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25
nov

Newsletter November 2011: Newsletter FLO – Aviation

 

 

Arthur Flieger, Attorney of Law Flieger Law Office bvba

With the cooperation of Stijn Brusseleers, Attorney of Law Flieger Law Office bvba

 

EU ETS: The war of the Titans or EU vs US

 

On October 6th, 2011 the Advocate General of the Court of Justice of the European Union stated in its opinion that the inclusion of International Aviation in the EU emissions trading scheme is compatible with the provisions and principles of International law invoked by the plaintiff, and which were discussed in this article.

 

The view is that airlines and airline associations cannot, as a rule, rely on the international agreements and customary international law invoked. In so far as the international agreements at issue are binding on the European Union at all, they primarily concern legal relations between the contracting parties, and are not intended to protect the rights or interests of individuals. According to the Advocate General only two provisions of the Open Skies Agreement may be relied upon in the present case as a benchmark to review being Article 7 and the second sentence of Article 15 § 3 of the Open Skies Agreement. In respect of the principles of customary international law at issue the opinion states that those principles determine the scope of sovereignty of States and limit their jurisdiction, but do not have an effect on the legal status of individuals.

 

The inclusion of aviation activities in the EU emissions trading scheme is, according to the Advocate General not contrary to international law. The principles of customary international law and international agreements relied on do not give rise to any legal objections, not even in so far as the EU emissions trading scheme extends to sections of flights that take place outside the air space of Member States of the European Union. The directive is concerned solely with aircraft arrivals at and departures from airports in 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, and if they fail to comply there is a treat of penalties, and a possibility to an operating ban. In view of the Advocate General 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, in this view 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.

 

Provisions of international agreements do not affect the validity of the Directive. There is, no impermissible unilateral action on the part of the European Union outside the framework of the International Civil Aviation Organisation ( ICAO ) since, under the Kyoto Protocol the limitation and reduction of greenhouse gases is not the exclusive competence of ICAO. The Open Skies Agreement does not rule out the application of market-based measures regarding aviation emissions either.

 

Furthermore, the inclusion in the EU emission trading scheme of flights of all airlines from and to European airports is compatible with the principle of fair and equal opportunity laid down in the Open Skies Agreement.

 

According to the Advocate General it is precisely that inclusion that establishes equality of opportunity in competition, as airlines holding the nationality of a third country would otherwise obtain an unjustified competitive advantage over their European competitors if the EU legislature had excluded them from the EU emission trading scheme.

 

Finally, the opinion states that under the EU emissions trading scheme airlines are not charged any fees, dues or other charges within the meaning of the relevant international-law agreements. EU emission trading scheme is a market-based measure, the purpose of which is 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 European Union are levied in respect of the emission of greenhouses gases, not merely fuel consumption or the persons or property on board.

 

However the General Court still have to decide on this matter and meanwhile US Lawmakers send a strong message to the European Union. The US house of Representative voted a ban that will prohibit US carriers from taking part in the EU ETS.

Called the EU ETS prohibition act of 2011, the bill confirming, the long held stance that US lawmakers would fall-in with their domestic airline industry and that the Obama administration in opposing ETS. The bill if passed to law would prohibit the US Carriers from participating in the program. It also tells other US federal agencies to take steps necessary to ensure that the US carriers are not penalized by ETS. The bill has been sent to the US Senate, where there is currently no companion legislation. The US lawmakers see the ETS as a tax on their domestic airlines and would in all likelihood accept a tax on miles flown within EU airspace alone. It’s the fact that airlines are charged from their destination point that is causing so many problems. As this bill passes to the Senate there now seems very little for the US to do other than initiate a trade war with the EU at the worst possible time when the economies of both zones are battling to recover.

 

As expressed earlier only a global solution for ETS is preferable, and that the politicians worldwide will still have their saying, despite the outcome of the filled to pronounce decision of the European General Court.

 

 

………..

 

 

Relevant EU legislation

The ETS was established pursuant to directive 2003/87. On November 19, 2008 the European Parliament and council adopted Directive 2008/101 (the Directive), which amends Directive 2003/87 to include aviation in the scheme for greenhouse gas emission allowance trading within the EU. Member States are required to implement the Directive. The U.K. government elected to implement the Directive by a two-stage legislative process. First, the Secretary of State for Energy and Climate Change issued the Aviation Greenhouse Gas Emissions Trading Scheme Regulations 2009 (the Regulations), which entered into force on September 17, 2009, and implemented certain provisions of the Directive. Following a lengthy consultation process with regard to the second stage, the Aviation Greenhouse Gas Emissions Trading Scheme Regulations 2010 came into force in August 2010, many months after the ATA case had commenced.

 

US Law: Library of Congress, Bill Text, 112th Congress, H.R. 2594 R.H

 

For further information and comment, please contact Arthur Flieger at Flieger@fliegerlaw.com, Website: www.fliegerlaw.com, telephone: +32 3 238 77 66

 

 

 

Copyright A. Flieger