The draft of the Commission Regulation establishing a Union Registry of emission allowances - practical consequences for jurisdictional decisions as regards an account’s location
Monday, 16 May 2011 07:00

 

Taking into account the division of powers and responsibilities between central and national administrators of the future Union Registry it could rise doubts whom to turn to with matters regarding specific cases within their practical functioning.


It follows from Annex I to the Regulation that the account administrator for operator holding account is a national administrator of the Member State “where installation is located”. For person holding account the account administrator is a national administrator that “has opened an account”. This crucial differentiation creates an area for possible choices as regards jurisdictional matters – mainly for the prospective holders of person holding accounts.

 

 

General points

 

The draft of the Commission Regulation establishing a Union Registry for the trading period commencing on 1 January 2013, and subsequent trading periods, of the Union emissions trading scheme pursuant to Directive 2003/87/EC of the European Parliament and of the Council and Decision 280/2004/EC of the European Parliament and of the Council and amending Regulations (EC) No 2216/2004 and (EU) No 920/2010 (hereinafter referred to as ‘Regulation’) struggles with some difficult legal problems of a precedent nature.

 

Among them is the one that originates in the fundamental structural change that will be in full effect from 2013, namely the substitution of multiple national registries with the single Union Registry. Furthermore, it follows from the newly published draft legal measure for the structure of the Union Registry that prospective account holders will enjoy some degree of discretion relating to the jurisdictional matters. Beneath there is an attempt to establish what would be the practical consequences for their choices.

 

The general point is that the entity responsible for operation and maintaining the Union Registry will be the Central Administrator, each Member State will designate, however, a national administrator and access and manage its own accounts and the accounts in the Union Registry under its jurisdiction through its national administrator.

 

It is interesting to see, how the Regulation resolves manifold organisational and legal troubles flowing from this crucial modification. I seems that the new provisions should build on experience gained, as regards jurisdictional issues, in the occurrence of recent thefts of allowances from registries. It should be reminded that jurisdictional questions were pivotal for deciding on some important legal questions, mainly on the  ownership of the stolen allowances.

 

It would be useful to note that under the new Union Registry provisions there are envisioned different types of accounts with differentiated legal status. Further remarks will deal with the most commonly used types of accounts i.e. the operator holding account and the person holding account (trading account, aircraft operator holding accounts, national holding accounts, EU accounts, external platform and verifier accounts excepting).

 

As regards jurisdictional matters the crucial differentiation between operator holding account and person holding account follows from Annex I to the Regulation which stipulates that the account administrator for operator holding account is a national administrator of the Member State ‘where installation is located. For person holding account the account administrator is, however, a national administrator that ‘has opened an account’. It could be inferred from the above that – contrary to the operator holding account (which is covered by the jurisdiction binding on the territory, where an installation is located, and may only sell or divest of its operator holding account together with the installation linked to the operator holding account  (Article 23(5)) – the prospective holder of a person holding account, having no installation, can choose in which Member States he would like to open an account (with some exceptions, however – see further remarks). The said Annex I to the Regulation determines also the question that the competent administrator for operator as well as person holding account is national – and not the central – administrator.

 

For the prospective holders of person holding accounts there was created, however, in such a manner an area for possible choices according to the criteria for most advantageous for the specific carbon market participant legal regime. It isn’t the purpose of the present remarks at this stage to evaluate these regimes from the point of view of the said benefits but to examine some features and the potential scope for the freedom to choose the jurisdiction for the emission account location.

 



 

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