Airline Regulatory ECJ Rules on Open Skies Bilaterals

Profession:Barlow Lyde & Gilbert

Article by Richard Gimblett and Sue Barham

Commission v United Kingdom, Denmark, Sweden, Finland, Belgium, Luxembourg, Austria, Germany

Judgment in cases C-466/98, C-467/98, C-468/98, C-469/98, C-471/98, C-472/98, C-475/98 and C-476/98

In BLG Aviation News (Issue 8) we reported on the opinion of the Advocate-General in this case which explored the validity of certain provisions in the air services agreements entered into between 8 EU member states (including the UK) and the US. The European Commission had brought these cases alleging that those provisions conflicted with the obligations of Member States under Community law - in particular Article 52 of the EC Treaty. On 5 November 2002, in a landmark ruling, the ECJ issued its judgment.

Article 52 of the EC Treaty enshrines the principle of "freedom of establishment" into EU law. Essentially this principle recognises the right on the part of individuals or companies belonging to one EU Member State to establish operations in another Member State and to be accorded the same treatment and advantages in relation to that operation as nationals of that State. The defendant Member States' bilateral agreements with the US provide traffic rights to designated airlines from the US and the Member State in question but also contain "nationality clauses" which permit the US to refuse such rights where an airline is not owned or effectively controlled by nationals of the State in question. The net effect of this is that other EU airlines established in that Member State are shut out from the ability to operate flights between the US and that State under its bilateral.

The ECJ dismissed arguments that the Community rules have no application in relation to such agreements which deal with air transport outside the EU. The Court held that Member States are obliged to conduct themselves consistently with Community law and therefore the fact that the EU has not legislated on air transport outside the community is not capable of rendering Article 52 inapplicable in that sector.

The ECJ further ruled that by entering into certain commitments within their bilateral agreements, Member States had infringed their obligations under EU law. In particular, the Court held that the nationality clauses in the air services agreements it had reviewed were contrary to the Member States' obligations to allow freedom of establishment - in this case to other EU carriers. The Commission's case against the UK was focused on...

To continue reading