A Luxembourg court has ruled against Norwegian in its case against Norway's Ministry of Climate and Environment, over the settlement of an administrative penalty of NOK399,685,275 kroner (USD37.4 million) for failing to pay climate change charges.
The European Free Trade Association (EFTA) court ruled that the penalty may not be settled via a dividend during insolvency restructuring proceedings. The court ruled on a question referred to it by the Oslo District Court (Oslo ingress) regarding European Union directive (2003/87/EC) which pertains to the payment of greenhouse gas emission fees.
Norwegian had offered to settle the obligation via a dividend as part of a compulsory debt settlement concerning its restructuring. Still, the Norwegian Environment Agency (NEA) rejected this, insisting that the settlement fully cover the total emissions for 2020. Norwegian was challenging this.
The referring court asked the EFTA Court whether EU legislation allows national legislation to permit settling the obligation to surrender emissions allowances through a dividend in a mandatory debt settlement during an insolvent company's restructuring.
In its ruling, the EFTA Court emphasised that the EU directive's purpose is to strictly regulate greenhouse gas emissions through accurate accounting and the mandatory surrendering of allowances equal to emissions. As a result, the court concluded that Article 12(2a) of the directive prohibits national legislation from allowing the settlement of the surrender obligation via a dividend in insolvency proceedings.
As reported by ch-aviation, the infringement fee is deemed so high that payment could negatively affect Norwegian's business operations.
ch-aviation has reached out to Norwegian for comment.
The airline had argued that it could not meet its emissions quota during restructuring due to uncertainty about its survival. It cited that Irish authorities did not impose a fee on Norwegian's now-defunct Irish subsidiary, Norwegian Air International. It claimed that paying the full quota could have led to criminal liability and that all claims during reconstruction, including environmental ones, were settled at 5% of the owed amount. The airline has allocated NOK15 million (USD1.4 million) for the fee in its budget.
The EFTA Court is a supra-national judicial body responsible for the three EFTA members who are also members of the European Economic Area (EEA): Iceland, Liechtenstein and Norway.
