European Court of Justice confirms that airlines must
compensate passengers under the Denied Boarding Regulations for
delays
Following the Opinion of Advocate General Bot in May 2012, the
European Court of Justice (ECJ) has confirmed that airlines are
required to pay compensation to passengers who experience a delay
of three hours or more, unless the airline can show it was caused
by 'extraordinary circumstances'.
what the Denied Boarding Regulations say about
compensation
It was previously common ground that consumers have an
entitlement to fixed compensation under the Denied Boarding
Regulations (EU Regulation 261/2004) where a flight is cancelled,
unless the airline can show the cancellation was a result of
'extraordinary circumstances'. This would include the 2010
Icelandic ash cloud as well as the heavy snowfall during the winter
of 2010.
Article 5 sets out the airline's requirement to provide care and
assistance and to pay compensation in the event of a delay.
Compensation is also payable where re-routing is offered but the
re-routed flight takes off at least the day after the original
planned departure. Article 6 goes on to flesh out the obligations
on the airline to provide care and assistance, which depends on the
distance of the flight and length of delay. Importantly, Article 7
sets out the fixed amounts of compensation payable in the event of
flight cancellation. The compensation payable depends on the
distance of the flight, as follows:
- 250 Euros for flights of 1,500 km or less;
- 400 Euros for intra-community flights of more than 1,500 km and
all other flights between 1,500 and 3,500 km;
- and 600 Euros for all flights not in the aforementioned
categories.
The obligations only apply to flights leaving a Member State of
the European Union or to airlines that are based in a Member
State.
Airlines can avoid liability to pay compensation (but not to
provide care and assistance: McDonagh v Ryanair) if they can show
the delay or cancellation was caused by 'extraordinary
circumstances'. This could include political instability,
meteorological conditions incompatible with the operation of the
flight (the ash cloud), security risk and strikes.
the decision in Sturgeon v Condor
In Sturgeon, the ECJ took its agenda for promoting consumer
protection one step further. It decided there was no justification
for distinguishing between a long delay and a cancellation. It felt
the wording of the Regulation was sufficiently wide to give rise to
a right to compensation for long delays. It defined a 'long delay'
as a loss of time equal to or in excess of three hours. The airline
could, however, rely on the 'extraordinary circumstances' defence
if it could show this was the cause of the delay. The decision came
as a shock to airlines that were previously only exposed to the
risk to pay compensation under the Regulations in the event of a
flight cancellation.
The ECJ has now, however, confirmed that the decision in
Sturgeon was correct and that the requirement to pay compensation
for delay can apply retrospectively. This is of notable concern to
airlines who may now be inundated with claims as the floodgates
open.
the High Court referral and proceedings at the ECJ
Unimpressed by the way in which the ECJ had stretched the
language of the Regulations, TUI, British Airways and Easyjet,
together with the International Air Transport Association (IATA)
launched judicial review proceedings against the CAA. They sought
to challenge the ECJ's decision in Sturgeon on the basis that it
conflicts with previous case law, involves an incorrect application
of the Regulation and is inconsistent with other principles and
provisions of international law. The CAA refused to confirm its
interpretation of the Regulations, which is why the airlines and
IATA sought judicial review.
In August 2010 the High Court referred a number of questions to
the ECJ about the interpretation of the Regulations. The German
Amtsgericht of Köln had already made a referral raising similar
questions so the proceedings were joined.
The High Court sought clarification from the ECJ on, amongst
other things, whether Articles 5 to 7 of the Regulation should be
interpreted so the fixed compensation under Article 7 should be
paid by airlines to passengers whose flights are subject to
delay.
Adopting the Advocate General's analysis, in two joined cases
(C-581/10 Nelson and Others v Deutsche Lufthansa and C-629/10 TUI
Travel and Others v CAA) the ECJ has unequivocally confirmed that
passengers whose flights are delayed may claim compensation under
the Regulations where they suffer a loss of time equal to or in
excess of three hours. In other words, compensation is payable
where the passenger reaches their intended destination three hours
or more after the arrival time originally scheduled by their
carrier.
The upshot of the decision is that compensation is available for
a very long delay and that a very long delay means three hours or
more.
The Court indicated that the principle of equal treatment
enshrined in European law required passengers whose flights were
subject to long delays to be treated in the same way as passengers
whose flights are cancelled at the last minute. The aim of the
compensation is to try and redress the loss of time a passenger
suffers when their flight is cancelled or delayed.
conclusion
If airlines and tour operators feel like they have taken another
blow from Europe, they may find some solace in the comfort offered
by the statistics, which suggest that less than 1.2% of flights
fall under the scope of the Regulations and that only 0.5% of those
flights involve delays of three hours or more. They also have the
'extraordinary circumstances' defence if the delay or cancellation
is beyond the airline's control and in addition the right to seek
reimbursement of monies they have had to pay out from the person
who caused the delay, including third parties.
Proceedings in England/Wales that were stayed pending the
outcome of this referral to the ECJ can now continue to progress
through to a final hearing. Airlines would be sensible to settle
these claims quickly to avoid the costs of litigation in the small
claims court.
Travel insurers should continue to refer policy holders back to
the airline in question to seek redress and compensation for delay
or cancellation before agreeing claims.
This is a simplification of the law and, should you be faced
with an issue following an accident out of your home jurisdiction,
always make sure you have good advice from someone experienced in
this area of law.
For further information, please contact Daniel
Scognamiglio in the Travel team in Southampton at daniel.scognamiglio@bllaw.co.uk
or call him on 023 8085 7339.
