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European Court of First Instance gives rulings on EU Emissions Trading Phase II National Allocation Plan rejections

DATE: 23 Sep 2009

The Second and Seventh Chambers of the European Court of First Instance today gave judgment in Cases T/183/07 and T-263/07 Poland v Commission and Estonia v Commission.

In both cases the Commission's decisions rejecting the Phase II National Allocation Plans for Poland and Estonia were annulled.

In the Poland case the decision was annulled on the basis (i) of a failure to provide reasons and (ii) infringement of the provisions of Article 9(1) and (3) of Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading with the Community. An argument based on the time-limit for the Commission's decision having expired was rejected. In the Estonia case the Commission's decision was annulled for similar reasons to those in the Poland case.

A number of similar challenges are pending before the Court of First Instance : Hungary (T/221/07); Latvia (T/369/07); Lithuania (T/368/07); Romania (T/484/07) and Bulgaria (T/499/07). A challenge brought by Slovakia (T/32/07) was withdrawn.

The United Kingdom intervened in the Poland and Estonia cases in support of the Commission. It has also intervened in all the pending challenges. The United Kingdom argued that (see para. 42 of the Estonia judgment) "if the Commission were to be unsuccessful in one of the cases concerning national allocation plans, the price of allowances during the second period would risk falling significantly due to the resulting oversupply of allowances, thereby completely undermining the effects of the Directive as a tool to reduce emissions. In other words, the consequences would be dire. The United Kingdom ... [urged] the Court to adopt a teleological interpretation of the Directive so as to allow the Commission to review national allocation plans in an effective manner and thus prevent Member States from fixing ceilings which are not capable of entailing an increase in the price of carbon or, therefore, of encouraging reductions in emissions."

James Maurici appeared for the United Kingdom in both the Poland and Estonia cases and is also acting in the other pending cases.