Re-routing: good or bad option? - CJEU in Austrian Airlines (C-826/19)

Most of us are still pretty much grounded and flights are few and far between, but as the travel sector is starting to slowly pick up passengers again, it may be worth it to look at the newest judgment on Regulation 261/2004. On 22 April the CJEU issued a judgment in the case Austrian Airlines (C-826/19). In this Austrian case the passenger claimed compensation due to the re-routing of their flight from Berlin Tegel airport to Berlin Schönefeld airport by the air carrier. This was caused by the poor weather conditions delaying the arrival of the aircraft in Vienna, with a later take off towards Berlin than scheduled, which would lead to the plane arriving at Tegel after the airport was closed for the night already. Generally, we would expect most passengers appreciating re-routing to a nearby airport, as this should avoid flight's cancellation or even really long delays. However, issues may arise, as we could see on the example of this case.

 

This case is unusual for four reasons set out below.

 

1) The delay in arrival at the Berlin airport (although the wrong one) was only 58 minutes from the scheduled arrival time.

 

The referring national court had doubts whether the flight Vienna-Berlin Tegel should be considered to be delayed or cancelled. If it was to be considered as delayed: Should the delay be calculated at the moment of landing at the alternate airport or rather when the passenger reaches the originally scheduled destination airport, or another agreed, pursuant to Article 8(3) Reg 261/2004 place?

The CJEU looks back to the judgment in the case Sousa Rodriguez (we commented on it back in 2011: More Compensation to Air Passengers...) and reminds that it is insufficient for a flight to take off according to the scheduled route, for it to be considered to be performed and not cancelled. No, the flight also needs to complete that scheduled route for this determination to be made (para 35). Consequently, if a plane is re-routed to a different airport, it cannot be considered to be performed according to the original schedule, and therefore, the original flight should generally be treated as cancelled (para 36). However, if that alternate airport is serving the same city or region, then such a determination would be contrary to the purposes of Regulation 261/2004, as it aims not only to protect passengers but also to minimise the amount of cancelled flights (paras 37-38). Therefore, air carriers should not be discouraged from re-arranging the passengers' flights to a nearby airport, if they then also cover costs of transportation to the original destination airport, pursuant Article 8(3) Reg 261/2004 (para 40). Passengers of such flights may then not claim compensation for their flights having been cancelled. That being said, if the delay in reaching the original destination airport is longer than 3 hours, then the passenger should be entitled to compensation. The CJEU then confirms that the delay should be calculated not at the moment the passengers reach the alternate airport, but rather, when they arrive either at the airport of their original destination or at another agreed with the air carrier place - when they used the alternate means of transportation to do so (para 48).

 

2) Poor weather conditions are usually perceived as an extraordinary circumstance releasing the air carrier from their compensation obligations pursuant to Regulation 261/2004. 

 

As the poor weather conditions took place during the preceding flights of the aircraft scheduled to travel from Vienna-Berlin Tegel, the question was whether the air carrier could invoke them as an extraordinary circumstance for subsequently delayed flights of the same aircraft.

This question was previously answered by the CJEU in the TAP case (see our comment: Deja Vu: Creative interpretation...), where the Court noted that provisions of Regulation 261/2004 should allow to account for an event to constitute an extraordinary circumstance not only for the flight directly affected by it, but also for the subsequent flights, for which a given aircraft was scheduled (paras 53-54). However, it is for the national court to determine whether there was a direct causal link between the extraordinary circumstance impacting one flight, and the subsequent delay or cancellation of another flight. The schedule of the aircraft should be taken into consideration in this assessment (para 56).

 

3) The passenger claimed that the air carrier was obligated to offer them free means of transportation between Schönefeld and Tegel airports, although the passenger lived only 24km away form Schönefeld airport. 

 

Here the doubts were whether re-routing took place as described in Article 8(3) Regulation 261/2004, which provision is applicable when a city is served by several airports. Doubts arose whether this provision is applicable as technically speaking Berlin Schönefeld airport is not located within the city borders of Berlin (para 19). CJEU draws attention to the fact that the Regulation does not define the notions used in this provision, thus they should be interpreted in a harmonious manner on the EU level. Therefore, it is irrelevant that national administrative rules might have placed the two airports in different regions. As long as the location of the airports is in the close vicinity to the same city, they are both serving the same city (paras 23-24). Such an interpretation allows the fulfilment of the objectives of the Regulation (assuring a high level of protection of passengers), as well as protects the interests of air carriers, as the determination of when an airport is serving a particular city or region does not depend on national administrative regulations (paras 27-29).

 

Another question asked whether the passenger should have been the one to request transportation to the original destination airport or another place, or whether the air carrier should have been the one to offer such an option.

Article 8(3) of Regulation 261/2004 obliges air carriers to cover the costs of the transport of passengers to the original destination airport or to another agreed place. This provision does not place an express obligation on the air carriers to actively, of their own initiative offer transportation to such locations, however, the Court interprets it broadly and reads such an obligation from this provision, following the protective aims of the Regulation (paras 60-63). Such an interpretation is supposed to balance interests of both passengers and air carriers. Passengers will be spared inconvenience of having to arrange for alternate means of transportation to the original destination airport and the air carriers will be able to avoid having to pay compensation by ensuring that passengers reach that original destination airport with the delay shorter than 3 hours (para 65).

4) The passenger claimed compensation from Regulation 261/2004 as a result of the air carrier breaching its obligations of care and assistance from Article 8(3) Regulation.

 

The CJEU looks back again at the Sousa Rodriguez case, in which the Court confirmed the right of passengers of cancelled and re-routed flights to claim damages (para 69). However, such damages should compensate specific costs that the passenger had to cover as a result of the air carrier not providing them with necessary care and assistance (para 70). These costs had to have been appropriate, reasonable and necessary. Consequently, a passenger may not claim compensation from Regulation 261/2004 to cover such damages, as its amount is determined in an objective way, unrelated to specific damages of each passenger (paras 71-72).

Of unfair terms, novation agreements and other not so magical creatures - CJEU in C-19/20

Dear readers, 

as the spring advances (not really, for those of us in continental Europe, but we keep faith), we should catch up with some case-law developments from the past weeks. 

Hereby, thus, a quick overview of a somewhat convoluted case decided by the CJEU on 29 April - IW v Bank BPH SA. After Dziubak, it is no surprise that more cases would be pouring in from Poland on the subject of credit in Swiss francs. 

In the case under discussion, the referring court was of the opinion that the consumers had been sufficiently informed about the risks associated with the mortgage contract, so that the main indexation interest was not unfair; however, within this mechanism, the bank had included an indication that the final cost to the consumer would incorporate a resale margin for the bank which was not further elaborated upon in the contractual documents. This left the bank unconstrained in determining such margin and the consumer unaware of what factors may affect the bank's determination.

The blank resale margin clause was later amended by means of an agreement between the parties which, according to the Court, established a sufficiently clear mechanism - thus "fixing" the term. 

While the consumers did not agree with the referring court's assessment of the main indexation terms, ultimately the questions for the CJEU all concerned the situation with regard to the resale margin mechanisms. 

The first question concerned the effect of the agreement amending the resale margin clause on the unfairness assessment: must a court exert unfair terms control in spite of the agreement? According to the Court, in substance, the agreement prevails when the consumers have signed it in full awareness of the fact that they were waving their rights to unfair terms control. Otherwise, the Court is supposed to assess the term and, where it finds it unfair, establish that the consumers are entitled to be put in the same position where they would have been without the agreement. 

The second and third questions concerned the admissibility of a finding that only the resale margin term should be invalidated, while leaving the rest of the indexation mechanism in place. Would such approach go against the CJEU-sanctioned prohibition of court revision of unfair terms? The Court does not give a final answer to this question, but instructs the national court to establish whether the resale margin determination can be considered as a "contractual obligation distinguished from he other contractual terms, capable of being the subject of an individual examination of its unfairness" [para 71]. The removal should not, on the other hand, remove an unfair element within a term, altering "the substance" of such term [para 80]. This is an interesting question in fact: on the one hand, it is obvious that the combination of indexation and resale margin was, taken together, the mechanism through which the cost of credit was fixed. On the other hand, the clause determining the bank's resale margin could very well be separately set at zero, without - as the referring court observes, creating a gap. This sounds, at first appraisal, like a question that would be best addressed in legislation. While the referring court mentioned the existence of legislation dealing with the unfair term in the MS, this legislation, which was passed after the contract was entered into, is in essence irrelevant to the dispute according to the CJEU.

The fourth question is more straightforward and concerns the consequences of finding that the resale margin term was unfair: when should the contract be invalidated? According to established case-law by the CJEU, whether a contract should be held in place after a finding of unfairness depends on whether, under national law, it is capable of continuing to function - based on an objective assessment and thus not on the subjective position of one of the parties [90]. The referring court wondered whether the contract's invalidation had a sanctioning character and to what extent the consumer's preference played a role, to which the court replied by summarising its case-law to the effect that the judge must first determine the consequences of unfairness on the contract and then, when relevant, allow the consumer to decide whether they prefer invalidation of the contract or maintaining the unfair term.

The fifth and final question went into the referring court's role with respect to the consumer's choice between invalidation and preservation of the unfair term: should the court actively inform the consumer about their options and the implication of their choices, or could this function be entrusted to the consumer's legal representation when they have one? The CJEU's answer in this respect is very clear: since it is upon the court to make sure that the consumer's rights in the procedure are respected, and in particular that their decision in respect of the outcome of unfair terms control is the result of "free and informed consent", the court must also inform the consumer about their choices [95].

Nothing in this decision comes particularly as a surprise. The more difficult points, ultimately, go back to the referring court who needs to decide whether the consumer has in fact waived the term's invalidity via the novation agreement and, if not, must assess whether the resale margin mechanism can be severed from the overall indexation mechanism (and, if not, must decide on the future of the contract). Unlike in Dziubak, it is not obvious in this case that the consumers would gain from the contract's overall invalidation, which could or could not add to the case's complexity. Curious what the Polish colleagues in the blog team may have to say on this case!

'Consumer Protection in Transition: Digital Transformation and Better Enforcement' - conference announcement

We should block our calendars for another interesting conference on consumer protection. University of Rijeka (Croatia), and more specifically Emilia Mišćenić, organises The 7th Petar Šarčević conference 'Consumer Protection in Transition: Digital Transformation and Better Enforcement' on 23-25 September. As the title suggests the speakers will discuss various issues arising from the need to adjust consumer protection to the challenges of the digital transformation and new technologies. Keynote speakers include Geraint Howells, Hans-W. Micklitz, Jürgen Basedow, Christian Twigg-Flesner, Pascal Pichonnaz, Vesna Tomljenović.

The conference will be organised in a hybrid model and participation (whether onsite or online) is free of charge. The detailed programme and registration details may be found here.