Europe's highest court has ruled in favour of the European Union's plan to include aviation in its Emissions Trading System (ETS) from 1 January 2012.
The ruling by the European Court of Justice (ECJ) follows an opinion from the court's advocate general in October, which stated that ETS does not violate international law.
"The Court of Justice confirms the validity of the directive that includes aviation activities in the emissions trading scheme," said the ECJ in a statement today.
In publishing its ruling, the ECJ concluded that "the uniform application of the scheme to all flights which depart from or arrive at a European airport is consistent with the provisions of the Open Skies Agreement designed to prohibit discriminatory treatment between American and European operators".
The ruling follows legal action taken by US lobby group Airlines for America and three of its members, which argued that including foreign carriers in ETS went against the Chicago Convention, the Kyoto Protocol and the open skies agreement.
However, the ECJ pointed out that the EU "is not bound by the Chicago Convention because it is not a party to that convention and also has not hitherto assumed all the powers falling within the field of the convention".
Regarding the Kyoto Protocol, it noted that "the parties to the protocol may comply with their obligations in the manner and at the speed upon which they agree and that, in particular, the obligation to pursue limitation or reduction of emissions of certain greenhouse gases from aviation fuels, working through the International Civil Aviation Organisation (ICAO), is not unconditional and sufficiently precise to be capable of being relied upon".
The ECJ ruled that there is "insufficient evidence" to determine that "the principle that a vessel on the high seas is governed only by the law of its flag could apply by analogy to aircraft".
"Application of the emissions trading scheme to aircraft operators infringes neither the principle of territoriality nor the sovereignty of third states, since the scheme is applicable to the operators only when their aircraft are physically in the territory of one of the member states of the EU and are thus subject to the unlimited jurisdiction of the EU," said the court.
Today's ruling will no doubt anger the USA and other countries that have expressed vehement opposition to the inclusion of their airlines in ETS, although what they will do next remains unclear at this stage.