From the formulation “purchaser and holder of an allowance or Kyoto unit” which contains a conjunction “and” also flows a less contentious conclusion that the both constituents must be present: “purchase” of emission allowances as well as the “possession” thereof.


The DCFR, however makes a reservation that where the transferee is already in possession of the goods, good faith acquisition will take place only if the transferee obtained possession from the transferor. There may arise doubts whether such reservation should also apply to the interpretation of the Article 37(4) of the Regulation).


Another interesting provision of the DCFR is that good faith acquisition does not take place with regard to stolen goods, unless the transferee acquired the goods from a transferor acting in the ordinary course of business. As in previous instances the question arises as to the applicability of such formulated rule to the interpretation of the Article 37(4) of the Regulation. It seems, however, that the Regulation, in the interest of the efficient functioning of the EU ETS and the certainty of the emission rights circulation should not be interpreted as imposing such a additional requirement.


Other features of emission allowances’ character determined by Article 37 of the Regulation (dematerialisation, fungibility) are of equal importance and they deserve a separate analysis.

The Regulation, furthermore, applied a proper solution determining in recital 12 in the preamble of the Regulation that the said legal measure  doesn’t 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, e.g. in case of fraud or technical error, as long as this does not lead to the reversal, revocation or unwinding of the transaction. In such a way the disputes of a civil law character have been allocated not impairing the integrity of legal titles to emission allowances held in the accounts in the registry.


The said modifications in the legal regime for the functioning of emission allowances registries could have a great impact on the spot market liquidity. The risk of legal title to allowances acquired and held in the acquirer account in the registry to become questionable has been in this way significantly reduced (and to some extent even eliminated).


Apart from that the practical effects of the described fundamental changes can be the increased integrity of the emission registry and thus the entire EU ETS as well as the reduction of risk of disputes regarding legal title to emission allowances transferred into the buyer account. Finally, the amendments at issue also lessen the role of initiatives taken up lately by some of the spot emission trading venues, consisting in verification by the trading venue of the whole chain of legal titles to emission allowances back to the initial allocation. Considering the new provisions protecting good faith of the acquirers of emission allowances, legal significance of such verification can be decreased and not so needed as before.