The Malta Independent 26 June 2022, Sunday

Law report: ECJ rules on the passenger’s right to compensation from non-EU air carriers

Ganado Advocates Thursday, 19 May 2022, 09:17 Last update: about 2 months ago

The European Court of Justice (the “ECJ”), on 7 April 2022, delivered a preliminary ruling with regards to Regulation (EC) No 261/2004 which establishes common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights (the “Air Passenger Rights Regulation”) and as a result, has extended the scope for passengers to seek compensation. In particular, for delays pertaining to connecting flights consisting of two legs which are serviced by non-EU air carriers.

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The case C-561/20 developed from a preliminary ruling request from the Brussels Companies Court, Belgium (the “Belgian Court”), which was made in the proceedings instituted in Belgium by Happy Flights BVBA, now holder of the claim for the three passengers, against United Airlines.

The proceedings before the Belgian Court and the questions posed to the ECJ

Three passengers made a single reservation via a travel agency, with the Community carrier Deutsche Lufthansa AG, for a connecting flight from Brussels, Belgium to San José, United States, with a stopover in Newark, United States. The entire connecting flight was operated by United Airlines, an air carrier established in a third country. The three passengers ended up arriving at their final destination in the United States with a delay of 223 minutes.

The three passengers lodged a complaint to the company Happy Flights BVBA, which in turn gave United Airlines formal notice that the air carrier was liable to pay compensation in the amount of EUR 600 per person for that delay, namely a total amount of EUR 1 800, pursuant to the Air Passenger Rights Regulation. United Airlines however argued that it was not liable to pay compensation to the passengers and this since the Air Passenger Rights Regulation was not applicable on the grounds that that delay had occurred during the second leg of the flight concerned.

Happy Flights BVBA summoned United Airlines to appear before the Belgian Court, seeking an order requiring it to pay the compensation together with default interest. In the context of the non-EU air-carrier, the Belgian Court had doubts concerning both the applicability of the Air Passenger Rights Regulation and its validity.

Given the circumstances, the Belgian Court decided to stay the proceedings and to refer the following questions to the ECJ for a preliminary ruling on the following matters:

(1)     Should the right to compensation as provided for in Article 7 of the Air Passenger Rights Regulation, be interpreted as meaning that passengers are entitled to financial compensation from a non-Community air carrier when they arrive at their final destination with a delay of more than three hours as a result of a delay of the last flight, the place of departure and the place of arrival of which are both situated in the territory of a third country, without a stopover in the territory of a Member State, in a series of connecting flights commencing at an airport situated in the territory of a Member State, all of which have been physically operated by that non-Community air carrier and all of which have been reserved in a single booking by the passengers with a Community air carrier which has not physically operated any of those flights?; and

(2)     If the first question is answered in the affirmative, does the Air Passenger Rights Regulation, as interpreted in the first question, infringe international law and, in particular, the principle of the exclusive and complete sovereignty of a State over its territory and airspace, in making EU law applicable to a situation taking place within the territory of a third country?

The relevant articles of the Air Passenger Rights Regulation

Of relevance for this preliminary ruling are Articles 3(1)(a) and 7 of the Air Passenger Rights Regulation. The mentioned Article 3(1)(a) provides for the scope of the mentioned Regulation and stipulates that the Regulation shall apply to passengers departing from an airport located in the territory of a Member State to which the Treaty applies. 

Article 7 of the Air Passenger Rights Regulation provides for the right to compensation as a result of denied boarding, cancellation of flights or flight delays. The Air Passenger Rights Regulation provides that passengers, in the case of a denied boarding, flight cancellation or certain delays, shall receive compensation amounting to:

a)      EUR 250 for all flights of 1 500 kilometres or less;

b)     EUR 400 for all intra-Community flights of more than 500 kilometres, and for all other flights between 1 500 and 3 500 kilometres;

c)      EUR 600 for all flights not falling under (a) or (b).

The operating air carrier may reduce the mentioned compensation by 50% and this when passengers are offered re-routing to their final destination on an alternative flight, the arrival time of which does not exceed the scheduled arrival time of the flight originally booked by two hours, in respect of all flights of 1500 kilometres or less; or by three hours, in respect of all intra-Community flights of more than 1500 kilometres and for all other flights between 1500 and 3500 kilometres; or by four hours, in respect of all flights other flights falling within the scope of the Regulation.

Referral to the ECJ

The ECJ confirmed that a flight with one or more connections which was the subject of a single reservation constitutes a whole for the purposes of the right of passengers to compensation provided for by EU law. The applicability of the Air Passenger Rights Regulation is to be assessed with regard to the place of the flight’s initial departure and the place of the final destination of that flight. The ECJ confirmed that -

“Making a distinction according to whether a delay is caused in the first or the second leg of a connecting flight that has been the subject of a single reservation would amount to an unjustified distinction, such that United Airlines would be obliged to pay compensation in the event of delay occurring during the first leg of that flight, but would not be obliged to do so in the event of delay occurring during the second leg of the said flight, even though such a connecting flight must be regarded as a whole for the purposes of entitlement to compensation and passengers suffer, in both cases, the same delay at the final destination as well as, therefore, the same inconvenience.

The ECJ further specified that the non-EU air carrier, which does not have a contract of carriage with the passengers, but which operated the flight, may be liable to pay the passengers compensation. The carrier which, during its passenger carriage activities, decides to perform a particular flight, including fixing its itinerary, constitutes the operating air carrier. That carrier is therefore regarded as acting on behalf of the contracting carrier. In this regard, the ECJ however emphasised that the operating air carrier which is obliged to compensate a passenger retains the right to seek compensation from any person, including third parties, in accordance with the applicable national law.

With regards to the validity of the Air Passenger Rights Regulation in the light of the principle of customary international law according to which each State has complete and exclusive sovereignty over its airspace, the ECJ states that a connecting flight falls within the scope of the regulation on the grounds that the passengers have started their journey from an airport located in a Member State. It adds that that applicability criterion does not undermine the conditions for the application of the principle of complete and exclusive sovereignty of a State over its airspace.

Concluding remarks

The decision is another example of the ECJ interpreting the provisions of Air Passenger Rights Regulation to continue to fill the gaps in consumer protection which have emerged in the aviation industry. The judgment also confirms the ECJ’s approach to the relationship between EU law and principles of customary international law and the standard of review to be applied when assessing the validity of an EU act.

 

Nigel Micallef is an Associate at Ganado Advocates.

 

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