European Union

Sandra Bitter v. Bundesrepublik Deutschland (European Court of Justice, 2015)

Jurisdiction: European Union


Principle law(s): EU Emission Trading Scheme (EU ETS) (Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC)


Side A: Sandra Bitter (Individual corporation)


Side B: Bundesrepublik Deutschland (Government)


Core objectives:

Company challenged the principle of proportionality under EU ETS


Summary
Sandra Bitter, insolvency administrator for the German company Ziegelwerk Höxter GmbH, filed a for a preliminary ruling on whether a fine of EUR 100 per tonne of carbon dioxide emitted imposed by German authorities on non-surrendered emissions prior to the company's insolvency violated the principle of proportionality under Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC. Bitter argued that, because Ziegelwerk Höxter had ceased its business activity before the opening of insolvency procedures in September 2011, it was no longer obliged to report or surrender its emissions allowances for 2011. Instead, she claimed that Ziegelwerk Höxter's contingent liabilities were solely to be registered as claims in the insolvency procedure. 

The Court held that the EU legislature must be allowed broad discretion in applying penalties and that the relatively high level of the penalty is justified by the need to have infringements of the obligation to surrender a sufficient number of allowances treated in a stringent and consistent manner throughout the European Union. The Court also noted that Directive 2003/87 grants operators a reasonable amount of time to comply with their surrender obligations and that the fact that the amount of the fine involved exceeded that of one in a previous case, in which the Court ruled that fines for penalties to surrender are consistent with the principle of proportionality, was irrelevant. In light of the principle of proportionality, the Court ruled, there is nothing in this case that affects the second sentence of Article 16(3) of Directive 2003/87, which does provide for a penalty of EUR 100 per tonne of carbon dioxide equivalent emitted for which the operator has not surrendered allowances.
Case documents

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