Laura Pierallini November 2 2016 Assignment of passenger rights to compensation Studio Pierallini | Aviation - Italy Laura Pierallini Aviation IntroductionCase lawCommentIntroductionFollowing a trend already seen in other EU member states, Italian courts are facing an increase in judicial claims by debt collection companies for denied boarding and the cancellation and delay of flights pursuant to EU Regulation 261/2004. The claims are based on the assignment of passenger rights to compensation under the regulation. The increase of judicial claims has resulted in a number of jurisdictional and legal entitlement issues which have been resolved by different Italian case law approaches.As regards jurisdiction, in Case C-204/08 the European Court of Justice (ECJ) established that:"In the case of air transport of passengers from one Member State to another Member State, carried out on the basis of a contract with only one airline, which is the operating carrier, the court having jurisdiction to deal with a claim for compensation founded on that transport contract and on Regulation (EC) No 261/2004… is that, at the applicant's choice, which has territorial jurisdiction over the place of departure or place of arrival of the aircraft, as those places are agreed in that contract."Therefore, according to the ECJ, an airline can be sued before the courts of the place of departure or the place of arrival based on the interpretation of Article 5(1)(b) of the EU Brussels I Regulation (44/2001) – replaced by Article 7(1)(b) of the EU Brussels Regulation (1215/2012) – which states that:"A person domiciled in a Member State may be sued in another Member State: (1) (a) in matters relating to a contract, in the courts for the place of performance of the obligation in question; (b) for the purpose of this provision and unless otherwise agreed, the place of performance of the obligation in question shall be… in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided."Case lawStarting from the strict application of the EU regulatory framework, one Italian court approach denies jurisdiction over claims submitted by companies to which passengers assign their compensation rights, as the abovementioned ECJ ruling would apply only to passengers as individuals and only in cases of air transport from one EU member state to another (thus excluding national routes). A different court approach interprets EU Regulation 1215/2012 and the ECJ decision in a broad sense to allow claims:brought by legal entities acting as passenger assignees; andregarding flights between national airports.Further, the contrast in case law concerns the lawful assignment of passenger rights to companies specialised in debt collection. Courts that have denied jurisdiction so far treat compensation as a personal right not subject to assignment, as it is strictly related to consumer protection and refunding individuals who have suffered damages which may seriously affect their private or business lives. This evaluation is in line with Preamble 2 of EU Regulation 261/2004, which states that "denied boarding and cancellation or long delay of flights cause serious trouble and inconvenience to passengers" and Article 1260 of the Italian Civil Code, which provides for the general rule of assignability of credits, unless they have a personal nature. Conversely, other courts have considered it lawful to assign compensation rights for non-economic damages (eg, denied boarding or the cancellation and delay of flights), as they are not of a personal nature. According to this jurisprudence, the ban on the assignment of rights pursuant to the Civil Code relates only to rights that satisfy an individual's direct interest – either physical or moral – such as alimentary obligations under family law.CommentThe majority of judicial decisions in this regard have been issued by the lowest Italian courts (ie, justices of the peace), which deal with claims of up to €5,000. Such decisions are subject to appeal before the ordinary tribunals and then – in the case of third and final-instance decisions – the Supreme Court. The Supreme Court holds ultimate jurisdiction over the compliance and interpretation of the law and, therefore, its decisions can establish criteria for the lower courts' judicial activity.For further information on this topic please contact Laura Pierallini at Studio Legale Pierallini e Associati by telephone (+39 06 88 41 713) or email ([email protected]). The Studio Legale Pierallini e Associati website can be accessed at www.studiopierallini.it.