It seems that before the amendment of the Registry Regulation rules as well as after such change the transfer of EUAs in itself may not be regarded as the sufficient proof of ownership of allowances sold. It is notably true when the allowances sold were transferred from an account other than the account of the seller.

The recent judgment of the England and Wales High Court Case No: HC10C00532 between Armstrong DLW GMBH and Winnington Networks Ltd of 11 January 2012 (the source: justifies evidently the necessity of last amendments to the Registry Regulation.

The main line of the case could be simplified and in essence expressed in a conclusion that improper conduct of the KYC (knowyourcustomer) checks by the EUAs buyer gave rise to the buyer’s liability towards third party from which EUAs had been stolen, in spite of the fact that:

1) the transaction at issue was spot trade (thus – according to the state of law at present – not involving financial instruments),

2) the EUAs being subject to the transaction had been transferred and entirely deposited with the buyer registry account before the buyer’s payment for units was effected.

The persons representing buyer (defendant) in this case ‘persistently and repeatedly’ stated that ‘the fact of transfer by the seller of the EUAs was itself proof of the seller's ownership and/or authority to trade’.

It is interesting that Article 37(2) of the Registry Regulation added similar provision to the previous text – but only later (‘The dematerialised nature of allowances and Kyoto units shall imply that the record of the Union Registry shall constitute prima facie and sufficient evidence of title over an allowance or Kyoto unit, and of any other matter which is by this Regulation directed or authorised to be recorded in the registry’).

It however seems that even the amended rules would not save the defendant (i.e. buyer) in the above-mentioned court trial because in the factual circumstances thereof the EUA’s transfer came from an account other than the seller’s account (simply since the allowances had been stolen).


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