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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Hello? Hello? - on affordable use of mobile phones abroad

We have posted before about the planned changes in the roaming costs for people travelling across the EU. (Towards no stress roaming) Last week the European Parliament and the European Council reached an agreement about a new regulation on roaming charges, that is supposed to be adopted by the council in June this year and start binding Member States as of 1 July 2012 (repealing regulation no 717/2007).

As of 1 July 2012 the cost for consumers of using data services on their mobile phones while being abroad will be lowered to 0,70 Euro per 1 MB, then to 0,45 Euro in 2013, and 0,20 Euro on 1 July 2014. At this moment, there is no cap for such charges set for the operators. Additionally, the cost of a 1 minute call should not exceed 0,29 Euro from 1 July 2012 and 0,19 Euro from July 2014 (current maximum is 0,35 Euro). Texting will also be cheaper for consumers from current 0,11 Euro to 0,09 Euro on 1 July 2012 and 0,06 Euro on 1 July 2014. These new price caps are expected to save families over 200 Euro each year, and over 1000 Euro to business travellers (see here).

Moreover, the currently binding regulation obliging operators to send alert messages to consumers who are approaching 50 Euro of charges in a month, is supposed to have its scope widened to cover consumers travelling outside the EU as well. This initiative is supposed to prevent consumers receiving shockingly high bills after their holidays abroad. Of course, the network in a country outside the EU would have to be compatible with the operator's settings in order for such an alert to be received.

The most important change is the introduction of a separation between domestic and roaming services that are being offered to consumers. This means that consumers will be able to choose (as of 1 July 2014) separate operators for their domestic and their roaming services, taking into account which operator has the best deal in either of these sectors for them. Consumers will be able to keep the same phone number while using two different operators. Increasing competition on the mobile phone market is bound to lead to further lowering of prices and making telecommunication sector more consumer-friendly. (New deal to cut mobile roaming prices, including data services)

For more information see the website on roaming or FAQ.

Consumer credit for dummies - new guidelines

One of the most recent consumer law directives adopted by the European Commission was the Consumer Credit Directive (2008/48/EC). Yesterday, the European Commission published Guidelines as to the application of this Directive in relation to costs and the Annual Percentage Rate of charge (APR). This Directive was established in order to assure that consumers all over Europe had access to the same standard information on the basis of which they could make a decision whether and on what conditions to take a credit.

As we all know, financial literacy is a problem among consumers and often the credit agreements are written in a language that makes understanding of the contract terms almost impossible. If a consumer misunderstands the credit information, he may take out a more expensive credit than necessary, may miscalculate the credit cost and increase the risk of insolvency and indebtedness. The Directive is supposed to counteract that, but in order to be effective it needs to properly and uniformly understood and interpreted. In order to facilitate this, the European Commission issued these Guidelines.

The Guidelines point out to creditors and consumers how to calculate the total cost of credit and the APR charge, as well as explains certain assumptions that have been made in the Directive. When the APR is properly estimated, the consumers can easily compare offers and know exactly how much the credit, including all its elements (e.g. charges on top of borrowing rate), will cost them.

RAPEX - keeping the danger at bay

RAPEX a is a rapid alert system that has been set up to detect dangerous non-food products that enter the European market from third countries. RAPEX functioning in the past years (it was set up in 2004) has greatly improved allowing for earlier detection of risky products (even at the point of entry) and effective removal of such products from the EU market. (Consumers: latest report on safety of products shows fewer dangerous items reaching the EU market)

The report on the functioning of RAPEX in 2011 shows that China remained the number one country who triggers the alert (with more than half of RAPEX notifications). Most significant is the decline from 23% in 2004 to 8% last year of notifying risky products of unknown origin. The RAPEX system allows for more precise identification with every year. The most frequently notified products are: clothing, textiles, toys and motor vehicles. The countries who notify the most are: Spain, Bulgaria, Hungary, Germany and the United Kingdom.

In order to improve product safety the European Commission is busy creating a new system of 'Seamless Surveillance' that would allow for tracking a product down the length of the industrial chain, from the manufacturer all the way to the consumer.

Europe and you

As a follow-up to the previous post, other initiatives for European citizens (also in their capacity of consumers) are:

1. The launch of the broadest public consultation ever on EU citizens' rights. Have you ever encountered difficulties moving to another EU country or shopping cross-border? European Commissioner Viviane Reding invites all European citizens to fill out a brief questionnaire to express their views on citizens' rights in the EU. See the press release and the questionnaire 'your rights, your future'. The consultation will be open till 9 September 2012.

2. A manifesto for re-building Europe from the bottom up, published by 90 European intellectuals. The manifesto introduces the idea of a 'European year of volunteering for everyone', utilising existing programmes such as the European Voluntary Service and Erasmus for All.

Erasmus, anyone?

I begin my contribution to this blog with a slightly off-topic post.

Tomorrow, or today- the 9th of May, by any means, is Europe day!

The Commission has chosen to celebrate by registering the very first European  Citizens' Initiative. What is this? Since 1 April 2012, groups of European citizens from at least seven different Member States can exhort the Commission to propose legislation to certain ends, provided that the Commission has competence over the subject. The Initiatives are then put in an online register and stay open for subscription for a period of 12 months. If a proposal reaches one million subscriptions within that time span, the Commission will act towards the approval of legislation in the desired direction (see also our previous post: European Citizens' Initiatives).

The Initiative which will be registered tomorrow is "Fraternité 2020 – Mobility. Progress. Europe". It was submitted by a group of citizens living in Austria, Belgium, Hungary, Italy, Luxembourg, Romania and Spain and seeks to "enhance EU exchange programmes – like Erasmus or the European Voluntary Service – in order to contribute to a united Europe based on solidarity among citizens".

Eager to step up for more Erasmus or to bring in your own initiative (maybe in the field of consumer law, or...)? All the info you need can be found on the Citizens' Initiative website.

And happy Europe day!

eHealth

We talk about e-commerce, e-communications, e-privacy, and taking into account the widespread use and influence of the internet in and on our lives, it does not surprise that even such personalised services like healthcare begin to be more and more influenced by the electronic world. Did you know that it's an eHealth week right now? To talk about better lifestyles, the European Commission together with Denmark organised a conference in Copenhagen 'Smart Health-Better Lives'. It's just the latest initiative within the long-term and ongoing eHealth Action Plan. A special Task Force that was established a year ago in order to research the EU healthcare, presented its recommendations to the European Commission, stressing the importance of reaching an agreement on the use of healthcare data across the EU.

The five recommendations to the European Commission are as follows:

•To create a legal framework and space to manage the massive amounts of health-related data. Implement safeguards so that citizens can use health applications ("apps") with the confidence that their data will be handled appropriately. This could boost the integration of user-generated data with official medical data, leading to healthcare that is more integrated and personalised and therefore delivers better outcomes.

•Support health literacy: Health data needs to be available in a form that patients can understand. More needs to be done to explain to people how integrating appropriately anonymised data into a central system can improve healthcare for them.

•Create a 'beacon group' of Member States and regions committed to open data and eHealth, including pioneers in eHealth applications.

•Use data power: eHealth applications must prove worthy of users' trust. Only then will users make their data available for feedback on preventive care or for benchmarking and monitoring performance of health systems.

•Re-orient EU funding and policies - specific eHealth budget lines need to be responsive and to enable the development of good ideas into fast prototyping and testing. Transparency should be required from health institutions through procurement and funding criteria.

(Better use of health data will transform the healthcare landscape, says export report)

European TV

In 2010 the Audiovisual Media Services Directive (2010/13/EU) was adopted and this week the European Commission presented the first report from its application by the Member States. The goal of the Directive was to enable free circulation of audiovisual content while promoting European content, and to restrict availability of harmful content (esp. for minors). We may not be receiving the same programmes all over Europe, but at least certain frameworks (like the amount of advertisements shown) is supposed to be harmonised. The report shows the effectiveness of the measures undertaken in the Directive, while at the same time pointing out its inefficiencies, especially with relation to the smart/hybrid TV (Connected TV).

The report shows that only Poland and Belgium still have to adapt their national laws to the Directive.

One of the main issues of the Directive is to limit advertising and teleshopping spots on TV - to the max of 12 minutes per hour. The report show that since this rule was implemented, in many Member States it has been breached. The European Commission will try to ensure the proper and strict application of this rule. Moreover, creative TV advertising which was claimed not to count as advertising spot, was recently determined by the CJEU to still fall under the 12-minute rule (see: Commission v. Spain, C-281/09)

What the Member States did not have any problems with was introducing stricter rules as to the advertisement of the alcohol on TV. It seems that both private and public persons are in agreement as to the potential harmful results of these advertisements and the need for its more careful control (see the earlier post today). The same careful implementation and application took place as far as protection of minors is concerned, which may be the result of detailed provisions of the Directive on these matters. Five Member States prohibit advertising in children's programmes, while four other Member States impose partial restrictions (as to timeframe or type of products), and seven more ban showing of sponsorship logos. The Directive prohibits: direct exploitation of minors inexperience or credulity in order to convince them to buy products or services; direct encouragement of minors to persuade their parents to purchase goods or services advertised; exploitation of special trust that minors have in parents, teachers, etc; unreasonably showing minors in dangerous situations.

The European Commission intends to pay closer attention to the regulation of Connected TV in the coming months, as well as take a closer look at the discrimination factors in advertisement (stereotyped representation of gender roles was found in 21-36% of the spots analysed). (Digital Agenda: Commission adopts first report on the application of the Audiovisual Media Services Directive)

Responsible (adversiting of) drinking

Continuing the theme of describing actions undertaken in the EU to make EU consumers healthier, it is worth it to mention that eight of biggest European alcohol firms (e.g., Carlsberg, Heineken) have united in order to introduce tighter self-regulation measures as far as alcohol advertising is concerned. The "Responsible Marketing Pact" was launched by these companies last month in all EU countries in cooperation with the World Federation of Advertisers (WFA) and the European Commission's European Alcohol and Health Forum (EHAF). The companies committed, among others, not to target children through the use of social media (by introducing effective age controls), by creating ads that are attractive to kids and to only purchase adverts in media that have an audience mostly consisting of adults (above 70% of expected audience). Consultants of Accentures as well as EHAF are supposed to carry out independent monitoring of performance of the commitments that have been made. (Drunk giants team up to head off ad regulation)

Reducing salt intake

Recently the European Commission published a report on the implementation of the EU Salt Reduction Framework by the Member States. The Member States were asked by the European Commission to take voluntary national initiatives in 2008 that would lead to reducing salt (specifically, sodium) intake among European citizens by a minimum of 16% over 4 years. The questionnaire was sent to Member States in February 2010 as to the results of the measures taken from mid 2008 until the end of 2009.

Medical evidence shows that current levels of sodium consumption in Europe lead to an increased blood pressure, as well as increase a risk of cardiovascular and renal disease. The World Health Organization (WHO) recommends not more than 2 grams of sodium (5 grams of salt) per day. On average the salt consumption in the EU is estimated to be in the range of 8-12 grams per day.

While the report indicates that there is no data available yet on whether the initiatives led to any changes in salt consumption, all Member States and Norway and Switzerland participate therein. 15 countries developed new public awareness campaigns on salt intake in the past three years. 13 countries managed to reach specific commitments from food companies to reduce salt in their products. For more data, see the report.