Air Transport Association of America and Others v Secretary of State for Energy and Climate Change

• Jurisdiction: European Union
• Judge: Kokott,Cunha Rodrigues,Bonichot,Lenaerts,Tizzano,Silva de Lapuerta,Bay Larsen,Toader,Ó Caoimh,Jarašiunas,Prechal,Levits,Skouris,Rosas
• Date: 21 December 2011
• Docket Number: (Case C-366/10)
• Court: Court of Justice of the European Union

Court of Justice of the European Union (Grand Chamber)

(Skouris, President;Tizzano, Cunha Rodrigues, Lenaerts, Bonichot and Prechal, Presidents of Chambers;Rosas, Silva de Lapuerta, Levits, Ó Caoimh, Bay Larsen, Toader(Rapporteur) and Jarašiunas, Judges; Kokott, Advocate General)

(Case C-366/10)

Air Transport Association of America and Others

and

Secretary of State for Energy and Climate Change 1

Air — Legal regime of international aviation — Chicago Convention, 1944 — Environmental protection — Rights of State of landing and take-off — Whether extending to regulating aircraft of foreign registration above the high seas and in air space of other States — Whether such regulation required to be based on multinational agreement

Environment — Treaties — Greenhouse gases — Emission allowances — European Union scheme for greenhouse gas emission allowance trading — Inclusion of aviation activities in that scheme through Directive 2008/101/EC — Whether certain international agreements and principles of customary international law could be relied upon to challenge validity of Directive 2008/101/EC — Whether Directive 2008/101/EC contravening Chicago Convention, 1944 — Kyoto Protocol to the United Nations Framework Convention on Climate Change, 1997 — Open Skies Agreement between European Union and United States of America, 2007 — Customary international law

Relationship of international law and municipal law — Treaties — European Union — Treaty to which all European Union States party — Whether binding on European Union — Chicago Convention, 1944

Summary:2The facts:—The Air Transport Association of America, American Airlines, Continental Airlines and United Air Lines Inc. (“the claimants”) instituted proceedings against the Secretary of State for Energy and Climate Change of the United Kingdom (“the defendant”), challenging the validity of the measures the United Kingdom had taken in adopting Directive 2008/101 of the European Parliament and of the Council of 19 November 2008 which sought to include aviation activities within the European Union scheme for greenhouse gas emission allowance trading.

The claimants challenged the Directive on three grounds. First, they argued that the European Union had exceeded its powers under international law by extending its emissions trading scheme to sections of international flights that took place over the high seas or over the territory of third countries rather than confining it to wholly intra-European flights. Secondly, they maintained that an emissions trading scheme for international aviation activities should have been negotiated and adopted under the auspices of the International Civil Aviation Organization (“the ICAO”), not introduced unilaterally. Thirdly, they argued that the emissions trading scheme amounted to a tax or charge prohibited by international agreements.

The claimants contended that the inclusion of international aviation in the EU emissions trading scheme contravened four customary international law principles: (1) the principle that each State had complete and exclusive sovereignty over its airspace; (2) the principle that no State could validly purport to subject any part of the high seas to its sovereignty; (3) the principle of freedom to fly over the high seas; and (4) the principle (the existence of which the defendant contested) that aircraft overflying the high seas were subject to the exclusive jurisdiction of the country in which they were registered, save as expressly provided for by international treaty. The claimants also argued that the Directive was incompatible with key international agreements, namely the Convention on International Civil Aviation, 1944 (“the Chicago Convention”), the Kyoto Protocol to the United Nations Framework Convention on Climate Change, 1997 (“the Kyoto Protocol”) and the Air Transport Agreement concluded between the European Union and the United States of America in 2007 (“the Open Skies Agreement”).

The English High Court stayed its proceedings on the matter and sought a preliminary ruling from the Court of Justice of the European Union (“the Court”).

Opinion of the Advocate General

Held:—A consideration of the questions referred to the Court disclosed no factor precluding the validity of Directive 2008/101/EC.

(1) International agreements could be relied upon as a benchmark for a review of the validity of acts of European Union institutions if the European

Union was bound by the agreement concerned, the nature and broad logic of the agreement concerned did not preclude such a review, and the content of the provisions appeared unconditional and sufficiently precise (para. 49).

(2) The European Union was not a Contracting Party to the Chicago Convention. The mere fact that all the Member States of the European Union were Contracting Parties to the Chicago Convention was not sufficient to make the Convention binding on the European Union. As such, the Convention could not be relied upon as a benchmark against which the validity of Directive 2008/101 could be reviewed (paras. 51–66).

(3) For an international agreement to be used as a benchmark against which the validity of acts of the European Union institutions could be reviewed in legal proceedings brought by individuals (natural or legal persons), the nature and broad logic of that agreement had to be capable of conferring rights that an individual could invoke before the courts (para. 71).

(4) Neither the nature of the Kyoto Protocol nor the specific provision at issue, Article 2(2),3 had direct application to individuals. The Kyoto Protocol governed relations between States and their respective obligations in the global endeavours to combat climate change. Article 2(2) concerned the cooperation amongst Contracting Parties through the ICAO towards the goals of the Protocol. Any beneficial effects on individuals from the measures undertaken by the Contracting Parties to the Protocol were indirect. As such, individuals could not invoke Article 2(2) of the Kyoto Protocol before the courts and it could not be relied upon as a benchmark against which the validity of Directive 2008/101 could be reviewed. However, for the sake of completeness in responding to the questions referred to the Court, parties to the Kyoto Protocol had not committed themselves under Article 2(2) to pursuing the limitation or reduction of greenhouse gases from aviation exclusively by working through the ICAO (paras. 76–87 and 139).

(5) Much of the wording of the Open Skies Agreement specifically referred to the rights and obligations of individuals, suggesting that it could have an effect on the legal status of individuals. However, only Article 7 and the second sentence of Article 15(3) of the Agreement4 could have a concrete effect on the legal status of airlines and were unconditional and precise enough to be relied upon as a benchmark against which the validity of Directive 2008/ 101 could be reviewed (paras. 90–107).

(6) It could not be inferred from Article 7 of the Open Skies Agreement that it would be prohibited for a Contracting State to take account, within the framework of its emissions trading scheme, of parts of flights taking place

outside that State's territory. Accordingly, there was no reason to interpret and apply Directive 2008/101 restrictively in the light of that provision (paras. 166–8 and 172–3).

(7) Article 15(3) of the Open Skies Agreement required environmental measures to be applied to airlines in a non-discriminatory manner. Directive 2008/101 included all airlines from and to European aerodromes within the emissions scheme, without drawing any distinction based on their nationality or the place of departure or destination of the flights in question. The principle of non-discrimination had not been breached (paras. 195–201).

(8) The emissions trading scheme did not breach the prohibition on charges for the arrival and departure of aircraft under the Open Skies Agreement. Article

14 of the Agreement, construed as a whole, enshrined a prohibition of discrimination against aircraft on grounds of nationality in respect of access to the airports of Contracting States. Even if the final sentence of Article 15 of the Chicago Convention (which applied by virtue of the reference in Articles 3(4) and 15(3) of the Open Skies Agreement) were to be construed as a wider prohibition of certain fees and charges, the EU emissions trading scheme was not precluded by that provision. No fees or other charges were being exacted from airlines in respect solely of the right of transit over or entry into or exit from the territory of any Contracting State. There were no fees or charges for the acquisition of emission allowances and the purchase price paid for an emission allowance was based on supply and demand according to free market forces (paras. 207–21).

(9) The emissions trading scheme did not breach the prohibition of taxes and charges on fuel under the Open Skies Agreement. The emission allowances that had to be surrendered in respect of flights that took off from or landed at aerodromes within the European Union were levied in respect of the emission of greenhouse gases, not merely fuel consumption (para. 229).

(10) Directive 2008/101 did not contravene the customary international law principles at issue.

(a) There was no extraterritorial effect of the EU emissions trading scheme. Directive 2008/101 was concerned solely with aircraft arrivals at, and departures from, aerodromes in the European Union, and it was only with regard to such arrivals and departures that any exercise of sovereignty over the airlines occurred. The fact that the calculation of emission allowances to be surrendered was based on the whole flight did not bestow upon Directive 2008/101 an extraterritorial effect (paras. 145–9).

(b) The territoriality principle did not prevent account being taken of parts of flights that took place outside the territory of the European Union in the application of...