A recent decision from the Ontario Small Claims Court marks the first time that a Canadian court has considered whether EU air passenger rights legislation can be enforced outside Europe.
In Barcelos v Azores Airlines (SATA) – an unreported decision released on 11 July 2019 – Deputy Judge Prattas held that a Canadian court could not enforce a plaintiff's compensation claim for a delayed flight under EU air passenger rights legislation.
The plaintiff, Marco Barcelos, was a passenger on a flight operated by the defendant, SATA Internacional – Azores Airlines, SA between Toronto, Canada and Pico Island, Azores, Portugal.
The plaintiff claimed that the flight had been delayed and sought compensation for that delay under the EU Flight Delay Compensation Regulation (261/2004), which establishes rights for airline passengers travelling to and from Europe who experience delays, cancellations and denied boarding.
The plaintiff was represented in the proceedings by a company called Click2Refund, which operates on a contingency basis pursuing compensation claims on behalf of passengers for compensation under the EU Flight Delay Compensation Regulation. Click2Refund has lawyers in North America and Europe who advance claims for compensation on behalf of passengers.
The plaintiff framed the action as a breach of contract claim.
The contractual relationship between SATA and its passengers is governed by SATA's tariff, which sets out the rights and obligations of the parties when a passenger purchases a ticket for a flight.
In its tariff, SATA states that it "fully complies" with the EU Flight Delay Compensation Regulation. The tariff also specifies certain rights available to the plaintiff in the case of delayed carriage. Notably, the tariff does not list compensation for long delays as a right available to the passengers.
The plaintiff claimed that because the tariff states that SATA fully complies with the regulation, the entire regulation and associated case law interpreting it from the EU courts should be incorporated into the contract and enforced as a breach of contract in an Ontario court.
This argument was necessary to the plaintiff's claim because neither the tariff nor the EU Flight Delay Compensation Regulation provide for compensation in the case of long delays.
Therefore, the plaintiff also relied on the decisions in Sturgeon v Condor Flugdienst GmbH (C-402/07) and Bock v Air France (C-432/07).(1) In Sturgeon, the European Court of Justice (ECJ) found that the compensation scheme under the EU Flight Delay Compensation Regulation for cancelled flights should also apply to long delays.
In response, SATA brought a motion to stay or dismiss the claim.
SATA argued that the claim should be dismissed for three reasons:
- The words 'fully complies' do not incorporate the EU Flight Delay Compensation Regulation and associated EU case law into the tariff such that they become enforceable as contractual promises in a Canadian court.
- If the EU Flight Delay Compensation Regulation and Sturgeon are not incorporated by reference into the tariff, they are not directly enforceable outside Europe.
- The court should decline jurisdiction over the dispute on the basis that EU bodies and courts are clearly the more appropriate forum.
SATA took the position that the plaintiff's claim disclosed no reasonable cause of action for breach of contract because the tariff's wording did not incorporate the EU Flight Delay Compensation Regulation or Sturgeon by reference.
The defendant pointed the court to language expressly incorporating the Montreal Convention into the tariff, arguing that if SATA had intended to incorporate the EU Flight Delay Compensation Regulation and Sturgeon into the tariff it would have used the same language.
The plaintiff argued that the words 'fully complies' demonstrated an intention to include in the tariff the EU Flight Delay Compensation Regulation and associated case law interpreting long delays to require the same compensation as cancellations.
The plaintiff took no issue with the defendant's submission that the EU Flight Delay Compensation Regulation and associated EU case law were not directly enforceable in the Canadian courts.
Finally, with respect to the issue of jurisdiction, the defendant argued that despite certain factors connecting the claim to Ontario, the claim should be litigated in a Portuguese court or before the Portuguese enforcement body specifically set up to enforce compliance with the EU Flight Delay Compensation Regulation – namely, the Civil Aviation Authority (ANAC).
The plaintiff argued that a number of connecting factors were present in this case, making Ontario the appropriate jurisdiction, including that:
- the plaintiff was resident in Ontario;
- the defendant carried on business in Ontario;
- the flight delay occurred in Toronto; and
- the contract of carriage had its start and end point in Toronto.
Given that the claim was framed as a breach of contract, Prattas began by looking at the tariff's wording, concluding that "on its plain wording no monetary compensation for delay is provided".
Prattas agreed with SATA that the words 'fully complies' did not incorporate the EU Flight Delay Compensation Regulation or Sturgeon by reference, such that the obligation to compensate passengers for long delays became a contractually enforceable promise outside Europe.
The court cited a US decision as persuasive authority for the proposition that in order to incorporate the EU regulation and case law into a tariff, the tariff's wording must demonstrate a clear and specific intention to do so.
In Dochak v Polskie Linie Lotnicze LOT SA (189 F Supp 3d 798 (2016)), the US District Court in Illinois held that the regulation had not been incorporated by reference into a tariff using the following language, because the tariff did not demonstrate the requisite intention:
In the event of denied boarding and of cancellation or long delay of flights, passengers are entitled to rights provided for in the Regulation (EC) No 261/2004 of the European Parliament and of the Council, in accordance with the rules and to the extent set forth by this Regulation.
Likewise, the court held that the words 'fully complies' demonstrated no intent to incorporate the EU Flight Delay Compensation Regulation or EU case law into SATA's tariff. Rather, the court held that "SATA's reference to 'fully compl[ying]' with EU 261 [the EU Flight Delay Compensation Regulation] should be interpreted as an acknowledgement that these rights exist and may be enforced in the appropriate forum". Prattas stated that he found merit in the argument that the regulation could not be enforced directly in Canadian courts, as the wording under Article 15(2) did not support an argument that the Canadian courts were "competent courts or bodies".
Finally, on the question of the appropriate forum, the court held that "ANAC is clearly the proper body to receive the plaintiff's complaint/claim". Prattas further held that:
[g]iven the principle of international comity espousing 'respect and deference to other states' and the specific provision of Article 16 of EU261 [the EU Flight Delay and Compensation Regulation] specifying that disputes are to be resolved by EU Member States through the National Enforcement Body and its respective courts, I would be hard pressed to maintain jurisdiction in this case.
This decision will be of interest to carriers operating flights between Canada and Europe, as it holds that a tariff that does not expressly incorporate the EU Flight Delay Compensation Regulation will not open a carrier up to breach of contract claims brought in Canada for declining to pay compensation under the regulation.
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