Select Committee on European Scrutiny Sixth Report





Commission Communication on the consequences of the Court judgements of 5 November 2002 for European air transport policy.

Legal base:
Document originated:26 November 2002
Deposited in Parliament:29 November 2002
Basis of consideration:EM of 11 December 2002
Previous Committee Report:None
To be discussed in Council:Not known
Committee's assessment:Legally and politically important
Committee's decision:Cleared


  8.1  The European Court of Justice recently considered cases brought by the Commission against Belgium, Denmark, Germany, Luxembourg, Austria, Finland, Sweden and the UK, with the Commission arguing that bilateral air services agreements between each of the Member States and the United States were in breach of Community law.

  8.2  In all eight cases the Court found that the air services agreements with the US fail to comply with Community law in that they contain a "nationality clause". This clause allows the US, if it chooses, to refuse to accept the designation of any air carrier not majority-owned and controlled by nationals of the Member State concerned. The Court held that such a clause contravenes Community law by giving more favourable treatment to carriers of the Member State concerned than to other Community carriers established there.

  8.3  In seven cases, but not that of the UK, the Court also found that Member States had failed to fulfil their EC obligations by also including in their agreements with the US provisions relating to areas where the Community has established exclusive competence by adopting internal rules, in particular on tariffs on intra-Community routes and on computer reservation systems.

The document

  8.4  The Commission's Communication sets out its view of the implications of the judgement. It says that, in addition to the areas identified by the Court, exclusive Community external competence extends to a number of other issues typically addressed by bilateral air services agreements, including safety issues, commercial opportunities such as ground handling, consumer protection, customs duties and other charges and environmental rules.

  8.5  The Commission says the eight Member States should now activate denunciation provisions in their agreements with the US. It asks all Member States not to take on new commitments with any third countries without clarifying compatibility with EU law. It also presents a case for the Council to give the Commission a mandate for EU/US talks.

The Government's view

  8.6  The Minister for Transport, Department of Transport (Mr John Spellar) tells us:

"The Government considers that the ECJ ruling could not be objectively described as an outright victory for either the Commission or the Member States. The Court rejected the Commission's most extreme claim that only the Community is entitled to conclude air service agreements with third countries. On the other hand the ruling means that any bilateral agreement negotiated by a Member States may only be concluded subject to certain conditions, notably that any rights conferred by an agreement must be available on equal terms to all Community (and EEA) carriers established in that Member State. In practice this may be a difficult condition to meet with some third countries. In addition, any such bilateral agreement could not include any provision, such as that relating to intra Community fares, where the Community possesses exclusive competence.

"The Commission presented its Communication at the Transport, Telecommunications and Energy Council on 5 December. The UK Government, along with many other Member States, made clear that we did not share the Commission's interpretation of the ruling, and rejected its call to denounce our bilateral air services agreement with the US. There was however general agreement that Member States and the Commission needed to discuss the consequences of the ruling urgently, including the question of a Commission mandate for negotiations with the US. The Committee of Permanent Representatives has been asked to work on proposals to be put to the Council.

"We will consider these proposals carefully when they emerge. In the meantime we are continuing with our programme of negotiations with other third countries, but we are taking care not to risk challenge by concluding new agreements, or amending existing ones by agreeing substantive new rights, unless we can persuade the other country to accept the designation of airlines owned and controlled by EU/EEA, as opposed to UK, nationals."


  8.7  We note both the Government's intention to continue, albeit with caution, bi-lateral air service agreement negotiations and the expectation that proposals consequent on the judgements will be put to the Council. When these proposals, which will undoubtedly raise important issues, emerge, we will want to scrutinise them carefully. Meanwhile we clear this document.

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