UK: EU 261 Delay Compensation: The ECJ has an Opportunity to put Things Right

Last Updated: 24 August 2010
Article by Sue Barham and Richard Gimblett

The Sturgeon/Böck ruling by the European Court of Justice ("ECJ") has been the subject of continued controversy and uncertainty ever since the judgment was published in November 2009. It will be recalled that, apparently undeterred by the express and unambiguous wording of EC Regulation 261/2004, the ECJ adopted what might kindly be described as an inventive interpretation of the Regulation in order to conclude that it entitles passengers to compensation for flight delays of over three hours. Whilst some carriers have gritted their teeth and reluctantly paid delay compensation, others have bided their time on delay claims, waiting to see whether the judgment will be allowed to stand in the long term.

Now, following judicial review action in the English court against the UK Civil Aviation Authority ("CAA") brought by BA, Easyjet and TUI and supported by IATA, the High Court has been persuaded to refer the issue to the ECJ to take a further look at passengers' rights under Regulation 261 in the event of a delay. Assuming the ECJ accepts the reference, it will now consider the following questions:

  1. Is Regulation 261 to be interpreted as requiring compensation to be paid to passengers whose flights are subject to delay and, if so, in what circumstances?
  2. If not, are Articles 5-7 of Regulation 261 invalid for breach of the principle of equal treatment?
  3. If Question 1 is answered in the affirmative, are Articles 5-7 of Regulation 261 invalid, in whole or in part, for (a) inconsistency with the Montreal Convention; (b) breach of the principle of proportionality; and/or (c) breach of the principle of legal certainty?
  4. If Question 1 is answered in the affirmative and Question 3 in the negative, what, if any, limits are to be placed upon the temporal effects of the Court's ruling in this case?
  5. If Question 1 is answered in the negative, is the Court's ruling to have retrospective effect?

The questions referred go to the heart of the criticisms of the Sturgeon judgment and will, one hopes, require the ECJ to apply a level of legal analysis that seemed to be lacking in last November's judgment. The ECJ will now have to consider fully whether the construction of Regulation 261 adopted in Sturgeon can possibly be correct in light of the express wording of the Regulation, previous ECJ case law, and the provisions of the Montreal Convention 1999. It will also have to address whether in reality there is a fundamental legal invalidity in the delay and cancellation provisions of the Regulation that can only be cured through amendment of the Regulation rather than by creative judicial interpretation. The ECJ will also be asked to deal properly with the question of whether, if Sturgeon is to stand uncorrected, the judgment has retrospective application to flight delays which occurred prior to its publication – that would be the general rule in cases such as this where EU legislation is being construed by the ECJ, but was a question which was not dealt with in terms in the Sturgeon judgment.

What happens now?

It will now take some time for the case to work its way though the ECJ procedure and it is likely to be many months before there is even an indicative view of what position the ECJ may take on the questions put to it. In the interim, the UK judicial review proceedings are stayed. The effect is that, in relation to delay compensation, the enforcement powers of the UK CAA (the UK's national enforcement body for Regulation 261 purposes) are also effectively suspended, such that any prosecution it brings on that issue would be stayed. Pending the determination of the referral by the ECJ, carriers therefore will not face criminal sanctions in the UK if they refuse to pay delay compensation under Regulation 261. That said, if the ECJ ultimately upholds.

Sturgeon and the legal challenge fails, carriers would then be susceptible again to prosecution for failure to pay delay compensation, including - theoretically at least - for any such failure which occurs during the period whilst the ECJ ruling is pending.

That begs the question as to what effect, if any, the referral will have on passenger claims for delay compensation brought through the civil courts. The impact as far as UK claims are concerned ought to be that, whilst passengers will not be prevented from commencing proceedings should they choose to do so, they are likely to have their claims stayed pending determination of the legal challenge by the ECJ. The approach of courts in other EU Member States in the light of the UK legal challenge will be interesting to monitor. One view may be that the referral is merely a local argument between three UK carriers and their national enforcement body which has no impact on claims in other jurisdictions. On the other hand, the case raises fundamental questions about the continuing validity of the delay, cancellation and compensation provisions of Regulation 261, and the ECJ's answers to those questions will ultimately affect – one way or another - courts, airlines, passengers' claims and national enforcement bodies in all EU Member States. Carriers should therefore be considering very carefully the impact of the UK legal challenge on any delay claims they are currently facing in any EU jurisdiction.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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