Varano v Air Canada [2021] EWHC 1336 (QB)
High Court of Justice, Queen's Bench
Facts
The parties
1. The Claimant, Marjolyn Varano, seeks compensation from the defendant airline, Air Canada, in the fixed sum of €600 in respect of a delayed flight in April 2016. The claim has been brought pursuant to Article 7 of Parliament and Council Regulation (EC) No 261/2004 of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding, or cancellation, or long delay of flights (“Regulation 261”).
2. The Defendant, Air Canada, denies that the Claimant is entitled to compensation under Regulation 261.
Agreed facts
3. It is common ground that:
a. For the purposes of Regulation 261, Air Canada is not a “Community carrier”, meaning that it is not an air carrier with an operating licence granted by a Member State.
b. In 2016 the Claimant made a single booking with the Defendant to fly from London Heathrow to Austin-Bergstrom International Airport, Texas, USA, via Toronto Pearson International Airport, Canada, by means of two directly connecting flights.
c. There was no delay to the first flight from London Heathrow to Toronto Pearson International; it landed at Toronto slightly ahead of schedule at 14:53 UTC on 10 April 2016.
d. The second flight, from Toronto to Austin, was scheduled to depart at 18.25 UTC, over three and a half hours later.
e. The aircraft allocated to operate the second flight was due to fly into Toronto from J.A. Douglas McCurdy Airport, Nova Scotia, but that incoming flight was cancelled as a result of a technical issue raising safety concerns. An alternative aircraft was therefore allocated for the flight from Nova Scotia to Toronto and then from Toronto to Austin. That alternative flight arrived into Toronto at 22.44 UTC and departed Toronto at 23.42 UTC, over five and a quarter hours late.
f. As a result, the Claimant’s flight arrived in Austin five hours and forty-nine minutes after the originally scheduled arrival time.
g. The Claimant is domiciled in the USA and is not a citizen of any Member State.
h. If the Claimant does have a right to compensation under the Regulation, contrary to the Defendant’s position, then the appropriate compensation in this case would be €600 having regard to the length of the flight and the length of the delay.
Issue(s)
4. Ms Varano contends that she has a right to compensation from Air Canada for the delay to the flight pursuant to Regulation 261.
5. Air Canada’s position is that Regulation 261, properly construed in accordance with principles of international law, cannot and does not apply in circumstances in which (i) the Defendant is a non-Community carrier and (ii) the causative delay arose on the second flight, being a flight operating outside of the EU (Toronto to Austin).
Discussion
[72] The effect of the analysis set out by Green LJ in Lipton is potentially far reaching. Leaving aside wider potential implications, I note that Amended Regulation 261 is limited in scope to passengers departing from an airport located in the UK, rather than (under Regulation 261) to passengers departing from an airport located in the territory of a Member State. It is conceivable, for example, that a claimant might have issued proceedings in 2019 in respect of delay to a flight departing from, say, Paris. If such a claim were heard in 2021 then the defendant airline might seek to rely on the analysis in Lipton to contend that the claimant has no cause of action under the Amended Regulation 261, even though such an argument would not have been available had the claim been heard in 2020. The correct approach to any such claims (including the effect of s.16 of the Interpretation Act 1978) would call for detailed consideration in light of Lipton.
[73] Green LJ concluded in Lipton, at [72], that the present governing law is the Amended Regulation 261, as foreshadowed at [53]. He repeated this conclusion at [82] in the context of determining the law applicable to the claim: “The first [step] is to identify the relevant domestic law. This is Regulation 261/04 as amended”. He then concluded that the Amended Regulation 261 had been properly construed by the judgment of Coulson LJ. Accordingly, reading the judgment as a whole, I do not consider that the relevant analysis as to the applicable Regulation in Lipton can properly be treated as obiter, albeit that the analysis was perhaps primarily concerned with setting out “basic principles” of more general application. I therefore consider that this court is bound to treat this claim as brought under the Amended Regulation 261, as now contended by the Claimant.
[74] In my view, however, the amending provisions, which are set out in Lipton, at [72], and which I shall take as read, introduce no modifications of substance relevant to the determination of this case (see further paragraph 94 below).
[75] Pursuant to section 6(3) of the EU(W)A 2018, any question as to the validity, meaning or effect of Amended Regulation 261 is to be decided, by this court, in accordance with the relevant retained case law and retained general principles of EU law and having regard to the limits of EU competences immediately before 31 December 2020. The new legal regime has been in place for only a few months and (as in Lipton) nothing of relevance in the case law of the CJEU has changed in the context of this case.
[76] The Claimant’s claim concerns delay at the final destination arising from the delayed departure of the second of two connecting flights from a non-EU airport in circumstances in which the contract for the flights was with a non-Community carrier. Air Canada is correct to note that this precise fact pattern has not arisen in any of the various authorities of the CJEU and of the Court of Appeal to which I have been referred. Nevertheless, those authorities do, in my view, provide the answers as to how Regulation 261 falls to be interpreted and applied in this case.
[77] In Gahan the contention of the defendant (summarised, at [33]) was that any delay to the second flight did not fall to be taken into account because the second flight fell outside the scope of the Regulation as they departed from a non-EU airport and, in the alternative (at [38]), was irrelevant because Emirates was a non-EU carrier.
[78] The first basis on which Arden LJ rejected the primary case of Emirates, at [73], was that as a matter of EU law:
“The Court of Justice has held that the liability for compensation for delay depends on the delay in arriving at “the final destination”. Where the carrier provides a passenger with more than one flight to enable him to arrive at his destination, the flights are taken together for the purpose of assessing whether there has been three hours’ or more delay. This is established by Sturgeon… and Folkerts… While the Interpretative Guidelines are not admissible as an aid to interpretation, they are consistent with my reading of the judgments of the conclusion of the Cour de Cassation in X v Emirates Appeal No 15-21590, 30 November 2016: para 58 above. In the case of directly connecting flights, travelled without any break between them, the final destination is the place at which the passenger is scheduled to arrive at the end of the last component flight”.
[79] The second point of EU law identified by Arden LJ and summarised in the heading at [76], was that “Article 7 applies to non-Community carriers in respect of flights to their final destination”. The critical analysis, for present purposes, was that:
“Regulation 261 applies to flights by non-Community carriers out of EU airspace even if flight 1 or flight 2 lands outside the EU. The necessary starting point here is that there is no requirement in Regulation 261 that they should land in the EU. Regulation 261 takes effect when the carrier is present in the EU and it imposes a contingent liability on the carrier at that point. The liability may never crystallise but if it does do so, it will crystallise outside the jurisdiction.”
[80] Arden LJ held, at [77], “The basis of jurisdiction asserted over non-community carriers is territorial… It is sufficient if flight 1 begins in the EU, as article 3(1) requires.” She relied on two reasons to support this conclusion:
a. The first, at [78], was that “… this is a case where the measure uses an activity outside the jurisdiction not to claim jurisdiction but to quantify a sanction imposed within the jurisdiction…”. She noted that in ETS the CJEU had rejected the argument that the EU emissions trading scheme involved a breach of the extraterritoriality principle in circumstances in which the scheme required an operator using an EU airport to surrender emissions allowances calculated on the basis of the whole flight and that”[s]o too in the present case, Regulation 261 applies to a non-Community carrier because they use EU airports. It is rational for the EU legislature to measure delay by reference to the final destination where there are two or more flights which are directly connecting as that is likely to be the best measure of the inconvenience to the passenger.”
b. The second point, at [79], was that this conclusion “is supported by the decision of the House of Lords in Holmes [1989] AC 1112… “category (2) cases” as defined by Lord Bridge of Harwich were held not to offend against the extraterritoriality principle, and they are more closely analogous to Regulation 261 since they concerned “carriage involving a place of departure or destination or an agreed stopping place in a foreign state and a place of departure or destination or an agreed stopping place in the United Kingdom or other British territory”…”
[81] In my judgment, the above analysis of Arden LJ sets out the relevant principles of EU law necessary to determine the current claim.
[82] It is common ground that Ms Varano should be taken as having booked interconnecting flights with Air Canada to take her from Heathrow to Austin, Texas. It was, in effect, a single booking. Regulation 261 was engaged in the present case because the flight operated out of Heathrow. The Amended Regulation 261, following, Lipton, is now engaged on the same basis. Air Canada provided the claimant with more than one flight to enable her to arrive at her destination and the CJEU has held, as Arden LJ noted at [73], that “the flights are taken together for the purpose of assessing whether there has been three hours’ or more delay”.
[83] This analysis is also consistent with the subsequent decisions of the CJEU in Wegener and České aerolinie, both of which emphasised the importance of the fact that the connecting flights were booked as “a single reservation” or “under a single booking”; in the latter case it was held that flights with one or more connections that are the subject of a single reservation must be regarded as a “single unit”.
[84] The correct analysis of the relevant CJEU case law, following Gahan at [76], is that Regulation 261 imposed a contingent liability on Air Canada when it operated the flight from Heathrow, namely a liability to pay compensation to Ms Varano if she experienced relevant delay in respect of arrival at the final destination. It is common ground that the delay at the final destination, Austin, was over 5 hours. The liability therefore crystallised in this case.
[85] Contrary to the submissions of Air Canada, the existing case law has held that such an interpretation of Regulation 261 is not precluded by the territoriality principle. As explained by Arden LJ, at [77], “[t]he basis of jurisdiction asserted over non-community carriers is territorial… It is sufficient if flight 1 begins in the EU, as article 3(1) requires.” It is irrelevant whether the delay was caused within the jurisdiction or outside the jurisdiction; the contingent liability was imposed when Air Canada was within the jurisdiction.
[86] In the present case it seems to me that the heart of Air Canada’s arguments on extraterritoriality are fundamentally the same as those advanced, and rejected, in Gahan. Indeed, reliance is placed by Air Canada on the same travaux preparatoires and the same opinion of Advocate General Sharpston in Schenkel. The answer to the extraterritoriality argument was provided by the Court of Appeal, in particular, at [76]. Regulation 261 applies to Community and non-Community carriers in respect of connecting flights (units of travel) starting in the EU and imposes a contingent liability on the carrier at that point in time.
[87] Air Canada correctly did not dispute that aspects of the Court of Appeal’s judgment in Gahan could be read as applying to the facts of the present case. However, by its skeleton argument Air Canada suggested that “to the extent some of Arden LJ’s reasoning arguably goes further than required by the facts of Gahan to encompass the facts of the present case, it is respectfully suggested that the reasoning is obiter and, for the reasons set out above, should not be followed”. I do not accept Air Canada’s contention in this regard. Arden LJ’s judgment addressed the multiple contentions raised by the defendant in Gahan and, in so doing, summarised and explained the relevant case law of the CJEU and identified the approach to be followed in respect of the proper interpretation of Regulation 261. Furthermore, that analysis is consistent, in my view, with the approach taken by the CJEU in the subsequent decisions of Wegener and České aerolinie.
[88] I have taken on board Air Canada’s reliance on the fact that in October 2021 a Belgium Court (C-561/20) considered it appropriate to make a reference to the CJEU in the relation to a claim for compensation against a non-Community airline arising in respect of delay on the second leg of a journey between airports outside of the EU. In my view, however, the existing case law of the CJEU, and of the Court of Appeal, provides a clear answer to the issues of interpretation arising in this case.
[89] Air Canada also relied on the European Commission’s proposal of March 2013 to amend Regulation 261 COM (2013) 130 final 2013/0072 (COD), which proposal included provision for a new Article 6a concerning missed connecting flights and it was contended that this should be seen as explicit clarification as to how the Regulation as presently drafted should be interpreted. I note that the proposal also included amendments to Article 6 itself to provide expressly for the right to compensation in respect of delays at the final destination. I do not consider that the proposal is of assistance (leaving aside issues of admissibility) in relation to the proper interpretation of the Regulation in the context of the issues arising in this case and, in any event, I am required to apply the further relevant decisions of the CJEU since its publication.
[90] As to Air Canada’s contention that it ought not to be placed in the “impossible position” of having to comply with two different sets of regulations, namely Regulation 261 and the new Canadian Air Passenger Protection Regulations introduced in 2019, I note that no possible inconsistency arises in the present case as the Canadian regulations post-date the relevant flight. Second, the fact that Canada has introduced new regulations is not, in itself, a basis for challenging the interpretation of Regulation 261 set out by the Court of Appeal or the CJEU previously. If a future case gives rise to a conflict in respect of the two sets of regulations then, no doubt, such conflict will fall to be considered in such a case and the court can then decide whether, as the Claimant contends, it is appropriate to adopt the approach indicated by the CJEU in ETS in respect of double regulation.
[91] As noted by Arden LJ in Gahan, at [80], there will inevitably be cases where the remedies conferred by Regulation 261 produce some odd results. Certain cases might also give rise to further issues in relation to the construction and/or application of the Amended Regulation 261. For example, additional issues might arise in respect of the obligations imposed by Articles 6 and 9 as to the provision of assistance (as opposed to the payment of compensation) to passengers in the event of a delay on an interconnecting flight in a foreign jurisdiction and/or in respect of the determination of arguments relating to “extraordinary circumstances” under Article 5(3) said to arise in a foreign jurisdiction. No such issues arise, however, in the present case.
[92] As noted above, Amended Regulation 261 does not contain modifications of substance in respect of the provisions of Regulation 261 which are relevant to this claim. Accordingly, Amended Regulation 261 falls to be interpreted in accordance with the retained case law of the CJEU and the decision of the Court of Appeal in Gahan, at least in so far as this court is concerned. As set out above, in my judgment, the existing case law provides the answers to each of the points raised by the Defendant in the present case.
[93] In light of Lipton, at [82], I have considered the corresponding provisions of the TCA and am satisfied that the above construction of the Amended Regulation 261 accords with the requirements of the TCA and provides appropriate protection to consumers in the context of the matters under consideration in that case.
[94] In case it is of relevance hereafter, my conclusions in respect of the proper construction of Amended Regulation 261 and the application of its provisions to this case would have been the same had I been construing and applying Regulation 261 to the facts of this case.
(7) Conclusion
[95] For the reasons set out above, in my judgment Ms Varano is entitled to the compensation claimed in respect of her delayed flight, albeit in the sum of £520, being the sum provided for by the Amended Regulation 261, rather than €600 as would have been due under Regulation 261.
Useful for
Irrelevant under EU261 that delay caused in third or non-EU country
