On October 6 2011 Advocate General Kokott, an adviser to the Court of Justice of the European Union, delivered an opinion in which she concluded that the European Union's plans to extend the EU Emissions Trading Scheme to the aviation sector are legal and do not contravene principles of international law.
The advocate general published her opinion in the context of legal proceedings brought before the English High Court by a group of airlines and airline associations which sought to challenge the legality of the UK and EU rules extending the scheme to the aviation sector.(1)
Although the opinion is not binding, in practice the court is often minded to follow the conclusions of the advocates general. A definitive ruling on the issue is expected early in 2012.
The EU Emissions Trading Scheme Directive (2003/87/EC) established a scheme for greenhouse gas emission trading within the European Union. In 2008 the European Parliament and the European Council adopted the EU Aviation Emissions Trading Scheme Directive (2008/101/EC) to bring aviation activities within the scope of the EU scheme. Under the latter directive, from January 1 2012, all aircraft that arrive or depart from EU airports will be subject to a cap on their carbon dioxide emissions. Aircraft operators that exceed this cap will be required to purchase more carbon dioxide allocations under the scheme.
The move has proved highly controversial because of the effect that it will have on airlines which operate international flights to and from the European Union. It is being challenged by the Air Transport Association of America, American Airlines and United Continental before the English courts. The claimants argue that the Aviation Emissions Trading Scheme Directive is invalid under international law, and that therefore the UK legislation that seeks to give effect to it must also be invalid. Both directives have been transposed into UK law (for further details please see "New regulations on aviation emissions trading").
As the claimant's arguments required a ruling on the interpretation and validity of the directive, the High Court stayed proceedings and referred the case to the Court of Justice of the European Union. Among other things, it asked whether:
any of the international agreements on which the claimants relied - notably, various principles of customary international law, the Chicago Convention, the Kyoto Protocol and the Open Skies Agreement - could be used as a benchmark against which to assess the validity of the directive; and
the extraterritorial effect of the directive was contrary to certain provisions of the international agreements, including the sovereign rights of third parties.
On the first question, the advocate general opined that provisions of the international agreements could be relied on as a benchmark to assess the validity of EU legislation only if:
the European Union is bound by the agreement in question; and
the agreement in question does not preclude such a validity review and the provisions of the agreement are unconditional and sufficiently precise.
Following a review of all of the international agreements, the advocate general concluded that the only provisions that satisfied both of these criteria were Articles 7 and 15(3) of the Open Skies Agreement. As such, these were the only benchmarks against which it was necessary to assess the validity of the EU scheme.
In respect of the compatibility of the extraterritorial effect of the directive, notwithstanding her conclusions on the appropriate benchmarks for assessing the directive's validity, the advocate general conducted a review of all of the provisions of the international agreements on which the claimants relied. Following this review, the advocate general concluded that the claimant's arguments were untenable and that the directive did not conflict with any of the provisions of the international agreements in question. As such, she recommended that the court uphold the validity of the directive.
The advocate general's opinion is not binding. The reasoning of such opinions tends to be followed in most cases, but it is not exceptional for the court to disagree. Once a ruling on the legality of the directive has been given, the case will be sent back to the High Court for it to rule on whether the UK legislation that implements the directive is legal, taking the ruling into account.
For further information on this topic please contact Austen Hall at Hogan Lovells' London office by telephone (+44 20 7296 2000), fax (+44 20 7296 2001) or email (firstname.lastname@example.org). Alternatively, contact Jacques Derenne at Hogan Lovells' Brussels office by telephone (+32 2 505 0911), fax (+32 2 505 0996) or email (email@example.com).
(1) In The Queen on the application of Air Transport Association of America Inc, American Airlines, Inc, Continental Airlines, Inc and United Airlines, Inc v Secretary of State for Energy and Climate Change  EWHC 1554 (Admin), High Court, Queen's Bench Division, Ouseley J.
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