Air passenger rights: Can a technical failure be considered an extraordinary circumstance exempting the air carrier from its obligation to compensate passengers under Regulation (EC) No 261/2004?
CJEU 13 June 2024 case C-385/23 Matkustaja A v/ Finnair Oyj and CJEU 13 June 2024 case C-411/23 D. S.A. v P. S.A
This text discusses the interpretation of Regulation (EC) No 261/2004 by the Court of Justice of the European Union (CJEU) regarding compensation for air passengers in cases of flight cancellations and delays. Specifically, it addresses whether technical failures can be considered “extraordinary circumstances” that exempt airlines from compensating passengers. Generally, technical problems are not deemed extraordinary unless they are beyond the airline’s control and not inherent to its normal operations. However, hidden design defects revealed by manufacturers can be considered extraordinary circumstances. The text highlights recent CJEU rulings (C-385/23 and C-411/23) that confirm this interpretation, emphasizing that airlines must take all reasonable measures to mitigate such issues.
Keywords: Regulation (EC) No 261/2004, compensation, extraordinary circumstances, technical failures, flight delay, hidden design defects, reasonable measures.
- INTRODUCTION
The Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, continues to be interpreted by the Court of Justice of the European Union.
Two new rulings of the Court of Justice of the European Union were rendered on 13 June 2024, once again, on the concept of “extraordinary circumstances” as per Article 5(3) of Regulation which provides that :
- In case of cancellation of a flight, the passengers concerned shall
[…]
(c) have the right to compensation by the operating air carrier in accordance with Article 7, unless:
(i) they are informed of the cancellation at least two weeks before the scheduled time of departure; or
(ii) they are informed of the cancellation between two weeks and seven days before the scheduled time of departure and are offered re-routing allowing them to depart no more than two hours before the scheduled time of departure and to reach their final destination less than four hours after the scheduled time of arrival; or
(iii) they are informed of the cancellation less than seven days before the scheduled time of departure and are offered re-routing, allowing them to depart no more than one hour before the scheduled time of departure and to reach their final destination less than two hours after the scheduled time of arrival. […]
- An operating air carrier shall not be liable to pay the compensation provided for in Article 7 if it can prove that the cancellation was due to extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.
[…] “
As a reminder, this obligation to compensate passengers in the event of flight cancellation applies in the same way in case of flight delays since the Sturgeon ruling, which held in principle that a delay of more than three hours on arrival in relation to the time initially scheduled is equivalent to cancellation (CJUE 19 Nov. 2009, Case C-402/07, Sturgeon (Cts) v Condor Flugdienst GmbH ).
In these two cases C-385/23 Matkustaja A v/ Finnair Oyj and C-411/23 D. S.A. v P. S.A, the question was whether technical failures caused by a hidden design defect revealed by the manufacturer of the aircraft or by a competent authority may constitute an “exceptional circumstance” within the meaning of Article 5(3) of Regulation (EC) N° 261/2004.
- PRINCIPLE: TECHNICAL PROBLEMS ARE NOT CONSIDERED EXTRAORDINARY CIRCUMSTANCES
The Court has established for a long time, as a matter of principle, that technical failures or breakdowns cannot be considered as extraordinary circumstances, unless the two cumulative conditions of being by their nature or origin, not inherent in the normal exercise of the activity of the air carrier concerned and being beyond that carrier’s actual control are met (CJEU, 22 December 2008 Wallentin-Hermann v Alitalia, Case C-549/07).
Then, a technical problem which comes to light during aircraft maintenance or is caused by failure to maintain an aircraft cannot be regarded as ‘extraordinary circumstances’.
Furthermore, even where a technical problem which has occurred unexpectedly is not attributable to poor maintenance and is not detected during routine maintenance checks, such technical problem does not fall within the definition of “extraordinary circumstances” (CJEU 17 September 2015 Van der Lans v/Koninklijke Luchtvaart Maatschappij NV, Case C257/14).
The failure of a so-called ‘on condition’ part, that is to say, a part which is replaced only when it becomes defective, even though it permanently stocks a spare part does not constitute an extraordinary circumstance within the meaning of Article 5(3) of Regulation (EC) N° 261/2004 either ( CJEU 12 March 2020 Finnair Case C 832/18).
However, the situation is different in the case of a hidden manufacturing defect revealed by the aircraft manufacturer or by a competent authority, which can be considered as an extraordinary circumstance, and this is confirmed by the Court of Justice of the European Union, in these two decisions of June 13, 2024.
- CONCEPT OF “EXTRAORDINARY CIRCUMSTANCE” : TECHNICAL FAILURES CAUSED BY A HIDDEN DESIGN DEFECT REVEALED BY THE MANUFACTURER AFTER CANCELLATION OF THE FLIGHT
In case C-385/23 Matkustaja A v/ Finnair Oyj, a passenger booked a flight with Finnair from Helsinki (Finland) to Bangkok (Thailand) scheduled for 25 March 2016. That flight was to be operated by an aircraft which had entered into service a little over five months earlier.
The fuel gauge of that aircraft experienced a technical failure during refuelling shortly before take-off. Taking the view that that failure fundamentally impinged on flight safety, Finnair cancelled the scheduled flight and did not operate the flight until the following day, namely 26 March 2016, using a back-up aircraft. That flight reached its destination some 20 hours late.
Since the model of the aircraft initially earmarked for the flight was a recent one, the defect in question, which had not occurred before anywhere in the world, was unknown prior to that failure. Consequently, neither the aircraft manufacturer nor the aviation safety authority was aware of the defect prior to that incident and they had therefore been unable to report it.
Finnair immediately launched an investigation into the cause of the failure affecting the fuel gauge. Approximately 24 hours later, the failure was overcome by emptying the fuel tank and refilling it. The aircraft was then fit to fly again.
Subsequent, more detailed investigations carried out by the manufacturer of the aircraft in question revealed that the failure was due to a hidden design defect affecting all aircraft of the same type.
Following its refusal to pay to a passenger the lump-sum of EUR 600 in compensation provided for in Article 5(1)(c) and Article 7(1)(c) of Regulation No 261/2004, Finnair argued before the before the District Court where an action was brought that the failure at issue constituted an ‘extraordinary circumstance’ within the meaning of Article 5(3) of that regulation and that it had taken all the measures which could reasonably be expected of it but the District Court considered that although the failure was indeed due to a design defect which was difficult to predict, it was inherent in the normal exercise of the activity of an air carrier.
On the contrary, the Court of Appeal, Finland held that the failure affecting the fuel gauge had to be regarded as an ‘extraordinary circumstance’, since it was not inherent in the normal exercise of Finnair’s activity and since, by its nature or origin, it was beyond Finnair’s actual control.
An appeal was then brought before the Supreme Court, which is the referring court in this case.
In this case, the question was more specifically whether the notification or recognition by the manufacturer, after the air carrier’s decision to cancel a flight, of the existence of a hidden design defect which affects an aircraft and liable to impinge on flight safety is capable of constituting an act of a third party which interferes with the carrier’s air activity and, therefore, of constituting an event of external origin required to be considered as an extraordinary circumstafcnce.
The answer of the Court is that Article 5(3) of Regulation No 261/2004 must be interpreted as meaning that the occurrence of an unexpected and unprecedented technical failure affecting a new aircraft model recently put into service which results in the air carrier cancelling a flight is indeed covered by the concept of ‘extraordinary circumstances’, within the meaning of that provision, where the manufacturer of that aircraft recognizes, after that cancellation, that that failure was caused by a hidden design defect concerning all aircraft of the same type and impinging on flight safety.
- CONCEPT OF “EXTRAORDINARY CIRCUMSTANCE” AND “REASONABLE MEASURES” EXPECTED: DETECTION OF HIDDEN DEFECT IN THE DESIGN WHERE THE ENGINE MANUFACTURER HAD INFORMED THE AIR CARRIER OF THE EXISTENCE OF A DEFECT OF THAT KIND SEVERAL MONTHS BEFORE THE FLIGHT CONCERNED
In case C-411/23 D. S.A. v P. S.A, the question was also to determine whether the notification or recognition by the engine manufacturer of the existence of a hidden defect in the design of an aircraft engine liable to impinge on flight safety is capable of constituting an act of a third party which affects the carrier’s air activity and, therefore, of constituting an event of external origin but in this case where such notification was made prior to the delayed flight in question.
In April 2018, the manufacturer of the engine fitted to the aircraft scheduled to operate that flight had sent that carrier an instruction and a report which disclosed the existence of a hidden design defect affecting the high pressure compressor blades of engines fitted to aircraft of the same model and imposed a number of restrictions on the use of those aircraft. After that date, the carrier claims to have contacted various carriers on several occasions with a view to chartering additional aircraft to pre-empt the possibility of an engine design defect being discovered in any of the aircraft in its fleet.
On 28 June 2018, four days before the scheduled flight, an engine malfunction occurred during a flight operated by the aircraft scheduled to carry J.D. on the flight he had booked. In accordance with the recommendations of the engine manufacturer, the air carrier at issue in the main proceedings conducted an emergency inspection of the engine concerned and identified an engine design defect. After consulting the engine manufacturer, the engine concerned was taken out of service and was then disassembled and sent to a maintenance center for repair.
Against that background, the carrier operated the flight scheduled for 2 July 2018 that same day, but it did not use the aircraft initially earmarked for that flight, opting instead for a replacement aircraft which arrived more than three hours after the originally scheduled arrival time.
In the first place, the Court clearly answers that the detection of a hidden defect in the design of the engine of an aircraft which is to operate a flight is covered by the concept of ‘extraordinary circumstances’ within the meaning of Article 5(3) of Regulation (EC) N° 261/2004, even where the engine manufacturer had informed the air carrier of the existence of a defect of that kind several months before the flight concerned.
The point in time at which the link between the technical failure and the hidden design defect is revealed by the aircraft manufacturer, the engine manufacturer or the competent authority is indeed irrelevant, since that defect existed at the time of the cancellation or long delay of the flight and the carrier had no means of control to correct it.
In the second place, it is reminded that in accordance with the case-law of the Court, since not all extraordinary circumstances confer exemption, in accordance with Article 5(3) of the Regulation, and that an air carrier is exempted from paying compensation in the event of cancellation or delay at arrival only if it can prove that the cancellation or delay is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.
It is perfectly understandable that when the air carrier was informed by the engine manufacturer had of the existence of a defect of that kind several months before the flight concerned, it is required to take measures to prevent the occurrence and the consequences of such an ‘extraordinary circumstance’.
However, we can still have some doubts about these measures appropriate to the situation, namely by measures which, meet conditions which are technically and economically viable for that carrier, taking into account that the air carrier cannot be required to make sacrifices that are unbearable in the light of its capacities, as the Court has already ruled, in a case where the extraordinary circumstance in question was the failure of the refueling system (CJUE 7 July 2022 in case SATA International – Azores Airlines SA ° C-308/2).
In this particular case, the air carrier concerned had contacted 8 carriers with a view to chartering a replacement aircraft, but the Court seems to consider that this is insufficient and that as part of “all the reasonable measures” which it is required to take in order to prevent the occurrence and the consequences of an ‘extraordinary circumstance’, an air carrier must adopt a preventive measure consisting of having a back-up fleet of aircraft on standby.
However, it will always be up to the courts, in assessing these reasonable measures, to evaluate whether the measure is viable for the carrier from a technical, economic and personnel point of view. This will not always be obvious, since it will be for example necessary to evaluate whether having a fleet of reserve aircraft is bearable in terms of the company’s capacity at the time. Uncertainty therefore remains in this respect.
