Lost baggage? You'll get €1134.71, not more - ECJ in Walz (C-63/09)

6 May 2010: ECJ case C-63/09 Walz

Liability of air carriers for loss of baggage is limited to €1134.71 which amount includes both: material and non-material damage.

Mr Walz lost his baggage on his way from Barcelona (Spain) to Oporto (Portugal) while using Clickair airlines. He claimed that his damage was worth in total €3200 of which: €2700 for the value of the lost baggage and €500 for non-material damage resulting from this loss.

Clickair airlines wanted to use the limit for compensation as established in the Montreal Convention - Article 22(2):

‘In the carriage of baggage, the liability of the carrier in the case of destruction, loss, damage or delay is limited to 1 000 Special Drawing Rights [SDR] for each passenger unless the passenger has made, at the time when the checked baggage was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless it proves that the sum is greater than the passenger’s actual interest in delivery at destination.'

1000SDR equals €1134.71 if anyone wonders (as at 21 April 2010 according to IMF - International Monetary Fund).

The ECJ was confronted with a question whether the limit set in the Montreal Convention applies to both material and non-material damage. The Montreal Convention itself does not define the term 'damage'. (Par. 21) The ECJ decided that the Montreal Convention uses the term 'damage' in its ordinary meaning, which means it should encompass both the material and non-material damages. (Par. 27-29) The limitation of the liability of the air carrier is a result of application of the strict liability doctrine:

'a carrier is presumed liable for that damage, ‘upon condition only that the event which caused the destruction, loss or damage took place on board the aircraft or during any period within which the checked baggage was in the charge of the carrier’.
A system of strict liability of that kind implies, however, as is apparent, moreover, from the fifth recital in the preamble to the Montreal Convention, that an ‘equitable balance of interests’ be maintained, in particular as regards the interests of air carriers and of passengers.' (Par. 32-33)


The idea behind that provision was therefore that the passenger would be compensated swiftly and easily, without having to prove the fault of the air carrier in losing the baggage.

What to do if you know you are traveling with the baggage that is worth much more?

Fill in a special declaration about the value of your baggage, making sure that the air carrier takes liability for its full value. That air carrier may charge you with extra costs for transporting the baggage but it might be worth the money.

In addition, Article 22(2) of the Montreal Convention provides that a passenger may make a special declaration of interest at the time when the checked baggage is handed over to the carrier. That possibility confirms that the limit of an air carrier’s liability for the damage resulting from the loss of baggage, laid down in that article, is, in the absence of any declaration, an absolute limit which includes both non‑material and material damage. (Par. 38)

Not overly optimistic maths

Consumer Markets Scoreboard - decline in consumer conditions - edition of May 2010

European Commission published on 29 March the Spring Consumer Markets Scoreboard. Consumer Markets Scoreboard informs as to how the internal market is performing for the consumers in terms of choice, competitive prices and satisfaction.

Interesting findings for the year 2009:

• only 29% consumers made any purchase in another EU country (25% in 2008)
  
• only 25% of retailers sold to another EU country (20% in 2008)
• 34% of EU consumers bought goods or services online from national sellers (28% in 2008)
• only 8% ordered online from elsewhere in EU
• over 60% of cross-border orders fail

Despite the European Commission being busy in the past decades in removing barriers to trade in the internal market, it seems that the trust of the consumers in trading cross-border is still significantly limited. There is a certain growth with every year in a number of transactions conducted, however, the progress is very slow. Hopefully, with the new directive on consumer rights focused on harmonizing the internal market even more, the chances grow that the coming years will be more successful.

Proposta di direttiva CE sui diritti dei consumatori – the way forward?

In her speech of 15 March 2010 (see earlier post on this blog) EU Commissioner Viviane Reding stated that the process of review of the Consumer Rights Directive needs a “rational calculation” in order to do justice to the interests of both businesses and consumers. The question is: how should we go about this? Now that the proposal is under review with the Commission and is expected to come before the European Parliament in the near future, it is a good time for reassessment. The challenge was taken up at a conference at the Scuola Superiore Sant’Anna in Pisa on 28-29 April. Under the title “La proposta di direttiva CE sui diritti dei consumatori e il suo impatto sul codice del consumo”, views were exchanged on the potential impact of the Directive on national laws, with particular attention for the Italian consumer code. The main difficulties of the original proposal remain:
• Should the degree of harmonisation aimed for be full, or maximum harmonisation? If so, which issues should be “targeted”: the technical ones only (e.g. information requirements to consumers, length of withdrawal periods) or also substantive issues (e.g. remedies)?
• Would there be a benefit in limiting the Directive’s scope to online transactions, as opposed to face-to-face transactions?
• What does the Directive, and the review process in European consumer law in general, tell us about the place of consumer law in relation to general contract law? In particular, should not more attention be given to the Draft Common Frame of Reference (DCFR) in the review process?
• Which policies prevail in European consumer law (e.g. internal market policy, consumer protection policy) and should they be the guidelines for future legislation?
More conferences are on the horizon… The Commission has taken up earlier academic input on the review of consumer law, so for those who have an interest in the process: now is the time!

Four ways to fix a broken legal system

TED talk by Philip K. Howard 'Four ways to fix a broken legal system' given in February 2010

Great talk on TED filled with certain ideas on how to improve legal system that could apply also to consumer law.

1. Judge law mainly by its effect on society, not individual situations

'We have the wrong frame of reference. We have been trained to think that the way to look at every dispute, every issue is a matter of individual rights so we peer through a legal microscope and look at everything, is it possible that there were extenuating circumstances (...) and of course the hindsight bias is perfect: there is always a different scenario that you can sketch out where it is possible that something could have been done differently, and yet we've been trained to squint into this legal microscope hoping that we can judge any dispute against a standard of a perfect society, where everyone will agree on what's fair, and where accidents will be extinct, risk will be no more. Of course, this is utopia. This is a formula for paralysis not freedom.'

2. Trust in law is an essential condition of freedom. Distrust skews behavior towards failure.

'If you make people self-conscious about their judgments, studies show, you will make them make worse judgments (...) Self-consciousness is the enemy of accomplishment. Edison stated it best: "Hell, we ain't got no rules around here, we're trying to accomplish something".'

3. Law must set boundaries protecting an open field of freedom, not intercede in all disputes.

'What people can sue for establishes the boundaries of everyone else's freedom. If someone brings a lawsuit over a seesaw, kid fell off the seesaw, doesn't matter what happens in the lawsuit, all the seesaws will disappear.'

4. To rebuild boundaries of freedom, two changes are essential:

• simplify the law

'The constitution is only 16 pages long it worked pretty well for 200 years.'

• restore authority to judges and officials to apply law
  

'We have to rehumanize the law. (...) You have to think that if there is a dispute there is somebody in the society who sees it as their job to affirmatively protect you if you are acting reasonably. That person doesn't exist today.'

Complain and it will be given to you

Conference "Consumer complaints and the implementation of a harmonised methodology to classify and report consumer complaints" organized by DG Sanco on Thursday, 27 May, in Brussels

The Commission has been paying more and more attention to consumer behavior in the past few years, trying to discover the influence it could have on effectiveness of the EU laws and regulations. This conference falls within this sphere of DG Sanco's interests. Policymakers will meet with complaints experts and will try to figure out a way to improve understanding on analysing and using complaints data by the Commission in order to improve consumer related policies.

The conference will be web-streamed and presentations and videos will be uploaded to the website after the conference.

NO discount passenger rights for discount airlines

Midday press briefing by Slim Kallas, EC Vice-President in charge of transport

As to the questions whether cheap airlines, e.g. EasyJet, RyanAir, etc. have to pay back the cost of the cancelled flight to the consumers or provide re-routing as well as accommodation, meals, etc. - see ca. 6 minutes down his presentation.

"EU must be respected. Airlines have legal obligations. Air passenger rights will be enforced by national authorities. This is not a voluntary scheme. EU passenger rights apply to all air companies. There are no discount passenger rights for discount airlines. All airlines have legal obligations under EU law."

Since the video plays automatically, I'll post it behind the 'Read more'. Enjoy!

Full Harmonisation in European Consumer Law conference

Conference 'Full harmonisation in European Consumer Law' will take place on 4-5 June 2010 in Frankfurt (Oder)

The conference 'Vollharmonisierung im Europäischem Verbraucherrecht' (yes, it will be held in German) is organized to discuss the forthcoming directive on consumer rights COM (2008) 614 that is still being worked on by the European Commission. One of the most controversial issues related to the proposal of the EC was that this directive was/is supposed to have a full harmonization character. That raised many questions as to the relation of this diretive to national general contractual laws. Therefore, it does not come as a surprise that whole conferences are devoted to this subject matter. The programme of the conference organized by the European University Viadrina may be found here.

Your flight has been cancelled - what can you claim back from the airlines?

Memo on Volcanic Ash Crisis published by the European Commission - clear answers as to rights of passengers stranded due to volcanic ash

The European Commission published a short memo in a reply to the volcanic ash crisis, trying to facilitate answers to the frequently asked questions. The first part of the memo concerns the role of the European Commission in solving the crisis and is definitely less relevant from the consumer point of view (it might have been different if the EC had power to clear up the skies, but it does not, so there). The second part concerns the rights of the stranded passengers. I have heard lots of doubts even amongst lawyers in the past few days as to what rights the consumers may make use of taking into account that the non-performance on the side of the airlines was clearly caused by exceptional circumstances or even: 'the power of God'.

The answer is straight-forward:
1. You have the right to either reimbursement or re-routing
2. You have the right to information - there is an obligation for airlines to inform you about rights and flight schedules
3. You have the right to care- that means food, drinks, accommodation as appropriate

The choice between reimbursement and re-routing depends on the consumer.

From the momemt of choosing reimbursement, the consumer ceases all his other rights towards the airlines - they are not supposed to provide refreshments, accommodation, etc. since they have already performed the contract (by paying back the money instead of providing a flight). The reimbursement covers the whole price the consumer paid (included all taxes and charges).

If the consumer chooses re-routing the airlines might pay for different means of transportation, until that time the consumer has a right to accommodation etc. on the cost of the airline. The consumer needs to wait then until the airline provides for re-routing. In case the consumer chooses to arrange transportation on his own, to get back home quickly, he may still claim reimbursement of the ticket price since the choice between these two measures is his.

The only right that the consumer loses is his right to compensation of the incovenience caused by the delays, etc. All other rights from the Regulation on Air Passengers Rights (EC Regulation 261/2004) still apply.

Workshop on the revision of the Package Travel Directive 90/314/EEC

Stakeholders' workshop on the revision of the Package Travel Directive (90/314/EEC)

The workshop will be held by the European Commission tomorrow - on 22 April 2010 - in Brussels. Webstreaming of the workshop is available (from 10.00 to 13.00 and from 14.30 to 17.00). After considering the feedback from consumers, civil society, national authorities and business, the Commission will assess the different policy options, with the aim of presenting a possible proposal for revising the current legislation at the beginning of 2011.

Teaching Consumer Law in the New Economy

Teaching Consumer Law in the New Economy - a conference for those interested in teaching consumer law

Centre for Consumer Law of the University of Houston organizes a conference Teaching Consumer Law in May 21-22, 2010.

It is a good opportunity for academics from all over the world to meet and discuss relevant consumer law related issues, recent developments in consumer law and what challenges they pose to the academic curriculum.

I am one of the speakers at this conference in the panel on 'Labels, Warnings, Behavioral Studies and Virtual Worlds'.

You should not miss out on an opportunity to be there if you are interested in consumer law.

Registration forms and more information may be found here.