EU Air Passenger Rights - Focus on Regulation 261/2004
John Balfour -
One of the most highly regarded aviation lawyers in the world gives his insight on European Union regulations pertaining to airline passengers, covering extraordinary circumstances, delays and cancellations.
John Balfour
Consumer protection is an important objective of the EU, and it has been given particular prominence in the area of air transport. Of the various measures introduced in this area, Regulation 261/2004, which lays down rules on compensation and assistance in the event of denied boarding, cancellation and delayed flights, has had the greatest impact on airlines and passengers, To a large extent, it has justifiably improved the treatment of air passengers who suffer disruption, but it has also imposed a (perhaps disproportionately) heavy burden on airlines – particularly as a result of unsatisfactory rulings by the European Court and as a result of unintended, and uncontemplated, consequences.
Extraordinary Circumstances - Wallentin-Hermann v Alitalia
The first significant ruling by the Court of Justice on the Regulation, delivered on 22 December 2008, in the case Wallentin-Hermann v Alitalia, caused considerable shock and dismay to the airline industry. The case concerned the interpretation of the “extraordinary circumstances” defence - the issue arising under the Regulation that has given rise to the most litigation.
When an air passenger’s flight is cancelled without sufficient advance notice, the Regulation obliges the carrier (in addition to rerouting or refunding the passenger, and providing necessary care) to pay the passenger compensation of an amount varying between €250 and €600, depending on the length of the flight. However, the carrier is not obliged to pay such compensation if it can prove that the cancellation is caused by “extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken”. Given that the cancellation of a long-haul flight carrying 300 passengers could result in a possible compensation liability for the carrier of €180,000, this defence is clearly of significant value to carriers, and it is not surprising that it has been widely used by carriers.
The Court confirmed that the expression was to be interpreted strictly, particularly as it constituted a derogation from the high level of consumer protection which was one of the fundamental purposes of the Regulation. The factual scenario involved an engine defect which had been discovered the day before during a check. The recitals to the Regulation indicate that “unexpected flight safety shortcomings” may constitute extraordinary circumstances, and the question was whether such a technical problem could constitute such circumstances. The Court held that it would only do so if the event “is not inherent in the normal activity of the air carrier concerned and is beyond the actual control of that carrier on account of its nature or origin”.
Thus far, the Court’s judgment is unsurprising, and consistent with the usual meaning of “extraordinary”. However, it went on to conclude that, as air carriers are confronted in the exercise of their activity with serious technical problems, and for this reason their aircraft are subject to regular and strict checks: “the resolution of a technical problem caused by failure to maintain an aircraft must therefore be regarded as inherent in the normal exercise of an air carrier’s activity”; and “consequently, technical problems which come to light during maintenance of aircraft or on account of failure to carry out such maintenance cannot constitute, in themselves, “extraordinary circumstances”.”
The Court then gave examples of technical problems which could be caused by exceptional circumstances – a hidden manufacturing defect in an aircraft, or damage caused to an aircraft by sabotage or terrorism.
In order to establish the defence, the carrier must show not only that the cancellation was caused by extraordinary circumstances, but also that the circumstances could not have been avoided even if all reasonable measures had been taken. The Court held that this required the carrier to show that: “they could not have been avoided by measures appropriate to the situation, that is to say by measures which, at the time those extraordinary circumstances arise, meet, inter alia, conditions which are technically and economically viable for the air carrier concerned”; and thus that: “even if it had deployed all its resources in terms of staff or equipment and the financial means at its disposal, it would clearly not have been able – unless it had made intolerable sacrifices in the light of the capabilities of its undertaking at the relevant time – to prevent the extraordinary circumstances with which it was confronted from leading to the cancellation of the flight”.
Comment
The Court’s treatment in the same way of technical problems caused by failure to maintain, and technical problems which come to light during maintenance is curious, and seems to overlook the normal meaning of “extraordinary”, as it is quite possible for a technical problem of a rare or unique type to manifest itself during maintenance procedures.
Also surprising is the Court’s leap from describing the reasonable measures which a carrier needs to take to establish the defence as “technically and economically viable” to the statement that this means deployment of all available resources except to the extent this would have led to “intolerable sacrifices”. Not only does this go beyond the normal meaning of “all reasonable measures”, but it introduces an element of subjectivity, in that what might be an intolerable sacrifice for one airline might not be for another.
The judgment has significantly circumscribed carriers’ ability to rely on the extraordinary circumstances defence. It may be that its strict approach was invited by the practice of some carriers at least of using the defence in the event of almost any type of technical problem, but it is questionable, for the reasons mentioned above, whether the Court’s conclusions are in line with the normal meaning of the language. It may be that in future cases on different facts carriers may be able to distinguish this judgment and establish the defence in respect of certain limited types of technical problem, but this remains to be seen.
Delay/Cancellation - Sturgeon
On 19 November 2009 the Court issued an even more disturbing judgment in the joined cases of Sturgeon v Condor and Böck and Lepuschitz v Air France. The questions referred to it by national courts in Austria and Germany essentially concerned the difference between delay and cancellation. The Court gave some clarification on this, explaining that a flight that is delayed, for however long, cannot be regarded as cancelled provided the flight is operated in accordance with the airline’s original planning.
It then went on to hold (answering a question not posed by the referring courts) that the Regulation was to be interpreted as conferring a right to compensation not only on passengers whose flights are cancelled (as clearly provided for by the Regulation) but also on passengers who suffer delay so that they reach their final destination three hours or more after the original scheduled arrival time. This is despite the fact that the Regulation only provides delayed passengers a right to care (ie, refreshments and accommodation) and a right to reimbursement where the delay is for at least five hours, and the fact that the Regulation only imposes obligations on carriers with regard to delays on departure, not arrival. As with cancellation, the “extraordinary circumstances” defence would be applicable if justified on the facts.
The Court’s principal justification for disregarding these clear provisions and effectively re-writing the Regulation was the need to interpret the Regulation broadly in the light of its purpose, having regard to the recitals and in accordance with general principles of EU law (such as equal treatment).
Comment
While the Court’s approach to interpretation is certainly appropriate when the meaning is unclear or ambiguous, a departure from the clear meaning of words where their meaning is clear (as in the case here) is not consistent with the Court’s previous judgments on interpretation, and it is inappropriate to rely on an unclearly worded recital (Recital 15) to support the conclusion. Moreover, if a provision is contrary to the general principles of EU law, the consequence is that it is ineffective, not that it is to be re-written.
The Court seems to have ignored another, equally important, basic principle of EU law – that of legal certainty, which requires that “every measure of the institutions which has legal effect must be clear and precise…. Legislation should not, therefore, be such as to cause confusion as to the nature of a person’s rights and obligations.”
Strictly speaking, preliminary rulings such as this do not have the status of binding precedent in subsequent cases, but in practice the national courts tend to accord them such status. National courts are entitled to ask the Court of Justice for a further preliminary ruling on similar issues, but in such a case the Court will normally confirm its earlier ruling.
On 10 August 2010, the English High Court did just this, making a reference to the Court of Justice in an action brought by TUI, British Airways, easyJet and IATA, essentially asking whether its Sturgeon ruling can be correct, and in the meantime staying all claims for compensation for delay. It is unlikely that the Court will hear the reference until late 2011 at the earliest, and it will be interesting to see whether the Court stands by its earlier ruling or not.
Volvanic Ash
The closure of airspace in much of Europe for several days in April 2010 as a result of the presence of volcanic ash in the air gave a new, and wholly unexpected, relevance to the Regulation. Thousands of flights were cancelled because of the closure of airspace. While there was at least no question of airlines having to pay compensation under the Regulation – as these were clearly extraordinary circumstances – it soon became clear that airlines were not able to escape their other obligations under the Regulation, to reimburse or re-route and to provide care, even though the cause of the cancellations was clearly beyond their control. Some airlines thus found themselves faced with having to bear hotel and meal costs for hundreds, or even thousands, of passengers over a period of a week or more, particularly at hub airports such as Heathrow, where many passengers were stranded between connecting flights.
A few months later the Commission issued some “informal guidelines”, which are helpful as far as they go, but do not go very far, and indeed cannot do so, as the Commission cannot change the law (unlike the Court of Justice!). These guidelines confirm that there are no exceptions to airlines’ obligations to reimburse or re-route and to provide care, and no limit in time to the care obligation. However, the guidelines do stress that principles of proportionality and reasonableness must be applied, so that the care obligation only obliges the airline to provide “adequate” care, without imposing a disproportionate and unfair burden on the airline, and that penal sanctions are inappropriate where airlines can show that they made reasonable efforts to comply with their obligations in the circumstances.
Legislative Intent and History
An examination of the legislative history shows that the final Regulation departed quite significantly from the original intentions as regards exception for “force majeure”. Whereas the Commission had originally proposed a complete exemption from any obligations in the case of a cancellation resulting from exceptional circumstances beyond the carrier’s responsibility, and both the Parliament and the Council had agreed that such exemption should apply to care obligations, it was removed at a late stage in the legislative process by the Conciliation Committee – apparently so as to be consistent with the Parliament’s position on delay. It does not appear that any proper consideration was given to the way in which those obligations would apply in the event of a major natural catastrophe, such as the volcanic ash cloud.
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Experience with the Regulation, both in the context of references to the Court of Justice and in the context of the volcanic ash crisis, has highlighted a number of problems and defects in it, and it is to be hoped that these will be addressed in the review of the Regulation which the Commission is due to carry out in 2011.