles of sovereign equality and territorial integrity.” This allowed Equatorial Guinea to bring its claim before the ICJ under the compromissory clause enshrined in Article 35(2) of the Palermo Convention. However, this gambit ultimately failed when the Court rejected the argument that the broad reference to sovereign equality in Article 4 incorporated the principle of state immunity into the Convention.

Nevertheless, Ukraine could still invoke this treaty in another way. Under Article 12(1) and (2) Palermo Convention, state parties are obligated to adopt measures necessary to enable the freezing and confiscation of property derived from offenses covered by the Convention, as well as property used to commit such offenses, including money laundering (as per Article 6). If Hungary’s accusations of money laundering are a mere pretext to use the funds as political bargaining chips, Ukraine could argue that Hungary committed an abuse of rights by seizing the funds and adopting legislation to keep them frozen. However, a similar strategy already failed in a case filed against Russia by Ukraine shortly after the beginning of the full-scale invasion. In that case, Ukraine argued that Russia had abusively invoked and thereby breached Articles I and IV of the 1948 U.N. Genocide Convention by falsely claiming the existence of a genocide against Russian speakers in the Donbas region in order to justify its aggression against Ukraine. The ICJ, however, was not convinced by this argument. In this regard, the Court stated that “while such an abusive invocation [of a treaty] will result in the dismissal of the arguments based thereon, it does not follow that, by itself, it constitutes a breach of the treaty.” Against this background, it seems unlikely that Ukraine will be able to use the Palermo Convention to its advantage. The same is true for the U.N. Convention against Corruption, which contains similar provisions on money laundering and sovereign equality.

Oschadbank’s Options

Although Ukraine may struggle to bring a viable claim against Hungary before the ICJ, Oschadbank could still pursue legal action independently. At the international level, there seem to be two possible pathways. The first one would be to pursue investment arbitration against Hungary under the 1994 Hungary-Ukraine Bilateral Investment Treaty (BIT). Although Oschadbank is wholly state-owned, it will most likely qualify as a protected “investor” under Article 1(2) of the BIT. Another tribunal previously ruled that state-ownership was not an obstacle in this context and that Oschadbank was eligible for protection under the similarly worded Russia-Ukraine BIT. However, Oschadbank would still face an uphill battle in establishing that the transported funds constitute an investment in Hungary, given their tenuous territorial nexus to this country.

The second pathway would be for Oschadbank to file an individual application before the European Court of Human Rights (ECtHR). According to the ECtHR’s long-standing jurisprudence, even wholly state-owned enterprises can enjoy the protection of the European Convention on Human Rights (ECHR), including its 1952 Protocol establishing a human right to property. The requirements in this regard include that the state-owned enterprise in question not participate in the exercise of governmental powers and be sufficiently independent from the government (see Iran Shipping Lines v. Turkey, paras. 78-82). Oschadbank seems to check these boxes. Regarding the merits of such an application, the ECtHR’s extensive jurisprudence on the freezing and confiscation of assets under proceeds-of-crime legislation makes clear that legislation enabling the seizure of proceeds of serious crimes such as money laundering does not violate the right to property under the ECHR, if it is proportionate (see, for example, Balsamo v. San Marino, paras. 81 and 92). However, if Hungary’s accusations of money laundering are unfounded, the principles established by this jurisprudence would not apply, and Oschadbank would likely prevail. According to the ECtHR, the burden of proving whether the assets in question are the proceeds of crime may legitimately be shifted to the accused party. Therefore, Oschadbank would be well advised to tread carefully.

Conclusions

While Ukraine itself does not appear to have a feasible way to bring a claim related to the seized assets before the ICJ, Oschadbank may be able to succeed with a human rights-based claim before the ECtHR. Alternatively, Ukraine could take up Oschadbank’s case and file an inter-state case against Hungary under Article 33 ECHR. This case could also include a claim related to the detention of the transport crew, which Ukraine has already denounced as a violation of the ECHR. The coming weeks will reveal whether a diplomatic solution to the dispute is still possible, or whether litigation is necessary.

The author thanks Prof. Tom Ruys for helpful comments during the drafting process.