EU's top court rules against Hungary's nuclear state aid

AMSTERDAM (Reuters) -The EU's top court said on Thursday the European Commission should not have approved Hungarian state aid for the expansion of its Paks atomic plant by a Russian company, ruling that the Commission had not checked whether the contract met EU rules.

Hungary granted the construction contract in a direct award to Russia's Nizhny Novgorod Engineering as part of an agreement between Russia and Hungary on the peaceful use of nuclear energy.

Russia in turn provided Hungary with a state loan to finance most of the development of the new reactors, and the European Commission approved the plan in 2017.

Russian state nuclear energy firm Rosatom, which signed an agreement with Budapest to build two 1.2 gigawatt reactors at Paks, said in a statement on Wednesday that it would continue to execute the project.

"Rosatom's primary task remains to implement the project in accordance with the highest international safety standards and in full compliance with contractual obligations," the company said.

Neighbouring Austria lodged a complaint about the state aid involved in the deal at the EU's General Court in 2018, but lost the case.

It then filed an appeal at the EU's Court of Justice, which said on Thursday that Austria had been right in arguing that the Commission should have examined whether the direct award of the construction contract to the Russian company was compatible with EU procurement rules.

(Reporting by Bart Meijer;Editing by Sharon Singleton, Helen Popper, Elaine Hardcastle)