How far can the extraterritorial reach of EU law go? A step further by the CJEU as a transnational actor

A decade after one of the most high-profile cases on the extraterritorial reach of EU law concerning the inclusion of global aviation emissions in the EU emissions trading system (‘ETS’) (Case C-366/10 Air Transport Association of America ‘ATAA’), the ECJ’s judgment in Case C-561/20 brought to light its lasting significance and its extension to a different aspect of air transport concerning passenger rights. It also reaffirmed the CJEU’s key role as a transnational actor when reviewing the geographic scope of secondary legislation. The CJEU has consistently extended EU regulation through two types of review: either by interpreting the scope of secondary legislation to cover activities taking place partly in third countries (e.g. Case C-424/13 Zuchtvieh-Export, Case C-592/14 European Federation for Cosmetic Ingredients, Case C-507/17 Google v CNIL) or by validating the legality of secondary legislation explicitly designed with a broad territorial scope (e.g. ATAA). Case C-561/20 combines both approaches, enabling the extraterritorial reach of EU law both through interpretation and legality review of Regulation (EC) No 261/2004 (‘Air Passenger Regulation’). 

Interpreting legislative intent: ensuring the effectiveness of Treaty objectives

The case was brought before the Brussels Companies Court by passengers seeking compensation from United Airlines (established in the United States) regarding a delay they faced in a connecting flight operated by United Airlines from Newark to San José (both in the US). The flight was operated on the basis of a commercial (code-sharing) agreement which enabled both United Airlines and Lufthansa to schedule and market the same flight. The passengers had arranged a single booking with Lufthansa via a travel agency covering their travel from Brussels to San José with a stopover in Newark. Given that the delay occurred in the second leg of the flight, entirely within the territory of a third country, the Court was called on to interpret the geographical scope of the Air Passenger Regulation, which entitles passengers departing from an EU airport, and in some cases, passengers arriving at an EU airport, to compensation in case of such delays. In particular, the Court focused on the interpretation of the former situation provided for in Article 3(1)(a), according to which the Regulation applies to ‘passengers departing from an airport located in the territory of a Member State’. 

Expanding the territorial scope of EU legislation through interpretation

Confirming its previous approach, the Court combined a textual and teleological interpretation in determining the Regulation’s scope. Without expanding, the Court held that the ‘clear wording’ of Article 3(1)(a) covers passengers on a connecting flight who departed from an airport in the EU. This is supported by previous case law, which established that a single reservation involving connecting flights is considered as a ‘whole’ for the purposes of ascertaining passengers’ rights to compensation (Case C-537/17 Wegener; Case C-502/18 České aerolinie). However, previous case law, while effectively expanding the geographic scope of the Regulation, focused on the definition of who is the ‘operating air carrier’ under Article 3(5) of the Regulation and therefore has an obligation to compensate, rather than on the territorial trigger for its applicability. In Case C-561/20, the Court held that the Regulation’s applicability is triggered by reference to a flight’s point of departure and arrival. Following AG Rantos’s Opinion, the Court clarified that ‘the place where a delay occurs… has no bearing on that applicability’ (para 30). Even though the Court presented the Regulation’s scope as being clear, thereby limiting its role to simply giving effect to legislative intent, the actual language is not necessarily clear-cut. Given that the Regulation does not specifically address the issue of connecting flights or the connection between departing passengers and the location at which the delay takes place, the territorial scope of the Regulation could have been interpreted in different ways. Presenting the territorial scope of EU secondary legislation as clearly worded even when not explicitly stated in the relevant provisions, has been followed in other policy fields, for example in Zucthvieh when the Court interpreted the Regulation on Animal Transport as applying to stages of journeys taking place in third countries when the transportation departs from the EU. In effect, as with Zuchtvieh, the interpretation of the Air Transport Regulation in this case resulted in greater extraterritorial reach than the explicit wording of the legislation necessarily indicated. 

The Court’s textual approach is supplemented by a teleological interpretation which again gives effect to legislative intent to achieve a high level of consumer protection. Focusing on the Regulation’s objective, and following the AG’s position (para 41), the Court explains that distinguishing compensation rights depending on where the delay occurred would be unjustified given that passengers suffer the same delay and consequently the same inconvenience (para 32). This again reflects the Court’s approach in case law such as Zucthvieh and EU Federation for Cosmetic Ingredients, in which it interpreted the territorial scope of EU legislation teleologically as giving effect to the objective of animal welfare. In the name of ensuring the effectiveness of Treaty objectives, the Court in this case did not impose any limitations on the EU’s regulatory authority in relation to delays on flights occurring entirely outside of its territory, so long as the passengers initially departed from an EU airport. 

Which territorial connection counts as a trigger and how to reconcile multiple claims to jurisdictional authority?

In the factual situation of the case, we can discern three different territorial connections. The first is with the EU Member State, in this case Belgium, from which the passengers first departed. The second is with Newark, to which the passengers arrive, but also from which the passengers subsequently depart (arguably there is a new departure point). The third is with San José, to which the passengers finally arrive. Is it so clear from the wording of Article 3(1)(a) that these passengers are entitled to the Regulation’s rights? Isn’t their departure from Newark able to break or supersede the territorial connection at the point of the initial departure? Such a factual scenario may give rise to multiple, possibly conflicting, claims of regulatory authority wishing to regulate the same issue. When a third country has a (double) territorial connection with the passengers (both departing and arriving within its territory), as well as a nationality connection with the air carrier, it might also have a legitimate jurisdictional claim over passenger rights. Discerning the EU’s competence on the basis of the first territorial connection prioritises the EU’s regulatory authority and contributes to the international discourse about which state should regulate activities only partially connected to its territory. While confirming the legislature’s choice as to the territorial connection triggering the Regulation’s applicability, the CJEU expanded this over the passengers’ whole trip in relation to a delay occurring entirely within the territory of a third country. The Court’s reasoning however does not acknowledge the important transnational implications of this judgment.

In previous cases when the CJEU interpreted EU legislation not explicitly designed with a broad territorial scope, it also devised some limits; for example, by accepting that the application of equivalent standards in the third country may be accepted in lieu of compliance with the EU standards (Zucthvieh, para 54). Having accorded a broad territorial scope to the application of the Regulation in relation to departing flights, the Court could have included some flexibility into its interpretation, providing for the possibility to take into account whether the passengers have been given (equivalent) benefits, compensation, assistance in the third country. The EU legislature explicitly provided for such equivalence in article 3(1)(b) as regards departing flights to third countries when operated by a Community carrier (but not in relation to article 3(1)(a)). Considering that the Court extended the Regulation’s scope beyond what it explicitly provides for, thereby extending its extraterritorial reach, it should have also devised the necessary constraints to avoid a potential conflict with third country law. 

Notably, consistently with its previous approach in interpretative cases, the Court did not refer to the provisions of the Treaty which establish its territorial limitation (articles 52(2) TEU and Article 355 TFEU). Also, it did not refer to any issues of sovereignty or jurisdiction under international law. While, as seen below, customary principles on jurisdiction were used as benchmarks in examining the validity of the Regulation, they did not play any role in interpreting its geographic scope in the first place. The binding nature of international law in the EU, confirmed both through case law (Case C-286/90 Poulsen) and in the treaties (Article 3(5) TEU and Article 216 TFEU) includes an obligation to interpret secondary legislation as far as possible in light of relevant international law. Consistently interpreting the Air Passenger Regulation with the customary principle of complete and exclusive sovereignty over a state’s airspace, may have enabled more substantial review by the Court than the light standard applied in reviewing whether the institutions committed a manifest error of assessment. The stringency of the review would be likely somewhat limited in light of the qualified obligation to consistently interpret EU legislation ‘so far as possible’. Nonetheless through consistent interpretation the Court would be required to justify its interpretation on the basis of the territoriality principle and respecting the sovereign rights of third countries. Instead, the Court only marginally examined the Regulation on the basis of international law in relation to the validity question referred. 

Validating legislative intent: establishing and maintaining a territorial connection

The second question posed to the Court questioned the legality of applying the Regulation to the second leg of the flight, given that it took place entirely within the territory of a third country, allegedly having ‘an extraterritorial effect contrary to international law’, and particularly the customary principle of complete and exclusive sovereignty of states over their airspace. In reviewing the Regulation’s validity, the Court reiterated its approach in ATAA by limiting its review to examining whether EU institutions made a ‘manifest error of assessment’ concerning the conditions of applying the principle. This light standard of review is applied because customary law principles do not have the same degree of precision as international agreements (para 51). While this may be a standard administrative test in EU law, applying such a marginal scope of review is questionable. It is not clear why the Court does not provide the possibility for full review in cases where the customary principle is sufficiently precise as with international agreements. Applying a manifest error of assessment review does not involve a serious engagement with the territoriality principle as interpreted internationally or a careful examination of the conditions for its application by the EU institutions. This becomes evident in the three reasons given by the Court in holding that no such error occurred. 

  1. A Close Territorial Connection: Established at the Initial Point of Departure 

Both the Court (paras 52-53) and the AG (para 61) considered that a ‘close connection’ with the territory of the EU is established at the initial point of departure. The regulation’s applicability on this basis does not violate the sovereign rights of third countries as the passengers’ initial departure squarely establishes the necessary link for subjecting them to the EU’s competence. This reflects the Court’s approach in ATAA, where it characteristically held that since an aircraft is located on an aerodrome on the territory of a Member State, this subjects it to the ‘unlimited jurisdiction of the EU’ (para 124). In this respect, it is notable that both the Court (para 55) and the AG (para 64) emphasized that the Regulation is not intended to apply to flights which are operated ‘wholly’ in a third country or between two third countries, without any connection with the territory of the EU. This limitation, which emerges as the only constraint to the extraterritorial reach of the Regulation, seems to ensure compatibility with the sovereignty of third countries. 

Contrary to the Court’s limited engagement with international law, the AG at least briefly set out the two most relevant international jurisdictional bases – the territoriality and nationality principles – albeit, by referring to AG Kokott’s opinion and not by directly relying on international law. In this context, he explained that the Regulation’s applicability to arriving flights under Article 3(1)(b) is based on a combination of the territoriality and nationality principles given that the aircraft lands in the EU and covers Community carriers. On the other hand, Article 3(1)(a) is based on the territoriality principle, as the initial departure from an EU airport establishes the necessary territorial link. Notably, AG Rantos, similarly to AG Kokott in ATAA, does not consider that taking into account circumstances taking place outside a state’s territorial competence is problematic from a public international law perspective. It is rather not an uncommon state practice (para 63). Following this logic, the applicability of the Air Passenger Regulation in this case does not amount to an extraterritorial application of EU law (para 65). A distinction seems to be made between extraterritorial regulation, in the absence of any territorial link with the EU, and what has been identified in the scholarship as ‘territorial extension’ or as ‘internal measures with extraterritorial implications’, which accordingly has become a common regulatory approach.  

2. A Close Territorial Connection: Retained and Unbroken 

Arguably, the CJEU went further than previous case law by holding that the territorial connection is retained, including for the leg of the flight operated outside the EU. According to the Court, it is important that the Regulation applies to ‘limited and clearly defined circumstances’ in which a flight ‘taken as a whole’ is operated from an airport located in a Member State. Using Scott’s mapping of ‘territorial extension’, this instance would qualify as a ‘transaction-specific’ sphere of regulatory intervention, taking into account circumstances abroad relating to an individual transaction. This transaction is broadly drawn, taking into account the worldwide delay/experience of passengers, not in a single EU-departing flight (as was the case with global aviation emissions in the ETS), but a single booking concerning an EU-departing flight taken as a whole, including transit flights. The physical connection to the EU territory in this case is thinner than the connection established in the context of ATAA. In fact, under the Aviation Directive, transit flights would have broken the territorial connection, limiting the number of allowances that the operator would have had to surrender under the ETS to those emitted during the single flight departing from or arriving at an EU airport. This had been criticized as it would incentivize the operation of more transit flights (than direct ones), potentially leading to an overall increase in emissions that would undermine the Regulation’s objective. The interpretation of the Air Passenger Regulation in this case surpasses this problem and establishes a broader understanding of the circumstances that fall within the EU’s regulatory remit on the basis of an initial territorial connection. 

3. Pursuing a Treaty objective through unilateral market entry conditions and the commercial choice of doing business with the EU 

As with the interpretation of the Regulation, its validity is informed by the objective pursued. To fulfil EU consumer protection objectives, the EU may in principle choose to permit a commercial activity – air transport – to be carried out in its territory only on condition that operators comply with EU criteria (para 58). The AG similarly corroborated the validity of the Regulation by reference to its objective, further stressing the need to achieve a high level of consumer protection as protected under Article 38 of the Charter of Fundamental Rights. The AG further stated that by choosing to operate flights (both direct and connecting) involving the EU market, the foreign airline undertook a risk that is inherent in offering services to the European market (para 67). This line of reasoning undermines the extraterritorial effects of EU regulatory standards, which are thereby exported to third countries. Presenting it merely as a matter of ‘commercial choice’, as was the case in ATAA, seems disconnected from commercial reality, which makes it difficult or commercially impossible for airlines to avoid EU airports altogether.

Focusing on the importance of achieving EU objectives, the Court repeated verbatim the reasoning applied in ATAA (para 128), leaving out the particular importance for such objectives ‘to follow on’ from an international agreement to which the EU is a signatory, as they did in relation to climate change in the context of that case. The international origin and affirmation of treaty objectives is therefore not a necessary precondition for the extension of EU standards when the commercial operator ‘chooses’ to operate a route from the EU. It also emerges that extending EU standards beyond EU borders does not necessarily relate to the effects that the regulated activity may have within the EU. While in ATAA, AG Kokott emphasized the need to regulate GHG emissions wherever they occur (para 154) and the Court referred to the effects of air polluting activities abroad within the environment of the Member States (para 129), it was not clear whether effects were considered a prerequisite for the exercise of EU (environmental) competences. Case C-561/20 clarifies that a territorial connection at the outset of the commercial activity is sufficient by itself, and irrespective of any effects in the EU, to justify the exercise of EU competences, at least in the field of consumer protection of air passengers. 


This post has sought to demonstrate the significance of Case C-561/20 in discerning the permissible geographic scope EU legislation. It also showcases the lasting relevance of the CJEU’s judgment in ATAA as regards the extraterritorial reach of EU competences. Even though the EU was politically forced to provisionally withdraw the inclusion of global aviation emissions in the ETS, the judgment has had a significant effect more broadly, validating the EU’s regulatory power over activities taking place beyond EU borders.

Overall, the Court’s review of the Air Transport Regulation largely enables the extraterritorial reach of EU regulation so long as there is a connection with the territory of the EU at some point of the commercial transaction, established and maintained more broadly through connecting journeys. Its implications may extend beyond the specific field of air passenger compensation in setting the parameters for legally permissible extraterritoriality in EU unilateral regulation. 

Acknowledgment: I would like to thank Alexandros Vryonides for his assistance in researching the CJEU’s case law on the territorial scope of the Air Passenger Regulation.