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The deal is part of the global war on terrorism and was demanded by the United States as part of a general tightening of security following the aircraft attacks in the US on September 11th 2001.

Under the terms of the agreement airlines have to provide the United States authorities with electronic access to the data contained in their reservation and departure control systems, called 'Passenger Name Records' (PNR). This information consists of 34 items of personal information about each of the passengers on board

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including names, addresses and credit card details.

The European Commission had already agreed with the US Department of Homeland Security to hand over the data. As a result, airlines flying between the US and the European Union have been transferring PNR data to US Customs since March 2003.

However, the European Parliament was unhappy with the deal and felt that it contravened much of the European national and transnational data protection legislation and took its case to the European Court of Justice. The Court agreed that the Council has exceeded its authority and has struck down the agreement.

The airlines now risk being caught between the authorities on both sides of the Atlantic. On the one hand airlines could be subject to fines from EU member states for providing PNR data to the US. On the other, Washington has warned that it may fine airlines that do not hand over the data.

For legal reasons, the Court has ruled that the agreement can stay in force until 30 September 2006. The agreement was supposed to last 42 months with the option to extend at the end of that period.