On December 21, 2011, the Court of Justice of the European Union
("CJEU") returned a ruling in the matter Air Transport
Association of America, et al. vs. Secretary of State for Energy
and Climate Change (C-366/10). At stake was the validity of
Directive 2008/101/EC, amending Directive 2003/87/EC (establishing
a scheme for
greenhouse gas emission
allowance trading within the European Community and amending
Council Directive 96/61/EC) to extend the EU Emissions Trading
Scheme to aviation activities including non-EU air carriers.
Under the extended scheme, all flights departing from or
arriving at an EU airport are subject to Directive 2008/101/EC
regardless of the carrier's country of registration or the
flight's point of origin or destination. Since January 1, 2012,
transatlantic flights operated by U.S. companies have been
accountable for all carbon dioxide emissions generated thereby, not
just emissions from the legs of such flights occurring over EU
This led several U.S. airline companies and trade associations
to seek judicial review of the Directive's United Kingdom
implementation measures in the High Court of Justice of England and
Wales. The High Court decided to stay the proceedings and to refer
the matter to the CJEU for a preliminary ruling.
Among the arguments raised by the claimants were that the
Directive violated the Chicago Convention on International Civil
Aviation, the 1997 Kyoto Protocol, and the 2007 Open Skies
Agreement between the EU and the U.S. The claimants also raised a
series of challenges based on international law principles,
including the principle that each Member State has complete and
exclusive sovereignty over its airspace, the principle that no
Member State may validly purport to subject any part of the high
seas to its sovereignty, and the principle that guarantees the
freedom to fly over the high seas.
The CJEU found it could not examine the validity of the
Directive in light of the Chicago Convention, because the powers
previously exercised by the Member States under that Convention
have not been assumed in their entirety by the European Union, and
therefore the EU is not bound by that Convention. Similarly, the
court found that the provisions of the Kyoto Protocol invoked by
the claimants were not "unconditional and sufficiently precise
so as to confer on individuals the right to rely on it in legal
proceedings" challenging the validity of the Directive.
In contrast, the CJEU found that the Directive was subject to
review under principles of international law and the Open Skies
Agreement. However, the court ultimately found that the Directive
did not contravene the requirements of either body of law,
concluding that its examination of the Directive "disclosed no
factor of such a kind as to affect its validity."
As far as the ability of the EU's legislature to regulate
those parts of flights not conducted over EU airspace, the court
concluded that the fact that certain activities contributing to the
pollution of the air, sea, or land territory of the Member States
occur partly outside that territory is not sufficient to call into
question the full applicability of European Union law in that
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