October 8, 2011
Advocate General Claims EU Not Bound by Chicago Convention
Given the length of the advocate general's opinion yesterday and the number of legal issues involved, analysis will be conducted in pieces over the course of multiple blog posts this week and next. One of the most surprising assertions in the advocate general's opinion was that the EU was not bound by the Chicago Convention. The advocate general bases this finding on the fact that the EU, as a body, has never signed the Convention. According to the opinion, the reality that each of the EU member states has signed the Convention does not obligate the EU in any way, as "the European Union itself does not enter into any international-law commitments towards the third countries concerned as a result of existing treaties concluded by Member States." The opinion also dismisses the functional succession theory the ECJ had previously endorsed in a case involving the EU's GATT. Under that theory, because all member states had signed GATT, and the EU had assumed the duties of the states under GATT, the EU had functionally succeeded the individual states to become a party to the treaty. The advocate general here distinguished the Chicago Convention from GATT, by asserting that the EU has "not yet" fully assumed the duties of its member states within the aviation sector. For support, the opinion notes that the EU only has observer status at ICAO meetings. This is quite a slippery distinction, made even more suspicious by the use of the phrase "not yet." It is unclear from the opinion whether, should the EU be deemed at some future point to have fully assumed these air transport sector duties from its member states, the EU will then become a functional successor and party to the Chicago Convention (which might not be something that ICAO would necessarily acknowledge, of course). But given the time frame of the current dispute, with the ETS entering into effect in January, it is likely the emissions standoff will have been resolved in some other fashion by the time the question of functional succession is revisited.
October 6, 2011
ECJ Initial Ruling Declares EU Emissions Scheme Permissible Under International Law
The advocate general of the European Court of Justice released a much-anticipated opinion this morning, finding the EU's emissions trading scheme valid under applicable international law (full opinion available here). The American carriers had alleged that the EU's plan violates the Chicago Convention, customary international law and the US/EU Open Skies agreement by regulating flights over non-EU airspace in excess of EU's regulatory authority, unilaterally implementing a scheme in an area under ICAO purview, and subjecting non-EU carriers to the equivalent of a tax for entering and exiting EU airspace or airports. The advocate general was unconvinced by any of these arguments. The advocate general in fact declared that the Chicago Convention was not binding on the EU, as the EU is not a contracting party to the Convention, though all 27 of its member states are. The advocate general went on to explain that even if the Convention were binding, the Convention would still be unlikely to prohibit the EU scheme. The opinion concludes that because the scheme only applies to flights that land at or take off from EU airports, there is a sufficient territorial connection to the flights being regulated to satisfy the Convention as well as customary international law. Additionally, according to the opinion, the designation of the emissions issue to the ICAO was not exclusive and does not prohibit unilateral action and the ETS emissions allowances are distinguishable from a tax because of the market-based system through which they are purchased. The blog will provide a detailed analysis of each of these legal conclusions tomorrow, but readers interested in an opposing take on these interpretations should read Brian F. Havel and Gabriel S. Sanchez's Toward a Global Aviation Emissions Agreement available from SSRN here.
Though the advocate general's opinion is nonbinding and the full court may come down differently when it provides its opinion, today's opinion suggests that if the ETS issue is to be resolved before taking effect in January it will likely require a political as opposed to a legal solution. Had the opinion come down on the side of the carriers the EU might have felt pressure to compromise on the issue. Many of the ETS opponents had recently expressed optimism about the legal challenge. The next step in the ongoing diplomatic standoff over aviation emissions may not come until the ICAO meeting next month.
October 5, 2011
Institute Quoted in Atlantic ETS Article
Senior Research Fellow Gabriel S. Sanchez is quoted in an article on the international dispute over the EU emissions plan appearing today in the Atlantic. See Mark Schapiro, Green War in the Skies: Can Europe Make U.S. Planes Pay for Pollution?, the Atlantic, Oct. 5, 2011 (available here). For those interested, the entire piece is a good summary of the issue to date, but the final paragraph was particularly intriguing:
What happens in the airspace over the North Atlantic, and how the European Court of Justice handles the contribution that the greenhouse gases emitted there make to climate change, has in many ways become a stand-in for the airspace of the world--a distinction in the sky that is, of course, not a natural but diplomatic creation. When the world's diplomats convene in Durban in late November for another round of climate negotiations, they will most likely be contending with the European Union as the sole government demonstrating a sustained commitment to the global principles of the (about to expire) Kyoto Protocol. Few new global initiatives are expected, leaving individual governments to devise their own widely varying approaches to climate change. The dispute in Luxemburg could be the harbinger of tensions to come.
Despite aviation law lagging behind international trade law in other sectors in its degree of liberalization, climate change is one area where the aviation sector has the potential to serve as a leader or test case for the future of global cooperation in other sectors. The reality that aviation emissions occur in international air space through activity serving multiple states makes air transport an ideal sector in which to approach greenhouse gas emissions as an international issue. The possibility that the airline emissions dispute will have ramifications for global emissions agreements beyond the aviation sector adds even more reason to follow the issue closely, beginning (if you haven't been following already) with the ECJ opinion expected tomorrow.
October 4, 2011
LAN, TAM to Appeal Merger Conditions to Supreme Court
Brazilian carrier TAM and Chilean flagship LAN Airlines have announced their intention to appeal to Chile's Supreme Court three of the conditions imposed by Chile's antitrust tribunal TDLC for allowing the merger of the two airlines to proceed. See LAN Airlines press release (available here). While LAN and TAM insist that this appeal does nothing to jeopardize the scheduled completion of the merger by the end of first quarter 2012, the appeal should still be of interest to the international air transport sector because one of the conditions appealed concerns the intriguing question of how LAN and TAM will resolve their code share agreements. LAN is currently a member of Oneworld, while TAM belongs to the Star Alliance. LATAM, when formed, will only participate in one of the two alliances, but according to the press release, the airlines object to the proposed scrutiny of any code share agreements retained outside of the chosen alliance.
October 3, 2011
Australia/Japan Open Skies Agreement Sign of Progress
Last Friday, Australia and Japan signed an open skies agreement lifting capacity restrictions on flights between the two countries and granting Australia fifth freedom rights for flights continuing beyond Japan. See Australia, Japan Sign Open Skies Aviation Agreement, Reuters, Sept. 30, 2011 (available here). The agreement is a positive reflection of both countries' recent interest in air transport liberalization, having been open skies skeptics only a few years ago. Particularly interesting was the announcement of a proposed new airline, Jetstar Japan, owned in equal parts (one third each) by Qantas, Japan Airlines and Mitsubishi. This falls within both countries' foreign ownership limits, but the the venture suggests international collaboration on airline ownership may not be as toxic a political notion as it was a few years ago when the Qantas/BA merger fell apart.