Delivered on the 21st of December last year, the Court’s ATAA-judgment (Case C-366/10, The Air Transport Association of America) was a nice Christmas present for EU policy makers, environmentalists, and everyone who takes climate change seriously. The judgment did, however, also provoke some very unchristmaslike responses, enraging all of the EU’s major trading partners (see previous post by J C Lawrence).
What was all the fuss about?
The EU ETS directive will force airline operators on flights to and from EU destinations to surrender emission allowences for emissions emitted during those flights. A number of American airline companies challenged the directive for being a unilateral and extraterritorial attempt to enforce EU’s climate change policies on others, and therefore in violation of a number of international treaties and principles of customary international law.
The most interesting part of the judgment is the Court’s analysis on whether the Directive is in conformity with the principle of territoriality. It first repeated its case law on international jurisdiction, stating that because the directive only applies to aircraft landing and departing from EU territory, the directive is in line with the principle of territoriality:
125 In laying down a criterion for Directive 2008/101 to be applicable to operators of aircraft registered in a Member State or in a third State that is founded on the fact that those aircraft perform a flight which departs from or arrives at an aerodrome situated in the territory of one of the Member States, Directive 2008/101, inasmuch as it extends application of the scheme laid down by Directive 2003/87 to aviation, does not infringe the principle of territoriality or the sovereignty which the third States from or to which such flights are performed have over the airspace above their territory, since those aircraft are physically in the territory of one of the Member States of the European Union and are thus subject on that basis to the unlimited jurisdiction of the European Union.
126 Nor can such application of European Union law affect the principle of freedom to fly over the high seas since an aircraft flying over the high seas is not subject, in so far as it does so, to the allowance trading scheme. Moreover, such an aircraft can, in certain circumstances, cross the airspace of one of the Member States without its operator thereby being subject to that scheme.
127 It is only if the operator of such an aircraft has chosen to operate a commercial air route arriving at or departing from an aerodrome situated in the territory of a Member State that the operator, because its aircraft is in the territory of that Member State, will be subject to the allowance trading scheme.
It then, in a reasoning remniscent of PreussenElektra, placed particular emphasis on the EU’s commitment to combatting climate change, dismissing any extraterritorial effects as being irrelevant for the outcome of the case:
128 As for the fact that the operator of an aircraft in such a situation is required to surrender allowances calculated in the light of the whole of the international flight that its aircraft has performed or is going to perform from or to such an aerodrome, it must be pointed out that, as European Union policy on the environment seeks to ensure a high level of protection in accordance with Article 191(2) TFEU, the European Union legislature may in principle choose to permit a commercial activity, in this instance air transport, to be carried out in the territory of the European Union only on condition that operators comply with the criteria that have been established by the European Union and are designed to fulfil the environmental protection objectives which it has set for itself, in particular where those objectives follow on from an international agreement to which the European Union is a signatory, such as the Framework Convention and the Kyoto Protocol.
129 Furthermore, the fact that, in the context of applying European Union environmental legislation, certain matters contributing to the pollution of the air, sea or land territory of the Member States originate in an event which occurs partly outside that territory is not such as to call into question, in the light of the principles of customary international law capable of being relied upon in the main proceedings, the full applicability of European Union law in that territory (see to this effect, with regard to the application of competition law, Ahlström Osakeyhtiö and Others v Commission, paragraphs 15 to 18, and, with regard to hydrocarbons accidentally spilled beyond a Member State’s territorial sea, Case C‑188/07 Commune de Mesquer  ECR I‑4501, paragraphs 60 to 62).