ECJ Advocate General finds the inclusion of third country airlines into the EU ETS is compatible with international law
European Court of Justice Advocate General Juliane Kokott (photo courtesy of ECJ)
Thu 6 Oct 2010 – In a 65-page opinion published today, the European Court of Justice’s (ECJ) Advocate General, Juliane Kokott, has concluded the inclusion of international aviation into the EU Emissions Trading Scheme (EU ETS) does not infringe the sovereignty of other states under international law and is compatible with relevant international agreements. The Advocate General also finds that as a market-based measure, the application of the EU ETS does not constitute a tax or charge on airlines. Although this is not binding on the judges hearing the case, the opinion’s emphatic dismissal of the arguments made by the Air Transport Association of America and leading US airlines is a significant victory for the EU. However, the opinion is unlikely to reduce mounting international opposition from major states to the EU ETS. The ECJ ruling is expected around the turn of the year and will then be sent back to the High Court in London.
The basis of the US airline case put to the 13 judges at the July hearing in the ECJ’s Grand Chamber was that their inclusion in the EU ETS breached a number of principles of customary law, contravening both the Chicago Convention and Kyoto Protocol, as well as the Open Skies agreement between the EU and United States.
Kokott found that the claimants, as airlines and trade associations, cannot rely on such international laws and agreements to protect them as they primarily concern legal relations between contracting parties, namely the participating states. “With regard to the principles of customary international law at issue, the Advocate General is of the view that they determine the scope of sovereignty of States and limit their jurisdiction, but do not have an effect on the legal status of individuals,” she said.
In addition, and more importantly, Kokott took the view that the EU ETS Directive itself is not contrary to international law and there were no legal objections to applying the scheme to sections of flights that take place outside EU airspace.
“The Directive is concerned solely with aircraft arrivals at and departures from the European Union, and it is only with regard to such arrivals and departures that the airlines have to surrender emission allowances in various amounts, depending on the flight, and if they fail to comply there is a threat of penalties, which might extend to an operating ban. Thus the Directive does not contain any extraterritorial provision, nor does it infringe the sovereign rights of third countries.
“Take-off and landing are essential and particularly characteristic elements of every flight; therefore, as a place of departure or destination, an airport within the territory of the European Union provides an adequate territorial link for the whole of the flight in question to be included in the EU ETS.”
Kokott also believes the EU had acted within the framework of the International Civil Aviation Organisation (ICAO) since, under the Kyoto Protocol, the limitation and reduction of greenhouse gases was not the exclusive competence of ICAO.
She was also of the opinion the EU-US Open Skies agreement does not rule out the application of market-based measures regarding aviation emissions. The application of the EU ETS was also compatible, she said, to the fair and equal opportunity laid down in the agreement in that it applied to all airlines regardless of nationality.
Finally, she took the view that the scheme did not breach the Chicago Convention article on fees, dues or other charges as it was a market-based measure, the purpose of which was environmental and climate protection.
“Accordingly, the emission allowances that have to be surrendered in respect of flights that take off from or land at airports within the EU are levied in respect of the emission of greenhouse gases, not merely fuel consumption or the persons or property on board.”
The ATA, which first brought the case in 2009 against the UK government along with US airlines American, Continental and United, responded that it was disappointed with the Advocate General’s opinion but pointed out that it was not the end of their case.
“The Air Transport Association is disappointed that Advocate General Kokott does not believe that the European Union is bound by the Chicago Convention, the treaty governing aviation, and that the unilateral application of the EU ETS to international aviation otherwise does not violate law,” it said in a statement.
“ATA’s view that the extension of this unilateral, regional scheme to aviation violates international law is supported by more than 20 countries (including Brazil, Russia, India, China, Japan, the United States and many others), which recently reconfirmed their opposition to the EU.
“Today’s action is an important step in the court process, but, as it is a non-binding, preliminary opinion, it does not mark the end of this case. The opinion will provide a basis on which the judges assigned to the case can further deliberate and come to a full and unanimous decision. In complex cases such as this one, it would not be unusual for the full Court’s final opinion to vary from the preliminary opinion.”
Sharing the ATA’s disappointment, IATA Director General Tony Tyler commented in a statement that the international community would not share the Advocate General’s opinion.
“Many governments are rightly concerned about the infringements on sovereignty and the Chicago Convention that Europe’s plans pose. Last week more than 20 states – including India, China, Japan, the US and Russia signed a declaration vowing to challenge the plan’s extra-territoriality at ICAO. And India, for example, has very clearly indicated that if Europe proceeds it will retaliate,” he said.
"We support and need positive economic measures as part of our strategy to manage aviation’s emissions. Emissions trading is one possibility. But it must be a global scheme under the leadership of ICAO. The principles for such a scheme were agreed in 2010 and ICAO is committed to delivering a global framework by 2013. Rather than risking a further escalation of tensions amongst states, I encourage Europe to support a successful, global and effective solution through ICAO,” said Tyler.
Unsurprisingly, the announcement from the ECJ was welcomed by EU Climate Commissioner Connie Hedegaard and she called for further dialogue with opposing states. “I am glad to see that the Advocate General’s opinion concludes that EU Directive is fully compatible with international law,” she said. “The EU reaffirms its wish to engage constructively with third countries during the implementation of this legislation.”
The Advocate General’s opinion was also applauded by a transatlantic coalition of environmental NGO’s that had intervened on behalf of the EU in the case.
“This is an encouraging development. We are pleased that the Advocate General found our arguments, and those of the European Union and its member states, persuasive, and we look forward to receiving the Court’s final opinion,” said the coalition in a statement. The NGOs involved included three US groups (Environmental Defense Fund, Earthjustice and Center for Biological Diversity) and three European groups (Aviation Environment Federation, Transport & Environment and WWF-UK).
“Airlines operate in a global market, and the reality is that those markets will be increasingly carbon-constrained,” commented Annie Petsonk, International Counsel at New York-based EDF. “It’s time for the US airlines to provide leadership and demonstrate that we can compete in the carbon-limited markets of the 21st century. No lawsuit will stop climate change or its effects, so it’s time to move forward and implement the solutions already available: Europe’s aviation Directive.”
On behalf of Brussels-based Transport & Environment, Bill Hemmings said: “The international community, aided and abetted by the airlines, has failed to make any progress on cutting aviation emissions in fourteen years despite innumerable meetings and negotiating sessions. The aviation industry should now start tackling climate change with engineers, not lawyers.”
Keith Allott, Head of Climate Change at WWF-UK, said that in the absence of a global deal, the EU ETS was “a positive first step in bringing runaway aviation emissions under control” and called on EU member states to dedicate revenues from the measure to climate action, especially in developing countries.
Although Advocate General Kokott has comprehensively dismissed the US airline legal arguments, and her opinions are likely to be confirmed by the judges in their ruling, it will not diminish the growing anger felt by many major nations, including the United States, that the EU has overstepped its climate change authority in a worthy attempt to control aviation emissions. The ECJ legal battle has already become a sideshow to a wider political conflict on the international stage as the Kyoto treaty winds down.