Can a foreign airline be required to pay out compensation under European laws for a delayed flight wholly outside Europe? Thanks to a recent European Court of Justice ruling, the answer appears to be yes, assuming it is connected to a European departure.
[C]onnecting flights that have been subject to a single booking must be regarded as constituting a whole for the purposes of passengers’ right to compensation provided for by Regulation No 261/2004…
– ECJ Guidance
The case stems from a delayed United Airlines flight from Newark to San Jose, California in 2018. A trio of passengers on that flight had arrived from Brussels earlier in the day and, after getting to California jus under four hours late, flied a claim against the airline under the EC261 framework.
United challenged the claim, suggesting that it should not be held to European laws based on actions wholly outside the territory of Member States. The ECJ disagrees.
Previously the ECJ has “consistently held that a flight with one or more connections which was the subject of a single reservation constitutes a whole for the purposes of the right of passengers to compensation under Regulation No 261/2004, implying that the applicability of that regulation is to be assessed with regard to the place of the flight’s initial departure and the place of the final destination of that flight.” With this position relatively well established, the challenge to the court is whether it can enforce such laws outside its borders.
In rendering this verdict the ECJ continues to assert its more customer-friendly position: “The place where a delay occurs… has no bearing on that applicability.”
According to United Airlines, the principle of sovereignty precludes that regulation from applying to a situation occurring in the territory of a third country, such as that at issue in the main proceedings, in which the delay occurred in the territory of the United States and its effects were produced exclusively within that territory. If that argument of United Airlines is correct, the referring court then questions the validity of the same regulation in the light of international law.
Regarding the extraterritorial impact of the law, United is the latest airline to lose such a fight. Last year Air Canada faced a similar challenge – and presented similar opposition – within the United States.
That issue was tied to COVID-19 flight cancellations and passenger refunds, something the airline opposed for many months. Once the Canadian government agreed to help with funding, however, the objections disappeared. That the airline was likely to lose its claim certainly did not help. Ultimately, Air Canada paid a $2 million penalty to the US DOT for its poor behavior, well less than the proposed $25 million fine.
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