May airlines use T&Cs to prohibit passengers from assigning their rights to claim damages? - CJEU in Air Europa Lineas Aéreas (C-173/23)

In today's Air Europa Lineas Aéreas judgment (C-173/23) the CJEU looked into the application of the Unfair Contract Terms Directive (UCTD) to contracts concluded between air passengers and air carriers. Specifically, the passenger in case suffered damages as a result of a delay in receiving his checked-in baggage. He assigned his claim for damages against the air carrier (Air Europa) to a third party (Eventmedia). The air carrier disputes the transfer of rights to Eventmedia, claiming that assignment of passenger rights is prohibited by a clause in its general conditions of carriage (para 12). The referring court had sufficient evidence to declare this clause unfair ex officio but had doubts whether it could do so procedurally. First, the consumer was not part of the judicial proceedings, as he was represented by the assignee of his rights (whose standing was contested). Second, if the court declared the clause unfair the consumer, still remaining outside the judicial procedure, would not have received a chance to object to the application of this finding. 

Ex officio unfairness testing after consumers assigned their claims

First, the CJEU reminds that it has already previously declared (in the DelayFix case - C-519/19) that the UCTD's application is based on the capacity of the parties when they were concluding a contract (B2C) rather than the identity of parties entering into a dispute (paras 17-18). Therefore, the UCTD applies to more cases than just the ones, in which a dispute is between B2C contractual parties (para 25).

The CJEU reminds further that the ex officio judicial mechanism aims to compensate for the imbalance between consumers and professional parties (para 29). Other procedural issues remain in the discretion of the Member States, provided that they comply with the principles of equivalence and effectiveness (para 31).

To comply with the principle of equivalence here, the national court needs to determine whether national law allows it to ex officio assess whether a contractual term is contrary to national rules of public policy. If the answer is affirmative, the unfairness assessment also needs to take place ex officio (paras 34-35). This conclusion is not impacted by the consumer's presence in the judicial procedure, as if conditions for the applicability of the UCTD have been fulfilled (e.g., contract concluded B2C) its provisions benefit from having been assigned an equivalent status to domestic rules of public policy.

The assessment differs regarding the observance of the principle of effectiveness, as this considers the specifics of each procedure and the role that the contested legal provision plays in it. Specifically, " (...) whether a national procedural provision makes the application of EU law impossible or excessively difficult must be analysed by reference to the role of that provision in the procedure, its progress and its special features, viewed as a whole, and, where relevant, the principles which lie at the basis of the national legal system, such as the protection of the rights of the defence, the principle of legal certainty and the proper conduct of proceedings (...)." (para 37). Here then the fact that the procedure occurs between two professional parties weakens the need to provide as much protection against unfair terms, as if a consumer was one of the parties in the dispute, as there should be more balance between parties in the dispute (para 38). The principle of effectiveness does not require then the national court to test unfairness ex officio (para 39), unless the professional assignee of the consumer's claim had no real chance to rely on the unfairness in the procedure (para 40).

Consequences of unfairness in light of audi alterem partem when consumers are not part of the judicial process

When national courts find a term unfair ex officio, they follow the rules of audi alterem partem, of a fair hearing, by apprising parties in the dispute of court's findings and giving them an opportunity to debate these and to be heard (para 44). This applies also in case the dispute is between the assignee of the consumer rights and it is this assignee that needs to be informed of the unfairness finding, alongside the trader (para 46). As the consumer is not a party to the dispute, they do not need to be informed of the court's finding of unfairness and do not need to address it (para 49). It is the assignee of their rights that may object to it instead (para 47), although, obviously, they are unlikely to do so as they would then lose standing in the procedure (para 48).

***

The first part of the judgment has enormous practical relevance, as air passengers commonly assign their rights for compensation to third parties. It is, therefore, important for the effectiveness of passenger protection framework that air carriers could not block this process by prohibiting the transfer of rights in their general terms and conditions. This judgment will help assure this further, following the previous judgment in the DelayFix case (see our comment here), as professional assignees of consumers' claims will be able to raise unfairness of the prohibition of transfer of rights themselves. If this is prohibited or hindered, they could then rely on the breach of the principle of effectiveness and expect national courts to test unfairness ex officio (pursuant to para 40). This way assures more legal certainty than relying on the ex officio unfairness testing due to the principle of equivalence, as it could differ between the Member States whether ex officio testing of measures of public policy was allowed.

The Tide Is High... - AG Szpunar on rights of passengers in maritime transport in Irish Ferries (C-570/19)

AG Szpunar issued an interesting opinion today in the case Irish Ferries (C-570/19), which required interpretation of Regulation 1177/2010 concerning the rights of passengers when travelling by sea and inland waterway. With the majority of the attention of the courts on the interpretation of the provisions of Regulation 261/2004 awarding air passengers with various rights in case of flights delays and cancellations, as well as denied boarding, passengers of other modes of transport might have felt forgotten. Well, perhaps the tide is now changing for passengers of maritime transport.

Just by looking at the provisions of Regulation 1177/2010 we can see many similarities to Regulation 261/2004. In case of interrupted maritime travel, passengers are also supposed to be properly informed by their carriers about this, have a right to assistance (refreshments and snacks, as well as overnight accommodation, although the latter right is limited, see Art 17(2)), as well as a right to re-routing and reimbursement (Art 18). There is also a right to compensation in case of a delay in arrival - Article 19 - with the extraordinary circumstance releasing the carrier from this obligation, e.g. bad weather conditions or other circumstances which could not have been avoided even if all reasonable measures had been taken (Art 20(4)).

In Irish Ferries a vessel that was to serve a particular maritime route - Dublin (Ireland) and Cherbourg (France) - was not built and deployed on time, despite expectations to the contrary. This meant that although the route has been advertised and tickets for journeys on this ferry have been sold, the company found itself a vessel short and decided to cancel previously made bookings. Affected passengers were notified 7-12 weeks in advance, received full reimbursement or a re-booking option. In the case re-routing was chosen, passengers did not have to pay any additional costs if the ticket price was higher for the new journey, but they were not compensated e.g. for traveling to/from the alternative port of departure (para 24). Passengers who chose to travel via the UK through a land bridge could claim compensation for their fuel costs (paras 29-31). The contested part was that Irish Ferries decided that the awarding passengers with the right to re-routing and reimbursement was mutually exclusive with paying them compensation for a delay. They claimed that Art 18 and 19 did not apply simultaneously.

The Irish National Transport Authority considered that Irish Ferries should have paid compensation to passengers whose journey was delayed - in compliance with Art 19 - and should have compensated all additional costs related to re-routing - in compliance with Art 18.

AG Szpunar's advice is first that Regulation 1177/2010 indeed applies to this case scenario (see for the detailed analysis paras 45-74). 

Second, he confirms that re-routing should come at no additional costs to passengers, and costs of travel to/from alternative ports of embarkation and disembarkation should be included in this (paras 84-85, 94). 

Third, AG Szpunar confirms that passengers who have been re-routed may claim compensation in the delay of arriving at their final destination, contrary to passengers who chose reimbursement (para 108). Both the legislative history as well as other provisions of the Regulation, e.g. Recital 14, indicate this (paras 105-106). The delay should be calculated by comparing the arrival time laid down in the contract and the actual time of arrival at the final destination - and not at the port of disembarkation (paras 115-116).

The compensation amounts to 25% of the ticket price, and the ticket price should be seen as encompassing all additional optional services chosen by the passenger (e.g. for a booking of a cabin, or a kennel, or access to premium lounges) (para 124). This differs from a standard, flat-rate compensation that air passengers are granted under Regulation 261/2004 (para 125). However, AG Szpunar recognised the option for maritime carriers to separate clearly services provided under the contract that are not part of 'passenger services', which would exclude them from the ticket price (para 126).

Further, the late delivery of the vessel does not amount to extraordinary circumstances, as it should be seen as being inherent in the normal exercise of the activity of the carrier. The concept of extraordinary circumstances is thus the same as under Regulation 261/2004 (paras 134-135). (see for more elaboration on the test under the given circumstances: paras 138-157).

The last two findings pertain to who has jurisdiction over enforcing Regulation 1177/2010 and whether the claim for a right to compensation is time-barred if the passenger did not demand it within two months from the date on which the transport was supposed to be performed.

This is a detailed case law as it explores a new terrain of passengers' rights and treads carefully on it. The interpretation of various provisions of Regulation 1177/2010 is very much welcomed, as it not only introduces more legal certainty to this field, but also allows for an easier comparison between rights of passengers of various modes of transportation. Let's see what the CJEU will have to say in this case!

Professional assignees of consumer claims may rely on the UCTD - CJEU in DelayFix (C-519/19)

The CJEU issued a judgment today in DelayFix case (C-519/19), which pertained to a dispute under Polish law involving aspects of both substantive and procedural consumer protection. Namely, a flight from Milan (Italy) to Warsaw (Poland) was cancelled and the passenger who was due compensation from the operating air carrier (Ryanair) for this cancellation assigned their claims to DelayFix. When DelayFix filed this claim in a Polish district court, Ryanair invoked a jurisdiction clause from their terms and conditions, which assigned the jurisdiction to Irish courts instead. The questions this situation raises are twofold, really: 1. whether the assignee of the passenger's claim for compensation is bound by a clause from the air carrier's terms and conditions that were incorporated in a contract of carriage between the passenger and the air carrier; 2. if yes, could the assignee invoke the unfairness of such a clause?

Assigning of claims and jurisdiction clauses

The CJEU reminds in this judgment that "(...)in principle, a jurisdiction clause incorporated in a contract may produce effects only in the relations between the parties who have given their agreement to the conclusion of that contract" (para 42). This results from the need to protect third parties who have not consented to such specific clauses. However, if, and only if, national law provides that when a third party, not privy to the original contract, succeeds the original contracting party in all their original rights and obligations, then that third party could be bound by the jurisdiction clause (para 47).

Validity of jurisdiction clauses

The CJEU reminds again that the validity of a jurisdiction clause needs to be assessed in light of the law of the country whose courts are designated in that clause, i.e. Irish law in this case (paras 49-50). This, of course, means that the UCTD remains applicable, as well, as it applies to the contracts concluded in the air transport sector (para 52). The interesting observation of the CJEU comes from paras 53-54, where the CJEU invokes a previous judgment in the Lexitor case (see our comment here) as setting a precedent to apply EU consumer law regardless the identity of the parties in the dispute, but on the basis of the capacity of the parties to the agreement. The CJEU further states that this should be applicable to the UCTD. The following parts of the judgment are unsurprising, as the CJEU reminds that jurisdiction clauses are likely to be considered unfair as they may hinder the consumers' rights to take legal action (paras 55-59).

CJEU in Kanyeba: "contract of transport" and the scope of Directive 93/13

Dear readers,

last week the Court of Justice rendered a decision of some consequence in the field of unfair terms - which was to an extent unexpected in light of the somewhat less conclusive AG Opinion published before the summer.

In Kanyeba, the CJEU had to decide on the applicability of Directive 93/13 to the legal relationship between a passenger who had boarded a train without paying a ticket and the railway operator: was this a matter of contract law or, given the fact that the consumer was seemingly not intending to pay the price, a matter or administrative regulations? Under Belgian law, authoritative court decisions had clarified that unfair terms control should apply in either scenario. The referring court, however, seemed to disagree: whether the Directive applies, it reasoned, is a matter of EU law and should thus be clarified by the Court of Justice.

The Court's answer suggests that the Directive does, in principle, apply. This descends from the fact that, according to the Court, Regulation No 1371/2007, which defines certain essential rights of passengers of train transport services, must be interpreted to mean that a contract to transport under the Regulation (and hence, it seems, for purposes of consumer protection) is concluded as soon as a passenger boards a train with the intention to travel - irrespective of whether they have a ticket or whether they intend to purchase one. This conclusion, according to the CJEU, is warranted both by the wording and context of article 3(8) of the Regulation and by the consumer protection goals. The latter would be undermined, the court says, if consumers were exposed to losing all protection as soon as they boarded a train with no ticket. 

The finding may not mean much in the case at stake as the Court observes that the terms and conditions featuring the terms under consideration in Kanyeba - some very steep penalties for failing to buy a ticket in time or pay an extra charge - may quite possibly be exempted from unfair terms control under article 1 of the UCTD, which safeguards national statutory or regulatory provisions if they are applicable irrespective of the parties' will. 

Of probably broader interest - if in itself not incredibly surprising - is the answer given in this case to a further question raised by the referring court: if the penalties were to be found unfair, would the court be allowed to "replace" them by means of general tort law?

The Court's answer comes in two instalments, which I think must be separately considered: 

1) in para 74 the Court reiterates that the Directive precludes "that a national court replace that term, in accordance with the principles of its contract law, with a supplementary provision of national law"; however, a little above the Court reasons that

2) the question whether circumstances such as those at issue in the main proceedings are, moreover, capable of falling within the ambit of the law governing non-contractual liability does not come within the scope of Directive 93/13, but of national law.

The Directive, the Court says, does not seek to harmonise non-contractual liability. Hence, we seem to understand, it does not pre-empt claims in torts by the seller concerning the same circumstances which the penalty clause would have applied to. 

This conclusion makes very good sense and could help clarify some questions that scholars in various Member States have been grappling with in the past few years. In particular, I think it is safe to read two implications into this decision: 

a) a national court cannot decide, so to say ex officio, to grant damages on the basis of general rules to a party who was seeking to enforce an unfair term;

b) however, the Directive does not preclude awarding of damages when the claimant makes a relevant submission and fulfils all the conditions for granting such a claim as established by national legislation. 

While the comparative lawyer in me would have loved it for the Court to engage in a more general analysis on the notion of contract under the UCTD, I think this is a very balanced decision which deals well with a number of relevant issues without excessively muddling the waters or hiding away. 

Ryanair seeks to kick out claims intermediaries via T&Cs

Dear readers, 

you may have not noticed - who reads standard terms anyway? - or may not be directly affected if you do not fly Ryanair, but there are interesting developments to be observed. 

Since some time, Ryanair has included the following clauses in its terms and conditions (visited on 24 July 2018):

15.2.2 Passengers must submit claims directly to Ryanair and allow Ryanair 28 days or such time as prescribed by applicable law (whichever is the lesser) to respond directly to them before engaging third parties to claim on their behalf. Claims may be submitted here

15.2.3 Ryanair will not process claims submitted by a third party if the passenger concerned has not submitted the claim directly to Ryanair and allowed Ryanair time to respond, in accordance with Article 15.2.2 above.

This is meant to preempt the intervention of intermediaries, such as EUclaim.nl, offering disappointed passengers assistance in pursuing their claims for compensation, in particular under the provisions of the passenger rights regulation.

In order to give effect to the terms (which passengers unsurprisingly may ignore), it has emerged this week, the company has sent a number of claim agents a cease-and-desist request. They essentially claim that the intermediaries are inducing contractual breach on the side of the consumers, who are invited to skip direct contact with the airline. Also, the airline maintains that consumers are in this way deprived of a substantive part of the compensation they would be entitled to (EUclaim, for instance, withholds 29% of the compensation paid, plus administrative fees). 

The Dutch consumer association Consumentenbond is not persuaded by Ryanair's good faith in the dispute, recalling the company's bad reputation qua claims management. 

For us, the interesting legal question would be whether courts would uphold the clause allowing Ryanair to ignore claims submitted by third parties without prior consumer request. This may or may not depend on the concerned country's implementation of Directive 93/13. A look at the directive's annex suggests that, while the term may not be a proper impairment in the sense of point q) in the list, it may be an inappropriate limitation of the consumer's rights to the effects of point b). It will be interesting to see whether any consumer associations will be willing and able to challenge the terms in court, or anyway whether pressure will be made on the company to get rid of them. We shall keep an eye open for future developments!

Joined cases Krüsemann - the Court disagrees with AG Tanchev

Dear readers, 

it feels like yesterday - and indeed it was just a couple of days ago! - that we were discussing the Advocate General's opinion in the joint cases concerning "wildcat" strikes at Tuifly. With incredible speed, the judgment was published today. 

The main question addressed in the opinion, and also the only question discussed in the judgment, is whether strikes of an airline's own personnel - and in particular informal strikes such as that at stake in the case before the Court - represented extraordinary circumstances within the meaning of the Passenger Rights Regulation. If you had read my previous post, you will know how much as a surprise the AG's opinion had come to me (and a few of my senior co-teachers in consumer and contract law to be honest!). 

Luckily, reading the Court's decision, it seems we will not have to change our teaching after all!

The decision, clearly excludes strikes arising from conflicts internal to the airline from the remit of "extraordinary circumstances"- including, for sound legal reasons, wildcat strikes. 

As to strikes in general, the Court observes that extraordinary circumstances have to meet two cumulative conditions: they must not be inherent to the normal exercise of the carrier's activity and they must not be within the carrier's sphere of control [para 32]. 

In the situation under consideration, according to the Court, it is clear that the strike action followed the unexpected announcement, by the company, of a restructuring plan. As the Commission had apparently submitted, the Court considers restructuring to be a normal component of the exercise of economic activity [para 38-40]. `To the extent that conciliatory actions on the side of the company were effectively able to stop the strike after a few days, the Court also considers the strike not to fall outside Tuifly's sphere of control [para 43-45].

With reference to the possibility of differentiating between "regular" and "wildcat" strikes, the Court raises one important point: namely, a differentiation based on what is legal and illegal industrial action in the country where the dispute originates would make passenger rights dependent on national law and give rise to discrepancies in consumer protection - something that the Regulation by its own nature seeks to eliminate [para 47].

Thus, the CJEU concludes, wildcat strikes following the announcement of a restructuring decision cannot fall within the notion of extraordinary circumstances outlined in the Passenger Rights Regulation. 

Sorry, AG Tanchev, better luck next time!     

No loophole for airlines- ECJ says an electronic complaint is a complaint in writing

On 12^th April the ECJ judgement on the Finnair case was published on article 31 of the Montreal Convention, with the main question revolving around what qualifies as a complaint in writing.

This is important as a complaint in writing is a requirement for bringing an action against the carrier.

The Court followed the AG Opinion (you can find the blog post on the AG opinion here).

 

Facts

Ms Mäkelä-Dermedesiotis travelled from Malaga to Helsinki on a Finnair flight in 2010. Upon arrival she discovered that items were missing from her checked-in luggage. On the same day of the flight, Ms Mäkelä-Dermedesiotis contacted the customer service of Finnair to report the incident. In that phonecall, she identified the lost items and informed the Finnair representative of their value. The representative entered the information provided by Ms Mäkelä-Dermedesiotis into the Finnair electronic information system. Ms Mäkelä-Dermedesiotis had taken out insurance and received compensation for her loss and the insurance company, Fennia, was subrogated in her place in the claim against Finnair. Finnair argued that Ms Mäkelä-Dermedesiotis had not filed a written claim within the periods laid down in Article 31 of the Montreal Convention.

 

Judgement

The first question was used to establish whether the requirements for bringing an action against the carrier are both filing a complaint within a certain time limit and in writing. The Court answered that indeed art. 31(4) of the Montreal Convention is to be interpreted in conjunction with art. 31(2) and 31(3), meaning that the complaint must be made in writing within the period specified in art.31(2).

For the second and main question, the Court chooses to interpret the term ‘in writing’ in a broader way stating that it ‘must be interpreted as referring to any set of meaningful graphic signs, irrespective of whether they are handwritten, printed on paper, or recorded in electronic form’ (para 35). The court adopts this broad interpretation of a complaint in writing which allows it to catch up to technological developments, as electronic complaints are common practice, especially for air carriers.

A narrow interpretation that would exclude electronic complaints would place a disproportionate barrier to consumers seeking to complain, as highlighted by the Court (para 34). As the Court leaves the form of the complaint open it draws attention to another element, that of being able to identify the passenger which made the complaint. In essence, the Court moves away from the written requirement, as one that needs to be made on paper, to any medium, including an electronic one, which allows for retrieval of information and identification of the complainant.

The third question asks whether the requirement of writing is fulfilled when a representative of the carrier records the complaint in the carrier’s electronic system with the knowledge of the passenger. The court does not view it as problematic that the passenger may be assisted to file the complaint. However, it sets an additional requirement that the passenger should be able to review the complaint and amend it or supplement it within the deadline for filing a complaint. (para 47). Not only is there a positive answer to the third question, but the court places an additional obligation to air carriers, not specifically listed in the Montreal Convention.

Finally, the fourth question was whether art.31 of the Montreal Convention prescribed any other requirements except that of giving notice of the complaint. The Court decided that since the Montreal Convention specifies the time limit for the filing of the complaint as well as the form (in writing) and the consequences of failure to comply with these requirements, there is no other substantive requirement (para 53).

 

Conclusion

To sum up, this is a sensible judgement that protects the interests of consumers and showcases that the Court understands the realities of air travel, as experienced by passengers daily. It also sends out the message to air carrier companies that they cannot circumvent their obligations from the Montreal Convention on the basis of an anachronistic interpretation of the wording of the Convention.

AG Tanchev: Wild-cat strikes are extraordinary circumstances (joined cases Krüsemann)

When a large number of British Airways flights were cancelled in 2017 due to strikes of the company's personnel, the competent UK regulator advised disappointed passengers to claim compensation under the Air Passenger Rights regulation: while the point had never been expressly decided upon by the CJEU, it the restrictive way in which the concept of extraordinary circumstances had generally been applied by the court suggested that only strikes truly "external" to the airline would excuse them from paying compensation. 

The opinion issued today by AG Wahl in a number of joint cases Krüsemann brought against TUIfly suggests a different answer to this general question. 

In the case at stake, a wild-cat strike had taken place agains the carrier due to unpopular restructuring plans: without a strike being officially announced by the unions, much of the staff called in sick on a number of consecutive days, effectively disrupting the airline's operations. This is a rather specific case because, technically, strikes of this kind are not legal - which makes it harder to impute them to someone who, like the carrier, is not breaking the law. 

AG Tanchev's opinion makes at points larger, at points smaller differentiations between regular and irregular industrial action.

On the one hand, the AG argues [at para 57] that 

the objectives of Regulation No 261/2004 point toward the inclusion of ‘strikes’ within the concept of ‘extraordinary circumstances’. This is buttressed by the case-law of the Court, detailed above, at least in the context of substantial absences affecting operational capacity, on the interpretation of ‘extraordinary circumstances’ to date. 

On the other hand, the following paragraph [58] states that 

 in a Union governed by the rule of law, so-called ‘wildcat strikes’ are not inherent in the normal exercise of the activity of the air carrier concerned. They are not akin to something that is intrinsically linked to the operating system of the aircraft, so that it is inherent in the normal exercise of an air carrier’s activity. I further take the view that informing the employees of a potential restructuring did not bring the wildcat strike within the control of TUIfly, given that a wildcat strike was not the inevitable consequence of this action.

This last paragraph seems particularly focussed on the illegal nature of the strike at hand, even though the last sentence could be generalised to legal strikes - of course it was not informing employees of the restructuring that led to the strike, but the intention to do so - and this would be no less true of a "regular" strike. 

He also notes in one of the footnotes (fn 35) to the opinion that 

the conclusion to the effect that a wildcat strike is an extraordinary circumstance is in conformity with a recent Commission proposal to amend Regulation No 261/2004 which provides a non-exhaustive list of circumstances considered as ‘extraordinary circumstances’ for the purposes of the regulation. This proposal includes ‘labour disputes at the operating air carrier or at essential service providers such as airports and Air Navigation Service Providers’.

Thus, according to AG Tanchev, it seems that all strikes would fall under the notion of extraordinary circumstances.

The impact of this conclusion on consumer rights, however, is mitigated by the answer he gives to another question raised in the preliminary ruling request: when the Regulation refers to extraordinary circumstances "which could not have been avoided even if all reasonable measures had been taken", does it intend that the circumstances as such could not have been avoided, or that their consequences could not be prevented?

AG Tanchev considers the latter to be the correct interpretation: the fact that a certain event cannot be avoided does not mean that it is impossible to prevent it, through appropriate arrangements, from causing delays or cancellations. It is for the national court invested with the question to determine whether, in the circumstances of a specific case, all reasonable measures have been taken in order to prevent the unforeseen circumstances from causing significant disruptions. 

The opinion seems destined to bring about quite some forehead-scratching. On the one hand, there are bits in it that will be welcome both on the side of the industry and on that of consumer advocates; on the other hand, by making much depend on national courts' appreciation of the circumstances of a specific case, it seems destined to increase uncertainty. It also seems likely that air carriers would use the case, if the opinion were taken up by the court, to oppose all requests a prima facie denial - and then see whether consumers are going to take their claim to court. 

It remains to be seen whether the Court will follow the AG on this path.

AG Sharpston Opinion in Finnair case : An electronic complaint is a complaint in writing

On the 20^th of December, the AG opinion on Case C-258/16 Finnair Oyj v Keskinäinen Vakuutusyhtiö Fennia (hereafter: Finnair case) was published. The case concerned the interpretation of Art. 31 of the 1999 Convention for the Unification of Certain Rules Relating to International Carriage by Air (hereafter: Montreal Convention) on timely notice of complaints.

Facts of case

Ms Mäkelä-Dermedesiotis travelled from Malaga to Helsinki on a Finnair flight in 2010. Upon arrival she discovered that items were missing from her checked-in luggage. On the same day of the flight, Ms Mäkelä-Dermedesiotis contacted the customer service of Finnair to report the incident. In that phonecall, she identified the lost items and informed the Finnair representative of their value. The representative entered the information provided by Ms Mäkelä-Dermedesiotis into the Finnair electronic information system. Ms Mäkelä-Dermedesiotis had taken out insurance and received compensation for her loss and the insurance company, Fennia, was subrogated in her place in the claim against Finnair. Finnair argued that Ms Mäkelä-Dermedesiotis had not filed a written claim within the periods laid down in Article 31 of the Montreal Convention.

Article 31 of the Montreal Convention states that:

1.Receipt by the person entitled to delivery of checked baggage … without complaint is prima facie evidence that the same has been delivered in good condition and in accordance with the document of carriage or with the record preserved by the other means referred to in paragraph 2 of Article 3

2.In the case of damage, the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and, at the latest, within seven days from the date of receipt in the case of checked baggage … In the case of delay, the complaint must be made at the latest within twenty-one days from the date on which the baggage … [has] been placed at his or her disposal.

3.Every complaint must be made in writing and given or dispatched within the times aforesaid.

4. If no complaint is made within the times aforesaid, no action shall lie against the carrier, save in the case of fraud on its part.’

Questions

The case eventually reached the Supreme Court of Finland which referred the following 4 questions to the CJEU:

(1) Is Article 31(4) of the Montreal Convention to be interpreted as meaning that, to preserve a right of action, it is necessary, in addition to giving notice of a complaint in due time, that the complaint be made in writing within the times specified, in accordance with Article 31(3)?

(2) If, to preserve a right of action, a complaint must be made in writing in due time, is Article 31(3) of the Montreal Convention to be interpreted as meaning that the requirement of writing may be fulfilled in an electronic procedure and also by the registration of the damage in the information system of the carrier?

(3) Does the Montreal Convention preclude an interpretation by which the requirement of writing is regarded as fulfilled where, with the knowledge of the passenger, a representative of the carrier records in writing the notice of complaint/the complaint either on paper or electronically in the carrier’s system?

(4) Does Article 31 of the Montreal Convention subject a complaint to further substantive requirements than that of giving notice to the carrier of the damage sustained?’

Opinion

The incident in question, where items were missing from the luggage but not the luggage itself, is best characterised as damaged baggage rather than loss of baggage, according to the AG. That is important to ensure that Art. 31 of the Montreal Convention applies.

The answer to the first question according to the AG is that the notice under Art. 31 needed not only to be made within the 7-day limit but also to be made in writing in order to be valid. That is hardly surprising as Art. 31(4) of the Montreal Convention clearly sets out both requirements and any other interpretation would leave the airline carrier vulnerable to complaints about damaged luggage that would be difficult to verify.

The real essence of the opinion can be found in questions 2 and 3 which ask whether an electronic record of the complaint via representative is compliant with the requirement of Art. 31 of the Montreal Convention to have the complaint ‘in writing’.

In order to answer the second question AG Sharpston contrasted the main characteristics of written and oral communication. The key characteristics of written communication are permanence and retrievability, while oral communication is only recalled from memory and it is difficult to verify. In other words, verba volant, scripta manent. The question then becomes whether electronic communication satisfies the requirements of permanence and retrievability and according to the AG, that is indeed the case. To support her argument, she points out how it is increasingly common, especially for airline companies to keep all their records electronically and how limiting the meaning of ‘in writing’ to a record made in paper would go against the purpose of the Montreal Convention. (para 44 of AG Opinion).

As Finnair held an electronic record of the complaint it was always possible to generate a printout of the complaint which would mean that even a stricto sensu interpretation of ‘in writing’ as ‘in paper’ would be satisfied. (para 49 of AG Opinion) This is a logical interpretation of the condition one that reflects technological developments and everyday practice and is not too onerous for consumers.

This brings us to the third question of whether the consumer needs to record the complaint themselves or whether someone else can do it on their behalf and under their direction as was the case here where the complaint of Ms Mäkelä-Dermedesiotis was recorded by a representative of Finnair. According to AG Sharpston, the Montreal Convention does not set any requirements that aim to prove the origin of the complaint, such as signing the complaint; meaning that the Montreal Convention does not preclude enlisting help for ‘transforming the complaint he wishes to make into written form’ (see para 57 of AG Opinion). So, a complaint that originated with the passenger who decided to report the complaint, as well as its content, that a representative of the airline assisted to record, is compliant with the requirements of the Montreal Convention.

Finally, the answer to the fourth question was that there are no other substantive requirements to be satisfied other than the complaint to be given in written form in the time limits prescribed.

AG Sharpston provided a convincing and intelligent analysis of the issues in question which was well grounded in the realities of the passenger-airline relationship. Airline companies should not be allowed to circumvent their responsibilities to passengers based on a narrow interpretation of the law. Accepting that electronic communications constitute communication ‘in writing’ is logical and consistent with the way companies function in the 21^st century. Overall, this is a welcome opinion that, if adopted by the Court will make a difference for many consumers in what is a very common occurrence. This blog will keep you informed you of all the developments of the case.