Tuesday, 15 May 2012

Airlines need to compensate passengers of delayed flights - confirmation of the CJEU's Sturgeon case by the AG Bot in cases C-581/10 and C-629/10

15 May 2012: opinion of the Advocate General Bot in joined cases C-581/10 and C-629/10 (Nelson and Others, TUI Travel and Others)

These two cases have been joined by the CJEU since they both concern the interpretation and validity of Articles 5, 6 and 7 of the Regulation no 261/2004 on air passengers compensation. Two courts, the German Amtsgericht Köln and the English High Court asked the CJEU for further interpretation of the judgement given in the Sturgeon and Others case, in which the CJEU decided that passengers of flights delayed by more than 3 hours may claim compensation on the same rules as passengers of cancelled flights. The national courts question the validity of the operative parts of the Regulation (Articles 5, 6 an 7 on compensation) since they see it as either contrary to the principle of equal treatment, or legal certainty and proportionality (as being inconsistent with the Montreal Convention prohibiting, e.g., payment of non-compensatory damages).

In the German case the passenger and his two sons arrived at his destination more than 24 hours later than the original scheduled arrival time, due to a technical defect in the steering mechanism of the aircraft, which resulted in the need to replace the plane. The consumer believed he had the right to compensation from Article 7(1) of the Regulation due to that delay. Lufthansa, operating that flight, considered it not to be cancelled but only delayed, for which, according to them the Regulation did not provide compensation. In the English case various British airlines demanded confirmation from the Civil Aviation Authority that they would not interpret the Regulation as imposing an obligation on airlines to compensate passengers in the event of delay. The CAA refused to give such a confirmation, as finding themselves bound by the CJEU's verdict in Sturgeon. The case was brought before the national court.

The CJEU's decision in Sturgeon led to a lot of discussion as to its validity so it does not surprise that there is a following request by national courts directed at the CJEU to reconsider and clarify its judgement. After all, the Regulation indeed does not directly provide for the compensation right to passengers of delayed flights, and granting it by the CJEU could be seen as overstepping its authority. The Advocate General Bot does not consider it to be the case, however, and advises the CJEU to confirm its previous verdict (in Sturgeon the AG Sharpston gave an opinion).

Firstly, the AG Bot rejects the claim that the decision in Sturgeon is inconsistent with the decisions of the CJEU in IATA and ELFAA case, since the latter one only questioned the validity of the provisions of the Regulation relating to providing care and assistance to the passengers, and not also compensation. (Par. 36-37) The parties did not present any other new evidence that could lead to the CJEU reconsidering its earlier decision. (Par. 39) The AG reminds the reasoning of the CJEU in Sturgeon - inferring a contrario from the Recital 15 that long delay is linked to the right to compensation just like cancellation is. (Par. 41) Moreover, it is in order to upheld the proper functioning of the principle of equal treatment that the CJEU gave such a decision, since:

"(...) passengers whose flights have been cancelled and passengers affected by a flight delay suffer similar damage, consisting in a loss of time, and thus find themselves in comparable situations for the purposes of the application of the right to compensation laid down in Article 7 of that regulation." (Par. 43)

Some voices criticised the CJEU for arbitrary defining the long delay to extending itself beyond 3 hours. (Par. 45) The AG Bot does not share that view, since he believes that the CJEU had to define the long delay in order to guarantee legal certainty: the same application of the right to compensation across Member States. (Par. 46) Moreover, he defends the choice made by the CJEU by stating that the CJEU considered passengers of delayed flights to be in the same situation as passengers of cancelled flights who have been re-routed who according to Article 5(1)(c)(iii) of the Regulation retain the right to compensation if they suffered a loss of time equal to or in excess of three hours in comparison with the original duration of the flight. (Par. 47)

Next, the AG Bot addresses the claims that Articles 5, 6 and 7 of the Regulation are incompatible with the Montreal Convention due to infringing the principle of proportionality. The AG Bot reminds that passengers may suffer two types of damage: 

" (...) (i) damage that is almost identical for every passenger, redress for which may take the form of standardised and immediate assistance or care for everybody concerned, and (ii) individual damage, inherent in the reason for travelling, redress for which requires a case-by-case assessment of the extent of the damage caused and can consequently only be the subject of compensation granted subsequently on an individual basis." (Par. 53)

Montreal Convention regulates the second type of damage. Article 6 of the Regulation regulates the right to care and assistance, which are standardised and immediate compensatory measures not falling under the scope of the Convention. (Par. 54) The same exclusion applies to the compensation from Article 7, since it is a flat-rate compensation, which does not depend on the individual damage suffered but instead is standardised on the basis of the flight distance covered. (Par. 55)

The AG Bot considers also a limited scope of delayed flights that give rise to the right to compensation, which could not then contribute to a severe financial burden of the air carriers, as they had claimed:

"In that regard, according to the figures brought to the attention of the European Commission by the European Organisation for the Safety of Air Navigation (Eurocontrol), less than 1.2% of flights potentially fall under the scope of the regulation’s provisions on delayed flights. Moreover, less than 0.5% of delayed flights are delayed by three hours or more, whether or not the delay is due to extraordinary circumstances. The proportion of flights for which delay confers entitlement to the compensation provided for in Article 7 of the regulation is less than 0.15%." (Par. 60)

In order to protect the interests of the air carriers, and remain in accordance with the principle of proportionality: the Regulation does not apply in case of delay caused by extraordinary circumstances which could not have been avoided; there is a redress right for the airlines; there is a possibility to limit the compensation by 50% if the delay is less than four hours. (Par. 62)

All in all, the AG Bot fully confirms the decision of the CJEU in Sturgeon and Others and rejects the arguments that the provisions of the Regulation could be infringing provisions of the Montreal Convention. This is good news for the air passengers, since even despite the decision in the Sturgeon case, the national courts were hesitant to grant compensation to passengers of delayed flights. Even though, the Regulation still does not explicitly grant such a right, the second judgement of the CJEU on it should clarify consumers' rights. Hopefully, what will follow would be a new, updated Regulation which would adjust these provisions in conformity with the CJEU's views. (see: Towards no stress flying)

2 comments:

  1. Thanks, very helpful summary.

    ReplyDelete
  2. I hope the United States follows this lead soon.

    ReplyDelete