European Court of Justice delivers two recent judgments in relation to extraordinary circumstances under Regulation 261

07-2018

The European Court of Justice has delivered two recent judgments in relation to extraordinary circumstances under Regulation 261: one in favour of airlines, disregarding the Advocate-General's opinion [Marcela Peskova, Jiri Peska v Travel Service]; and one against the airline, apparently disregarding the recitals to the Regulation [Helga Krusemann and Others v TUIFly GmbH].

Case Summary: Marcela Peskova, Jiri Peska v Travel Service A.S.

Under Article 5(3) EU Regulation 261/2004 ("Reg 261") an air carrier is not obliged to pay compensation if it can prove that the cancellation is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.

In May 2017 the Court of Justice of the European Union ("CJEU") held that a bird strike should be classified as 'extraordinary circumstances' under Reg 261. In the case, two passengers were delayed in total by 5 hours and 20 minutes. A technical failure had occurred which caused a delay of 1 hour and 45 minutes; however the major cause of the delay was due to a birdstrike. In looking closely at the wording of Article 5(3) Reg 261 and the test in Wallentin-Hermann, the CJEU held that a birdstrike and any subsequent damage is 'not intrinsically linked to the operating system of the aircraft' or inherent in the aircraft's normal activity and therefore it is beyond its actual control. This therefore widened the application of Article 5(3) and could easily apply to other events such as lightning strikes and not just bird strikes.

This decision came as something of a relief for air carriers as it did not follow Advocate General Bot's opinion in July 2016 where he concluded that bird strikes are inherent and do not fall within the meaning of 'extraordinary circumstances' under Reg 261. With previous case law narrowing the scope of 'extraordinary circumstances' in favour of passengers, this judgment was perhaps unexpected and may provide some clarification on what will be regarded as 'extraordinary circumstances' in the future.

The judgment does not, however, resolve whether or not the airline is able to avoid liability for compensation. Although the CJEU concluded that once there had been a birdstrike the extraordinary circumstance exception can apply, it also referred the question of whether all reasonable measures had been taken to avoid the birdstrike back to the national court. This reflects the two-limbed test for "extraordinary circumstances" in Wallentin-Hermann. The CJEU held that airlines should take reasonable measures at a technical and administrative level to avoid the birdstrike, but these measures do not require them to 'make intolerable sacrifices'. Furthermore, following the birdstrike, the airline chose in this case to conduct a thorough inspection including flying out a second technician which caused further delay. Although the first technician was qualified to release the aircraft the owner had insisted that a further inspection be carried out. The CJEU was clearly influenced by the fact that where an operating air carrier which is liable to pay compensation, Reg 261 expressly preserves its ability to seek recourse against a third party. The CJEU concluded that any delay caused by an additional safety check when the required checks had already been carried out by a suitably qualified expert would not constitute extraordinary circumstances. The national court therefore has to assess the cause of the delay and whether the initial measures to prevent a birdstrike met a "reasonable measures" test.

Case C-315/15

Case Summary: Helga Krusemann and Others v TUIFly GmbH

In the second judgment, the Court held that unauthorised 'wildcat' strikes do not automatically constitute "extraordinary circumstances" under Regulation 261 and therefore do not necessarily absolve an airline of responsibility to pay compensation for delays or cancellations.

In October 2016, following a surprise announcement by the company of an impending corporate restructure, 89% of TUIFly's cockpit crew and 62% of its cabin crew placed themselves on sick leave for a week. The airline refused to pay passengers who consequently claimed compensation under Regulation 261, taking the position that the strikes constituted extraordinary circumstances that could not have been avoided, per the provision under article 5(3) of the Regulation, excluding the airline from its obligation to pay. The joined cases were referred to the European Court of Justice.

The Court held that as corporate restructures are an inherent part of any business, the social fallout of these is also an inherent part of the business. Accordingly such fallout, strikes included, cannot be held to be extraordinary circumstances. On the issue of whether the strikes could have been avoided, the Court determined that, as the mass sick leave occurred shortly after the restructure was announced and ceased shortly after the airline reached an agreement with staff representatives, the sick leave was within the control of the company and could therefore have been avoided.

Here the Court appears to have departed from the very text of the Regulation itself. Recital 14 specifically cites strikes as a circumstance where airlines may be exempt from compensating delayed passengers. However, in coming to its decision, the Court relied on its previous rulings in Wallentin-Hermann v Alitalia and Corina van der Lans v KLM to conclude that this recital instead provides that strikes are merely an example of an event that may itself lead to extraordinary circumstances occurring, rather than the circumstances in itself. Accordingly, in interpreting the Regulation strictly, so as to afford the highest level of passenger protection (deemed to be the objective of the Regulation), the present strikes were held not to constitute extraordinary circumstances.

Joined Cases C‑195/17, C‑197/17 to C‑203/17, C‑226/17, C‑228/17, C‑254/17, C‑274/17, C‑275/17, C‑278/17 to C‑286/17 and C‑290/17 to C‑292/17, 17 April 2018