In order to implement the Kyoto Protocol, the EC adopted Directive 2003/87/EC. That Directive was in turn implemented in France by ordinance of April 15th 2004 and decree n° 2004-832 of August 19th 2004.
Arcelor and the other plaintiffs requested the President, the Prime Minister and other competent ministers to repeal the decree n° 2004-832 of August 19th 2004. They received no response and so they brought an action before the Conseil d'Etat to annul the implicit rejection of their request. They alleged that decree n° 2004-832 of August 19th 2004 was illegal because it applied to steel producers and infringed the principles of the right to property and to trade freely and the principle of equality guaranteed by the French Constitution.
The Conseil d'Etat noted that decree n° 2004-832 of August 19th 2004 applied to steel producers because that is exactly what was required by Directive 2003/87/EC. Thus, if it declared decree n° 2004-832 of August 19th 2004 to be unconstitutional, it would in effect be declaring invalid a measure adopted by an EC institution. But it did not have jurisdiction to do that.
The Conseil d'Etat found that the right to property and to trade freely as well as the principle of non-dsicrimination were general principles upheld by EC law in the same way as they were protected by the French Constitution. Therefore, in order to give full effect to the supremacy of EC law, the Conseil d'Etat decided to refer a question to the Court of Justice under Article 234 EC on the validity of Directive 2003/87/EC.
The Conseil d'Etat made a press release that explains the importance of this judgment available here.
That marks a significant departure from the Conseil d'Etat's previous practice: Previously, it would simply have ruled on the constitutionality of the French decree without worrying whether the decree was a measure implementing a superior rule of EC law.
Those who consider that direct actions for annulment before the Court of First Instance represent a superior way of protecting individual rights would do well to note that Arcelor did bring an action to annul Directive 2003/87/EC. But that action, Case T-16/04 Arcelor has been pending before the Court of First Instance for over three years.
For a previous post on emissions trading, see here.