In 2004, the European Council and Parliament enacted EC 261/2004, a set of consumer protection rules designed to establish the obligations of airlines in the event of denied boarding, flight delays and cancellations. EC 261 includes a compensation regime for passengers whose flights are canceled without sufficient notice. The EC 261 compensation provision, which only explicitly addresses canceled flights, was expanded in 2009 by the European Court of Justice (ECJ) to provide compensation to passengers whose flights were delayed by three hours or more. See the Sturgeon Case.¹ Because the Sturgeon decision created confusion in the application of EC 261 and because it greatly expanded the potential obligations of airlines operating to and from the EU, the ECJ was asked by courts in Germany and England to revisit its ruling.
On October 23, 2012, the ECJ issued a decision reaffirming the application of EC 261 compensation to passengers delayed for three hours or more, in the joined cases Nelson v. Deutsche Lufthansa AG and TUI Travel v. Civil Aviation Authority.² Although not completely unexpected, this ruling is a rejection of the airlines’ arguments against the Sturgeon decision and a disappointing next step for the industry in the continuing controversy over EC 261.
The ECJ’s decision stems from separate proceedings in Germany and England. In the Nelson Case, a local German court in Cologne questioned whether passengers who had experienced a 24-hour delay in transportation from Nigeria to Germany were entitled to EC 261 compensation. In the TUI Travel Case, the High Court of England and Wales requested clarification as to whether the U.K. Civil
Aviation Authority should enforce EC 261 delay compensation. After hearing from the parties in both cases, the ECJ reaffirmed its position that passengers delayed three hours or more are entitled to EC 261 compensation.
Among the issues raised by the German and English Courts was whether the ECJ’s expansion to cover delay compensation was valid in light of the limitations of the Montreal Convention³ and whether the ECJ had violated European principles of legal certainty, proportionality and temporality.
Before addressing the national courts’ concerns, the ECJ first reaffirmed the rationale of the Sturgeon decision. In Sturgeon, the ECJ held that passengers who experience cancellations (resulting in a delay in the passenger’s arrival of three hours or more) and long delays suffer the same injury, i.e. the “inconvenience of loss of time.” Because the injury is the same, the European principle of “equal treatment” requires that such passengers have the same or similar remedies. Thus, the Court concluded that European legal principles require that passengers delayed for three hours or more have access to the same remedies as those whose flights were canceled.
Notably, the ECJ also reaffirmed that airlines are entitled to the defense of extraordinary circumstances, if they have taken all reasonable measures to avoid the delay. However, the decision provides no further clarification as to the types of factual circumstances which would constitute extraordinary circumstances.
By characterizing EC 261 as a remedy for the “inconvenience of loss of time,” the ECJ drew a distinction between the EC 261 remedy and the delay provisions in the Montreal Convention.
The Montreal Convention is a multilateral agreement that was established to unify passengers’ rights throughout the world. All European Union member-states are signatories to this Convention as members of the European Union. Accordingly, both national laws and European regulations must comply with the requirements of the Montreal Convention.
In analyzing the interaction of EC 261 and the Montreal Convention, the ECJ recognized that Articles 19, 22, and 29 of the Montreal Convention collectively provide the sole remedies for damages suffered from the delay in air transportation. However, to get around this limitation, the ECJ concluded that the injury of loss of time is “not [a] damage arising as a result of delay, but … an inconvenience” resulting from the “lack of comfort or … [from] being temporarily denied means of communication…”. Under the ECJ’s logic, inconvenience is separate from, and unrelated to, damages from delay.
According to the ECJ, EC 261 compensation falls outside the Montreal Convention and a passenger can seek this compensation in addition to damages available under the Montreal Convention. Notably, this conclusion is in direct conflict with US law, which holds that the Montreal Convention provides the exclusive remedies for all damages experienced in the course of international transportation. See El Al Israel Airlines, Ltd. v. Tseng, 525 U.S. 155 (1999).
The ECJ next dismissed the legal issues arising out of European law. It summarily stated that the application of EC 261 to delay compensation does not violate the principle of “legal certainty” because both passengers and airlines are knowledgeable regarding the scope of their respective rights and obligations. The ECJ rejected the argument that it had acted disproportionately in Sturgeon, pointing out that the decision as to long delays was an “appropriate and necessary” measure to achieve a “legitimate objective” within the scope of the European legislation.
Lastly, it concluded that it is under no obligation to limit the temporal effect of this or prior rulings. Thus, EC 261 compensation should be granted to an entitled passenger whether or not he or she traveled on a delayed flight prior to this or the Sturgeon Case.
This decision stands as a confirmation of the ECJ’s existing interpretation of passengers’ rights in Europe. Although the decision clearly is an attempt to provide a definitive answer regarding the scope of EC 261, it is likely that this regulation, this case, and the established case law will remain highly contentious for the foreseeable future.
¹ Joined Cases C-402/07 and C-432/07 Sturgeon v. Condor Flugdienst GmbH  ECR I- 10923; see also Case C-344/04 IATA, ELFAA v. Department of Transport  ECR I-403.
² Joined Cases C-581/10 and C-629/10, Nelson v. Deutsche Lufthansa AG, TUI Travel plc, et al v. Civil Aviation Authority.
³ Convention for the Unification of Certain Rules for International Carriage by Air, done at Montreal on May 28, 1999, (entered into force on November 4, 2003), S. Treaty Doc. 106-45, 1999 WL 33292734, 2242 U.N.T.S. 350 (2000).