Regulation 261 in practice after ECJ Grand Chamber's decision on Sturgeon

18 February 2013

Almas Daud

Following on from our publication in October 2012 of the ECJ decision on passengers rights to compensation under Regulation (EC) 261/2004, we look at what has happened in the Airline Industry since the Sturgeon decision was confirmed.

Although an understandably tough decision for airlines, others in the industry have welcomed the decision. The CAA Director of Regulatory Policy stated of the decision "it offers much needed clarity for passengers, the airline industry and the CAA about when compensation must be paid following delays.” The Consumer Director of HolidayTravelWatch stated: “I welcome the decision…I am pleased for many of these Consumers that they can now move ahead with their claims…”. Many consumers had stayed their claims in anticipation of the ECJ decision.

Since the decision there have been a number of referrals to the ECJ on the Regulation and related points. One such referral involved limitation periods for claiming under the Regulation. KLM refused to pay compensation to an air passenger whose flight had been cancelled on the basis that the claim was time barred – the action was brought 4 years later. KLM argued that the 2 year time limit pursuant to Article 29 of the Warsaw Convention applied and therefore the claim was out of time. The ECJ held that neither the Warsaw Convention nor the Montreal Convention was relevant for determining the limitation period under the Regulation. It would be determined by the law of each member state. Therefore, an air passenger claiming in England for flight delays or cancellation has 6 years to bring an action. Following this ruling, airlines will have to deal with differing limitation periods depending on which member state the action is brought in, an added burden to the already increasing load on airlines.

Since the decision in Nelson was published on 23 October 2012, the CAA Complaints Team has received over 500 enquiry calls and emails in relation to flight delays falling within the Regulation. 397 new files have been opened since the decision and this is only claims made through or with the CAA’s assistance. Many more will have been made by consumers with legal advice or of their own accord. Websites such as moneysavingexpert.com also offer guidance on claiming. Around 400 existing CAA files have been re-opened since the decision in order for air passengers to claim compensation.

What remains to be seen is how flexibly ‘extraordinary circumstances’ will be interpreted under the Regulation. This is now one of the only weapons in an airline’s arsenal to battle the increasing number of compensation claims. It is by no means an exact science and will depend very much on the ECJ’s approach to the term, and there are a number of cases pending decisions. Extreme weather and unforeseen circumstances such as strikes would easily fall within the definition. However, with technical aircraft faults it will primarily be experts who can provide definitive guidance and the CAA is often having to consult with such experts before providing advice to consumers who contact them. 

Other articles related to the Aviation Bulletin for February 2013:

> The passenger as master of the journey: connecting flights under the 1999 Montreal Convention

> ACG V Olympic Airlines: The meaning of “airworthiness” and the “as-is, where-is” principle

> Islamic Aircraft Financing