In its judgment delivered on 17 September 2015 in van der Lans v KLM, the Court of Justice of the EU held that the ‘extraordinary circumstances’ defence (which relieves a carrier of its obligation to pay compensation in respect of a cancelled or delayed flight under Regulation (EC) 261/2004) does not apply in the case of an unexpected technical problem which is not attributable to poor maintenance and was not discovered during routine maintenance.

The facts

Ms van der Lans held a ticket for carriage with KLM from Quito (Ecuador) to Amsterdam (Netherlands). During pushback it was discovered that one of the aircraft’s engines would not start due to a lack of fuel feed. KLM’s investigations revealed that the issue was caused by a problem with two separate engine components. The aircraft did not depart until the following day, with Ms van der Lans suffering a twenty-nine hour delay on arrival as a result.

Ms van der Lans brought a claim against KLM before the District Court in Amsterdam in respect of the flight delay, claiming compensation of EUR 600 under Regulation (EC) 261/2004 (the ‘Regulation’). KLM sought to defend that claim on an ‘extraordinary circumstances’ basis, per Article 5(3) of the Regulation. Its arguments included that the defective components were within their average lifespan and that they had been inspected during the aircraft’s last ‘A’ check. The District Court chose to refer a number of questions to the Court of Justice of the European Union (‘CJEU’) for consideration, essentially focussing on the status of technical issues as ‘extraordinary circumstances’. The CJEU reformulated the Court’s specific questions as follows:

... whether Article 5(3) of Regulation No 261/2004 must be interpreted as meaning that a technical problem, such as that at issue in the main proceedings, which occurred unexpectedly, which is not attributable to defective maintenance and which was not detected during regular tests, falls within the definition of ‘extraordinary circumstances’ within the meaning of that provision, and if so, what the reasonable measures are that the air carrier must take to deal with them.

It appears that KLM in fact settled Ms van der Lans’ claim in advance of judgment being handed down, and accordingly requested the CJEU to discontinue its consideration of the questions referred. However, the CJEU decided that, as it had already done most of its work on the case, and in the interest of legal certainty, it would proceed to judgment in any case.

The judgment

Article 5(3) of the Regulation relieves the carrier from its obligation to pay compensation in respect of a cancelled or delayed flight “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”. In its judgment in Wallentin-Hermann v. Alitalia [2008] the CJEU confirmed that technical issues are only ‘extraordinary’ if they are not inherent in the normal exercise of the activity of the air carrier and are beyond the actual control of that carrier on account of their nature or origin.

As mentioned above, the CJEU held that technical problems of the type suffered by KLM do not constitute extraordinary circumstances, even if they arise unexpectedly and do not result from poor maintenance or are not discovered during maintenance. It reached this conclusion on the basis that such unexpected technical problems are inherent in the normal exercise of the carrier’s activity, and that the prevention of such technical problems, or the repairs occasioned by them, are not beyond the actual control of the carrier, since it is required to ensure the maintenance and proper functioning of the aircraft. The CJEU noted that the breakdown suffered by KLM:

remains intrinsically linked to the very complex operating system of the aircraft, which is operated by the air carrier in conditions, particularly meteorological conditions, which are often difficult or even extreme, it being understood moreover that no component of an aircraft will last forever.

The CJEU confirmed that certain technical problems may constitute extraordinary circumstances, but only those arising from hidden manufacturing defects or acts of sabotage or terrorism.

In the usual manner the CJEU confirmed that a carrier’s obligations to passengers are without prejudice to its right to seek compensation from any third party responsible for the problem, such as a manufacturer which has supplied a faulty component.

Comment

The CJEU’s judgment is unsurprising given the restrictive approach to the availability of the defence in the event of technical problems it took in its Wallentin-Hermann judgment, and the test of inherency in the normal exercise of the carrier’s activity that it set forward. However, it goes further by making it clear that the two examples given in that judgment of technical problems which could give rise to the defence were not non-exclusive (the possibility of which was left open) but rather exclusive. Consequently, according to the CJEU, the defence will only be available in the event of technical problems where they have been caused by a hidden manufacturing defect or sabotage or terrorism – clearly not just extraordinary, but very restricted circumstances.

On 28 September 2015 the UK CAA issued practical guidance to carriers in respect of van der Lans, noting that the failure of components whilst under warranty and/or or at an earlier stage in their life than anticipated by programmed maintenance schedules fall outside the scope of the ‘extraordinary circumstances’ defence. The CAA further referred to the CJEU’s explicit recognition that ‘safety-critical defects identified by the manufacturer or other competent authority which ground an aircraft fleet would fall within the exemption.’ It provided further clarification as follows:

Click here to view table

That the CJEU’s judgment makes the carrier liable for events which are unforeseeable and hence unavoidable may seem unreasonably hard on carriers, but this is consistent with the overwhelming priority that the CJEU accords to consumer protection, and the logical consequence of the application of the inherency test. The problem arises from the existence of this test, first put forward in Wallentin-Hermann and applied precedentially ever since then, without further discussion or room for any doubt, and the fact that there is almost no limit to what a Court may find to be inherent in the normal exercise of an air carrier’s activity. The CJEU’s finding that the prevention of unexpected technical problems is not beyond the control of the carrier also seems counter-intuitive, and displays a lack of understanding of how the maintenance of aircraft works.

Arguably, the CJEU’s very strict way of interpreting the defence is not consistent with the legislative intent behind the Regulation (an important principle for the interpretation of EU law), which suggests that the legislators intended a defence somewhat closer to the normal ‘force majeure’ defence, but as the CJEU has ignored this on several occasions now such an argument has no realistic possibility of success.

In the case of Huzar v. Jet2.com [2014], which dealt with similar facts/questions, the English Court of Appeal came to much the same conclusion as the CJEU in the present case. However, whilst Huzar is only binding on the English Courts, the van der Lans decision has now set a rather unwelcome precedent on an EU-wide basis. That said, many national courts were already adopting a position that technical issues were not ‘extraordinary’, and as a result the effect of the judgment could be limited in practice.

As was the case in previous judgments such as Wallentin-Hermann, the CJEU raised the possibility of carriers taking recourse action against those who might ultimately be responsible for the technical issue/the failure of a part. However, no consideration was given to the commercial reality that such action will often be impracticable/not economically viable, particularly having regard to the contractual position vis-à-vis manufacturers/MROs, including contractual exclusions for consequential loss.

Recent UK case on ‘extraordinary circumstances’

In a judgment delivered on 14 January 2016 in Evans v Monarch Airlines, the Reading County Court held that passengers whose flight was delayed by reason of lightning strikes were entitled to compensation under the Regulation. The court held that lightning strikes did not constitute ‘extraordinary circumstances’ for the purposes of the Regulation, even though they are included in the CAA’s list of examples of extraordinary circumstances , on the grounds that they are inherent in the normal exercise of an air carrier’s activity.

This is clearly an unwelcome decision for airlines, although coming from a lower level court it has no formal precedential status, and is unsurprising given the CJEU’s inherency test and strict application of it in the van der Lans case.

Proposed revision of the regulation

It will be recalled that recent attempts to revise the Regulation stalled. However, it appears that the Dutch government is intending to use its Presidency of the EU in the first half of 2016 to try to renew attempts at amendment. This may provide an opportunity for carriers to argue for a more understanding approach to technical problems, although the prospects of any amending legislation reducing passengers’ rights must be slight.