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European Union: General Court Rejects Challenge to Emissions Trading Directive

(Mar. 16, 2010) On March 2, 2010, the General Court of the European Union rejected a challenge, brought by “the world's largest steel producer” Arcelor S.A., to the EU's 2003 Emissions Trading Directive. The Luxembourg-based company argued that several European Community law principles – the right to property and to the pursuit of economic activity, equal treatment, freedom of establishment, legal certainty – were violated by certain Directive provisions. It therefore sought both the annulment of the provisions and damages for the harm it suffered as a result of the Directive's adoption. The action was lodged against the European Parliament and the Council of the European Union on January 15, 2004 (when the General Court was the Court of First Instance of the European Communities). (Gabriela Forbes, EU Court Dismisses Challenge to Emissions Trading Rules, PAPER CHASE NEWSBURST, Mar. 3, 2010, available at

The General Court dismissed as inadmissible the action for annulment of the Directive. It noted that while a company may bring an action against Community acts that concern it directly and individually, “Arcelor is neither individually nor directly concerned by the directive.” (Press Release, No. 17/10, The General Court of the European Union, The General Court Dismisses the Action Brought by Arcelor Challenging the Validity of the Emissions Trading Directive (Mar. 2, 2010), available at
.) The Directive applies, the Court stated, “in a general and abstract manner, to all of the operators” covered in its annex, and therefore it did not result in unequal treatment. The Court also rejected Arcelor's application for damages, finding that the company has not shown that, in adopting the directive, “the Community legislature committed a sufficiently serious breach” of the principles mentioned above “to give rise to non-contractual liability on the part of the Community.” (Id.)

Aside from dismissing the action, the Court ordered Arcelor to bear its own costs and those incurred by the Parliament and the Council, but ordered the European Commission, which intervened in support of the Parliament and Council, to bear its own costs. (Case T-16/04, Arcelor v Parliament and Council, Court of Justice of the European Union website, Mar. 2, 2010, available at
.) The company has two months to appeal the decision, limited to points of law only, to the EU Court of Justice (Press Release, supra.)

The 2003 Directive establishes a scheme for greenhouse gas emission allowance trading within the European Community “in order to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner” (art. 1). (Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 [as amended to Apr. 23, 2009] Establishing a Scheme for Greenhouse Gas Emission Allowance Trading Within the Community and Amending Council Directive 96/61/EC, 2003 OFFICIAL JOURNAL OF THE EUROPEAN UNION (L 275) 32, available at
.) Under the scheme, which is compatible with the United Nations Framework Convention on Climate Change and the Kyoto Protocol, EU Member States allocate GHG emissions allowances to domestic operators of installations (the types of which are listed in an annex to the Directive), in accordance with national allocation plans. Operators that reduce emissions may sell their surplus allowances to other operators; conversely, operators with emissions in excess of their allowances may purchase the necessary allowances from an operator with a surplus. (Press release, supra.)