Passengers who have suffered a long delay or cancellation under Regulation 261 are entitled to compensation in the currency of their place of residence

By Simon Phippard, Sandra Nicolle

09-2020

Ruling in Case C-356/19, Delfly v Smartwings Poland sp. z o.o., formerly Travel Service Polska sp. z o.o.

The Court of Justice of the European Union (CJEU) was asked whether aggrieved passengers may demand compensation under Regulation 261/2004 in the currency of their place of residence, and whether this right took priority over any national law that precludes a claim in a national currency. The CJEU held that passengers must be entitled to claim for compensation in their national currency, for the principles of broad interpretation of the regulation and of equal treatment of aggrieved passengers to be upheld.

Background

The claimant had a booking for travel from a non-EU country to Poland. The flight was delayed for more than three hours, and so she was entitled to compensation amounting to €400 under Regulation 261/2004 (the "Air Passenger Rights Regulation"). She brought her claim to the national court, requesting that the airline pay 1,698.64 Polish Zlotys, the equivalent to 400€ on the date of the claim.

The airline contended that the claim should be rejected on the ground, inter alia, that the claim had been expressed in an incorrect currency. This ran contrary to national law provisions and case law, whereby the claim should have been expressed in euros instead. 

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

The national court asked the CJEU whether the Air Passenger Rights Regulation allowed passengers who have suffered a significant delay or a cancellation to demand compensation in the national currency of their place of residence. The Polish court wanted confirmation that this right existed, and whether it overrode any legislation or case law of a Member State that would have any action for compensation expressed in such currency dismissed.

The CJEU's ruling

The wording of the Air Passenger Rights Regulation does not refer to any currency other than the euro in which compensation must be paid, but that does not mean that compensation in any other currency is excluded.

The main objective of the Air Passenger Rights Regulation is to ensure a high level of protection for passengers, and therefore its provisions conferring rights on passengers must be interpreted broadly. If passengers were limited to bringing claims in euros, and not in any other national currency, this would restrict their exercise of their right to compensation, and would go against the principles of high levels of protection and broad interpretation.

The Court explained that all aggrieved passengers were to be treated in the same way when they brought a claim under the Air Passenger's Rights Regulation. The Regulation does not look at their nationality or place of residence, only the place of departure of their delayed/cancelled flight. Passengers could expect to receive standardised and immediate compensation, as appropriate. If there were to be a condition that compensation could only be paid in euros, this would create a difference in treatment between passenger claimants. Such a difference in treatment could not be justified. 

Having taken the view that passengers should not be precluded from obtaining compensation in the currency of their place of residence, the CJEU pointed out that for this to be possible, there must be a conversion from the euro to that currency. The Air Passenger Rights Regulation does not contain any instructions as to how this may be done, and therefore the manner in which the conversion is made is a matter of national law. 

Conclusion

The CJEU concluded in this decision that denying passengers entitled to compensation under the Air Passenger's Rights Regulation payment in the national currency of the place of their residence would be incompatible with (i) the principle of broad interpretation of the Regulation's protective measures and (ii) the principle of equal treatment of aggrieved passengers (comparable situations must not be treated differently).

The CJEU has only indicated that the manner in which conversion is made is a matter of national law. National law is to oversee the setting of the exchange rate applicable to the conversion, and the conversion is to be done in compliance with the principles of equivalence and effectiveness. 

Cases on currency issues under the Air Passenger Rights Regulation are relatively infrequent and with multiple currencies in use throughout the EU these issues arise from time to time. In 2018 the CJEU concluded that the pricing transparency provisions in Regulation 1008/2008, which enables airlines to express fares in "euros or local currency", do not impose a specific national currency. However, where an airline quotes fares in a currency other than euros, the fare used must be objectively linked to the service offered. This decision arguably takes a similar approach: without being unduly prescriptive, it seeks to protect the interests of passengers in non-euro Member States, while providing clarity on the airlines' obligation to compensate a standard amount to qualifying passengers.