The Decision of the European Court of Justice on Open Skies and Competition Cases

Abstract

The open skies court judgments of the European Court of Justice relate to legal action brought by the European Commission seeking a declaration against eight member States which had signed bilateral air services agreements with the United States. The contention of the Commission was that the defendant Member States were in flagrance of their duty and obligations under Articles 10, and 43 in particular of the EC Treaty and that, according to EC law, only the Commission was competent, on behalf of its Member States, to conduct negotiations and to enter into agreements pertaining to market access and other related commercial aviation issues. While the Court refused to draw the inference that only the Commission could conduct negotiations and enter into agreements in the manner claimed, it brought to bear one clear principle in its judgments, that the traditional national ownership and control clauses of the bilateral agreements in question clearly eroded Articles 10 and 438 of the EC Treaty. It was the view of the Court that the clauses in question permitted the foreign party, i.e. the United States, to withdraw, suspend or limit operating licences or technical authorisation of an airline designated by the European States that were parties to the action if a substantial part of the ownership or effective control was not vested in that State or its nationals. These decisions may have far reaching consequences for the manner in which future competition laws and frameworks within the European Union may unfold. This article examines implications and possible scenarios in that context.