In Commission of the European Communities v Council of the European Union (C-440/05) the European Court of Justice (Grand Chamber) annulled the ship-source pollution framework decision, holding that a decision to set minimum penalties for shipping pollution should have been taken according to transport provisions, rather than justice, over which Member States have a veto. It is up to governments to set penalties. The court ruled that while the EU may require member states to introduce criminal penalties to ensure its rules are effectively implemented, it is not permitted to lay down the type and level of criminal penalties to be applied because this falls outside its jurisdiction. Luxembourg declared that this should be left to the European Commission, which had brought the legal action. Because the framework decision is indivisible, the entire law was thrown out. The ruling means the EU can set criminal penalties for breaches of its laws and supports EU plans to set minimum sentences for breaches of environmental law.

Separately the court is being asked to examine whether the ship-source pollution directive is compatible with international law, on which a ruling is expected on 20.11.07.