European Union: EU Regulation 261 And Compensation For Delay – The Advocate General’s Opinion In The References Re Sturgeon

The ruling of the Court of Justice of the EU delivered in November 2009 in the joined cases of Sturgeon v Condor and Bock and Lepuschitz v Air France caused great surprise and consternation in the airline and legal communities and academic circles. This was because the ruling held that EU Regulation 261/2004 was to be interpreted as meaning that airlines were liable to pay compensation to passengers whose flights are delayed in arrival by three hours or more, contrary to both the clear wording of the Regulation, former case law of the CJEU, international law (the Montreal Convention of 1999) and the legislative intent. These concerns prompted TUI Travel, British Airways, easyJet and IATA jointly to ask the UK CAA for confirmation that it would not interpret the Regulation as imposing an obligation on airlines to compensate passengers in the event of delay and, following the CAA's refusal to give such confirmation, to commence proceedings against the CAA in the English Administrative Court, which referred certain questions to the CJEU for preliminary ruling. Shortly thereafter, the Amtsgericht Cologne referred to the CJEU certain similar questions arising out of a claim by a Mr Nelson and his family for compensation in respect of a Lufthansa flight that was delayed in arrival by more than 24 hours. In view of the similarity of the questions referred, the two actions were joined.

On 15 May 2012 Advocate General Bot delivered his opinion in connection with the joined cases, concluding that: there is no reason why the Court should reconsider its interpretation in its Sturgeon ruling; the Regulation should be interpreted as obliging airlines to pay compensation to passengers whose flights are delayed in arrival by three hours or more; and such obligation is not incompatible with the Montreal Convention or with the principles of proportionality and legal certainty.

While the Advocate General's opinion only has persuasive weight, and the CJEU is not bound by his conclusions, in practice it is fairly unusual for the CJEU not to follow the recommendations in an Advocate General's opinion. The opinion is therefore deeply disappointing to airlines, and to many lawyers, who are hoping that the Court will take the opportunity provided by these two references to remedy what many see to be a grave judicial error and constitutional impropriety.

The opinion is disappointing not only for the conclusions it reaches, but also for the paucity and poverty of reasoning used in arriving at these conclusions. The Advocate General took the view that the Court was correct to hold as it did on the basis of the principle of equal treatment, and that "nothing new which might call into question the interpretation that the Court gave...has been presented by the parties to the disputes in the main proceedings"! The principal arguments which he considered and commented on were: inconsistency with the approach taken by the Court in its IATA and ELFAA ruling in 2006; the arbitrary and unjustified fixing of the dividing line at three hours; and incompatibility with the Montreal Convention and the principles of proportionality and legal certainty.

The IATA and ELFAA ruling

One of the challenges made by IATA and ELFAA to the Regulation was on the grounds of infringement of the principle of legal certainty, due to an inconsistency between the text of the Regulation, which provides for an extraordinary circumstances defence to the obligations imposed on airlines in the case of cancellation but not delay, and recital 15, which appears to envisage that a defence of extraordinary circumstances may apply in cases of delay as well as cancellation. The Court rejected this argument by IATA and ELFAA on the basis that the provisions of the Regulation dealing with cancellation and delay were "entirely unambiguous" and therefore that, while a recital to a regulation could sometimes explain the meaning of the text of the regulation, it could not in this case justify derogating from the actual provisions. The UK Government argued in the referred TUI case that this meant that, according to the Court, the Regulation does not oblige airlines to compensate passengers for delay, and recital 15 cannot be used to modify the meaning of the provisions of the Regulation.

The Advocate General disagreed with this argument, distinguishing the context of the Court's statements in the IATA and ELFAA case – ie, it was responding to IATA's and ELFAA's arguments described above about the apparent ambiguity as to whether the defence of extraordinary circumstances applies only in the event of cancellation or also in the event of delay.

It is true that the Court in that case was only concerned with the argument about the applicability of the extraordinary circumstances defence, and fair enough for the Advocate General to highlight that limited context. However, this does still not answer the question why the Court should in that case find the Regulation's provisions on delay "entirely unambiguous" but nevertheless in the Sturgeon judgment be prepared to read into them significant implied obligations which are absent from the text. Furthermore, as the Advocate General points out, the Court in Sturgeon adopted the "teleological" method of interpreting the Regulation (ie, an approach that relies on the intention behind the legislation rather than its strict wording), and inferred from recital 15 "that the notion of long delay is also linked to the right to compensation". Not only is this inconsistent with what the Court said about recital 15 in its IATA and ELFAA judgment, but it ignores the legislative intent and the simple historical reason for the ambiguity in recital 15 – the fact that at one stage during the legislative process it had been intended that the extraordinary circumstances defence should apply also in cases of delay but the recital was not been modified appropriately when this idea was dropped.

The three hour dividing line

In response to criticisms that the fixing of the dividing line for compensation at three hours delay is arbitrary and unjustified, the Advocate General first pointed out the need for rules to be clear and precise in accordance with the principle of legal certainty. He then recalled the Court's original reason for choosing three hours as the dividing line – namely, the fact that Article 5(1)(c)(iii) of the Regulation provides that passengers whose flights are cancelled on less than seven days notice shall not have a right to compensation if they are offered re-routing allowing them to depart no more than one hour before scheduled departure time and to arrive at their final destination less than two hours after the scheduled time of arrival.

While it is true that Article 5(1)(c)(iii) does provide a basis for creating a dividing line so as to treat passengers whose flights are delayed in the same way as passengers whose flights are cancelled, the analogy is in fact not quite correct. This is because passengers whose flights are cancelled and are offered re-routing in accordance with this provision will in fact arrive at their final destination up to two not three hours late. The other hour which the Court added to arrive at three hours in fact is the time by which the substitute flight can depart earlier than the originally scheduled flight.

The Montreal Convention

The referring courts asked how a requirement in the Regulation to pay compensation to passengers for delay could be consistent with Article 29 of the Montreal Convention, which provides that "In the carriage of passengers, baggage and cargo, any action for damages, however founded, whether under this Convention or in contract or tort or otherwise, can only be brought subject to the conditions and such limits of liability as are set out in this Convention". Article 29 goes on to state that "...... in any such action, punitive, exemplary or any other non-compensatory damages shall not be recoverable".

The Advocate General dismissed these concerns on the basis of the finding by the Court in the IATA and ELFAA case that the Regulation and the Convention deal with different types of damage – the former with damage that is almost identical for every passenger, redress for which may take the form of standardised and immediate assistance, and the latter with individual damage, redress for which requires a case-by-case assessment of the damage caused and compensation on an individual basis. He took the view that the "flat-rate" nature of the obligation to pay fixed amounts of compensation (variable depending on journey length) in the case of delay fell into the former category, and hence there was no inconsistency with the Convention.

The Court having held as it did in the IATA and ELFAA case, it is not unreasonable for the Advocate General to follow it, as, although compensation for delay was not of course in question before the Court in that case, the same reasoning should apply. However, the problem remains that the distinction that the Court found between the two regimes is flawed, and patently so, because the remedies provided by the Regulation are by no means all standardised for all passengers or immediate. One of the remedies for passengers who suffer delay of five hours or more is reimbursement of the ticket cost, which may include not only for the part(s) of the journey not made but also for parts already made if the flight is no longer serving any purpose for the passenger. Consequently, amounts payable to passengers pursuant to this obligation of reimbursement may vary considerably, and may take some time to calculate and agree where the passenger is claiming reimbursement for flights already taken.

More serious still is the Advocate's completely glossing over one of the most important questions referred – in specific terms by the Amtsgericht Cologne – ie, does the right to compensation for delay constitute a claim for non-compensatory damages, and if so how is this consistent with the last sentence of Article 29 of the Convention? This question cannot simply be answered by reference to the Court's distinction between standardised and individual damages, and one can only speculate that the Advocate General did not answer it because he could not. If the amount of compensation is "flat-rate" and "standardised", it cannot be compensatory and hence is clearly not permitted by Article 29.

Proportionality

As to allegations of infringement of the principle of proportionality, the Advocate General pointed out that the Court had already considered this issue in its Sturgeon ruling and had found compliance with the principle. He also concluded that the effects of airlines having to pay compensation for delay would not be disproportionate because, on the basis of figures provided by Eurocontrol, only 0.15% of flights involve delayed arrival by three hours or more. It is also relevant for the purposes of proportionality that: the airline has a defence if the delay was caused by extraordinary circumstances; the airline has a right of recovery from any third party responsible; and the amount of compensation is reduced by 50% where the delay is less than four hours.

Of all the Advocate General's conclusions, this seems the least contentious, particularly given the limits of the principle of proportionality for the purposes of invalidating legislation. However, he makes no mention of the likely cost to airlines of having to compensate for delays, which airlines estimate to be substantial, and one would have expected the airlines to put forward in argument. And the right of recourse against third parties is likely to be of such little use in practice as to be of no significance for the purposes of proportionality.

Legal certainty

One of the most important grounds for uncertainty about the correctness of the Sturgeon ruling is the principle of legal certainty, which the Court has in other cases said 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". The Court's Sturgeon ruling appears to be blatantly inconsistent with this principle, as the text of the Regulation is perfectly clear to the effect that airlines are obliged to compensate passengers only in the case of cancellation and not in the case of delay.

However, all that the Advocate General says on this crucial point is "For the reasons set out in points 31 to 48 of this Opinion, I consider that interpretation [ie, to the effect that passengers are entitled to compensation for delay] not to be contrary to the principle of legal certainty"! Points 31 to 48 of the Opinion deal with: distinguishing what the Court said in the IATA and ELFAA case; the teleological method of interpretation and recital 15; the principle of equal treatment; and the justification for the three hour dividing line. At one stage (point 46) he does indeed mention the principle of legal certainty, and indeed describes it as "a fundamental principle of European Union law", but refers to it in order to support his position that there must be a clear dividing line between delays which qualify for compensation and delays which do not. In other words, nowhere in his Opinion does the Advocate General discuss in any way whatsoever how it can be compatible with the principle of legal certainty for the Court to be able to re-write legislation which is entirely clear so as to significantly amend it.

Temporal effects

The questions referred included questions about the temporal effects of the ruling. The Advocate General had no hesitation in expressing the view that, if the Court gives an interpretation of an EU Regulation, then that interpretation applies with effect from the date the Regulation came into force, unless the Court sees reason to limit the temporal effects: the Court did not do so in its Sturgeon judgment, and hence there is no case for limiting the temporal effects of the ruling.

In the light of EU law on the temporal effect of rulings of the Court, it is respectfully submitted that this conclusion is entirely correct, although the financial and practical effects of this for airlines (if the Court upholds its original Sturgeon ruling) are likely to be horrendous, given that the Regulation has been in force since 2005.

What now?

The judgment of the Court is now awaited, and may perhaps be expected some time after the summer. As mentioned above, it is by no means out of the question that the Court will come to a conclusion different to that of the Advocate General, although it must be said that in practice this happens less rather than more frequently. It is earnestly to be hoped that this will be one of the minority cases, and that the Court will take the opportunity still open to it to rectify a ruling which is unsustainable on several legal grounds and brings the EU legal system into disrepute.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.