10 year battle over airline tax comes to end as court declares it illegal
International law firm Bird & Bird has been representing the Board of Airline Representatives in Belgium in a landmark case which will impact the global airline community. The case has contested the legality of a tax introduced in Brussels affecting all airlines flying into Brussels National Airport. The tax, which was introduced in 1995, has now been declared illegal and the case itself has set an important legal precedent.
Introduced by the municipality of Zaventem, which is also where the Brussels National Airport is located, the so-called “airline exploitation tax” charged all airlines flying through Brussels 0.3 euros on all departing passengers. The Board of Airline Representatives has now successfully contested the legality of this tax based on the Convention on International Civil Aviation (The Chicago Convention). In doing so, this case has also set an important legal precedent – this being the first time Article 15 of the Chicago Convention has been applied directly as an integral part of domestic law.
Catherine Erkelens, co-head of Bird & Bird's International Aviation & Aerospace Group, initiated court proceedings in 1995 on behalf of the Board of Airline Representatives also advising the airlines not to pay the tax despite the apparent length of time it would take to reach a conclusion in court.
Proceedings started first in the injunction court where Catherine managed to reach a favourable decision prohibiting the recovery of the tax pending judgment of the Administrative High Court. This court then concurred and this decision was again confirmed by two further courts, the Court of Appeal and by the Supreme Court. Finally earlier this month, the Administrative High Court annulled the tax regulation.
In fact, in the 10 years these proceedings have taken, the tax was accruing and including fines for non-payment, would have meant a gain of 2 million euros each year back-dated to 1995 by the municipality.
Commenting Catherine said:
“This situation was indeed very challenging. We knew that the procedure for annulment starting with the Administrative High Court would take several years and even if we won would not have a suspending effect. A tax is payable regardless of whether it is contested and the municipality forced the airlines to pay the tax regardless of the pending litigation.
So in 1995 we started injunction procedures in order to have the recovery of the tax prohibited. We used this process because if my clients paid the tax in the intervening time until the tax regulation was annulled, it would have been near impossible to reimburse their money after winning the case.
This really is an important victory for an age which has seen not only an increase of airport charges, but also an increase of taxes sometimes contrary to international policies. And to this end, has also set an important legal precedent – showing for the first time that Article 15 of the Chicago Convention has a direct effect in domestic law”.
For more information on this, please contact Catherine Erkelens on + 32 2 282 60 00. For more information on Bird & Bird please call Larry Cattle on +44 20 7415 6156.