Tag: Property

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Milis Energy: CJEU confirms inapplicability of ECT in intra-EU relations, shields volatile energy subsidies from property rights, freedom of enterprise assault.

In Case C-306/19 Milis Energy the CJEU addresses on of the elephants in the energy transition room namely the support measures given by Member States to renewable energy installations, in particular photovoltaic energy, and the legality of reducing those support measures (a phenomenon which is to be expected seeing as the variety of energy transition measures gradually make renewable energy move from an infant industry to a mature industry).

As readers will know, reduced support and the sometimes capricious development of national energy subsidies has landed many an EU government in court, including in investor-State dispute settlement. Those latter cases often involve the controversial Energy Charter Treaty (ECT), and in current case the CJEU, not unexpectedly given its Komstroy case-law, holds that Milis, being incorporated in Italy, cannot call upon the ECT in its dispute with a Member State.

Articles 16 (freedom of enterprise) and 17 (property rights) of the EU Charter of Fundamental Rights were held not to protect Milis. With respect to Article 17, the CJEU emphasised that Member States enjoy a wide margin of discretion in the context of renewable energy subsidies and that both EU law and Italian law being subject to such volatility, an economic operator active in the sector necessarily must assume a regulatory and subsidy environment subject to frequent change, hence ruling out the qualification of enviseaged State subsidies in the sector as being a ‘good’ protected by Article 17 [41 ff]. With respect to Article 16, the Court emphasises the great discretion State enjoy to regulate economic enterprise [54 ff].

Geert.

 

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Air Berlin, CJEU holds that freely allocated emission trading rights do not absolutely belong to the estate of the corporation.

A brief note on Case C-165/20 Air Berlin in which the CJEU held that under the EU’s emission trading scheme, the number of greenhouse gas emission allowances allocated free of charge to an aircraft operator must, in the event of cessation of that operator’s aviation activities (here due to insolvency) during the period of greenhouse gas emission allowance trading in question, be reduced in proportion to the part of that period during which those activities are no longer carried out.

Of note is in particular the Opinion of Advocate General Hogan who earlier, in answering arguments with respect to property rights and the need for their protection under the EU Charter of Fundamental Rights and Freedoms, had opined (28) that

‘Given that the allowances in question were allocated free of charge pursuant to an EU legislative scheme and do not derive from the assets or occupational activity of an aviation operator, in this case Air Berlin, they do not constitute property rights which must be safeguarded by the Union legal order pursuant, inter alia, to Article 17 of the Charter’

and that

‘The emissions trading scheme is simply a mechanism designed to incentivise certain economic behaviour (namely, the reduction of greenhouse gases). While the allowances could be and were traded, this was permitted in the context of undertakings otherwise engaging in economic activity (such as aviation) which perforce was liable to contribute to environmental pollution. It was never envisaged that these allowances could themselves be monetised independently of this economic activity or that they would be regarded as tantamount to a form of quasi-currency which could then be treated as a liquid asset in an insolvency.’

Geert.

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