II - 211Case T-16/04
Arcelor SA
v
European Parliament and  
Council of the European Union
(Environment — Directive 2003/87/EC — Scheme for greenhouse gas emission 
allowance trading — Action for annulment — Lack of direct and individual 
concern — Action for damages — Admissibility — Sufficiently serious breach of a 
higher-ranking rule of law conferring rights on individuals — Right to property — 
Freedom to pursue a trade or profession — Proportionality — Equal treatment — 
Freedom of establishment — Legal certainty)
Judgment of the General Court (Third Chamber), 2 March 2010   .   .   .   .   .   . II - 220
Summary of the Judgment
1. Actions for annulment — Natural or legal persons — Measures of direct and individual 
concern to them — Legislative measure — Directive
(
Arts 230, fourth para., EC and 249, third para., EC)
SUMMARY — CASE T-16/04
II - 2122. Actions for annulment — Natural or legal persons — Measures of direct and individual 
concern to them — Directive 2003/87 — Scheme for greenhouse gas emission allowance 
t
rading
(
Arts 174 EC, 175(1), EC and 230, fourth para., EC; Directive 2003/87 of the European 
Parliament and of the Council, Annex I)
3. Procedure — Application initiating proceedings — Formal requirements — Identification 
of the subject-matter of the dispute — Brief summary of the pleas in law on which the ap -
pl
ication is based
(Statute of the Court of Justice, Arts 21, first para., and 53, first para.; Rules of Procedure of 
the General Court, Art. 44(1)(c))
4. Non-contractual liability — Conditions — Unlawfulness — Sufficiently serious breach of 
Community law
(
Arts 174 EC, 175 EC and  288, second para., EC; Directive 2003/87 of the European 
Parliament and of the Council)
5. Freedom of movement for persons — Freedom of establishment — Provisions of the Treaty
(Arts 3(1)(c), EC, 43 EC, 174 EC, 175 EC and 249, third para., EC; Directive 2003/87 of the 
European Parliament and of the Council)
6. Environment — Atmospheric pollution — Directive 2003/87 — Scheme for greenhouse gas 
emission allowance trading
(
Arts 5, second para., EC, 10 EC, 174 EC to 176 EC and 249, third para., EC; Directive 
2003/87 of the European Parliament and of the Council, Arts 9(1) and 11(1))
7. Community law — Principles — Fundamental rights
(Directive 2003/87 of the European Parliament and of the Council, Arts 9(1) and 11(1))
8. Environment — Atmospheric pollution — Directive 2003/87 — Scheme for greenhouse gas 
emission allowance trading
(
Arts 43 EC and 174 EC; Directive 2003/87 of the European Parliament and of the Council, 
Arts 3(a) and 12(2) and (3))
9. Environment — Atmospheric pollution — Directive 2003/87 — Scheme for greenhouse gas 
emission allowance trading
(
Art. 174 EC; Directive 2003/87 of the European Parliament and of the Council, Arts 9(1) 
and (3), and 11(1), and Annex III; Council Decision 2002/358)
10. Community law — Principles — Legal certainty
(Arts 2 EC and 3(1)(c) and (g)) EC; Directive 2003/87 of the European Parliament and of the Council, Art. 1)
ARCELOR v PARLIAMENT AND COUNCIL
II - 2131 . The mere fact that the fourth paragraph 
of Article  230 EC does not expressly 
r
ecognise the admissibility of actions 
brought by private persons for annul -
men
t of a directive within the meaning 
of the third paragraph of Article 249 EC 
is not of itself sufficient to render such 
actions inadmissible  . The Community 
institutions cannot, merely by means of t
heir choice of legal instrument, deprive 
individuals of the judicial protection which is afforded to them by the Treaty, 
 
even if that legal instrument is a dir -
ective  .  Similarly, the mere fact that the 
contested provisions form part of a meas -
ur
e of general application which consti -
tutes a real directive and not a  decision, 
within the meaning of the fourth para -
g
raph of Article 249 EC, taken in the form 
of a directive is not of itself sufficient to exclude the possibility that those provi -
sions ma
y be of direct and individual 
concern to an applicant  .
(see para  . 94)
2 . Although it is true that, when adopting a 
measure of general application, the Com -
m
unity institutions are required to re -
spect higher-ranking rules of law, includ -
ing 
fundamental rights, the claim that 
such a measure infringes those rules or 
rights is not sufficient in itself to establish 
that the action brought by an individual is admissible, without running the risk of 
rendering the requirements of the fourth 
paragraph of Article 230 EC meaningless, as long as that alleged infringement does not distinguish the applicant individually 
just as in the case of the addressee of a 
measure
 .In that regard, there is no express or specific provision which is either high-
er-ranking or of secondary legislation 
which would have required the Com -
m
unity legislature, when adopting 
 Directive 2003/87, establishing a scheme for greenhouse gas emission allowance trading w
ithin the Community, to take 
any particular account of the situation of pig iron and steel producers vis-à-vis the situation of operators in the other indus
-
tr
ial sectors referred to in Annex I to that 
directive  . Thus, Article 174 EC and Art -
icle 175(1) EC in particular, as legal bases for the regulatory activity of the Com
-
m
unity on environmental issues, do not 
provide for such an obligation  .
In addition, a steel producer cannot be regarded as being individually concerned 
by the provisions of Directive 2003/87
 .
(see paras 102, 103, 105)
3 . An application seeking compensation for 
damage caused by a Community institu -
tion m
ust state the evidence from which 
the conduct which the applicant alleges 
against the institution can be identified, the reasons why the applicant considers 
that there is a causal link between the 
SUMMARY — CASE T-16/04
II - 214conduct and the damage it claims to have 
suffered, and the nature and extent of 
that damage  .
However, although, in the light of the 
circumstances at the time when the ap-
plication was lodged for compensation as 
a result of the alleged unlawful conduct of the Parliament and the Council in 
adopting Directive 2003/87, establishing 
a scheme for greenhouse gas emission al -
lowance trading within the Community, 
that harm could not fail to have a future 
element since the contested directive was still in the process of being transposed into the national legal systems and al -
though, in the light of the scope of the Member States with regard to the im-plementation of the allowance trading 
scheme in their territories by means of 
their national allocation plans, the ap -
plicant was unable to specify the exact 
extent of that future harm at the time 
at which it brought its action, it was not essential to specify in the application, 
as a condition of admissibility, the exact 
extent of the harm suffered, and even less to specify the amount of compen -
sation sought since that is possible, in any event, up to the reply stage, on the condition that the applicant pleads such 
circumstances and provides the informa -
tion whic
h makes it possible to assess the 
nature and extent of the harm suffered, 
thereby enabling the defendant to defend 
itself  .
(see paras 132, 135)4 . As regards the non-contractual liability 
of the Community as a result of the adop -
tion of Dir
ective 2003/87, establishing a 
scheme for greenhouse gas emission al -
lowance trading within the Community, 
a possible sufficiently serious breach of 
the rules of law which confer rights on 
individuals must be based on a manifest and serious failure to have regard for the 
limits of the broad discretion enjoyed 
by the Community legislature when ex -
ercising its powers on environmental is -
sues under Articles 174 EC and 175 EC  . 
Exercise of that discretionary power, on t
he one hand, implies the need for the 
Community legislature to anticipate and evaluate ecological, scientific, technical and economic changes of a complex and 
uncertain nature and, on the other, the 
balancing and arbitration by that legisla
-
t
ure of the various objectives, principles 
and interests set out in Article 174 EC  . In 
the contested directive, that is reflected in t
he establishment of a series of objec -
tive
s and sub-objectives which are in part 
contradictory  .
(see paras 141, 143)
5 . The Community institutions must re -
spect, in the same way as the Member 
States, the fundamental freedoms, such 
as the freedom of establishment, which serve to achieve one of the essential ob-
jectives of the Community, namely the 
completion of the internal market pro -
vided for in Article 3(1)(c) EC  .
ARCELOR v PARLIAMENT AND COUNCIL
II - 215However, it does not follow from that 
general obligation that the Community 
legislature is required to regulate the area 
at issue in such a way that the Commu -
nity legislation, particularly where that 
legislation takes the form of a directive 
within the meaning of the third para -
graph of Article 249 EC, must provide an 
exhaustive and definitive solution to cer -
tain problems raised from the perspec -
tive of completing the internal market or 
effect a complete harmonisation of na -
tional le
gislation in order to exclude any 
conceivable barriers to intra-Community trade
 . Where the Community legislature 
is called on to restructure or establish a c
omplex scheme, such as the allowance  
trading scheme, put in place by Dir -
ective 2003/87 establishing a scheme for greenhouse gas emission allowance trad
-
ing within the Community it is entitled to have recourse to a step-by-step approach, and to carry out only a progressive har -
monisation of the national legislation at issue, as the implementation of such measures is generally difficult inasmuch  
as it supposes, on the part of the compe -
tent Community institutions, the elab -
oration, by means of diverse and complex national provisions, of common rules 
consistent with the objectives defined 
by the Treaty and receiving the approval of a qualified majority of the members 
of the Council
 . That is also the case for 
Community legislation in the area of the 
pr
otection of the environment under 
 Articles 174 EC and 175 EC  .
(see paras 177, 178)6 . Under the third paragraph of Art -
icle  249  EC, a directive is binding  
up
on each Member State to which it 
is addressed only as to the result to be achieved, but leaves to the national au -
thorities the choice of form and methods, 
which logically implies that the Member 
States are left with the necessary discre -
tion to define transposition measures  . 
In addition, pursuant to the principle of sub
sidiarity laid down in the second 
paragraph of Article 5 EC to which refers recital 30 of Directive 2003/87, establish
-
ing a s
cheme for greenhouse gas emis -
sion allowance trading within the Com -
munity, the Community is to take action only if and in so far as the objectives of 
the proposed action cannot be sufficient -
ly ac
hieved by the Member States and 
can therefore, by reason of the scale or 
effects of the proposed action, be better 
achieved at Community level  . It is appar -
ent from Articles 174 EC to 176 EC that, in the area of protection of the environ -
men
t, the Community and the Member 
States have shared competence  . There -
fore, the Community rules do not seek to effect complete harmonisation in that 
area and Article 176 EC allows the Mem -
ber States to introduce more stringent 
protective measures, subject only to the 
conditions that they should be compat -
ible w
ith the Treaty and that they should 
be notified to the Commission  .
In accordance with those principles, Directive 2003/87 does not provide for 
complete harmonisation at Community 
SUMMARY — CASE T-16/04
II - 216level of the conditions underlying the 
establishment and functioning of the al -
lowance trading scheme  . Provided that 
they respect the rules of the Treaty, the M
ember States enjoy broad discretion 
regarding the implementation of that scheme, in particular in the context of the elaboration of their national alloca
-
tion plans and their independent deci-
sions on emi
ssion allowance allocation 
under Article  9(1) and Article  11(1) of 
that directive  . Consequently, the mere 
fact that the Community legislature left 
op
en a particular question falling within 
the scope of the contested directive and of a fundamental freedom, such as the freedom of establishment, in such a way 
that it is the task of the Member States to 
regulate that issue in the exercise of their discretion, albeit in accordance with the 
higher-ranking rules of Community law, 
does not in itself justify that omission being classified as being contrary to the rules of the Treaty
 . That is made all the 
more evident by the fact that the Mem -
b
er States are required, pursuant to their 
duty of genuine cooperation under Art -
icle 10 EC, to ensure the effectiveness of directives, which also implies that they 
are required to interpret national law in 
the light of the objectives and principles underlying the directive at issue
 .
(see paras 179, 180)
7 . Both the Community legislature, when 
adopting a directive, and the Member S
tates, when transposing that directive 
into national law, are required to ensure  
that the general principles of Commu -
nity law are respected  . Thus, it is apparent 
from settled case-law that the require -
men
ts flowing from the protection of 
the general principles recognised in the Community legal order, which include fundamental rights, are also binding on 
Member States when they implement 
Community rules, and consequently they are bound, as far as possible, to apply the  
rules in accordance with those require -
ments  . Those principles apply by ana -
logy to the fundamental freedoms of the Treaty
 .
In that regard, although Directive 2003/87, establishing a scheme for green -
house gas emission allowance trading within the Community, and in particular Articles 9(1) and 11(1) thereof, grants the  
Member States discretion and, in prin -
ciple, that discretion is broad enough to  
enable them to apply the rules of that dir -
ective in conformity with the require -
men
ts resulting from the protection of 
the fundamental rights and fundamental freedoms under the Treaty
 . In addition, 
since the implementation of that directive i
s subject to review by the national courts, 
it is incumbent upon those courts, if they encounter difficulties relating to the in
-
t
erpretation or validity of the directive, to 
refer a question to the Court of Justice for a preliminary ruling in the circumstances set out in Article  234  EC
 . Consequent -
ly, the authorities and the courts in the 
Member States must not only interpret 
their national law in a manner consistent 
ARCELOR v PARLIAMENT AND COUNCIL
II - 217with the contested directive but also en -
sure that they do not rely on an inter -
pretation of the latter which would be 
in conflict with the fundamental rights protected by the Community legal order, 
with the other general principles of Com -
munity law or with the fundamental free-
doms of t
he Treaty, such as the freedom 
of establishment  . The Community legis -
lature cannot be accused of having failed to resolve in an exhaustive and definitive  
manner, within the framework of a dir -
ective, a problem coming within the 
scope of the freedom of establishment, 
where that directive grants the Member 
States a discretion which enables them fully to respect the rules of the Treaty and 
the general principles of Community law
 .
(see paras 181-184)
8 . In the absence of the free cross-border 
transfer of emission allowances for 
g
reenhouse gas within the meaning of 
Article 12(2) and (3), read in conjunction with Article  3(a) of Directive 2003/87, establishing a scheme for greenhouse gas 
emission allowance trading within the 
Community, the efficiency and perfor
-
manc
e of the allowance trading scheme 
for the purposes of Article  1 of that 
 directive would be seriously disrupted  . 
It is for that reason that Article 12(2) of t
hat directive imposes on the Member 
States the general obligation to ensure that that freedom is made effective in the relevant national legislation
 . Conversely, 
that directive does not provide for any r
estriction on cross-border transfers of allow
ances between legal persons within 
the same group of companies, irrespec -
tive of where their registered office and/or principal place of business are lo-
cated within the internal market  . In the  
lig
ht of the aforecited provisions of 
 Directive 2003/87, it cannot therefore be concluded that that directive contains an unl
awful restriction on the funda -
men
tal freedoms of the Treaty, including 
the freedom of establishment, or that it encourages the Member States not to 
respect those freedoms
 . A fortiori, the 
Comm
unity legislature cannot be held 
responsible for having failed in that re -
sp
ect, in a manifest and grave manner, to 
have regard to the limits of its discretion under Article 174 EC in conjunction with 
Article 43 EC
 .
(see paras 188, 190)
9 . Directive 2003/87, establishing a scheme 
for greenhouse gas emission allowance 
trading w
ithin the Community, does 
not contain any provisions governing the extent of the financial consequences which may result from both a possible 
insufficiency of allowances allocated to 
an installation and the price of those al
-
low
ances, since that price is determined 
exclusively by the market forces which came into being following the establish -
men
t of the allowance trading scheme, 
which, pursuant to Article  1 of that 
 directive, seeks to promote reductions of greenhouse gas emissions in a cost-eff
ective and economically efficient man
-
ner . Regulation at Community level of 
the prices of allowances might thwart the 
SUMMARY — CASE T-16/04
II - 218main objective of that directive, which 
is to reduce greenhouse gas emissions 
through an efficient allowance trading 
scheme in which the cost of emissions and investments made to reduce such 
emissions is essentially determined by 
market forces (recital 5 in the preamble to that directive)
 . Consequently, in the 
event of an insufficiency of allowances, t
he incentive for operators to reduce, 
or not to reduce, their greenhouse gas emissions will depend on a complex eco
-
nomic de
cision taken in the light, first, of 
the price of emission allowances available on the exchange market and, second, of the costs of possible measures to reduce 
emissions which may aim either to re -
duce production or to invest in more ef -
fic
ient methods of production in terms 
of energy output (recital 20 of the same directive)
 .
In such a scheme, the increase in the cost 
of emissions and, consequently, in the 
price of allowances, which depends on 
a series of economic parameters, cannot be regulated in advance by the Commu -
nity legislature without reducing, or even completely removing, the economic in-centives which constitute its very basis 
and thereby adversely affecting the effec -
tiveness of the allowance trading scheme  . 
In addition, the establishment of such a 
s
cheme, including its economic prem -
i
ses, in order to comply with the obliga -
tions resulting from the Kyoto Protocol, comes within the broad discretion grant -
ed to the Community legislature under Article 174 EC and constitutes, in itself, a legitimate and appropriate choice  . It is 
on the basis of that legitimate choice that t
he Community legislature based the al -
low
ance trading scheme on the premise 
that, under Article 9(1) and Article 11(1) of Directive 2003/87, it is the task of the 
Member States to decide, on the basis of 
their national allocation plans (NAP) and in the exercise of the discretion granted 
to them in that regard, on the total quan -
tity of allow
ances to be allocated and the 
individual allocation of those allowances 
to the installations established in their 
territory  . That decision is subject only 
to a restricted initial review by the Com -
mi
ssion, pursuant to Article 9(3) of that 
same directive, particularly in the light of 
the criteria set out in Annex III thereto  . 
Therefore, the variations to which the obj
ectives and emission reduction meas -
ur
es of the various Member States will 
be subject, which are the result of their obligations under the Kyoto Protocol, as 
reflected in the burden sharing agree -
ment laid down in Decision 2002/358, 
concerning the approval, on behalf of the 
European Community, of the Kyoto Pro -
tocol to the United Nations Framework 
Convention on Climate Change and the joint fulfilment of commitments there -
under, and, consequently, the uncertainty regarding the total quantity and the indi-vidual quantities of allowances to be al-
located to the different industrial sectors 
and to operators on the basis of the vari -
ou
s NAPs, cannot be attributed to the 
provisions of the directive as such  .
(see paras 199-202)
ARCELOR v PARLIAMENT AND COUNCIL
II - 21910 . The fact that it is not possible to predict 
how the exchange market will develop 
c
onstitutes an element which is inher -
en
t and inseparable from the economic 
mechanism characterising the allowance trading scheme, put in place by Directive 
2003/87 establishing a scheme for green-
hou
se gas emission allowance trading 
with the Community, which is subject to the classic rules of supply and demand, 
characteristic of a free and competitive market, in accordance with the prin
-
ciples laid down in Article 1 of, in con -
junc
tion with recital 7 in the preamble to,  
that directive and Articles  2  EC and 3(1) (c) and  (g)  EC  . That aspect cannot 
therefore be categorised as being con -
trar
y to the principle of legal certainty 
without calling into question the very economic bases of the allowance trading scheme as set out in the contested direc -
tive in a manner c
onsistent with the rules 
of the Treaty  .
(see para  . 203)