BRUSSELS, Belgium (BBC) - The European Court of Justice has blocked an EU-U.S. agreement that requires airlines to transfer passenger data to the U.S. authorities.

The court said the decision to hand over the data was not founded on an "appropriate legal basis".

European airlines have given U.S. authorities passengers' names, addresses and credit card details.

The U.S. said the data would help fight terrorism, but the European Parliament said the data could be misused.

The agreement demands that within 15 minutes of take-off for the United States, a European airline must send the U.S. authorities 34 items of personal information about the passengers on board.

Washington had warned that it would impose heavy fines and deny landing rights for any airline failing to comply with the agreement.

The U.S. authorities also said passengers would be subject to long security checks on arrival, if the data was not sent in advance.

Parliament opposition

The U.S. demanded tighter airline security worldwide after the 11 September 2001 attacks on New York and Washington by suicide hijackers.

But the European Parliament consistently opposed handing over the passenger details to the U.S., arguing that the U.S. did not guarantee adequate levels of data protection.

It asked the European Court of Justice to annul the deal.

In its ruling on Tuesday, the court found that the EU Council of Ministers' decision to sign the agreement on "Passenger Name Records" lacked an adequate legal basis.

The Council and the European Commission based their actions on the EU Data Protection Directive, but the court said the directive did not apply to data collected for security purposes.

It gave the EU until 30 September 2006 to find a new legal solution.

Difficult position

"The court's judgment is about the legal basis, and about the legal basis only. It did not concern the content of the agreement," said the European Commission's chief spokesman Johannes Laitenberger. The U.S. Mission to the EU said it had already agreed with the Commission to look for "an agreed interim approach to data transfers that fully respects the court's ruling."

But executive officer of the British Air Transport Association Bob Preston told the BBC European airlines could potentially be left in a "difficult position, between a rock and a hard place".

"If we don't supply the information to the United States authorities then we're liable to fines of up to $6,000 per passenger and the loss of landing rights," he said. "And if we do supply the data, potentially we're breaking the law (on data protection)."