Worth the Wait? Energy Solidarity before the Court of Justice in Case C-848/19 P – Germany v Poland

On Thursday, 15 July 2021, the Court of Justice of the European Union delivered its much-awaited judgment in Case C-848/19 P – Germany v Poland. This case was important because the Court was called upon to decide whether the principle of energy solidarity would retain the status of a justiciable principle of EU primary law the General Court had declared it to possess in a September 2019 judgment. A second open question in advance of the judgment was how expansive an energy solidarity obligation the Court of Justice would endorse, and whether it would provide more specifics as to the content of that principle, thus going beyond the rather broad definitions that were put forward by the General Court and by Advocate General (AG) Campos Sánchez-Bordona in his March 2021 Opinion. In a recent FSR podcast, Kim Talus (Universities of Tulane, Eastern Finland and Helsinki); Dirk Buschle (Energy Community Secretariat; College of Europe); and Leigh Hancher (FSR) speak to Max Münchmeyer (European University Institute) about the ruling and discuss the implications of this landmark judgment. This blog aims to briefly set the scene and to highlight some of the most important aspects of the decision.

The Development of the Case

The facts of the case have been summed up in greater detail elsewhere in the context of the General Court judgment and the AG’s Opinion (for example here and here), so that a brief summary will suffice. The case concerns a dispute about capacity allocation in the OPAL natural gas pipeline, which connects with the Nord Stream 2 pipeline at Greifswald in Northern Germany and carries Russian gas through Eastern Germany to the German-Czech border.

In 2016, the Commission approved (subject to amendments) a decision by the German Federal Network Agency (Bundesnetzagentur) which modified the conditions of the exemption from third-party access rules that had been granted to OPAL in a way that would allow Gazprom to expand its use of the OPAL pipeline far beyond the 50% capacity it had been allowed to use under the previous exemption. Poland brought a case before the Court, alleging that the Commission's decision compromised both Polish and European energy security. According to Poland, this would, inter alia, violate article 194(1) TFEU, which states that the aims of the European Union's energy policy (which explicitly include ensuring the security of supply). shall be pursued in a "spirit of solidarity between Member States".

This solidarity provision, which was introduced by the Treaty of Lisbon as part of the first dedicated article allocating (shared) energy competence to the EU, previously had been widely considered a more political guideline with no legal force of its own. However, in a surprising ruling in September 2019, the General Court disagreed, stating that the principle of energy solidarity was justiciable and that the Commission, by failing to take into account Polish energy security concerns when considering the change to the OPAL exemption, had violated that principle and was thus in breach of Union law. This ruling was appealed by Germany. Among the grounds of appeal was the claim that the concept of solidarity was too abstract a notion and was never meant to have legal effect of its own. The AG in his Opinion, however, endorsed the General Court’s assessment of energy solidarity as a justiciable principle that “entails rights and obligations both for the European Union and for the Member States” (paragraph 70 of the General Court judgment). The following section highlights some of the most important ways in which the Court of Justice engaged with the interpretation of solidarity put forward by the General Court and the AG.

Energy Solidarity Before the Court of Justice

The Court of Justice dismissed all grounds of appeal and upheld the 2019 General Court judgment. This blog focuses on three especially noteworthy aspects of the ruling.

First, it seems that the Court of Justice followed the AG’s Opinion quite closely. In particular, it endorsed the reasoning that solidarity in article 194 is “a specific expression, in the field of energy, of the principle of solidarity, which is itself one of the fundamental principles of EU law” (paragraph 38). It also emphasised, to a greater degree than had been done by the AG, the link between the principle of solidarity and that of sincere cooperation as per article 4(3) TEU (paragraph 41). In fact, the Court of Justice stated that the obligation on the Commission to conduct a security of supply assessment as part of the exemption granting process arises from the principle of energy solidarity “read in conjunction with the principle of sincere cooperation” (paragraph 52, emphasis added).

Secondly, the Court also endorsed the AG’s reliance on precedent of the justiciability of solidarity in the area of immigration, asylum and border control, laid down in article 80 TFEU, as sufficient to counter Germany’s argument that the abstract nature of solidarity does not allow its direct applicability as a principle of EU primary law (paragraph 42). The Court thus concludes that “there is nothing that would permit the inference that the principle of solidarity referred to in Article 194(1) TFEU cannot, as such, produce binding legal effects on the Member States and institutions of the European Union” (paragraph 43).

As anticipated in paragraph 43, the Court of Justice thus followed the General Court’s and the AG’s interpretation that while the TFEU speaks only of a “spirit of solidarity between Member States”, the solidarity obligation in fact has both a horizontal (between Member States) and a vertical (between Member States and the Union) dimension. Given the facts of the case, the Court focused especially on the latter, confirming “that acts adopted by the EU institutions, including by the Commission under that policy, must be interpreted, and their legality assessed, in the light of the principle of energy solidarity” (paragraph 44). However, the Court also endorsed the General Court’s broader finding that “the principle of solidarity entails rights and obligations both for the European Union and for the Member States, the European Union being bound by an obligation of solidarity towards the Member States and the Member States being bound by an obligation of solidarity between themselves and with regard to the common interest of the European Union and the policies pursued by it” (paragraph 49).

A third notable aspect of the judgment is that the Court quite unequivocally states that, beyond the energy security context of the case at hand, energy solidarity applies to all objectives of EU energy policy enumerated in article 194(1), which include the functioning of the energy market, the promotion of energy efficiency and renewable energy, and the interconnection of energy networks. On this matter, the Court states that solidarity is “the thread that brings [these objectives] together and gives them coherence” (paragraph 43). It is unclear whether this interesting phrasing could be read to mean that the principle of solidarity does not just apply within the policy areas listed in article 194(1) TFEU but could also be applied as a means to moderate and manage trade-offs between them.

Looking Ahead

This is undoubtedly a landmark decision, and the Court seems to accept the most expansive version of energy solidarity possible when reading the General Court ruling in conjunction with the AG Opinion: the Court of Justice recognised both the horizonal and vertical dimensions of the principle of energy solidarity emphasised in the General Court judgement and further affirmed the importance of the principle of energy solidarity for all dimensions of EU energy policy. This very expansiveness is sure to lead to further solidarity litigation before the CJEU. Particularly interesting here will be the application of the energy solidarity principle to other areas of EU energy policy, matters that are more closely related to the core of the von der Leyen Commission’s European Green Deal priority. Questions such as what Member State solidarity with the EU’s commitment to become the first climate-neutral continent by 2050 might look like, and whether and how this principle might change the EU’s commitment to accomplish this ambitious decarbonisation effort in a “just” manner, could conceivably find their way before the Court.

Following the September 2019 General Court ruling, the European Commission introduced a new solidarity section in its exemption decisions (see, for example the Commission’s exemption decision regarding the Alexandroupolis LNG Terminal or the Resia electricity interconnector between Italy and Austria). These solidarity assessments have been relatively brief and formulaic, focusing on whether there has been sufficient stakeholder consultation (including other Member States) conducted by the national exemption-granting authorities. It will be interesting to observe whether the Commission will see the need to adjust its solidairty assessment in light of the Court of Justice ruling, and indeed whether its methodology can and will be challenged legally or politically in the future.

Given the Court of Justice’s emphasis on the principle of sincere cooperation as a foundation for energy solidarity, its forthcoming judgment in Case C-121/21 R Czech Republic v Poland might offer an opportunity for the Court to apply and potentially further substantiate the principle of energy solidarity. In this case, the Czech Republic claims, inter alia, that a breach of article 4(3) TEU has taken place through Poland’s alleged failure to fulfil its EU environmental impact assessment and consultation obligations for the continuation of lignite mining near the Polish-Czech border.

In an expert panel hosted by the FSR on 20 May 2021 to discuss the AG’s Opinion, some speakers already expressed grave concerns about the broad and open-ended version of energy solidarity endorsed by the AG, both regarding the more immediate implications for the OPAL pipeline and for EU energy policy more generally. The Court of Justice’s 15 July ruling is unlikely to have assuaged these apprehensions, opening the door for much future debate on the development and influence of the energy solidarity principle. This podcast commentary will be among the first of many such discussions.

 

 

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