Tag: Trade and environment

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Dutch judge gives green light to export ban for fuels banned under EU law. Gives short shrift to extraterritoriality and leakage arguments.

In Zenith Energy Amsterdam B.V. and Exolum Amsterdam BV v The Netherlands a Dutch judge last week rejected the challenge by fuel traders of the Dutch ban on export of fuels to non-EU (particularly Ecowas) countries of fuels falling short of the EU requirements under Directive 98/70. The Dutch Statute is the culmination of established Dutch studies of the sector (The Netherlands being a prime tank storage country) and of repeated EOWAS calls that the export causes issues on their territories.

A first test is the duty of care under the Dutch environmental laws, which in summary obliges industry et al to prevent and /or limit the environmental and public health impacts of their production. The judge [4.10] refers to the travaux and recitals of the Act which contains the duty of care, as having recognised the global, one might say ‘extraterritorial’  impact of Dutch and European industrial activities, and emphasises that the duty of care requires a dynamic interpretation in line with societal and technical developments.

In 4.13 the judge emphasises that Directive 98/70 does not harmonise export outside of the EU and that the Directive therefore does not impede national rules on export and in 4.14 the rule is said not to force duties upon third States who themselves have signalled the difficulties. The judge also explicitly refers to Urgenda and UNEP to emphasise that looking after the environment and public health elsewhere, is an expression of the State’s own duty of care. 4.16 ‘fuel leakage’ (the drug dealer defence: trade will just move elsewhere, Antwerp in particular) has not been made out on the facts, quite the opposite, the State can show that the majority of traders already export cleaner fuel from Dutch ports.

Of note is also that the judge, Vetter J, in commendable Dutch style, does not exhaust himself in the arguments, rather cutting straight to the chase.

A judgment of note. Geert.

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French neonicotinoids measures and administrative compliance under EU law. The CJEU takes a view protective of Member States’ room for manoeuvre.

The ‘transparency’ or ‘notification’ Directive 2015/1535 (the successor to Directive 98/34) featured twice at the CJEU yesterday. In Case C‑711/19 Admiral Sportwetten, the Court held that a national tax rule that provides for taxation of the operation of betting terminals does not constitute a ‘technical regulation’ that needs to be notified under the Directive. In Case C-514/19 Union des industries de la protection des plantes it held more directly than Kokott AG had opined, that France had validly informed the Commission of the need to take measures intended, in particular, to protect bees by banning the use of 3 active substances of the neonicotinoid family which had been authorised for use under the relevant EU procedure. That procedure is regulated by Directive 1107/2009 on plant protection products.

The complication in the case in essence is a result of the dual procedure for national safeguard measures as a result of the existence of both the PPP and the notification Directive. May a communication of a Member State under the Notification Directive, double as notification of emergency measures under the PPP Directive? The CJEU held it can, provided the notification contains a clear presentation of the evidence showing, first, that those active substances are likely to constitute a serious risk to human or animal health or to the environment and, second, that that risk cannot be controlled without the adoption, as a matter of urgency, of the measures taken by the Member State concerned, and where the Commission failed to ask that Member State whether that communication must be treated as the official provision of information under the regulation.

The Court referred to its findings in C-116/16 Fidenato, that a Member State’s power, provided by an EU act, to adopt emergency measures requires compliance with both the substantive conditions and procedural conditions laid down by that act (a requirement, I would add, which conversely also applies to the European Commission), but adds that a notification to the Commission under Article 71(1) of Regulation 1107/2009 requires only that the Member State concerned ‘officially informs’ that institution, without having to do so in a particular manner.

More generally, the Court emphasises the principle of sound administration imposed upon the EC, which explains its insistence on the EC having proactively to ensure the Member State concerned be aware of its obligations under the EU law concerned or indeed adjacent law. A certain parallel here may be made with the rules of civil procedure which require from those soliciting the courts that they approach the court with clean hands.

The Court in essence, I submit, finds that, the consequences for the Member State concerned in failing to meet the requirements for it to be able to make use of a safeguard provision in secondary law being so great, the conditions imposed on them must be met by a strict due diligence on behalf of the European Commission.

Of note is that the judgment does not entail any finding on the substantive legality of the French ban.

Geert.

 

 

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Request for consultations under the Trade and Sustainable Development chapter of the EU-Korea FTA.

Update 25 January 2021 the Report was issued today and found Korea to be in breach. For the EC press release see here.

Update 23 January 2020 for the EC’s first written submission see here.

Update 20 September 2019 the US too have now requested environment consultations under KORUS, their FTA with Korea.

Update 5 July 2019 Ditto for the Korea issue. Update 21 June 2019 the EU /Ukraine issue, below, has now led to a formal request for establishment of panel.

Update 10 April 2019 see USTR for their report on having successfully resolved a timber management issue under the US /Peru FTA.

Update 19 March 2019 see Quentin Decleve here for the US following suit, related to rule of law /due process/ hearing rights issues before the Korean competition authority.

Update 16 January 2019 the first such trigger was quickly followed by a second: the EU have requested consultations with Ukraine over the country’s ban on the export of unprocessed woods. Update December 2020 the Report is out and found in favour of the Ukraine.

This is a short posting for completeness and filing purposes. The EU have requested consultations with South Korea under the Trade and Sustainable Development chapter of the EU-Korea FTA. Labour rights are at the heart of the request. The request is a first trigger of the ‘Trade and’ consultations chapters under recent EU FTAs. I am not in a position to say more at this stage.

Geert.

 

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Essent 2.0. The CJEU surprisingly does distinguish. Support for renewable, ‘green’ energy not entirely carte blanche.

Excuse the attempt at pun in the title (which readers may have even missed. ‘Green’ v carte ‘Blanche’. It’s Thursday, and these are busy weeks). Apologies also to the readers who are new to the debate. The legality of support schemes for renewable energy  EU law has occupied mine and others’ mind for a little while now. One may want to refer eg to my paper on the Vindkraft et al judgment or to various postings on this blog. Specifically, for the latter, my post on the AG’s Opinion in Essent 2.0, case C-492/14., judgment issued today.

Bot AG had opined, very very reluctantly, that the Court’s case-law meant that Flanders could indeed reserve the benefit of the free distribution of electricity produced from renewable energy sources solely to generating installations directly connected to the distribution systems located in Flanders, thereby excluding generating installations located in other Member States.

The Court itself has now distinguished its own case-law: the EU has not harmonised the national support schemes for green electricity; this means that it is possible in principle for Member States to limit access to such schemes to green electricity production located in their territory. However the Court’s sympathy is now limited to schemes that support producers only. Green energy support schemes, whose production costs seem to be still quite high as compared with the costs of electricity produced from non-renewable energy sources, are inherently designed in particular to foster, from a long-term perspective, investment in new installations, by giving producers certain guarantees about the future marketing of their green electricity (at 110, with reference to Vindkraft).

However it is not the purpose of the Flemish scheme to give direct support to producers of green electricity. Rather, the free distribution of green electricity constitutes a financial advantage conferred primarily on the supplier of such electricity, which may, in certain circumstances, depending notably on the sale price which the consumer is charged by the supplier for his electricity, to a certain extent and indirectly also benefit the consumer (at 112).

Such a support mechanism offers no certainty that the economic advantage thus obtained for suppliers will ultimately actually and essentially be required to benefit producers of green electricity, particularly the smallest local generating installations which the Flemish Region claims to have wanted to support, which are not both producers and suppliers (at 113).

The Court is not game to assist the AG with his call for an explicit recognition of the potential to use discriminatory measures within the context of mandatory requirements (the implications of Cassis de Dijon). That is a pity, but not a surprise.

Overall, the Court’s judgment is a welcome safeguard to its more open-ended sympathy for renewable energy support schemes. Those who challenge such schemes in future, know what to do. They need to show that there is no certainty that the economic advantage obtained for suppliers will ultimately actually and essentially be required to benefit producers of green electricity, as opposed to distributors or consumers.

Next-up: a reversal of T-351/02 Deutsche Bahn?

Geert.

 

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Neither extraterritoriality questions nor WTO concerns unsettle the CJEU. Animal testing ban applies outside EU.

The last part of this title is a bit of a stretch, apologies: soundbite beats nuance. I reported earlier on the High Court’s referral to the CJEU in the Cosmetics Regulation case, C-592/14 . The Court held last week, 21 September. Much like in C-366/10, the emissions trading /aviation case, the Court was unimpressed with accusations of extraterritoriality (‘territory’ is not discussed in the judgment) and does not even flag WTO concerns (Bobek AG had, and simply suggested this is an issue that solely lies with the WTO itself to resolve).

Referring to the need to interpret the Regulation with a view to its object and purpose, the Court insists that in particular to avoid easy circumvention of the Regulation, data obtained from animal testing carried out outside the EU, cannot be employed for the marketing of cosmetics in the EU, even if those tests had to be performed so as to meet the regulatory requirements of third countries.

Of course in WTO jargon, this recalls the discussion of non-product incorporated production processes and -methods (n-PR PPMs) however the Court is more concerned with regulatory efficiency.

Geert.

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Ach no! CJEU distinguishes rather than extinguishes its Preussen Elektra case-law in Germany v EC. State aid for renewable energy.

Update May 2019. The General Court’s judgment upon appeal was annulled by the CJEU in Case C-405/16 P at the end of March. In essence, as TaylorWessing point out, although the German State controlled the implementation of the EEG surcharge, it did not control the sums generated, so that the existence of State aid is ruled out.

 

The rather long judgment in T-47/15 Germany v Commission is neatly summarised by the CJEU here. I have reported before on both the State Aid and the free movement implications of the Court’s seminal findings in Preussen Elektra. In current case, the Court essentially upholds the EC’s finding of the more recent German regime amounting to illegal State aid and incompatibility with the Internal Market – in contrast with its earlier findings in Preussen Elektra.

Disappointingly, Preussen Elektra was distinguished rather than its merits called into question. Rather like Advocate-General Bot I stubbornly insist that Preussen Elektra is bad case-law and I continue to call upon the Court to scrap its findings in same.

Geert.

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‘We did not like it. Not one little bit!’ Bot AG reads Dr Seuss in Essent 2.0.

Perhaps because it so reflected our children’s character [all ‘Duracell‘ kids] there is one part of Dr Seuss’ Cat in the Hat which has always stuck with me:

so all we could do was to

sit!

   sit!

      sit!

         sit!

and we did not like it.

not one little bit.

I was reminded of the line, reading Bot AG’s Opinion in Case C-492/14, ‘Essent 2.0’ (not yet available in English at the time of writing). In order to promote the generation of renewable energy, Flanders law makes transmission of electricity generated from renewable sources, free of charge. However this courtesy is limited to electricity generated in installations directly connected to the grid. Essent imports (a considerable part of) its green electricity from The Netherlands. It does not therefore enjoy free transmission.

Bot’s disapproval of trade restrictions like these is well established and has often been reported on this blog. The CJEU disagrees with its AG on many of the issues. I am in general of the same view as the AG. Mr Bot continues to find the Court’s case-law unconvincing and makes no attempt to hide it. He repeatedly mentions that he is duty-bound to apply Essent /Vindkraft without believing they are good law. It is with obvious regret that he Opines that given the Court’s stand in Essent /Vindkraft, he has no option but to propose that the Court find the Flemish regime acceptable.

The AG does however leave open a future window for change: in particular, if and when the secondary law regime on renewable energy specifically, and energy as a whole, is amended, one may be able to distinguish Essent /Vindkraft.

Bot also reminds us of the unclear position of environmental exceptions under Article 36 TFEU and the Rule of Reason. He calls upon the Court formally to acknowledge that the Cassis de Dijon distinction between the Rule of Reason and Article 36 (the former does not allow ‘distinctly applicable’ national measures (read’ discrimination) while the latter does) no longer exists.

I do not like judgment in Preussen Elektra. Or in Essent. Not one little bit. It discourages the creation of a true European energy market. Perhaps the Court will surprise us all in Essent 2.0 and will correct some of the damage it has done with its standing case-law on the matter.

Geert.

 

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Cheers to that! The CJEU on excise duties, alcohol, packaging and regulatory autonomy in Valev Visnapuu.

Postscript 10 December 2015 For a similar exercise, see Sharpston AG in C-472/14 Canadian Oil.

Less is sometimes more so I shall not attempt to summarise all issues in Case C-198/14 Valev Visnapuu. The case makes for sometimes condensed reading however it perfectly illustrates the way to go about dealing with obstacles to trade put in place for environmental, public health or, as in this case, both reasons.

Mr Visnapuu essentially forum shops Estonia’s lower prices on alcohol by offering Finnish clients home delivery of alcoholic beverages purchased there. No declaration of import is made to Finish customs and excise, thereby circumventing (accusation of course is that this is illegal) a variety of excise duties imposed for public health and environmental reasons, as well as a number of requirements relating to retail licenses and container requirements (essentially a deposit-return system) for beverages.

Confronted with a demand to settle various tax debts, as well as with a suspended prison sentence, Mr Visnapuu turns to EU law as his defence in a criminal proceeding. The CJEU then had to settle a variety of classic trade and environment /public health questions: whether the packaging and packaging waste Directive is exhaustive on the issue of deposit-return system (answer: no and hence the system additionally needs to be assessed vis-a-vis EU primary law: Article 34 ff TFEU or Article 110 TFEU); whether in the context of that Directive excise duties on packaging may be imposed (yes) and packaging integrated into a functioning return system exempt (yes; in the absence of indications that imported systems are less likely to enjoy the exemption); whether the relevant excise duties fall under Article 34 ff TFEU or Article 110 TFEU (answer: it is part of an internal system of taxation hence needs to be judged vis-a-vis Article 110 TFEU); and finally whether the retail licence requirement needs to be judged viz Article 34 or Article 37 TFEU (answer: mixed, given the various requirements at stake). Final judgment on proportionality is down to the Finnish courts.

Readers in need of a tipple would be advised to postpone until after reading the judgment. Again though the case shows that if one keeps a clear head, classic structures of applying EU law go a long way in untangling even complex matters of law and fact.

Geert.

 

 

 

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Landmark judgment in the making. High Court refers to Luxembourg, demarcation of Moroccon territory viz Saharawi.

How exactly is the EU bound by public international law? What is the justiciability of acts of foreign sovereign nations in EU courts? To what extent can an individual rely on customary or other sources of public international law, in national courts or at the CJEU?  All of these questions often puzzle non-lawyers (if something is illegal due to a higher rule, how can the lower rule still be in existence) and lawyers alike. At the EU level, things are complicated due to the hybrid (OK: sui generis) nature of the EU, and its complicated relationship with international law.

In Western Sahara Campaign UK, claimant is an independent voluntary organisation founded in 1984 with the aim of supporting the recognition of the right of the Saharawi people of Western Sahara to self-determination and independence and to raise awareness of the unlawful occupation of the Western Sahara. Defendants are the Inland Revenue, challenged for the preferential tariff given on import to the UK of goods that are classified as being of Moroccan origin but in fact originate from the territory of Western Sahara. The second challenge is brought against the Secretary of State for the Environment and Rural Affairs (DEFRA) in respect of the intended application of the EU-Morocco Fisheries Partnership Agreement to policy formation relating to fishing in the territorial waters of Western Sahara.

Essentially, it is claimed that defendants ought not to apply the relevant European agreements for these are, arguably, in violation of public international law. Claimant contends that Morocco has annexed the territory of Western Sahara and claims it as part of its sovereign territory despite decisions of the United Nations and the International Court of Justice (ICJ) that the people of Western Sahara have the right to self-determination. Accordingly it is said that Morocco’s occupation is in breach of the principles of international law and the Charter of the United Nations.

Under EU law, only the CJEU can establish the invalidity of EU law. Blake J decided to send the case to Luxembourg for preliminary review. Defendants opposed such reference primarily because they submit that the issues raised by the claimant are matters of public international law that the CJEU will decline to adjudicate on in the present circumstances. Precedent which they relied on is not unequivocal, however. This case therefore will be an opportunity for the CJEU (Grand Chamber, one would imagine) to clarify the relationship between EU and public international law.

Geert.

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If you can’t beat them, join them? Using BITs for environmentally proactive purposes.

Update 29 September 2016. The award was made public on 28 September 2016. It sides with Barbados. Look for my analysis in a separate blog piece.

Thank you for the team at Dechert to remind us of the potential that BITs may be used to pursue proactive, rather than just reactive environmental litigation. A word of explanation: Bilateral Investment Treaties, in particular their investor-state dispute settlement mechanisms, are currently under a lot of pressure following the public outcry over the TTIP negotiations. Allowing private investors to sue countries that roll out regulation, using vague principles of protection of property, is seen by many as a form of corporate bullying.

Dechert’s briefing however reminds us firstly, specifically vis-a-vis stubborn air pollution in the Indonesia area, that States may carry responsibility in line with Trail Smelter’s nec utere tuo principle. The possibility for individuals (as opposed to neighbouring States) suing on that basis, is of course complicated by the mechanism of (absence of) direct effect of huge chunks of international environmental law. That is where investor-state can come in handily. Such as in Allard v Barbados at the Permanent Court of Arbitration. Dechert’s summary of that case reads ‘the Canadian owner of an eco-tourist facility in Barbados is currently suing the Government of Barbados for an alleged breach of the full protection and security provision (among other provisions) in the Canada- Barbados bilateral investment treaty. Peter Allard argues in his claim that Barbados breached its treaty obligations by failing to enforce its domestic environmental laws, which he alleges led to the environment being spoilt and a loss of tourist revenues at his eco-resort’.

A timely reminder of the good BITs can do, just before I am to speak (again) tomorrow on TTIP and why EU citisens are so suspicious of it.

Geert.

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