Compensation for delayed flights also for package travellers - CJEU in Primera Air Scandinavia (C-215/18)

Going through the backlog: last week, on 26 March, the CJEU issued a judgment in Primera Air Scandinavia (C-215/18). The judgment has not yet been published in English, thus our readers may be especially keen to find out what did the Court decide in this air passenger rights case where air travel was included in a package travel contract (about the opinion in the case read here).

Compensation for a delay of a flight included in a package travel contract

The CJEU follows the reasoning presented by AG Saugmandsgaard Øe and decides that air passengers may claim compensation for a delayed flight from the operating air carriers pursuant Regulation 261/2004 also if their air travel follows from a package travel contract that they have concluded with a travel agency (paras. 31-37). As a reminder, Package Travel Directive does not contain a similar right to compensation which could lead to awarding passengers with double compensation for the same loss. This differentiates this judgment from the one in the case of Aegean Airlines where passengers wanted to claim reimbursement of a flight ticket's price, which right they also had on the basis of the PTD.

Jurisdiction 

Brussels I Regulation (Regulation 44/2001) specifies which court has jurisdiction over disputes resulting from a contractual relationship, as well as provides for special jurisdiction rules for consumer contracts. One of the questions raised asked whether a claim for a compensation may be perceived as a contractual one, considering that there was no contract between the operating air carrier and the consumer, but rather between the consumer and the travel agent. The CJEU again follows the AG's reasoning and previous case law (see flightright) in applying broad interpretation to the notion of a 'contractual' claim. It is namely not relevant whether the parties in the proceedings had a contractual relationship, but instead whether the claim between them follows from a voluntarily adopted obligation of one of these parties towards the other one (paras. 45 and 48-49). Therefore, jurisdiction rules applicable to contractual claims (art. 5 Brussels I Regulation) are applicable here. However, special jurisdiction rules from section 4 on consumer contracts do not apply here, as for their applicability it is actually necessary that a contract was concluded between consumers and the defendant (paras. 59-60).

Conclusion

In the given case, as the flight was conducted between Czech Republic and Iceland, the claim could be raised in one of these two countries, as they both may be seen as places of performance of the contract. This is convenient for the passenger who was domiciled in the Czech Republic. However, if the passenger in case was domiciled e.g. in France, they would not be able to benefit from a possibility to file a claim in French courts, following the special rules on jurisdiction for consumer contracts.

This judgment is very interesting, but it needs to be mentioned that the current COVID-19 crisis shows us that in practice air passenger rights might not be very helpful. Airlines who had to cancel flights en masse in the past weeks, keep on choosing not to reimburse passengers' air tickets but rather issue them with vouchers for future flights. That is a clear breach of Regulation 261/2004. Of course, accepting the voucher does not take away consumers rights to further claim the reimbursement, but whether such claims will be successful, even if consumers decide that the hassle is worth the trouble, remains to be seen. Some authors of this blog may be the guinea pigs in the upcoming legal battles and will keep you posted!

Can we make variable interest rates transparent? - CJEU in Gómez del Moral Guasch (C-125/18)

On 3 March 2020 (yes, we are a bit behind in our commenting on the most recent developments, sorry about that! We are making our way through the news of the past few weeks) the CJEU issued a judgment in the case Gómez del Moral Guasch (C-125/18). We have previously commented on the AG Szpunar's opinion in this Spanish case (Unfairness assessment of variable interest rates...), which brought up two main issues: 1) scope of unfairness testing for terms reflecting mandatory provisions; 2) transparency assessment. Just as a reminder the consumer's mortgage loan contract came with a variable interest rate and the claim raised a possible unfairness of a term referring to an index on the basis of which the rate would be calculated.

Ad 1)

The CJEU agreed with AG Szpunar that unless the index has been prescribed by the national legislation to mandatorily apply to consumer mortgage loan contracts irrespective of the parties' choice or in absence of their choice, a term referring to it falls within the scope of application of the UCTD (paras. 32-34). This means this term could be tested for unfairness (para. 36), as Bankia had the chance to define the interest rate in any way, as long as it was 'clear, specific and comprehensible to the borrower and was consistent with the law' (para. 35).

Ad 2)

The CJEU again stresses the need for both formal and material transparency assessment under the UCTD, observance of which should allow an average consumer to understand the specific method used for calculating the variable interest rate and evaluate potentially significant economic consequences of that term on consumer's financial obligations (para. 51). In reference to the material transparency assessment the CJEU instructs national courts to check whether the essential information relating to the calculation of the variable interest rate was easily accessible to anyone intending to take a mortgage loan, e.g. because the method used for calculating that rate has been published (para. 53). National court should further inquire whether consumers were given the data on past fluctuations of the index (para. 54).
The CJEU emphasises the importance of the principle of transparency in an earlier part of the judgment (paras. 44-46). The emphasis is placed on the weak position of consumers in a transaction, the protection of which requires traders to provide clear and intelligible information to consumers in standard contract terms, regardless of whether these terms are core contractual terms.

In the last part of the judgment (paras. 63-66) the CJEU highlights the fact that if a term, indicating an index on the basis of which the variable interest rate is calculated, is unfair and is nullified, when this would have 'particularly unfavourable' consequences for consumers, the national court may choose to replace this term with a reference to a statutory index.

Comment
This judgment is another in a series of judgments elaborating for national courts mainly how to evaluate the compliance with the principle of transparency. The continued references to the possibility of average consumers to understand complex financial contracts, as long as the data provided to them is complete enough, remain somewhat jarring in light of the behavioural evidence showing the widespread lack of financial illiteracy. It seems past time for the legislators and regulators to intervene and set more guidelines on transparent disclosures/further need for consumer advice services in this area.

Consumers buying ‘discount cards’ for future transportation contracts have the right to withdraw - Case C‑583/18 (Verbraucherzentrale vs DB Vertrieb GmbH)

Case C‑583/18 (available in French here) deals with the Consumer Rights Directive, particularly with its scope of application and the exclusion of contracts for the transportation of passengers. The case originated in a dispute between the Verbraucherzentrale, the German consumer association, and DB Vertrieb GmbH, a company in the group of the railway company Deutsche Bahn. In this context, DB Vertrieb sells cards that allow passengers to have discounts on the price of their train tickets – either 25% (BahnCard25) or 50% (BahnCard50). These cards are sold online but no information about the right of withdrawal is given to consumers. DB Vertrieb GmbH argues that this omission is justified by the fact that there is no right of withdrawal in these ‘discount cards’ contracts, since they are excluded from the scope of application of the Consumer Rights Directive. Indeed, the Consumer Rights Directive excludes contracts for passenger transport services from its scope (Article 3(3)(k)). Consequently, the referring Court asked the CJEU whether the contract concluded between consumers and Deutsche Bahn can be considered a service contract under Article 2(6) of the Consumer Rights Directive and, if so, whether it can also be considered a contract for passenger transport service under Article 3(3)(k) in such a way that it would be excluded from the scope of the Directive.

The CJEU answered the first question in a straightforward and broad manner, in line with the broad definition of ‘service contract’ in the Consumer Rights Directive. The CJEU highlighted that Article 2(6) states that a service contract is ‘any contract other than a sales contract’ and, given that the contract in question does not involve the transfer of ownership of a good (Article 2(5)), it is not a sales contract. Not being a sales contract, it is a service contract. ‘Discount contracts’ are, therefore, considered service contracts under the Consumer Rights Directive.

Regarding the second question, the CJEU considered that a contract through which the consumer enjoys a price discount if and when concluding a future transportation contract is not a contract for passenger transport services as defined by Article 3(3)(k), since the contract in question does not have as a primary object the transportation of passengers.

Furthermore, the CJEU argued that the two contracts in question – the ‘discount card’ contract and the actual passenger transportation contract – are two different contracts, not legally connected to each other. In other words, the conclusion of the contract which gives the consumer a price discount in a future transportation contract does not mean that the consumer will necessarily conclude the transportation contract.

Finally, the CJEU considered that the existence of a right of withdrawal in the ‘discount card’ contract does not create any objective inconvenient for the transportation company. The CJEU based this argument on the rationale behind the exclusion of contracts for the transportation of passengers from the Consumer Rights Directive, explained in Recital 49. Recital 49 states that it would be inappropriate to give consumers the right to withdraw from service contracts where the conclusion of the contract leads the professional party to set aside the corresponding capacity which could not be filled or would be difficult to fill in case of withdrawal. In this case, the acquisition of ‘discount cards’ by consumers does not mean that Deutsche Bahn will alter its capacity (e.g. available seats on trains).

Therefore, Article 3(3)(k) must be interpreted as not including ‘discount cards’ contracts, which means that, in practice, the contract in question is covered by the Directive and by its provisions regarding the right of withdrawal.

Case C‑511/17 Unicredit Bank Hungary: Ex officio unfairness assessment limited to subject matter and to existing legal and factual elements

In  the case C-511/17, the CJEU followed the AG’s opinion closely (about which we wrote here). The case deals with the scope of the obligation to assess the unfairness of contractual terms ex officio, under Directive 93/13/EEC (Unfair Terms Directive).

The CJEU clarified that the Unfair Terms Directive does not oblige national courts to conduct any unfairness assessment beyond the subject matter of the dispute (paragraph 28). In other words, as AG Tanchev also defended, the CJEU highlighted the importance of protecting the ne ultra petita principle. However, the CJEU considered that it is within the subject matter of the dispute that national courts examine ex officio the unfairness of contractual terms in order to guarantee a high consumer protection, particularly to prevent the consumer’s claim from being rejected when it could have been upheld had the consumer invoked the unfair nature of that particular term (paragraph 32).

In addition, the CJEU established that national courts are only obliged to carry out an ex officio assessment of unfairness regarding those contractual terms whose unfairness can be determined by existing elements of law and fact available to the court (Profi Credit Polska case). However, in order to implement the duty of ex officio examination, national courts should not be confined exclusively to the elements of law and fact provided by the parties (paragraph 36). This means that national courts can, of their own motion, take investigative measures in order to complete the case file. However, national courts should only do this if the existing elements of law and fact ‘give rise to serious doubts as to the unfair nature of certain clauses which were not invoked by the consumer but which are related to the subject matter of the dispute’ (paragraph 37).

Finally, the CJEU reiterated that in order to assess the unfairness of a contractual term (on which the claim is based) the national court must take into account all the other terms of the contract (Banif Plus Bank, C‑472/11). This obligation is justified by the fact that the assessment of one or more specific terms must be contextualized, and the ‘cumulative effect of all the terms of that contract’ must be taken into account (paragraph 47). This does not mean, however, that there is an obligation for the national court to ex officio assess the unfairness of all individual clauses in the contract – it is rather a duty to contextualize the assessment of unfairness. The CJEU also calls for a non-formalistic consumer protection, that is, an interpretation of the claim that is based on the comprehension of its content and of the laws it invokes (paragraph 33).

Therefore, the CJEU concluded that Article 6(1) of the Unfair Terms Directive does not require national courts to examine every individual contractual term ex officio. Instead, the Unfair Terms Directive must be interpreted as imposing an obligation to examine only the contractual terms which are connected to the subject matter of the dispute, as long as the national courts have the legal and factual elements required for that assessment (which can be supplemented by measures of inquiry). The CJEU also determined that, while Articles 4(1), 6(1) and 7(1) impose a duty to take all contractual terms into account, there is no duty for the national court to individually assess the unfairness of each term.

In this specific case, the CJEU determined that the terms that the consumer did not challenge but whose unfairness assessment is required of the referring court are not connected to the subject matter of the dispute in the main proceedings. Therefore, the national court does not have a duty to ex officio assess the unfairness of those terms (paragraph 39).

Double compensation available in case of a delayed re-routing flight: case C‑832/18 Finnair

Earlier this week, the Court of Justice delivered a judgment in case C-832/18 Finnair. The case proceeded without written opinion from the AG and concerned the interpertation  of Regulation (EC) No 261/2004 on passenger rights in the event of denied boarding and of cancellation or long delay of flights. The judgment adds another major element to the pro-consumer case law of the Court of Justice.

Facts of the case

The dispute revolved around a Finnair flight from Helsinki (Finland) to Singapore, which encourtered multiple problems. Not only was the original flight cancelled due to a technical defect, but also the alternative connection, scheduled for the next day, was delayed by almost 19 hours. The applicants brought an action in a Finnish court seeking to have the airline ordered to pay them the sum of EUR 1200 each: covering EUR 600 on account of the cancellation of the original Helsinki-Singapore flight plus additional EUR 600 on account of the delay of the subsequent Helsinki-Chongqing-Singapore re-routing flight. While Finnair agreed to award compensation of EUR 600 in respect of the cancellation of original flight, it refused to grant the second compensation claim. According to Finnair, Regulation No 261/2004 did not impose an obligation of this kind and, even if it did, the delay of re-routing flight had been caused by extraordinary circumstances (defect of an ‘on condition’ part). Interestingly, unlike the Finnish court of first instance, the Court of Justice did not find the arguments of Finnair convicing and opted for a pro-consumer reading of applicable EU law.

Judgment of the Court

Double compensation

The Court began its analysis by recalling that, pursuant to Article 5(1)(a) of Regulation No 261/2004, read in conjunction with Article 8(1), in the event of cancellation of a flight, the passengers concerned should be offered the choice between three different forms of assistance, namely either reimbursement of the ticket and, where appropriate, a return flight to the first point of departure, or re-routing to their final destination at the earliest opportunity, or such re-routing at a later date at their convenience, subject to availability of seats. Passengers in the case at hand opted for the latter form of assistance, in the course of which, however, the encountered further difficulties.

Focusing on the scope of Regulation No 261/2004, the Court found that nothing in its Article 3 suggests that the regulation should not apply to air passengers who have been transferred by the air carrier, following the cancellation of a booked flight, on a re-routing flight to their final destination. On the contrary, Article 3(2)(b) explicitly referrs to passengers who have been transferred by an air carrier from the flight for which they held a reservation to another flight, irrespective of the reason. 

Furthermore, as noted by the Court in para. 27, Regulation No 261/2004 does not contain any provision intended to limit the rights of passengers who find themselves in a situation of re-routing. Broad reading of the scope of passenger rights was further supported by the purpose of that regulation, which is to address the serious trouble and inconvenience caused by denied boarding, cancellation or long delay of flights (in the case at hand experienced twice), as well as the effectiveness of an obligation to provide assistance in the form of re-routing under Article 8(1). Consequently, a possibility of claiming double compensation in analysed conditions has been accepted.

Extraordinary circumstances

Also in the second part of the judgment the Court did not clearly side the airline, even if its findings remain at a high level of generality. The Court appears to suggest that key elements of the notion of ‘extraordinary circumstances’ have already been explained in its prior case law and it is now the task of national courts to apply them to cases before them. The Court thus began by recalling that according to Article 5(3) of Regulation No 261/2004, read in the light of recitals 14 and 15, by way of derogation from Article 5(1), an air carrier is to be released from its obligation to pay passengers compensation under Article 7, if the carrier can prove that the cancellation or delay of three hours or more is caused by ‘extraordinary circumstances’ which could not have been avoided even if all reasonable measures had been taken or, where such circumstances do arise, that it adopted measures appropriate to the situation, deploying all its resources in terms of staff or equipment and the financial means at its disposal, in order to prevent that situation from resulting in the cancellation or long delay. In doing so, the Court referred to its previous case law, on which we reported in our earlier posts (see eg Runaway closure..., Loose screws...). The Court further recalled that events may be classified as ‘extraordinary circumstances’ if, by their nature or origin, they are not inherent in the normal exercise of the activity of the air carrier concerned and are outside that carrier’s actual control, both conditions being cumulative (para. 38). The notion, therefore, does not include technical shortcomings inherent in aircraft maintenance, considering that breakdowns of this kind, even premature, are, in principle, intrinsically linked to the operating system of the aircraft.

In the case at hand Finnair contended that technical defect it was faced with should nonetheless be qualified as an extrordinary circumstance, considering that the affected rudder steering servo was a so-called ‘on condition’ part, which is only replaced by a new part when it becomes defective. The airline appears to have stocked up on the spare part, but a delay - related to repair itself - was nonetheless unavoidable. The Court did not expressly endorse such an interpretation, however. Rather, according to the Court, the failure of an ‘on condition’ part, which the air carrier has prepared to replace by permanently stocking a spare part, constitutes an event which, by its nature or origin, is inherent in the normal exercise of the activity of the air carrier concerned and is not outside its actual control, unless such a failure is not intrinsically linked to the operating system of the aircraft, which it is for the referring court to determine.

Ex-officio powers of national courts in enforcing Directive 2008/48/EC: the CJEU in C-679/18 OPR-Finance

Earlier today the European Court of Justice (CJEU) delivered its judgment C-679/18 OPR-Finance s.r.o. v GK on the interpretation of Articles 8 and 23 of Directive 2008/48/EC on Consumer Credit (CCD).

The facts

In April 2017 the consumer concluded a revolving credit agreement with OPR Finance for 192 EUR. After defaulting on payment of due installments, the creditor started enforcement action infront of the District Court of Ostrava (Czech Republic), claiming 307 EUR plus statutory interest. It appeared to  be clear for the referring court that OPR Finance did not claim they have assessed the consumers creditworthiness prior to granting the loan, and it was also clear that the consumer did not raise the objection of nullity  of the contract, the applicable penalty for failing to assess creditworthiness under Czech law.

The legal issues

The referring national court was unsure whether Article 8 on creditors obligation to assess consumers creditworthiness read in conjunction with Article 23 on the obligation of Member States to provide for effective, proportionate and dissuasive penalties for the breach of national provisions adopted pursuant to the CCD, provides for the national courts ex officio obligation to act i.e. obligation of national courts to examine on their own motion whether the creditors have complied with their obligation to assess consumers creditworthiness and ex officio obligation to apply the appropriate penalties provided by national laws.

At second instance, the national court asked whether the national provisions that provide for an obligation of consumers to raise the objection of nullity of the credit agreement within a 3 year time limit are contrary to the said provisions.

The ruling

The first question the CJEU answered positively, ruling that there is an ex officio obligation of national courts to examine whether creditors have complied with their obligation to assess consumers creditworthiness. Not only that national courts must assess ex officio whether the duty of creditworthiness assessment has been complied with but they should also apply the appropriate penalties ex officio, provided they are compliant with Article 23.

In its reasoning the CJEU referred to its previous case-law on establishing an obligation of national courts to rule ex officio on infringements of EU consumer law (para. 18), reinforcing the justification for such approach the weaker position of consumers vis-a-vis businesses in their contractual relationships (para. 19). It has also considered the importance of ex officio powers for achieving the objectives of the CCD. Importantly, it has highlighted that the purpose of Article 8(1) is to make creditors accountable for their lending decisions and to prevent them from providing consumers with unaffordable credit (para. 20). Moreover, the CJEU emphasized the importance of ex officio powers for the protection of consumers against the risks of over-indebtedness and bankruptcy and for the emergence of a well-functioning internal market in consumer credit with a high level of consumer protection (para. 21).

The CJEU further ruled that where national courts find the infringement of Article 8 on their own motion, they should also apply the appropriate sanctions without waiting for consumers to make applications to that effect, provided that national provisions on penalties are compliant with Article 23 and the associated CJEU on its interpretation (paras. 25-27). As mentioned above, under the applicable provisions of Czech law, the penalty of nullity of the contract only applied under the condition that consumers raised an objection of nullity within the limitation period of 3 years. The sanction of nullity itself relieved consumers from paying interest and associated costs to the credit, only requiring the repayment of the principle sum borrowed (para. 29). The CJEU examined the these requirements from the aspects of equivalence and effectiveness (paras. 32-33) and concluded that they are contrary to principle of effectiveness (para. 36). The said conditions make the sanction impossible or excessively difficult to operate in practice. Importantly, the CJEU dismissed the relevance of administrative penalties of competent supervisory authorities, emphasizing the separation of civil and administrative penalties for breaches of consumer credit law (para. 37), given that such penalties have no effect on harmed consumers, consumers to whom the credit was granted in the infringement of Article 8 of the CCD (para. 38).

Concluding thoughts 

This seems to be a well reasoned judgment that provides additional important protection for consumers against the risks involved in borrowing and raises the responsibility of creditors for complying with their obligation to assess consumers creditworthiness. It is now important that national courts follow the judgment and use their powers where appropriate.

Health claims and the value of an asterisk for the average consumer: case C-524/18 Dr. Willmar Schwabe

Back in January the Court of Justice delivered a noteworthy judgment in case C-524/18 Dr. Willmar Schwabe, on which we have not had a chance to comment so far. The case concerned the interpretation of Article 10(3) of Regulation (EC) No 1924/2006 on nutrition and health claims made on foods and arose from a dispute between two competing producers of food supplements in Germany: Dr. Willmar Schwabe and Queisser Pharma, concerning the alleged misleading packaging of a ginseng-based supplement marketed by the latter.

To recall, Regulation No 1924/2006 harmonises national provisions relating to nutrition and health claims used in the labelling, presentation and advertising of foods placed on the EU market. Besides not being false, ambiguous or misleading, the use of nutrition and health claims should comply with a number of more specific conditions. Notably, the presence, absence or reduced content of a substance in respect of which the claim is made must have been shown to have a beneficial nutritional or physiological effect, as established by "generally accepted scientific evidence" (Article 5(1)(a)). What is more, reference to general, non-specific benefits of the nutrient or food for overall good health or health-related well-being may only be made if accompanied by a specific health claim from the lists of permitted health claims in the Union Register (Article 10(3)). Under Commission's implementing Decision 2013/63/EU food business operators are responsible to "demonstrate the link" between specific claims included on the list and the general references made in relation to their products.

Visual link between general and specific claims

Source: apotheke-adhoc.de

Core question in the case at hand revolved around the necessary link between general and specific claims. Specifically, the question was whether a general statement "B vitamins and zinc for the brain, nerves, concentration and memory" made on the front side of the packaging was sufficiently linked to the more specific health claims included on the reverse side, considering that no visual link was established between the two.

The Court addressed the question referred using literal, systematic and teleological reasoning. Included in the analysis were among others: the use of the word "accompanied" in Article 10(3) of Regulation No 1924/2006, the regulation's purpose of providing "a high level of consumer protection", and the need to interpret derogations from the general prohibition of health claims in Article 10(1) strictly. Considering these factors together, the Court found that specific health claims should not only specify the content of general claims, but also the location of those two claims on the packaging of the product should enable an average consumer to understand the link between those claims. Accordingly, the concept of "accompanying" referred to in Article 10(3) must be interpreted as including both a substantive and a visual dimension (para. 40), the latter referring to an "immediate perception by the average consumer ... of a direct visual link between the reference to general, non-specific health benefits and the specific health claim" (para. 47). Interestingly, according to the Court, such a link requires, in principle, spatial proximity or immediate vicinity between the reference and the claim, yet the relevant requirement could exceptionally be satisfied by means of an explicit reference, such as an asterisk (*). The chosen method should ensure, in a manner that is "clear and perfectly comprehensible to the consumer", that, in spatial terms, the content of the health claims and the reference match (para. 48).

Evidential requirements for general claims

Applying a similar interpretative toolkit, the Court went on to analyse whether ‘general’ health claims, such as the ones made on the front of analysed packaging, should also be justified by scientific evidence in accordance with Articles 5(1)(a) and 6(1) of Regulation No 1924/2006. In this regard the Court opted for a reading which reduced the burden placed upon the food business operators. Thus, although the response to the second question referred was generally an affirmative one, the Court went on to conclude that the evidential requirements for general claims are satisfied when such claims are accompanied by specific health claims that are supported by generally accepted scientific evidence which has been verified and authorised and have been included in the Union register.

Overall, while the first part of the judgment applies a rather strict benchmark, the second part restores the balance for food business operators. Although the notion of an average consumer, who is reasonably well informed and reasonably observant and circumspect,  features prominently in the judgment, the requirement to interpret exceptions strictly lends support to the application of a strongly protective test in the first part of the analysis. Importantly, food business operators should bear in mind that the use of an asterisk may, but does not necessarily have to, satisfy the requirement of sufficient visual link, and was accepted only exceptionally, due to large size or length of the specific health claims invoked. Whenever possible, spatial proximity or immediate vicinity between general and specific claims should be ensured. As long as the conditions of Article 10(3) are fulfilled, evidential requirements of Article 5(1)(a) are also satisfied.

Violent passengers = extraordinary circumstances - AG Pikamäe in Transportes Aéreos Portugueses (C-74/19)

Last week, on 27 February, AG Pikamäe issued an opinion in a relatively weird as to facts air travel case - Transportes Aéreos Portugueses (C-74/19). A passenger in this case had a flight reservation with TAP airlines (Portuguese airlines) for a journey between Fortaleza (Brazil) and Oslo (Norway) with a connection in Lisbon (Portugal). The first flight has been delayed, as the plane, which was intended to travel between Fortaleza and Lisbon first had to make a trip from Lisbon to Fortaleza. On that journey there was, ahem, a problematic passenger who proceeded to bite (!) and attack other passengers, as well as the crew. Consequently, the flight was diverted to Las Palmas (Spain) to remove the problematic passenger. Due to the delay of that flight, the whole travel schedule of the given passenger was uprooted, and they ended up arriving in Oslo more than 24 hours after the planned arrival time.

Aggressive passenger behaviour may be seen as extraordinary circumstances

AG Pikamäe draws attention to the importance of a safe flight for EU legislator, which is both mentioned in Recital 14 of Regulation 261/2004 (unexpected flight safety shortcoming are an example of an extraordinary circumstance) and in its Article 2(j) pursuant to which denied boarding may be justified by safety concerns (paras. 30-31). Whilst aggressive behaviour of passengers has not been enumerated in any provision as a cause for safety concerns, it could fall within the scope of general safety notions of this Regulation. Moreover, Regulation 2015/2018 introduces a list of occurrences that need to be reported as they may cause a serious risk in civil aviation, amongst others in Annex I point 6(2) it mentions 'difficulty in controlling intoxicated, violent or unruly passengers' (para. 33). Regulation 2018/1139 further obliges a captain of an airplane to take any measures to minimise the consequences on the flight of a disruptive passenger's behaviour (Annex 5 point 3(g)) (para. 34). Therefore, EU legislation has previously considered aggressive consumer behaviour as a safety risk. The AG mentions also other air safety rules, which all indicate that as aggressive consumer behaviour may be considered a serious risk to air safety, it could be considered an extraordinary circumstance in the meaning of Art. 5(3) Regulation 261/2004. After all, educating or punishing of violently acting passengers should not be seen as falling within the scope of a normal activity of air carriers (paras. 41-46). Further, the air carrier has a limited option, if any, to control the behaviour of passengers on the plane (paras. 49-50). Still, AG Pikamäe indicates that if the crew was aware of the problems with the passenger's behaviour before the flight had started, then possibly the air carrier could not claim the need to divert the plane and remove the aggressive passenger as an extraordinary circumstance (para. 51). Instead, they could have denied boarding to the aggressively acting passenger.

AG Pikamäe further emphasises that already on the basis of previous case law (Peškova and Peška case as well as Germanwings case), it was apparent that the extraordinary circumstance does not have to pertain to the delayed/cancelled flight of a given passenger (para. 57 and further). A causal link between the extraordinary circumstance and the delayed/cancelled flight is sufficient (para. 59).

Does this mean that the passenger in the given case may not claim compensation? Not all is yet lost. Namely, the air carrier needs to take all reasonable measures to ensure that the extraordinary circumstance does not impact the passenger's flight (Art. 5(3) Regulation 261/2004). Here, it could perhaps not be required from TAP that they have additional planes on hold in Brazil to step in, when the original aircraft is delayed. However, AG Pikamäe draws attention to the fact that the longer the delay in reaching the final destination, the more flexibility seems to be there for the air carrier in trying to mitigate the consequences of an extraordinary circumstance, e.g. by increasing the speed of the aircraft, re-routing the passenger either within TAP or allied air carriers (here, Star Alliance) (para. 73).

Free and informed consent required to accept an unfair term - AG Saugmandsgaard Øe in Ibercaja Banco (C-452/18)

On 30 January 2020 AG Saugmandsgaard Øe issued his opinion in another case concerning 'floor clauses' used by a Spanish bank (C-452/18 Ibercaja Banco). See previously our discussion of this problem and explanation what 'floor clauses' are e.g. when we commented on the Gutierrez Naranjo case (Spanish 'floor clauses'...).

In this particular case a consumer concluded in 2011 a mortgage loan agreement with Caja de Ahorros with a variable interest rate, establishing that the interest rate will never exceed 9.75% and will not drop below 3.25% (floor clause). In 2014 the bank Ibercaja substituted Caja de Ahorros in the loan agreement and concluded an additional agreement with the consumer titled 'novation contract changing the loan'. The latter contract lowered the floor clause to 2.35%. It also included a term confirming the validity and application of the loan agreement, its terms, and having parties waive their rights to make any claims based on the loan agreement, also in regard of the payments that have already been made under the loan agreement. That novation contract had an added in consumer's handwriting note, signed by the consumer, attesting to the consumer's awareness and understanding of the fact that the interest rate will never drop below 2.35%. 

It is, therefore, clear that the Ibercaja bank tried to protect itslef from the floor clause being declared as unfair, following the judgment of the Spanish Supreme Court in 2013 on this matter, by asking consumers to explicitly acknowledge the floor clauses in the contracts in a novation contract (see also paras 21-22). This action preceded the Gutierrez Naranjo judgment, where the CJEU confirmed the unfairness of the floor clauses and did not allow Spanish courts to limit consequences for the banks of the use of such unfair terms. The question then in this case is whether the consumer could still claim the floor clause to be unfair despite the novation contract and the consumer attesting to the awareness and understanding of the consequences of the loan agreement?

AG Saugmandsgaard Øe first notes that the classification of the contract concluded between the consumer and bank Ibercaja should be left to the national law to determine. There is indeed a dispute in Spanish law whether such an agreement is a novation contract or a settlement, but as this classification has no link to EU consumer law, it is not for the CJEU to solve this query (para. 28).

A novation contract MAY validly change an unfair term

The main point highlighted in the opinion is that pursuant to the CJEU's case law, the consequence of an unfair term being not binding for the consumer, does not mean that the term is void but rather that it is voidable (paras. 37-38). In Banif Plus Bank case the CJEU has already declared that the consumer may decide to stay bound by a contract containing an unfair term provided that consumer's decision follows from a 'free and informed consent' (paras. 39-40). This leads AG Saugmandsgaard Øe to infer that if consumers freely and on an informed basis decide to novate a loan agreement and waive their rights to claim unfairness of floor clauses, they should have a right to do so (para. 41), whether this decision is made as a result of a court informing them of their rights or on a contractual basis (para. 42). Of course, this may only occur after the problem with the terms in the contract has already arisen and not beforehand (paras. 43-44). However, AG Saugmandsgaard Øe is not blind to the possibility that consumers signing such a novation contract might have not had all information to their disposal that would allow them to make such a free and informed choice or might not have had an actual choice to negotiate the contract terms (para. 51). Therefore, the national court needs to consider this on the circumstances of the given case, especially whether the bank did not impose the term on the consumer, acted in good faith, provided transparent terms and did not skew the contractual balance between the parties (para. 54).

Consumer ACTIVELY contributes to the adoption of the term

AG Saugmandsgaard Øe emphasises that there is a rebuttable presumption that any standard terms that have been pre-drafted by a trader are not individually negotiated terms and it is the trader who has the burden of proof of the contrary, whilst with all other terms it is the consumer who has to prove that the term was not individually negotiated (para. 61).

To prove that the term is individually negotiated, the bank here would not only need to prove that it conducted discussions with the consumer about the contractual terms, but also that the consumer took an active part during these discussions in setting the content of the term (para. 63). AG Saugmandsgaard Øe suggests that it would not be a sufficient proof of the conducted negotiations for the bank to claim that the floor clause in a given contract was set at a level lower than in other loan agreements (para. 64).

Material transparency and consequences of its lack

When assessing whether a contractual term on the basis of which parties waived their rights to make claims was transparent, AG Saugmandsgaard Øe elaborated on what is required to determine it materially transparent. The following should be tested: whether an average consumer would have been aware of the legal issue related to the floor clause, as well as of rights they had as a result thereof on the basis of UCTD, and whether they knew of the choice to either sign the novation contract or refuse it and go to court instead, as well as whether they knew they were waiving that last right (para. 79). It is also relevant whether consumers were given a reasonable time to make their decision (para. 81). Here, the consumer was not given the draft of the novation contract in advance of the meeting nor given a chance to take it home and think about it before signing it. Looking at the particular case, the AG also emphasises the broad scope of the waiver agreement and the possibility that the consumer was completely not aware of the unfairness of floor clauses when signing the novation contract (para. 80). The fact that there was a general knowledge, according to the Spanish Supreme Court, of the problem of unfairness of floor clauses and of its judgment in that case, should not release the bank from giving individualised information about this to the consumer. Moreover, the fact that there was a handwritten note confirming consumers awareness and understanding of a floor clause, might not be sufficient to evidence actual understanding of a consumer, esp. if that handwritten note was dictated by the bank (para. 82). Even more interestingly, the AG then follows in stating that just the lack of transparency could amount to unfairness in this case, as it would take away a possibility of consumers providing free and informed consent for contract novation (para. 83).