On 12 October 2017, the Court of Appeal handed down its decision in the joined cases of Gahan v Emirates and Buckley and ors v Emirates  EWCA Civ 1530. In both cases the passengers suffered delays at a connecting point and, consequently, on arrival at their final destination. They claimed compensation under Regulation 261/2004 (the "Regulation"), as applied by the Court of Justice of the European Union (the "CJEU") in Sturgeon v Condor . The Liverpool County Court, which heard both cases, came to a different conclusion in each case.
The principal issues on appeal were whether delays suffered by the passengers during the second leg of their respective journeys were compensable under the Regulation, whether there was jurisdiction under the Regulation and whether the right to compensation under the Regulation is, insofar as non-Community air carriers are concerned, excluded by virtue of the exclusive liability regime established under the Montreal Convention 1999 (the "Convention"). The UK Civil Aviation Authority (the "CAA") and International Air Transport Association ("IATA") intervened in the proceedings, respectively in support of the passengers' and Emirates' positions.
Miss Thea Gahan made a single booking with Emirates to travel from Manchester to Bangkok via Dubai. Her flight from Manchester to Dubai (flight 1) was delayed so that it arrived 3 hours and 56 minutes late in Dubai, causing her to miss her connecting flight from Dubai to Bangkok (flight 2) and arrive more than 13 hours after her originally scheduled arrival time. Miss Gahan sought compensation under the Regulation.
Similarly, the Buckley family made a single booking with Emirates to travel from Manchester to Sydney via Dubai. The first flight (flight 1) to Dubai was delayed on arrival by 2 hours and 4 minutes, with the result that the Buckleys were automatically rebooked on to another flight the following day (flight 2) arriving in Sydney some 16 and a half hours after their originally scheduled arrival time. The Buckleys brought a claim against Emirates for compensation under the Regulation.
The first instance decisions
In Gahan, the County Court, following the judgment in Sanghvi v Cathay Pacific Airways  ("Sanghvi"), took the view that compensation was only payable for flight 1, but not for flight 2, which was to be viewed separately from flight 1 and, as such, did not fall within the scope of the Regulation.
In Buckley, the court came to a different view, finding that compensation was payable based on the family's delayed arrival in Sydney, since the delay on flight 2 was merely the consequence of the delay on flight 1, this being a flight that departed from an airport within the EU and therefore within the scope of the Regulation.
The parties' submissions in the Court of Appeal
Emirates argued that the only relevant flights for the purpose of calculating any delay were the first flights (flights 1) out of EU airspace, as only these flights fell within the scope of the Regulation; the connecting flights (flights 2) were not relevant since they were performed entirely outside of the EU by a non-Community carrier. Emirates relied on the CJEU decision in Emirates v Schenkel  and the High Court decision in Sanghvi, which essentially held that, for the purposes of the Regulation, each flight was to be construed as a unit of travel and successive carriage constituted a journey, composed of individual flights. Thus, where a flight operated by a non-Community carrier started outside the EU, that flight was outside the scope of the Regulation.
Emirates also argued that the Court of Appeal should not follow Sturgeon so as to impose liability on non-Community carriers where this would violate the Convention's exclusivity. The exclusivity of the Convention's predecessor, the Warsaw-Hague regime, was confirmed unequivocally by the House of Lords in Sidhu v British Airways . Having regard to the different routes by which the Convention takes effect in the UK for Community and non-Community carriers (respectively by way of Regulation (EC) 2027/97 (as amended) and the Carriage by Air Act 1961), Emirates submitted that the Court of Appeal was not bound to follow CJEU jurisprudence on the complementary nature of remedies for flight delay under the Convention and Regulation when dealing with a non-Community carrier, and should instead apply Sidhu.
IATA, intervening in the Court of Appeal proceedings by way of written submissions, further argued that the extension of the Regulation to flights performed by non-Community carriers on flights departing from (or wholly outside) the EEA would amount to an extraterritorial application of the Regulation.
The passengers, relying on the Interpretative Guidelines issued by the European Commission in June 2016 and the CJEU decisions in Sturgeon and Air France v Folkerts , in particular regarding the principle of equal treatment, argued that the relevant delay was not that on flight 1 but that suffered at the "final destination". They maintained that there was no exercise by the EU of extraterritorial jurisdiction as the delay on flight 2 was merely relevant to the calculation of the amount of compensation due under the Regulation. Relying further on the CJEU decision in R (o/a Air Transport Association of America) v Secretary of State for Energy and Climate Change  (the ETS case), the passengers submitted that it was necessary to take into account the conduct or circumstances abroad to apply a measure first triggered by a territorial connection.
The Court of Appeal decision
On the issue of what counts as a delay under the Regulation, the Court of Appeal noted that the CJEU held previously in Sturgeon and Folkerts that the operating carrier's liability to pay compensation depends on the passenger's delay in arriving at the "final destination". It held that where the air carrier provides a passenger with more than one directly connecting flight to enable him to arrive at their destination, the flights should be taken together for the purpose of assessing whether there has been three hours’ or more delay on arrival; and that in case of directly connecting flights, the final destination is the place at which the passenger is scheduled to arrive at the end of the last component flight.
The Court went on to hold that the Regulation applied to flights operated by non-Community carriers out of EU airspace even if flight 1 or flight 2 lands outside the EU, since the Regulation does not require that a flight must land in the EU. The Regulation takes effect when the carrier is present in the EU and it imposes a contingent liability on the carrier at that point, which liability crystallises outside the jurisdiction – i.e. that the Regulation applies because flight 1 departs from an EU airport.
The passengers' appeal was thus allowed and that of Emirates was dismissed.
It is noteworthy that the Court of Appeal judgment has followed the CJEU's line of reasoning in the Sturgeon, Nelson and Folkerts decisions even though neither concerned a non-Community carrier. In doing so, it has held the Regulation to have a territorial extension so as to apply to a delay in arrival of a flight on a non-Community carrier outside of the EU, including on a flight wholly outside of the EU (if it is directly connected to a flight commencing from an EU airport). There is perhaps room for debate as to whether this is in keeping with the jurisdictional provisions found in Article 3 of the Regulation, not least because there is a German decision to the contrary. However, the result in these cases is that Community and non-Community carriers are in the same position under the Regulation with regard to directly connecting flights. It remains to be seen how this territorial extension of an EU Regulation will be viewed by third party states and their carrier, or indeed academics.
It also remains to be seen whether these issues will be revisited under a further appeal in these cases.