Swiss International Air Lines AG v The Secretary of State for Energy and Climate Change & Ors

A national court should refer an EU-law validity issue to the Court of Justice where the scope of the applicable legal exception remains genuinely uncertain. The external-relations exception to equal treatment could not be treated as settled where it was unclear whether it covered internal EU legislation affecting third countries and what limitation was imposed by the words in all respects. If equal treatment applied, the challenge required an arguable case that the EU legislature had manifestly exceeded its broad political discretion. Close connections with a third country did not automatically justify singling it out. The appeal was therefore allowed and questions concerning validity and remedies were referred.

Swiss International Air Lines AG challenged UK regulations implementing Decision 377/2013/EU, which temporarily suspended emissions-allowance obligations for flights involving most non-EEA countries but not Switzerland. Swiss argued that the differential treatment breached the EU principle of equal treatment and sought a preliminary reference concerning the validity of the Decision.

HH Judge Pelling QC refused permission on the papers, and Lewis J dismissed the renewed oral application. The central issues on appeal were whether the external-relations exception excluded the equal-treatment principle and, if not, whether Swiss had an arguable case that the EU legislature had exceeded its discretion.

1. Disposition. Vos LJ gave the judgment, with Burnett and Underhill LJJ agreeing. The appeal was allowed, permission to apply for judicial review was granted, and questions were referred to the CJEU under article 267 of the TFEU.
2. External-relations exception. The oft-repeated CJEU statement that there was no general principle requiring equal treatment of third countries in the EU’s external relations contained material qualifications. The significance of the words in its external relations and in all respects had not been authoritatively resolved. [1976] ECR 19, [1982] ECR 3745 and [1998] ECR 1-973 did not remove the doubt. It was arguable that the exception might apply to internal EU legislation affecting external relations, but it was also open to the CJEU to confine it to situations involving direct dealings with third countries. A reference was therefore required.
3. Equal treatment and discretion. If the principle applied, Swiss had to show that the EU legislature had manifestly exceeded the bounds of its discretion. The EU enjoyed broad discretion in making political choices connected with international environmental negotiations. However, Switzerland’s close political, economic and geographical connections with the EU did not automatically justify singling it out. The recitals gave only exiguous reasons, and it was at least arguable that the exclusion had not been coherently justified.
4. Remedies. The reference properly included questions about rectification of the emissions register, possible damages under article 340 of the TFEU, steps required of national authorities, and any other relief. Including a question about action by the national competent authority could avoid later delay and uncertainty.

• Court of Appeal (Civil Division): Appeal allowed. Permission to apply for judicial review was granted and questions concerning validity and remedies were referred to the CJEU.
• High Court of Justice, Queen’s Bench Division, Administrative Court: HH Judge Pelling QC refused permission on the papers. Lewis J dismissed the renewed oral application, holding that the equal-treatment principle did not apply to the differential treatment of third countries and that, in any event, no arguable breach had been shown.