Code Sharing Agreements: jurisdiction given to place of departure of first connecting flight for Regulation 261/2004 claims

Code sharing agreements present several advantages to airlines who wish to extend their offerings to passengers. It is however becoming increasingly important for airlines to take the time to detail risk allocation in these agreements, in particular with regards to passenger claims under Regulation 261/2004 on delays, denied boarding and cancellations. This could minimise the risk of claims in the court of a territory in which a defendant airline does not operate – as is confirmed to be possible pursuant to the ruling discussed below.

Background

Two passengers booked a journey from Hamburg (Germany) to San Sebastian (Spain). The single booking comprised three connecting flights. British Airways operated the first leg of the journey (Hamburg to London), and Iberia operated the second (London to Madrid) and third (Madrid to San Sebastian) legs. The third leg of the journey was cancelled without sufficient warning, and the passengers claimed the standard compensation under Regulation 261/2004 through flightright, who submitted the claim against Iberia to the local court of Hamburg.

Referral to the Court of Justice of the European Union (CJEU)

The referring court asked the CJEU to confirm whether it had jurisdiction over the dispute, seeing as both the place of departure and the place of arrival of the cancelled flight were outside its territorial jurisdiction.

It also asked the CJEU whether it was possible for the claimant to sue both carriers involved in the journey which gave rise to the dispute. It noted that in another recent case^[1], the operating carrier of the first leg of the journey could be sued for the purpose of a claim under Regulation 261/2004, for all connecting flights of the journey under the same booking. The referring court wanted confirmation that the air carrier operating the final leg of the journey could also be sued on the basis of Regulation 261/2004 in the same way.

The CJEU's ruling

The CJEU interpreted the Regulation on jurisdiction (Regulation 1215/2012) and concluded that the referring court did have jurisdiction over the claim for compensation brought against Iberia.

On the basis of Article 7(1)(b) of the Regulation, defendants can be sued in the courts for the place of performance of their obligation. The court had previously established that for direct flights, passengers could bring their Regulation 261/2004 claims in either the place of departure or the place of arrival of the aircraft^[2]. This interpretation applied in the same way to journeys with two legs in a single booking - claims under Regulation 261/2004 can be brought in the place of departure of the first leg of the journey, or in the place of arrival of the second flight.

The CJEU took the view that, in the context of a single booking split into three legs, the obligation of the contracting air carrier is to carry the passengers from point A to point D, and point A is a principal place of provision of the service. The place of departure of the first flight satisfies the proximity test between the contract and the competent court, and fulfils the principle of predictability pursued by the rules of jurisdiction. Therefore the local court of Hamburg had jurisdiction over the dispute in the main proceedings.

The CJEU acknowledged that the passengers may not have had a direct contract with Iberia. But Iberia was performing obligations under Regulation 261/2004, and pursuant to Article 3(5), Iberia was to be regarded as performing obligations on behalf of the airline which did have a contract with the passengers.

It was therefore possible for the claimant to sue the air carrier responsible for the final leg of the journey, at the court of the place of departure of the first leg of the journey, regardless of whether the defendant airline actually operates there.

[1] Judgment of 11 July 2019, Ceske Aerolinie, C-502/18 EU:C:2019:604

[2] Judgment of 9 July 2009, Rehder, C-204/08, EU:C:2009439, paragraphs 43 and 47