Belén Devesa de Travy October 26 2022 NEBs as new claim agencies in Spain? Augusta Abogados | Aviation - Spain Belén Devesa de Travy Aviation IntroductionSpanish perspectiveCommentIntroductionUnder the EU Flight Compensation Regulation,(1) member states are allowed to establish proceedings according to which national enforcement bodies (NEBs) can take administrative enforcement actions aimed at compelling airlines to pay compensation to passengers whenever the NEB decides that an individual complaint is well founded. This is what the European Court of Justice (CJEU) decided in its judgment of 29 September 2022,(2) in answering a request for a preliminary ruling relating to article 16 of the EU Flight Compensation Regulation.The CJEU's judgment aligns with a prior judgment given on 17 March 2016,(3) but the CJEU seems to have gone one step further as regards NEBs' powers to compel airlines to pay compensation to passengers when hearing an individual complaint. While in its 2016 judgment the CJEU stated that member states were not obliged to empower NEBs to take enforcement actions to compel an air carrier to pay compensation to a passenger, in its 2022 judgment it states that member states have discretion to grant such powers. The CJEU also determines that this empowerment to NEBs is conditional upon the national laws allowing the passenger and the air carrier to bring proceedings to challenge the decisions made by NEBs before the courts.Spanish perspectiveA practical implication of this judgment is that member states are allowed to grant enforcement powers to their NEBs to compel airlines to pay compensation under article 7 of the EU Flight Compensation Regulation, even in the course of mediation or other alternative dispute resolution (ADR) procedures conducted by the NEB itself.A new ADR proceeding for air passenger disputes was recently implemented in Spain by Ministerial Order TMA/201/2022 (for further details, see "New ADR proceeding aims to improve resolution of air passenger disputes"). Under the new ADR proceeding, the Spanish NEB (AESA) can hear and decide upon individual claims brought by passengers under the EU Flight Compensation Regulation (including cancellations, significant delays, boarding denials and schedule changes).According to the Spanish ADR regulations, while passengers will be not bound by the AESA's decisions over their individual claims, airlines will be. Where the AESA determines that an air carrier must pay compensation to the complainant, the carrier will be still able to appeal the AESA's decision before the courts. However, regardless of the appeal, the airline is obliged to pay compensation to the passenger within one month of receipt of the AESA decision.To strengthen the position of the passenger, the new ADR provisions expressly state that the AESA's decisions are immediately enforceable through the courts. Additionally, failure to comply with an AESA decision may result in fines of between €4,500 and €70,000 for late or partial fulfillment, or between €70,001 and €250,000 in the case of total disregard of a compensation decision.With this regulatory framework in mind, the recent CJEU judgment is concerning, because the Spanish government may be tempted to grant additional enforcement powers to the AESA to compel air carriers to pay compensation decided by the AESA itself. However, the CJEU also emphasises that air carriers should have the possibility of bringing a legal action before the competent national court.Under the recently approved ADR regulations, this right to appeal before court is recognised. However, it is uncertain whether it provides airlines with an effective remedy before a court, because it will be not compulsory to formally sue the passenger in appeal, so the passenger will not need to appear before the court. Even if the passenger is summoned when airlines challenge an AESA decision, the regulation on the new ADR proceeding allows the passenger to choose not to appear. When coupled with the airline's obligation to pay compensation within 30 days from an AESA decision and the potential compulsory powers of AESA, this peculiarity casts some serious due process concerns on the effectiveness of court actions in appeals of AESA decisions. If the court reverses and rules in favour of the air carrier, the right to recover any payments already made to passengers might be in jeopardy when seeking enforcement of the judgment.CommentIt is to be hoped that in practice, despite the rather unbalanced regulatory environment, an equitable balance will be found to provide adequate protection to all parties involved.For further information on this topic please contact Belén Devesa de Travy at Augusta Abogados by telephone (+34 933 621 620) or email ([email protected]). The Augusta Abogados website can be accessed at www.augustaabogados.com.Endnotes(1) Regulation (EC) 261/2004.(2) C-597/20.(3) C-145/15 & C-146/15.