Hidden plane defects and cancelled flights - CJEU in C-385/23 (Finnair) and C-411/23 (D.)

This June the CJEU issued two judgments analysing the scope of the application of the 'extraordinary circumstances' exception to airlines' scope of liability for cancelled flights, where cancellation was a consequence of a hidden plane defect.  

In Finnair (C-385/23) a relatively new plane (5 months old) had a failure of a fuel gauge, which became evident during refuelling shortly before take-off. Due to flight safety concerns the flight was cancelled and passengers only flew the next day, arriving at their destination ca 20 hours late. Investigation of the defect showed that even though this plane was the first one to experience this defect, all other aircrafts of the same type suffered from this defect.

In D. (C-411/23) the carrier has received a notification of a hidden design defect in the engine from its manufacturer together with a list of restrictions on the future use of an aircraft. A few months later, the defect manifested and the engine had to be sent out for a repair. Due to a global engine shortage, engine replacement was not possible for almost a week in that plane. This meant that the passenger's flight was delayed by more than 3 hours, as an alternative aircraft had to be used to operate the flight.

Manufacturer reveals design defect after the technical failure occurred

Finnair's case is a relatively straightforward one. The CJEU confirms that the 'extraordinary circumstances' defence from Article 5(3) Regulation 261/2004 on air passenger rights applies also when the manufacturer of a plane discovers the existence of a hidden defect after that defect manifested and caused harm. The time of recognising a defect as a hidden one is irrelevant, thus this recognition does not have to precede the occurrence of a technical failure. While dealing with consequences of technical failures could normally be seen as falling within the normal exercise of airlines activity and within their control, the CJEU has previously recognised an exception for hidden manufacturing defects of planes (paras 30, 33-35).

Carrier's knowledge of the design defect before the technical failure occurred

Similarly, in D. the CJEU recalls previous case law on when technical failures may amount to 'extraordinary circumstances', i.e., when hidden design defects manifest themselves, as these are not inherent in airlines' normal activity and remain beyond their actual control (paras 34, 36-38). It then also stresses the irrelevance of the timeframe in which the manufacturer reveals the existence of a hidden defect to air carriers "since that defect existed at the time of the cancellation or long delay of the flight and the carrier had no means of control to correct it" (para 40).

This is an interesting conclusion, as we could have anticipated that if air carriers are informed about one of their aircrafts belonging to a class of planes with a hidden design defect, they would then have (some) control on the follow-up steps: repair or replacement. Taking remedial measures would also remain consistent with the objective of assuring a high level of flight safety (para 41). 

This brings us to the second part of Article 5(3) Regulation 261/2004 which only releases air carriers from their liability if they took 'reasonable measures' when extraordinary circumstances occurred, i.e. "conditions which are technically and economically viable for that carrier" (para 44). The CJEU leaves it to the national court to determine whether all reasonable measures have been taken by the carrier, both after the notification of a hidden defect and after this defect manifested itself (para 48). This could have included the airlines' capability (financial and technical) to have this engine repaired while replacing the grounded aircraft with a chartered one or by fitting a replacement engine in it (para 50). Alternatively, if this was viable, the airline could have arranged for a back-up fleet or aircraft and crew on standby (para 51). What the CJEU does not consider a reasonable measure is the airline resizing its operations just in case of a hypothetical occurrence of a defect (para 52).

Costs of repatriation flights during Covid-19 not covered by Regulation 261/2004 - CJEU in Austrian Airlines (C-49/22)

On Thursday, June 8th, the CJEU issued a judgment in the Austrian Airlines case (C-49/22). The national court asked for help with interpreting Articles 5 and 8 of Regulation 261/2004 on air passenger rights regarding assistance that operating airlines need to offer passengers of cancelled flights, as well as passengers' rights to reimbursement and re-routing. 

Facts

Image by Stephen Cruickshank from Pixabay     

Passengers in this case were stuck on a beautiful island of Mauritius, when Covid-19 led to cancellation of their return flight. The airline did not inform them directly thereof, despite having their contact details. When they heard about the cancellation from their travel agent (a day later), they managed to arrange for a return flight home via the Austrian consulate. Ironically, the repatriated flight was with Austrian Airlines as well, and took place at the time their original return flight was scheduled. As the passengers were asked to contribute to the cost of the repatriation flight, they are trying to claim this amount back from Austrian Airlines. The claim is that the airline failed to organise re-routing of passengers, which they had to arrange and pay for themselves. 

Repatriation flight not a re-routed flight

The CJEU first considered whether the repatriation flight could be considered a re-routed flight, for which organisation and cost Austrian Airlines would need to take responsibility. The short answer is: Repatriation flight does not qualify as a re-routed flight. Despite Regulation 261/2004 not defining a re-routed flight (para 25), and everyday language suggesting that this notion would be broadly interpreted (para 26), the CJEU highlights the need for the 'commercial nature' of a re-routed flight (para 29). This need stems both from the legal basis for the adoption of Regulation 261/2004 and some of its provisions referring to concluded contracts and fee-paying passengers (Art. 2(b) and 3(3)). Sensibly, the CJEU stresses that as the repatriation flight is not commercial in nature, it may differ from commercial flights in terms of available services and conditions on board, and would not be in the discretion of the operating air carriers to offer to passengers (paras 31-32).

No EU entitlement to reimburse costs of a repatriated flight

May a passenger claim repatriation costs back from the operating airline of a cancelled flight? Unsurprisingly, this would not fall within the scope of the reimbursement provided for in Article 8 Regulation 261/2004, which specifies the passengers' right to claim back costs of the ticket for the parts of the journey not made (paras 40-41). Although, Art. 12 Regulation 261/2004 allows passengers to claim 'further compensation', assessed on an individual basis, from the airlines but only provided that national or international law gives them such a claim (para 36). The CJEU stresses, however, that Article 8 by listing various rights of passengers (reimbursement or re-routing) implies that the air carrier has an information duty about these rights, which only when fulfilled would lead to passengers being able to effectively exercise their rights (paras 43-44). If the air carrier fails in this information duty, which forms part of its obligation to offer assistance to passengers, the passenger is entitled to 'reparation in kind' (para 48). This will be limited to what 'proves necessary, appropriate and reasonable to remedy the shortcomings of the operating air carrier' (para 49).

It is then unlikely that passengers could use Regulation 261/2004 for claiming costs of their repatriation back from the airlines whose flights were cancelled due to Covid-19. Even if the airlines breached their obligations under EU law (to inform about flight cancellation, about passenger rights in the even of cancellation, offer assistance, reimburse part of the travel costs), the compensation claimed would aim to compensate for damages arising from this breach rather than be related to costs of the repatriated flight.

Cancellation of connecting flights: whom to sue and where? Case C-606/19 flightright

On 13 February the Court of Justice delivered an order in case C-606/19 flightright concerning jurisdiction over the claim for compensation brought against an air carrier in charge of the final leg of the journey divided into several legs, confirmed in a single booking.

The case involved two passengers who booked a journey from Hamburg (Germany) to San Sebastian (Spain) via London and Madrid, comprising of connecting flights operated by different carriers. The problem faced by the passengers was cancellation of the third flight of the journey, operated by Iberia. The question to be addressed was whether a claim against Iberia could be brought before the court in Hamburg. Pursuant to Article 7(1)(a) of Regulation No 1215/2012 (Brussels I bis) in matters relating to a contract, a person domiciled in a Member State may be sued in another Member State in the courts for the place of performance of the obligation in question. The subsequent provision explains that in the case of the provision of services the place of performance of the obligation in question is generally the place in a Member State where, under the contract, the services were provided or should have been provided.

It was already clear from the previous case law that both the place of departure and that of arrival must be considered as the principal places of the provision of services under a contract for carriage by air, which in turn gives the person bringing a claim for compensation on the basis of Regulation No 261/2004 a choice of jurisdiction. This is the case for both direct flights and, mutatis mutandis, situations in which the journey with connecting flights consisting of a confirmed single booking for the entire journey comprises two legs. In the latter case, the passenger can also choose to bring the claim before the court or tribunal which has territorial jurisdiction over the place of departure of the first leg or one having jurisdiction over the place of arrival of the second leg.

The present case dealt with a similar legal matter yet with relation to a multi-leg flight, operated by different carriers. According to the Court none of this affected the procedural position of the passenger experiencing a cancellation or delay. First of all, the Court stressed that a contract for carriage by air consists of a confirmed single booking for a three-leg journey establishes the obligation for an air carrier to carry a passenger from a point A to a point D. The place of performance, within the meaning Article 7(1) of Regulation No 1215/2012, can therefore be the place of departure of the first leg of the journey (point A).

What is more, the rule of special jurisdiction for matters relating to a contract set out in that provision does not require the conclusion of a contract between two persons, but the existence of a legal obligation freely consented to by one person in respect of another on which the claimant’s action is based.  This is the case for an air carrier performing obligations under Passenger Rights Regulation No 261/2004 on behalf of another carrier having a contract with a passenger, in line with Article 3(5) of that regulation. Consequently, even though there were no complications on the first leg of the trip and the Hamburg-London flight was not operated by Iberia, the claim against the carrier could be brought in the Hamburg court.