Provisional text

JUDGMENT OF THE COURT (Second Chamber)

15 May 2025 ( * )

( Reference for a preliminary ruling – Scheme for greenhouse gas emission allowance trading – Union Registry – Regulation (EU) No 389/2013 – Record of a surrender of such allowances in that registry – Finality of transactions – Article 40 – Reversal of finalised processes – Article 70 – Surrender under a provision of EU law subsequently invalidated by the Court of Justice – Impossibility, for the operator, to recover the allowances concerned for the period in question – Validity )

In Case C‑414/23,

REQUEST for a preliminary ruling under Article 267 TFEU from the Helsingin hallinto-oikeus (Administrative Court, Helsinki, Finland), made by decision of 30 June 2023, received at the Court on 6 July 2023, in the proceedings

Metsä Fibre Oy,

intervening parties:

Energiavirasto,

THE COURT (Second Chamber),

composed of K. Jürimäe, President of the Chamber, K. Lenaerts, President of the Court, acting as Judge of the Second Chamber, M. Gavalec, Z. Csehi (Rapporteur) and F. Schalin, Judges,

Advocate General: M. Campos Sánchez-Bordona,

Registrar: C. Strömholm, Administrator,

having regard to the written procedure and further to the hearing on 17 October 2024,

after considering the observations submitted on behalf of:

– Metsä Fibre Oy, by A.-S. Roubier and M. af Schultén, asianajajat, and J. Kauppinen, oikeustieteen maisteri,

– Energiavirasto, by N. Kankaanrinta and J. Pakkala, acting as Agents,

– the Finnish Government, by A. Laine and H. Leppo, acting as Agents,

– the European Commission, by B. De Meester, I. Söderlund and G. Wils, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 12 December 2024,

gives the following

Judgment

1 This request for a preliminary ruling concerns the validity and interpretation of Articles 40 and 70 of Commission Regulation (EU) No 389/2013 of 2 May 2013 establishing a Union Registry pursuant to Directive 2003/87/EC of the European Parliament and of the Council, Decisions No 280/2004/EC and No 406/2009/EC of the European Parliament and of the Council and repealing Commission Regulations (EU) No 920/2010 and No 1193/2011 (OJ 2013 L 122, p. 1), and the interpretation of Article 17 of the Charter of Fundamental Rights of the European Union (‘the Charter’).

2 The request has been made in an action brought by Metsä Fibre Oy against a decision of Energiavirasto (Energy Agency, Finland) concerning greenhouse gas emission allowances which that company had to surrender pursuant to the provisions of EU law concerning the emissions trading scheme existing within the European Union, which were subsequently declared invalid by the Court.

Legal context

Directive 2003/87/EC

3 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 (OJ 2003 L 275, p. 32), as amended by Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 (OJ 2009 L 140, p. 63) (‘Directive 2003/87’), established, in accordance with Article 1 thereof, a scheme for greenhouse gas emission allowance trading within the Community in order to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner.

4 Article 19 of that directive, headed ‘Registries’, provides:

‘1. Allowances issued from 1 January 2012 onwards shall be held in the Community registry for the execution of processes pertaining to the maintenance of the holding accounts opened in the Member State and the allocation, surrender and cancellation of allowances under the [European] Commission Regulation referred to in paragraph 3.

…

3. In order to implement this Directive, the Commission shall adopt a Regulation for a standardised and secured system of registries in the form of standardised electronic databases containing common data elements to track the issue, holding, transfer and cancellation of allowances, to provide for public access and confidentiality as appropriate and to ensure that there are no transfers which are incompatible with the obligations resulting from the Kyoto Protocol [to the United Nations Framework Convention on Climate Change, approved on behalf of the European Community, by Council Decision 2002/358/EC of 25 April 2002 (OJ 2002 L 130, p. 1) (“the Kyoto Protocol”)]. …’

Regulation No 3 89/2013

5 Regulation No 389/2013 was adopted on the basis of Article 19 of Directive 2003/87. Although it was repealed, with effect from 1 January 2021, by Commission Delegated Regulation (EU) 2019/1122 of 12 March 2019 supplementing Directive 2003/87/EC of the European Parliament and of the Council as regards the functioning of the Union Registry (OJ 2019 L 177, p. 3), it nevertheless remains applicable, in accordance with the second paragraph of Article 88 of that delegated regulation, until 1 January 2026, to (i) all operations required in relation to the trading period between 2013 and 2020, (ii) the second commitment period of the Kyoto Protocol and (iii) the compliance period defined in Article 3(30) of Regulation No 389/2013.

6 Recital 8 of Regulation No 389/2013 is worded as follows:

‘As allowances and Kyoto units exist only in dematerialised form and are fungible, the title to an allowance or Kyoto unit should be established by their existence in the account of the Union Registry in which they are held. Moreover, to reduce the risks associated with the reversal of transactions entered in a registry, and the consequent disruption to the system and to the market that such reversal may cause, it is necessary to ensure that allowances and Kyoto units are fully fungible. In particular, transactions cannot be reversed, revoked or unwound, other than as defined by the rules of the registry, after a moment set out by those rules. Nothing in this Regulation should prevent an account holder or a third party from exercising any right or claim resulting from the underlying transaction that they may have in law to recovery or restitution in respect of a transaction that has entered a system, such as in case of fraud or technical error, as long as this does not lead to the reversal, revocation or unwinding of the transaction. Furthermore, the acquisition of an allowance or Kyoto unit in good faith should be protected.’

7 Article 40 of that regulation, headed ‘Nature of allowances and finality of transactions’, provides, in paragraphs 3 and 4 thereof:

‘3. The fungibility of allowances and Kyoto units shall imply that any recovery or restitution obligations that may arise under national law in respect of an allowance or Kyoto unit shall only apply to the allowance or Kyoto unit in kind.

Subject to Article 70 and the reconciliation process provided for in Article 103, a transaction shall become final and irrevocable upon its finalisation pursuant to Article 104. Without prejudice to any provision of or remedy under national law that may result in a requirement or order to execute a new transaction in the Union Registry, no law, regulation, rule or practice on the setting aside of contracts or transactions shall lead to the unwinding in the registry of a transaction that has become final and irrevocable under this Regulation.

An account holder or a third party shall not be prevented from exercising any right or claim resulting from the underlying transaction that they may have in law, including to recovery, restitution or damages, in respect of a transaction that has become final in the Union Registry, for instance in case of fraud or technical error, as long as this does not lead to the reversal, revocation or unwinding of the transaction in the Union Registry.

4. A purchaser and holder of an allowance or Kyoto unit acting in good faith shall acquire title to an allowance or Kyoto unit free of any defects in the title of the transferor.’

8 Article 70 of that regulation, headed ‘Reversal of finalised processes initiated in error’, states, in paragraphs 1 and 2 thereof:

‘1. If an account holder or a national administrator acting on behalf of the account holder unintentionally or erroneously initiated one of the transactions referred to in paragraph 2, the account holder may propose to the administrator of its account to carry out a reversal of the completed transaction in a written request. The request shall be duly signed by the authorised representative or representatives of the account holder that are authorised to initiate the type of transaction to be reversed and shall be posted within five working days of the finalisation of the process. The request shall contain a statement indicating that the transaction was initiated erroneously or unintentionally.

2. Account holders may propose the reversal of the following transactions:

(a) surrender of allowances;

(b) deletion of allowances;

(c) exchange of international credits.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

9 Metsä Fibre operates a bioproduct mill in Äänekoski (Finland). Between 2013 and 2017, that undertaking surrendered greenhouse gas emission allowances which it had been allocated for that installation.

10 By judgment of 19 January 2017, Schaefer Kalk (C‑460/15, ‘the judgment in Schaefer Kalk ’, EU:C:2017:29), the Court declared invalid certain provisions of Commission Regulation (EU) No 601/2012 of 21 June 2012 on the monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council (OJ 2012 L 181, p. 30), which was in force from 2013 to 2018 and which systematically included carbon dioxide (CO2) transferred to another installation for the production of precipitated calcium carbonate in the emissions of a lime combustion installation, regardless of whether or not that carbon dioxide is released into the atmosphere.

11 By decision of 26 April 2022, the Energy Agency carried out a new assessment of the total amounts of CO2 emissions from the Äänekoski installation for the years 2013 to 2017. It considered, in the light of the judgment in Schaefer Kalk , that, for those years, Metsä Fibre had surrendered approximately 115 000 greenhouse gas emission allowances in excess to the Union Registry and authorised it to carry forward that excess to 2021. By contrast, that agency took the view that it was not possible to return a quantity equal to the excess allowances surrendered to that installation’s account, since the time frames set out by Regulation No 389/2013 for the reversal of an erroneously entered transaction in the Union Registry had expired. In addition, that decision states that that regulation does not provide for the option of transferring a positive compliance status of the compliance account to the account of another installation of Metsä Fibre.

12 According to Metsä Fibre, the correction thus made by the Energy Agency did not, however, draw all the appropriate inferences from the judgment in Schaefer Kalk in so far as it did not allow Metsä Fibre to dispose entirely of those excess greenhouse gas emission allowances. Since those allowances are not registered in the Union Registry, they in effect do not exist, with the result that Metsä Fibre could not sell them.

13 Metsä Fibre states that, following extensive investments made at its Äänekoski plant, it is almost CO2 neutral. Therefore, it would not practically be able to use the excess 115 000 greenhouse gas emission allowances available to it in the context of future surrendering of allowances. In that regard, the Energy Agency itself acknowledges that, with the current level of annual emissions from that installation, which is less than 20 tonnes of carbon dioxide, it would take approximately 6 000 to 7 000 years to use those 115 000 allowances.

14 It is in that context that Metsä Fibre sought the annulment of that decision before the Helsingin hallinto-oikeus (Administrative Court, Helsinki, Finland), which is the referring court. It submits that the abovementioned decision is contrary to primary EU law, in particular as a situation in which an operator cannot in effect use the corrected greenhouse gas emission allowances is in breach of the right to property and the principle of equality, and is, moreover, contrary to economic sense. Metsä Fibre deems itself, de facto, to be deprived of legal protection in so far as the rule of law resulting from the judgment in Schaefer Kalk is not applied to it.

15 In those circumstances, the Helsingin hallinto-oikeus (Administrative Court, Helsinki) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

‘(1) Are the provisions of Articles 70 and 40 of [Regulation No 389/2013] regarding the [time frames] for reversal of transactions and the final and irrevocable nature of transactions invalid when the right to property under Article 17 of the [Charter] and the other rights protected in [that Charter] are taken into account, in as much as the provisions at issue prevent the retransfer of the allowances to Metsä Fibre Oy in a situation where the surrender of excessive allowances to the Union Registry was based on the application of the provisions which were found in the [judgment in Schaefer Kalk ] to be invalid, and the company cannot use the positive compliance status of the compliance account because of the current low level of emissions from the Äänekoski installation?

(2) If Question 1 is answered in the negative, are the provisions of Articles 70 and 40 of [Regulation No 389/2013] at all applicable in a situation where the surrender of excessive allowances to the Union Registry [is] based on [the] application of the provisions which were found in the [judgment in Schaefer Kalk ] to be invalid and not on a transaction unintentionally or erroneously initiated by an account holder or a national administrator acting on behalf of the account holder?

(3) If Question 1 is answered in the negative and Question 2 is answered in the affirmative, is there any other way made possible by EU law to put Metsä Fibre Oy in the position, with respect to use of the allowances, in which it would have been if the provisions which were found in the [judgment in Schaefer Kalk ] to be invalid had not existed and the company had not surrendered excessive allowances on the basis of them?’

Consideration of the questions referred

The first question

16 By its first question, the referring court asks, in essence, whether the provisions of Articles 40 and 70 of Regulation No 389/2013 regarding the final and irrevocable nature of the transactions and the time frames for their reversal are valid in the light of the Charter.

17 The referring court thus starts from the premise that those provisions prevent the reversal of a surrender of greenhouse gas emission allowances to Metsä Fibre in a situation where, first, the surrender of those excessive allowances by that undertaking to the Union Registry was based on the application of the provisions of Regulation No 601/2012 declared invalid by the judgment in Schaefer Kalk and, second, that operator will not be able to use the 115 000 greenhouse gas emission allowances at its disposal because of the low level of emissions that the Äänekoski installation now produces.

18 While Articles 40 and 70 of Regulation No 389/2013 preclude drawing the appropriate inferences from the judgment in Schaefer Kalk with regard to Metsä Fibre, the referring court has doubts as to their validity in the light, inter alia, of the right to property guaranteed by Article 17 of the Charter.

19 In accordance with the second subparagraph of Article 40(3) of Regulation No 389/2013, a transaction carried out under the scheme for greenhouse gas emission allowance trading becomes final and irrevocable upon its finalisation in accordance with the conditions provided for in that regulation. That provision also states that, in principle, no law, regulation, rule or practice on the setting aside of contracts or transactions is to lead to the unwinding in the registry of a transaction that has become final and irrevocable under that regulation.

20 As is apparent from the second subparagraph of Article 40(3) of Regulation No 389/2013, that scheme is to be applied subject to the provisions of Article 70 of that regulation and without prejudice to any provision of or remedy under national law that may result in a requirement or order to execute a new transaction in the Union Registry.

21 In that regard, it follows from Article 70(1) of Regulation No 389/2013 that a transaction may be reversed once it has been initiated erroneously or unintentionally and provided that the account holder requests the reversal within five working days of the finalisation of the transaction.

22 Regulation No 389/2013 thus introduced a strict scheme for the reversal of transactions, which seeks to guarantee, as far as possible, their finality.

23 In particular, that scheme does not make it possible to rely on the declaration of invalidity of provisions of EU law governing the calculation of the emissions of an installation covered by the greenhouse gas emission allowance trading scheme in order to seek the reversal of a completed transaction, within the meaning of Article 70 of Regulation No 389/2013.

24 Furthermore, the situations provided for in Article 70(1) of Regulation No 389/2013 relate to errors made by the operators concerned and therefore relate to scenarios which are fundamentally different from the situation at issue in the main proceedings in which the illegality of a provision of EU law established ex post is relied upon. Accordingly, that provision cannot be applied by analogy in the present case. That is all the more so since such an application would require the strict time limits imposed by that provision to be disregarded.

25 Although the provisions of the second subparagraph of Article 40(3) and of Article 70(1) of Regulation No 389/2013 therefore preclude the judgment in Schaefer Kalk from being taken into account in order to initiate the reversal of the restitution of greenhouse gas emission allowances surrendered in excess in the account of the installation concerned, that fact cannot, however, lead to their invalidity in the light of an operator’s right to property in a situation such as that of Metsä Fibre, guaranteed by Article 17 of the Charter, since the third subparagraph of Article 40(3) of Regulation No 389/2013 makes it possible to ensure that, in any event, the application of those provisions does not impose a disproportionate burden on such an operator.

26 The third subparagraph of Article 40(3) of Regulation No 389/2013, read in conjunction with recital 8 of that regulation, states that an account holder or a third party is not prevented from exercising any right or claim resulting from the underlying transaction that they may have in law, including to recovery, to restitution or to damages, in respect of a transaction that has become final in the Union Registry, for instance in case of fraud or technical error, as long as this does not lead to the reversal, revocation or unwinding of the transaction in the Union Registry.

27 It is thus apparent that the third subparagraph of Article 40(3) expressly envisages the situation in which a transaction has become final in the Union Registry. In such a case, it is, in particular, for the account holder to exercise a right to recovery, to restitution or to damages, provided that that action does not lead to the reversal, revocation or unwinding of the transaction in that registry, the alternative nature of those three actions demonstrating their equivalence.

28 That option to seek recovery, restitution or damages, which the third subparagraph of Article 40(3) of Regulation No 389/2013 provides is available ‘for instance in case of fraud or technical error’, must, a fortiori, be available to the account holder that has correctly applied EU legislation subsequently invalidated by the Court. That is all the more so since, as is shown by the phrase ‘for instance’, the series of events referred to in that provision does not form an exhaustive list.

29 That provision thereby allows the account holder concerned to assert its right to redress for the damage caused by a transaction which, ex post , has proved to be excessive in the light of a judgment of the Court, but which, being final and irrevocable, can no longer be reversed. Since the transaction concerned has not been reversed in the Union Registry, the functioning of that registry is not to be called into question.

30 In that regard, the account holder concerned must be able to rely on its right to recovery, to restitution or to damages before a competent national authority, since the Member States are required to ensure compliance with the third subparagraph of Article 40(3) of Regulation No 389/2013, in particular by establishing, to that end, effective remedies.

31 In those circumstances, in accordance with the considerations set out in paragraphs 26 to 30 of the present judgment, an operator of an installation such as Metsä Fibre may assert the rights or claims referred to in the third subparagraph of Article 40(3) of Regulation No 389/2013, including the right to receive damages, so that it is placed, as regards the use of greenhouse gas emission allowances, in the same situation in which it would have been, had the provisions which were found in the judgment in Schaefer Kalk to be invalid not existed and had that operator not surrendered excessive allowances.

32 Although a request for such damages is subject to the terms and conditions normally applicable to requests of that nature, it should also be noted that, having regard to the fact that the Energy Agency has credited the accounts of other installations affected by the judgment in Schaefer Kalk with a number of greenhouse gas emission allowances equivalent to the number of emission allowances surrendered in excess for use in future allowance trading periods, damages based on the third subparagraph of Article 40(3) of Regulation No 389/2013 must, in principle, in a situation such as that in the main proceedings, result in the operator of the installation concerned being restored to a position which is materially equivalent in economic terms to that of the operators of the installations of which the accounts had been thus credited.

33 The operator of an installation which has modified its production process in order to reduce CO2 emissions and, thus, to comply with the objectives of the European Union to a greater extent as regards the protection of the environment is not to be disadvantaged by the fact that the low level of emissions now produced by that installation reduces its interest in being credited with emission allowances for use in future allowance trading periods.

34 It follows from all the foregoing considerations that Articles 40 and 70 of Regulation No 389/2013 do not preclude the effects caused by the application of provisions of EU law subsequently declared invalid by a judgment of the Court being effectively remedied.

35 In those circumstances, it must be held that consideration of the first question has disclosed no factor of such a kind as to affect the validity of the provisions of Articles 40 and 70 of Regulation No 389/2013 regarding the final and irrevocable nature of the transactions and the time frames for their reversal.

The second and third questions

36 In the light of the answer given to the first question, there is no need to answer the second and third questions.

Costs

37 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Second Chamber) hereby rules:

The examination of the first question referred has disclosed no factor of such a kind as to affect the validity of the provisions of Articles 40 and 70 of Commission Regulation (EU) No 389/2013 of 2 May 2013 establishing a Union Registry pursuant to Directive 2003/87/EC of the European Parliament and of the Council, Decisions No 280/2004/EC and No 406/2009/EC of the European Parliament and of the Council and repealing Commission Regulations (EU) No 920/2010 and No 1193/2011, regarding the final and irrevocable nature of the transactions and the time frames for their reversal.

[Signatures]

* Language of the case: Finnish.