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 Contractual  time  limits  and  the  nature  of  compensation    

under  Regulation  (EC)  261/2004        

1 On   23  March   2015,   the   Civil   Aviation   Authority   (‘the   CAA’)   released   a   compliance  report  entitled   ‘Financial   compensation,   technical   faults  and   time   limitations’.1     The  report   outlined   the   CAA’s   view   on   the   law   as   it   presently   stands   in   respect   of  compensating   airline   passengers   under   Regulation   (EC)   No.261/2004   (‘the  Regulation’),  for  cancellations  and  long  delays  to  their  flights.    

2 The  report  additionally  examined  a  number  of  UK  and  foreign  airlines’2  responses  to  the  following  five  questions:  

(1) Following   the   Jet2  v  Huzar   judgment3  the  CAA  published  updated  guidance   (CAA  List)   on   the   incidents   that   could   be   considered   to   be   an   ‘extraordinary  circumstance’.   Please   confirm   that   you   apply   this   guidance   when   considering  compensation  claims.  

(2) Are  you  paying  passenger  claims  for  compensation  that  fall  within  the  scope  of  the  Jet2  v  Huzar  judgment?    

(3) If   you   are   not   paying   passenger   claims,   please   explain   what   approach   you   are  taking  to  these  claims  and  your  reasoning  for  not  paying.  

(4) The  Dawson  v  Thomson  Airways  judgment4  confirmed  that  the  limitation  period  in  the  UK  for  taking  a  case  to  court  in  respect  of  the  Denied  Boarding  Regulations  is  six  years.  Please  confirm  that  you  apply  this  limitation  period.    

(5) If,  for  any  reason,  you  apply  a  different  limitation  period,  please  explain  what  it  is,  how  you  apply  it  in  practice  (for  example  through  your  terms  and  conditions),  and  why   you   consider   it   is   not   in   conflict   with   the   Dawson   v   Thomson   Airways  judgment.    

3 The  report  concluded  that  of  the  15  largest  airlines  asked  to  respond,  the  approaches  of   three  of   the  airlines  did  not  meet  the  CAA’s  expectations  on  compliance.     It  was  

                                                                                                               1  Available  at  http://www.caa.co.uk/docs/33/CAP%201275%20Compliance%20Report%20230315.pdf    2  The  terms  ‘airline’  and  ‘air  carrier’  are  used  interchangeably  in  this  article.    3  [2014]  EWCA  Civ  791.  4  [2014]  EWCA  Civ  845  

2    

therefore   announced   (to  much   fanfare   on   BBC   Radio   4’s  Money   Box   programme5)  that  the  CAA  will  be  commencing  enforcement  action  under  Part  8  of  the  Enterprise  Act   2002   against   Jet2.com   Limited   (‘Jet2’)   and   Wizz   Air   Hungary   Airlines   Limited  (‘Wizz   Air’)   by   requesting   undertakings   from   the   airlines   to   comply  with   the   CAA’s  expected   approach,   in   particular   changing   their   contractual   time   limits   for   bringing  claims  under  the  Regulation  from  2  to  6  years.    

4 The  CAA’s  view  on  contractual   time   limits  can  be  summarised  as  being   reliant  on  a  misconstrued   interpretation  of   the   effect   of   the  CJEU’s   decision   in   Joan  Cuadrench  Moré   v   KLM   (C-­‐139/11)   and   the   Court   of   Appeal   judgment   in  Dawson   v   Thomson  Airways  Ltd,  a  view  which  is  discussed  further  below.    

5 Additionally   the   report   revealed   that   the   CAA  will   use   its   Part   8   powers   to   obtain  further   information   from  Ryanair  on   its   approach   to  assessing  passenger   claims   for  flights  disrupted  by  technical  faults.      

6 This  article  examines  below  whether   the  CAA’s  views  on  contractual   limitations  are  correct   and  whether   it   is   prudent   to   take   enforcement   action   against   a   number   of  airlines  on  the  basis  of  its  views,  both  in  light  of  recent  cases  from  the  County  Court  at  Liverpool,  and  the  proper  scope  of  the  Court  of  Appeal’s  judgments  in  Jet2  v  Huzar  and  Dawson  v  Thomson  Airways.    

Drew  v  Ryanair      7 On   29   January   2015,   judgment   was   handed   down   in   Drew   v   Ryanair   Ltd6  in   the  

County   Court   at   Liverpool   in   respect   of   the   applicability   of   the   airline’s   terms   and  conditions  that  purported  to  time-­‐bar  a  claim  brought  under  article  7  of  Regulation  (EC)  no.261/2004  (‘the  Regulation’).    

8 The  hearing  was  a  test  case  in  respect  of  a  number  of  claims  brought  by  passengers  for  delays  or  cancellations  caused  to  their  flights.  Ryanair  Ltd’s  (‘Ryanair’)  defence  to  all  of  these  actions  was  that  they  were  time  barred  by  reason  of  having  been  brought  more   than   two   years   after   the   time   limit   specified   in   the   airline’s   terms   and  conditions  (in  force  at  the  time  of  booking).    

                                                                                                               5  http://www.bbc.co.uk/programmes/b05j92m4    6  Claim  no.  A00BL660.    

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9 As  the  Regulation  contains  no  provision  on  the  time  limits  for  bringing  actions  before  the  national  courts  for  compensation  under  articles  5  and  7,  it  is  prima  facie  open  to  airlines  to  place  contractual  time  limits  on  bringing  such  actions.    

10 The   particular   condition   relied   upon   by   Ryanair   was   article   15.2   of   its   General  Conditions   of   Carriage   for   Passengers   and   Baggage   (‘General   Conditions’)   which  provided:  

 

“Any   right   to  damages   shall  be  extinguished   if  an  action   is  not  brought  within  two  years  of  the  date  of  arrival  at  destination,  or  the  date  on  which  the  aircraft  was  scheduled  to  arrive  or  the  date  on  which  the  carriage  stopped.  The  method  of   calculating   the   period   of   limitation   shall   be   determined  by   the   court   of   law  where  the  case  is  heard.”    

11 District  Judge  Henthorn,  handing  down  a  reserved  judgment,  held  that  compensation  under  article  7  of  the  Regulation  could  not  be  classed  as  ‘damages’,  and  therefore  did  not   fall   within   the   scope   of   the   limit   imposed   by   article   15.2   of   the   General  Conditions.    The  judge  went  on  to  decide  that  if  he  was  wrong  about  the  classification  of   compensation,   the   reference   to   ‘damages’   in   article   15.2   was   sufficiently  ambiguous   that   it   should   be   construed   contra   proferentem,   i.e.   against   the   airline  being  the  drafter  of  the  condition.    

12 In  response  to  additional  arguments  raised  by  the  claimant,  the  judge  made  further  findings  that:  

 

(1) Ryanair’s   conditions   did   not   amount   to   a   derogation   of   article   15   of   the  Regulation   that  excludes  airlines   from   limiting  or  waiving   their  obligations  owed  to  passengers  under  the  Regulation.    

 

(2) The  airline’s  conditions  were  not  unfair  as  two  years  provided  a  reasonable  time  limit  within  which  to  bring  a  claim  under  the  Regulation.    

13 The  case  is  to  be  compared  with  the  Scottish  case  in  2014  of  Vergara  v  Ryanair  Ltd7  in  which  Sheriff  Principal  Lockhart  held  on  appeal  that  a  claim  for  compensation  under  the   Regulation   was   not   a   claim   for   damages   as   the   entitlement   to   compensation  arose  without   needing   to   prove   loss   to   the   passenger,   or   fault   on   the   part   of   the  airline.     The   sheriff   in   the   court   below   had   therefore   been   wrong   to   equate   the  

                                                                                                               7  18  July  2014,  Ayr  Sherriff  Court,  claim  no.  2014CAYR35,  found  at:  https://www.scotcourts.gov.uk/search-­‐judgments/judgment?id=53d29da6-­‐8980-­‐69d2-­‐b500-­‐ff0000d74aa7    

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payment  of  compensation  with  the  payment  of  damages  for  a  delict  (a  civil  wrong).    Accordingly,  Ms  Vergara’s  claim  was  also  not  time-­‐barred  by  article  15.2  of  Ryanair’s  General  Conditions.  

14 The  impact  of  Drew  v  Ryanair  has  already  been  felt  in  cases  concerning  other  airlines.    In   a   case   in   February   2015,   again   in   the   County   Court   at   Liverpool,   District   Judge  Smedley  placed  reliance  on  Drew  v  Ryanair  in  finding  that,  as  compensation  was  not  damages,   section   69   of   the   County   Courts   Act   1984   did   not   apply   to   claims   for  compensation   under   the   Regulation,   the   effect   being   that   the   claimants   were   not  entitled  to  interest  on  the  sums  awarded.    

15 This  article  examines  six  questions  in  light  of  these  judgments  and  the  CAA’s  report:  

(1) Is   compensation  payable  under  article  7  of   the  Regulation   the   same  as  ‘damages’  at  common  law  in  England  and  Wales?    

(2) What   about   ‘compensation’   payable   under   other   parts   of   the  Regulation?    

 (3) If   ‘compensation’   under   article   7   is   not   ‘damages’   then   can   interest  be  

awarded  for  such  claims?    (4) Are   contractual   terms   and   conditions   limiting   the   time   to   bring   claims  

under  the  Regulation  unfair?    (5) Do  such  terms  and  conditions  amount  to  an  infringement  of  article  15  of  

the  Regulation?    

(6) Is  the  CAA’s  proposed  enforcement  actions  the  correct  approach?  

Is  compensation  under  the  Regulation  the  same  as  ‘damages’?  

16 It   is  worth  remarking  that  in  a  slew  of  cases  in  2013  and  20148,  Ryanair  successfully  argued  that  its  terms  and  conditions  applied  to  claims  under  the  Regulation  so  as  to  

                                                                                                               8  Thieme  v  Ryanair  Limited,  Deputy  District  Judge  Sherlock,  Cardiff  County  Court,  14  March  2013;  Pickard  v  Ryanair  Limited,  District  Judge  Maw,  Lincoln  County  Court,  31  July  2013;  Wills  v  Ryanair  Limited,  District  Judge  Sparrow,  Southampton  County  Court  18  December  2013;  Goel  and  Jaskirat  v  Ryanair  Limited,  Deputy  District  Judge  Masheder,  Manchester  County  Court,  5  March  2014;  Burke  v  Ryanair  Limited,  Bury  St  Edmunds  County  Court,  8  April  2014.    

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bar  those  brought  after  the  two-­‐year   limit.    However,  as  was  pointed  out  by  Sheriff  Principal  Lockhart  in  Vergara  v  Ryanair  Ltd9,  it  appears  that  few  if  any  of  these  cases  fully   evaluated   whether   ‘compensation’   under   the   Regulation   amounted   to  ‘damages’  under  the  common  law.      

17 In  examining  the  definition  of   ‘damages’,  reliance  was  placed  by  both  District  Judge  Henthorn  in  Drew  and  the  sheriff  in  Vergara  on  the  authoritative  practitioners’  text,  McGregor  on  Damages.      

18 McGregor10  defines  damages  “quite  simply  as  an  award  in  money  for  a  civil  wrong”.11    Three   types   of   case   are   described   where   “pecuniary   satisfaction   by   success   in   an  action”  do  not  constitute  damages  because  they  are  not  dependent  on  wrongdoing12,  the  three  types  being:  

(1) actions  for  money  payable  by  the  terms  of  a  contract;  

(2) actions  in  restitution  not  based  on  a  wrong,  and    

(3) actions   under   statutes   where   the   right   to   recover   is   independent   of   any  wrong.13  

19 District   Judge   Henthorn   in   Drew   concluded   that   payments   under   article   7   of   the  Regulation   were   analogous   to   payments   under   various   Social   Security   Acts,   or  compensation   under   the   Employment   Rights   Act   1996,   the   latter   including  compensation   for   unfair   dismissal.14     In   drawing   the   analogies   the   judge   held   that  such  payments  were  “clearly  expressed  not  to  be  damages  in  MacGregor  on  Damages  [sic]”.  

20 With   respect   to   the   district   judge,   his   analogies   are   misconceived.     In   analysing  situations   in  which  statutes  create  rights   to  recover  money,  McGregor  on  Damages  gives  the  following  guidance:  

 “Actions   claiming   money   under   statutes,   where   the   claim   is   made  independently  of  a  wrong,  are  not  actions  in  damages…  On  the  other  hand,  actions  claiming  money  which  are  based  upon  statutes  which  have  created  a  

                                                                                                               9  At  para.18.    10  19th  Ed.,  2014,  Sweet  &  Maxwell.    11  Ibid,  p.1,  para.1-­‐001.    12  Ibid,  p.2,  para.1-­‐003.    13  Ibid.    14  Para.23  of  the  judgment.    

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tort  are  actions  for  damages  and  are  within  the  definition  adopted  here.  The  statutory   tort  may  be  one   the  existence  of  which   is   spelt  out  by   the   courts  from  the  general  duty  imposed  by  statute,  or  the  statute  may  create  the  tort  expressly…”15  

21 It   is  evident  from  the  above  passage  that  where  statutes  create  torts,  and  allow  for  actions   for   the   recovery   of   money   in   compensation   for   such   tortious   acts,   this  compensation  might  be  capable  of  being  described  as  damages.      

22 The   authors   of  Winfield  &   Jolowicz   on   Tort16  quote  Winfield’s   original   definition   of  ‘tort’:  

“Tortious  liability  arises  from  the  breach  of  a  duty  primarily  fixed  by  law;  this  duty   is   towards  persons  generally  and   its  breach   is   redressible  by  an  action  for  unliquidated  damages.”17  

23 Whilst  the  authors  of  Winfield  &  Jolowicz  on  Tort  conclude  that  the  above  definition  cannot  be  relied  on  as  being  entirely  accurate  in  today’s  legal  landscape,  they  make  it  clear   that   the   remedy   of   unliquidated   damages   is   a   necessary   element   of   any  definition  of  ‘tort’  or  ‘tortious  liability’:    

“If  the  claimant  cannot  recover  unliquidated  damages  then  whatever  claim  he  may  have,  it  is  not  for  tort.”      

24 Although  further  reasons  are  not  given  by  the  authors   for  the  quoted  view,   it   is  an  integral  part  of  tort  law  that  damages  are  intended  to,  as  far  as  money  can,  place  the  claimant   back   in   the   position   s/he  would   have   been   in   had   s/he   not   suffered   the  tortious  act.    As  this  exercise  will  differ  on  a  case-­‐by-­‐case  basis,  damages  cannot  be  fixed  at  a  set  rate;  they  depend  on  the  individual  circumstances  of  each  claimant  and  hence  cannot  be  liquidated.    

25 Accordingly,   compensation   awarded   on   an   unfair   dismissal   claim   can   properly   be  thought   of   as   a   payment   in   respect   of   a   civil   wrong   created   by   statute18,   and   an  unliquidated   damages   claim,   for  whilst   compensation  may   be   capped,   an   award   is  designed  to  place  the  claimant  back  in  the  position  prior  to  being  unfairly  dismissed  which  depends  on  the  claimant’s  particular  circumstances.    

                                                                                                               15  p.3,  para.1-­‐007.    16  19th  Ed.,  2014,  Sweet  &  Maxwell.  17  p.3,  para.1-­‐003.    18  Originally  created  in  legislation  by  the  Industrial  Relations  Act  1971.    

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26 By   contrast,   what   the   Regulation   creates   in   article   7   cannot   be   construed   as   the  creation  of  a  tort  as  compensation  is  fixed  (250,  400  or  600  euros),  and  therefore  not  unliquidated;   nor   is   compensation   dependent   on  wrongdoing   being   committed   by  the  airline.    

27 Support   for   the   conclusion   that   compensation   under   article   7   is   not   the   same   as  damages  can  be  found   in  Nelson  v  Deutsche  Lufthansa  A.G.   (cases  C-­‐581/10  and  C-­‐629/10)19  –  interestingly  not  mentioned  in  either  the  Drew  or  Vergara  judgments.    

28 In  Nelson  the  CJEU  held  that  compensation  under  article  7  could  not  be  categorised  as  “damage  occasioned  by  delay”  within   the  meaning  of  article  19  of   the  Montreal  Convention20,  giving  the  following  three  reasons:21    

(1) A   loss   of   time   is   not   damage   arising   as   a   result   of   a   delay,   but   is   an  inconvenience,   like   other   inconveniences   inherent   in   cases   of   denied  boarding,  flight  cancellation  and  long  delay  and  encountered  in  them,  such  as   lack   of   comfort   or   the   fact   of   being   temporarily   denied   means   of  communication  normally  available.  

(2) A   loss   of   time   is   suffered   identically   by   all   passengers   whose   flights   are  delayed  and,  consequently,  it  is  possible  to  redress  that  loss  by  means  of  a  standardised  measure,  without  having  to  carry  out  any  assessment  of  the  individual   situation   of   each   passenger   concerned.   Consequently,   such   a  measure  may  be  applied  immediately.  

(3) There  is  not  necessarily  a  causal  link  between,  on  the  one  hand,  the  actual  delay   and,   on   the   other,   the   loss   of   time   considered   relevant   for   the  purpose  of  giving  rise  to  a  right  to  compensation  under  the  Regulation  or  calculating  the  amount  of  that  compensation.  

29 Although  Nelson  was  not  referred  to  in  District  Judge  Henthorn’s  judgment  in  Drew,  he  adopted  the  same  terminology  in  deciding  that  a  payment  under  article  7  was  in  effect  a  payment  for  inconvenience  caused  by  delay22.  As  there  was  no  freestanding  right   to   damages   for   inconvenience   in   English   law   –   for   such   a   right   has   to   be  ancillary  to  a  claim  for  personal  injury  or  damage  to  property  –  the  judge  held  that  a  

                                                                                                               19  [2013]  1  All  E.R.  (Comm)  385.  20  The  Convention  for  the  Unification  of  Certain  Rules  for  International  Carriage  by  Air  (‘the  Montreal  Convention’).    21  Paragraphs  51-­‐53  of  the  judgment.    22  Para.24.    

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compensatory   claim   for   inconvenience  under   article   7   could   not   be  described   as   a  damages  claim.23    

30 Sheriff  Principal  Lockhart  in  Vergara  made  a  similar  finding,  and  additionally  held  that  a  claim  for  compensation  under  article  7  was  not  a  claim  for  damages  as  it  was  not  contingent  on  proof  of  negligence  or  breach  of   contract  on   the  part  of   the  airline.    Accordingly  compensation  could  not  be  said  to  be  in  respect  of  the  commission  of  a  ‘civil   wrong’,   i.e.   the   commission   of   a   tort,   given   the   absence   of   the   necessity   for  wrongdoing.    

31 The  fact  that  the  scheme  of  compensation  under  article  7  is  not  dependent  on  there  being  ‘fault’  on  the  part  of  an  airline  was  a  point  also  emphasised  in  Jet2.com  Limited  v  Huzar.24  

32 As   Ryanair’s   present   conditions   include   the   words   “any   damages   and/or  compensation”,   District   Judge   Henthorn   concluded   his   judgment   in   Drew   by  commenting   that  his   determination   that   the   claim  was  not   time-­‐barred  might  well  have  been  different  had  it  concerned  the  new  wording.    This  seems  somewhat  of  an  understatement   given   that   the   word   ‘compensation’   would   specifically   include   a  claim  under  article  7.    

33 In   conclusion,   it   is   evident   compensation   pursuant   to   article   7   of   the   Regulation  cannot  be  regarded  as  damages  within  the  meaning  of  English  law.    

Compensation  under  other  articles  of  the  Regulation  

34 The  distinction  between  damages  and  compensation  under  article  7  may  be  said  to  be  different   in   respect  of  claims   for   failure   to  provide  reimbursement  or   re-­‐routing  under   articles   5(1)(a)   and   8,   care   and   assistance   under   article   9,   and   “further  compensation”  as  referred  to  in  article  12  of  the  Regulation.      

35 In  Rodriguez  v  Air  France   [2011]   (case  C-­‐83/10),   the  CJEU  confirmed  that  article  12  permitted   national   courts   to   award   compensation   provided   for   in   the   Montreal  Convention25  or   “under   national   law”,   for   damage,   including   non-­‐material   damage,  arising  from  breach  of  contract.    

                                                                                                               23  Ibid.    24  [2014]  EWCA  Civ  791.  25  Described  as  ‘damages’  in  the  Convention  itself.    

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36 The   CJEU   also   emphasised   in   Rodriguez   that   an   airline’s   failure   to   carry   out   its  obligations  under  articles  8  and  9  could  give  rise  to  a  claim  for  reimbursement  of  a  plane   ticket,   the   cost   of   meals   and   refreshments,   hotel   accommodation,   and/or  transport  between  the  airport  and  place  of  accommodation  if  the  airline  refused,  or  otherwise  failed,  to  provide  such  services.    

37 In  McDonagh  v  Ryanair  Ltd  [2013]  (case  C-­‐12/11),  the  CJEU  said  the  following  about  such  claims:    

“…an  air  passenger  may  only  obtain,  by  way  of  compensation  for  the  failure  of  the  air  carrier  to  comply  with  its  obligation  referred  to  in  Articles  5(1)(b)  and   9   of   Regulation   No  261/2004   to   provide   care,   reimbursement   of   the  amounts   which,   in   the   light   of   the   specific   circumstances   of   each   case,  proved   necessary,   appropriate   and   reasonable   to   make   up   for   the  shortcomings  of  the  air  carrier  in  the  provision  of  care  to  that  passenger,  a  matter  which  is  for  the  national  court  to  assess.”  

38 It  is  difficult  to  see  this  definition  as  anything  other  than  the  payment  of  unliquidated  damages   arising   “from   the   breach   of   a   duty   primarily   fixed   by   law”   as   defined   in  Winfield  &  Jolowicz  on  Tort.26  

39 It  should  be  remembered  that  article  12  permits  any  award  of  compensation  made  under   the   Regulation   to   be   deducted   from   any   other   award   of   compensation  permitted   by   the   Montreal   Convention   or   domestic   legislation   so   as   to   prevent  double-­‐recovery;  a  point  emphasised  by  the  sheriff  in  Vergara.27  

Can  interest  be  obtained  on  compensation  under  article  7?  

40 As  stated  above,  Deputy  District  Judge  Smedley  placed  reliance  on  Drew  v  Ryanair  in  holding   that   claimants   could   not   recover   interest   as   s.69   of   the   County   Courts  Act  1984   did   not   apply   to   claims   for   compensation   under   the   Regulation.28     Whilst  compensation  under   article   7   is   not   damages   for   the   reasons   explored   above,   and  therefore   the   judge’s   decision   is   undoubtedly   correct,   s.69   of   the   1984   Act   also  permits  interest  to  be  awarded  in  respect  of  claims  for  recovery  of  debts.      

41 In  full  section  69(1)  states:  

                                                                                                               26  See  paragraph  22  above.    27  Paragraph  23.    28  Nor  under  section  35A  of  the  Senior  Courts  Act  1981.  

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“Subject   to   rules   of   court,   in   proceedings   (whenever   instituted)   before   the  county  court  for  the  recovery  of  a  debt  or  damages  there  may  be  included  in  any  sum  for  which  judgment  is  given  simple  interest,  at  such  rate  as  the  court  thinks  fit  or  as  may  be  prescribed,  on  all  or  any  part  of  the  debt  or  damages  in  respect  of  which  judgment  is  given,  or  payment  is  made  before  judgment,  for  all  or  any  part  of  the  period  between  the  date  when  the  cause  of  action  arose…”  

42 The  question  that   inevitably  arises  then  is  whether  a  claim  for  compensation  under  article  7  of   the  Regulation  can  be   said   to  be   in   respect  of   “the   recovery  of  a  debt”  within  the  meaning  of  s.69(1)  of  the  1984  Act?29  

43 Nowhere   in   the   Regulation   is   the   right   to   compensation,   as   created   in   article   7,  described  as  a  ‘debt’.    Once  a  passenger  is  subject  to  a  cancellation  or  delay  of  over  three  hours   then   there  exists  an   ‘obligation’  on   the  part  of   the  particular  airline   to  pay   the   passenger   a   fixed   sum   of   money,   subject   to   the   airline   raising   a   defence  under  article  5(3).    If  an  airline  can  establish  in  court,  or  it  is  accepted  by  a  claimant  passenger,  that  the  cancellation  or  delay  in  question  was  caused  by  an  ‘extraordinary  circumstance’  then  article  5(3)  acts  as  a  complete  defence  to  the  claim.    

44 The   right   to   compensation   under   article   7   can   therefore   only   become   a   properly  described  debt,   i.e.   a   sum  of  money   that   is   due  and  owing,   either  when   liability   is  accepted   by   the   airline   or   pursuant   to   a   court   judgment   finding   in   favour   of   the  passenger.    

45 If  a  right  to  compensation  under  article  7  only  crystallises  as  a  debt  upon  the  delivery  of  a  court   judgment   then  until   this   time,   including  at   the  date  of   issuing   the  claim,  the  claim  itself  cannot  be  described  as  a  claim  for  the  recovery  of  a  debt  within  the  meaning  of  s.69(1)  of  the  1984  Act.    Accordingly,  interest  should  not  be  given  on  any  sum  awarded  under  a   judgment.    Of  course,  pursuant   to   s.74  of   the  1984  Act,  any  money  awarded  will  become  a  judgment  debt,  with  interest  accruing  on  it,  after  the  date  for  payment  of  the  sum  awarded  has  passed.    

46 In   summary,   defendant   airlines   appear   to   be   in   a   strong   position   to   argue   that  interest  should  not  be  awarded  in  the  County  Court  under  s.69  of  the  1984  Act,  or  in  the  High  Court  under  s.35A  of  the  Senior  Courts  Act  1981.      

                                                                                                               29  It  appears  there  is  no  binding  case  authority  on  this  issue.  

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47 However,  one  can  envisage  arguments  being  advanced  that  might  place  emphasis  on  a   wider   definition   of   ‘debt’   to   claim   that   interest   does   accrue,   for   example,   that  compensation   claims   under   article   7   are   ‘contingent’   debts   or   liabilities   which   fall  within   the   definition   found   in   s.69(1).     That   said,   the   use   of   the   word   ‘recovery’  implies   a   debt   outstanding   when   a   claim   is   first   issued   which   is   not   the   case   in  defended  claims  under  article  5  and  7.      

Are   terms   and   conditions   limiting   the   time   to   bring   claims   under   the   Regulation  unfair?  

48 In  Drew  v  Ryanair,  District  Judge  Henthorn  referred  briefly  to  the  decisions  of  District  Judge  Mitchell  in  Clissold  v  Ryanair  Ltd30  and  District  Judge  Benson  in  Banks  v  Ryanair  Ltd31,  in  both  of  which  Ryanair’s  terms  and  conditions  in  respect  to  time  limits  were  found  to  be  fair.      

49 Whilst  the  decision  in  Clissold  is  not  publically  available  online,  in  Drew  District  Judge  Henthorn  drew  attention  to  the  fact   that  Ryanair  had  placed  reliance   in  Clissold  on  the  fact  that  the  Office  of  Fair  Trading  had  approved  its  terms  and  conditions.    

50 In   its   submission   to   the  CAA32,   Jet2   relied  upon   the  decision   in  Clissold  and   that  of  Pickard  v  Ryanair  (2013)  in  support  of  their  two-­‐year  contractual  limitation  period.    In  both   cases,   the   passengers’   claims   were   dismissed   as   they   had   not   been   brought  within  Ryanair’s  two-­‐year  limitation  period  which  in  both  cases  was  adjudged  to  have  been  “fairly  imposed”.        

51 Jet2  also  referred  in  its  submission33  to  a  number  of  decisions  of  the  Liverpool  County  Court  in  which  claims  against  the  airlines  had  been  struck  out  by  the  Court  of  its  own  volition  on  the  basis  that,  by  entering  into  a  contract  with  the  airline,  the  passenger  had  agreed,  under  the  relevant  clause  of  terms  and  conditions,  that  the  limitation  for  claims  would  be  reduced  to  two  years.  

52 In  reaching  his  own  conclusions  that  article  15.2  of  Ryanair’s  General  Conditions  was  not  unfair,  District  Judge  Henthorn  in  Drew  said:34  

                                                                                                               30  3  May  2012  31  22  August  2014.    32  See  page  25  of  the  CAA’s  report.    33  See  page  25  of  the  CAA’s  report.  34  At  para.30.  

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“All  [the  conditions]  do  is  limit  the  time  in  which  a  claim  can  be  made  and  the  time   period   of   two   years   is   not   unreasonable   or   unfair.     I   consider   that   the  operator  of  a  budget  airline  is  entitled  to  provide  reasonable  limit  on  the  time  in  which  any  claim  can  be  made.    Otherwise  they  would  be  obliged  to  provide  for  contingent  liabilities  in  their  accounts  for  up  to  six  years.    The  time  allowed  gives   passengers   more   than   ample   opportunity   to   bring   a   claim   within   a  reasonable  period.  For  example,  the  two  year  period  is  substantially  more  than  the  time  for  Claimants  to  present  claims  before  Employment  Tribunals.”  

53 In  Vegrara  v  Ryanair,  Sheriff  Principal  Lockhart  was  not  required  to  decide  the  issue  of   fairness   as   the   findings   by   the   sheriff   in   the   court   below   that   article   15.2   of  Ryanair’s  General  Conditions  did  not  breach  the  Unfair  Contract  Terms  Act  1997,  or  the  Unfair  Terms  in  Consumer  Contracts  Regulations  1999,  were  not  challenged.35  

54 In  its  submission  to  the  CAA,  Jet2  said  this  about  a  contractual  limitation  period  being  unreasonable,  viz.  unfair:36  

“Provided   that   the   conditions   of   carriage   are   incorporated   into   the   contract  with   the   passenger,   and   the   period   is   not   unreasonable,   an   airline   has   a  defence   to   a   claim   if   it   is   commenced   in   the   courts   after   the   expiry   of   that  shorter  contractual  period.    …  “A  2  year  limitation  period  cannot  be  considered  to  be  unreasonable  given  that  it  is  the  same  period  as  is  provided  for  in  the  Montreal  Convention  in  respect  of  much  more  complex  and  serious  causes  of  action.  Indeed  it  is  a  generous  period  when  one  considers  that  in  a  flight  delay  claim,  the  passenger  immediately  has  all  of  the  information  and  evidence  he  or  she  needs  to  lodge  a  claim.”  

55 At   least   one   academic   commentator   has   recently   doubted   whether   contractual  conditions  limiting  the  time  to  bring  claims  “could  withstand  sustained  scrutiny  in  the  light  of  European  Union  consumer-­‐protective  norms,   in  particular   the  provisions   set  out   in   Directive   13/1993   on   Unfair   Terms   in   Consumer   Contracts   and   its   national  implementing  measures”.37  

                                                                                                               35  See  para.6  of  the  judgment.    36  See  pages  24  and  25.    37  Prassl,  Jeremias,  ‘EU  Aviation  Law  before  the  English  Courts:  Dawson,  Huzar,  and  Regulation  261/2004’,  Air  &  Space  Law  journal,  Kluwer  International  Online,  vol.39,  no.6  (2014):  365–384,  at  379.    

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56 As  no  higher  court  has  considered  whether  a  two-­‐year  time  limitation  on  Regulation  claims   are   unfair   under   EU   and   domestic   legislation,   a   return   to   first   principles   is  necessary  to  establish  which  position  is  correct.      

57 Turning  first  to  the  Unfair  Contract  Terms  Act  1977  (‘UCTA’),  the  statute  prohibits  a  party  in  certain  situations,  including  one  in  which  that  party’s  written  standard  terms  of  business  are  used,   from  excluding  or  restricting   liability   in  relation  to  a  claim  for  breach   of   contract   or   negligence,   except   in   so   far   as   the   term   satisfies   the  requirement  of  reasonableness.    

58 The  method  for  determining  reasonableness  is  laid  down  in  section  11(1).    The  clause  in  question  must  have  been  a  fair  and  reasonable  one  to  be  included  in  the  contract  having   regard   to   the   circumstances   that   were,   or   ought   reasonably   to   have   been,  known  to  or  in  the  contemplation  of  the  parties  when  the  contract  was  made.    

59 The   cases   of  Thomas  Witter   Ltd   v   TBP   Industries   Ltd38  and  Sargant   v   CIT   (England)  (t/a   Citalia) 39  confirmed   that   UCTA   applies   to   contractual   limitation   clauses  purporting  to  set  time-­‐limits  for  bringing  claims.      

60 Although  UCTA  arguably  does  not  apply  to  a  contractual  term  that  sets  a  time  limit  to  bring  a  claim  under  article  7  of  the  Regulation  –  as  such  a  claim  is  not  dependent  on  the  airline  being  in  breach  of  a  contact  or  acting  negligently  –  this  it  somewhat  moot  as  clauses  setting  time  limits  will  apply  to  types  of  claims  brought  under  the  Montreal  Convention40,  and  therefore  will  need  to  withstand  the  scrutiny  of  UCTA’s  provisions.      

61 In  Sargant,  the  claimant  was  prevented  from  bringing  a  claim  against  the  defendant  tour   operator   because   she   had   not   complied  with   the   contractual   requirement   to  lodge  a  written  complaint  within  28  days  of  returning  from  her  holiday.    Circuit  Judge  Sir  David  Hughes-­‐Morgan  held  that  the  clause  passed  UCTA’s  test  of  reasonableness  because  delay  caused  genuine  prejudice  to  the  defendant’s  chance  of  defending  the  claim   and   the   ABTA   Code   of   Conduct   for   Tour   Operators   in   force   at   the   time  permitted   a   time   limit   on   complaints   of   not   less   than   28   days.   Furthermore,  Regulation  5(9)  and  Schedule  2  of  the  Package  Travel  Regulations  1992,  although  not  yet  in  force  at  the  time  of  the  claimant’s  holiday,  permitted  such  restrictions.    

                                                                                                               38  [1996]  2  All  ER  573.  39  [1994]  C.L.Y.  566  (Croydon  County  Court).  40  Given  that  claims  under  the  Convention  will  almost  invariably  be  breaches  of  contract  and/or  claims  in  negligence  even  though  the  Convention  proves  the  sole  avenue  of  redress.    

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62 It   is   noteworthy   that   the  Montreal   Convention   requires  passengers   to   give  written  notice  to  the  air  carrier  in  respect  of  both  damage  to  baggage  and  damage  caused  by  delay  claims,  such  notice  to  be  given  within  7  days  of  receipt  in  the  case  of  checked  baggage  and  21  days  from  the  date  on  which  the  baggage  is  returned.41,42    

63 Consideration   of   whether   a   contractual   limitation   clause   is   ‘fair   and   reasonable’  under  UCTA  will  largely  involve  the  same  considerations  as  to  whether  the  clause  is  unfair  under  the  Unfair  Terms  in  Consumer  Contracts  Regulations  1999  (‘UTCCRs’).43        

64 Pursuant  to  Reg.5(1)  of  UTCCRs,  a  contractual  term  which  has  not  been  individually  negotiated  shall  be  regarded  as  unfair  “if,  contrary  to  the  requirement  of  good  faith,  it   causes   significant   imbalance   in   the   parties’   rights   and   obligations   under   the  contract  to  the  detriment  of  the  consumer”.    

65 Lord  Bingham  described   the   essence  of   good   faith   as   “a  principle   of   fair   and   open  dealing”44  which  required  terms  to  be  expressed  “fully,  clearly  and  legibly,  containing  no  concealed  pitfalls  or  traps”  with  “appropriate  prominence”  being  “given  to  terms  which  might  operate  disadvantageously  to  the  consumer”.45    

66 The  UTCCRs  also  include  a  list  of  potentially  unfair  terms  at  paragraph  1,  Schedule  2,  the  following  two  being  relevant:    

“(b)  inappropriately  excluding  or  limiting  the  legal  rights  of  the  consumer  vis-­‐à-­‐vis   the  seller  or  supplier  or  another  party   in   the  event  of   total  or  partial  non-­‐performance  or  inadequate  performance  by  the  seller  or  supplier  of  any  of  the  contractual  obligations;  and    

(q)  excluding  or  hindering  the  consumer’s  right  to  take  legal  action  or  exercise  any  other  legal  remedy.”  

67 Fairness  is  to  be  judged  taking  into  account  the  nature  of  the  subject  matter  of  the  contract   and   by   reference   to   all   the   circumstances   existing   when   the   term   was  agreed  and  to  all  of  the  other  terms  of  the  contract  or  any  other  contract  on  which  it  

                                                                                                               41  Per  article  31.    42  The  Convention  relating  to  the  Carriage  of  Passengers  and  their  Luggage  by  Sea  (‘the  Athens  Convention’),  in  respect  of  luggage  claims  for  contracts  of  carriage  on  the  sea,  has  similar  provisions.        43  The  UTCCRs  implement  Directive  93/13/EEC  on  unfair  terms  in  consumer  contracts  (Unfair  Terms  Directive).  Note  that  the  UTCCRs  will  be  replaced  by  Part  2  of  the  Consumer  Rights  Bill  if  enacted.    44  Interfoto  Picture  Library  Ltd  v  Stiletto  Visual  [1988]  1  All  ER  348  at  352.    45  Director  General  of  Fair  Trading  v  First  National  Bank  Plc  [2001]  UKHL  52,  para.17.  

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depends.   In   Perenicova   v   SOC   finance   spol   sro 46 ,   the   CJEU   remarked   that   the  requirement  in  Directive  93/13/EEC  to  have  regard  to  all  the  existing  circumstances  gave  “a  particularly  wide  definition  of  the  criteria  for  making  such  an  assessment”.    

68 In  a  frequently  cited  passage,  Lord  Millett   in  Director  General  of  Fair  Trading  v  First  National   Bank   Plc47  gave   the   following   guidance48  in   determining  whether   a   clause  might  fall  foul  of  Reg.  5(1):  

“It  is  obviously  useful  to  assess  the  impact  of  an  impugned  term  on  the  parties'  rights   and  obligations   by   comparing   the   effect   of   the   contract  with   the   term  and   the   effect   it  would  have  without   it.   But   the   inquiry   cannot   stop   there.   It  may  also  be  necessary  to  consider  the  effect  of  the  inclusion  of  the  term  on  the  substance  or  core  of  the  transaction;  whether  if  it  were  drawn  to  his  attention  the   consumer   would   be   likely   to   be   surprised   by   it;   whether   the   term   is   a  standard  term,  not  merely  in  similar  non-­‐negotiable  consumer  contracts,  but  in  commercial  contracts   freely  negotiated  between  parties  acting  on   level   terms  and  at  arms'   length;  and  whether,   in  such  cases,  the  party  adversely  affected  by   the   inclusion   of   the   term   or   his   lawyer   might   reasonably   be   expected   to  object   to   its   inclusion   and   press   for   its   deletion.   The   list   is   not   necessarily  exhaustive;  other  approaches  may  sometimes  be  more  appropriate.”  

69 In  Mohammed   Aziz   v   Catalunyacaixa49,   the   CJEU   gave   the   following   guidance   at  paragraphs  68  and  69  of  the  judgment:  

“In   order   to  ascertain  whether  a   term   causes  a   ‘significant   imbalance’   in   the  parties’   rights  and  obligations  arising  under   the  contract,   to   the  detriment  of  the   consumer,   it  must   in   particular   be   considered  what   rules   of   national   law  would  apply  in  the  absence  of  an  agreement  by  the  parties  in  that  regard.  Such  a  comparative  analysis  will  enable  the  national  court  to  evaluate  whether  and,  as  the  case  may  be,  to  what  extent,  the  contract  places  the  consumer  in  a  legal  situation  less  favourable  than  that  provided  for  by  the  national  law  in  force.  To  that  end,  an  assessment  should  also  be  carried  out  of  the  legal  situation  of  that  consumer   having   regard   to   the   means   at   his   disposal,   under   national  legislation,  to  prevent  continued  use  of  unfair  terms.  

                                                                                                               46  [2012]  (C-­‐453/1).  47  [2001]  UKHL  52.  48  At  para.54.    49  [2013]  (C-­‐415/11).  

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“With  regard  to  the  question  of  the  circumstances  in  which  such  an  imbalance  arises   ‘contrary   to   the   requirement   of   good   faith’,   having   regard   to   the  sixteenth   recital   in   the  preamble   to   the  directive  and  as   stated   in  essence  by  the  Advocate  General  in  point  74  of  her  Opinion,  the  national  court  must  assess  for   those  purposes  whether   the  seller  or  supplier,  dealing   fairly  and  equitably  with   the   consumer,   could   reasonably   assume   that   the   consumer  would   have  agreed  to  such  a  term  in  individual  contract  negotiations.”  

70 The  following  principles  can  therefore  be  gathered  from  the  above  cited  case  law:  

(1) The   determinative   requirements   for   the   fairness   test   are   the   separate  requirements  of  lack  of  good  faith  and  significant  imbalance.      

(2) The   requirement   of   good   faith   is   one   of   fair   and   open   dealing:     openness  requires  that  terms  should  be  expressed  fully,  clearly  and  legibly,  containing  no  concealed  pitfalls  or  traps.    

(3) Appropriate   prominence   should   be   given   to   terms   that   might   operate  disadvantageously  to  the  consumer.    

(4) Fair  dealing   requires   that  a   seller/supplier   should  not,  whether  deliberately  or  unconsciously,  take  advantage  of  the  consumer's  necessity,  indigence,  lack  of  experience,  unfamiliarity  with  the  subject  matter  of  the  contract  or  weak  bargaining  position.  

(5) Fairness  is  to  be  judged  taking  into  account  the  nature  of  the  subject  matter  of   the  contract  and  by  reference  to  all   the  circumstances  existing  when  the  term  was  agreed  and  to  all  of   the  other   terms  of   the  contract  or  any  other  contract  on  which  it  depends.    In  other  words,  it  will  be  necessary  to  consider  the   effect   of   the   inclusion   of   the   term   on   the   substance   or   core   of   the  transaction  /  contract.    

(6) In   assessing   fairness,   and   as   part   of   the   exercise   in   (5)   above,   it   will   be  necessary  to  compare  the  effect  of  the  contract  with  the  term  included  and  the  effect  the  contract  would  have  without  it.  

(7) In  deciding  whether  a  seller/supplier  has  dealt   fairly  and  equitably  with   the  consumer,  the  courts  should  decide  whether  it  could  reasonably  be  assumed  that   the   consumer   would   have   agreed   to   such   a   term   in   (hypothetical)  individual  contract  negotiations.      Put  another  way,   the  court  should  assess  

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whether,  if  the  term  were  drawn  to  the  consumer’s  attention,  s/he  would  be  likely  to  be  surprised  by  it  or  object  to  its  inclusion  and  press  for  its  deletion.    

(8) Whether   the   term   is   a   standard   term,  not  merely   in   similar  non-­‐negotiable  consumer  contracts,  but   in  commercial  contracts  freely  negotiated  between  parties   acting   on   level   terms   and   at   arms'   length   may   be   a   determining  factor.    

(9) In  order   to  ascertain  whether  a   term  causes  a   ‘significant   imbalance’   in   the  parties’   rights   and  obligations   to   the  detriment  of   the   consumer,   particular  consideration  must  be  given  to  what  rules  of  national  law  would  apply  in  the  absence   of   the   term.   Such   a   comparative   analysis   will   enable   the   national  court   to   evaluate   whether   and,   as   the   case   may   be,   to   what   extent,   the  contract   places   the   consumer   in   a   legal   situation   less   favourable   than   that  provided  for  by  the  national  law  in  force.    

(10) It  may  be  unfair   to  exclude  or   limit   the   legal   rights  of   the   consumer   in   the  event  of  total  or  partial  non-­‐performance  or  inadequate  performance  by  the  seller  or  supplier  of  any  of  its  contractual  obligations.  

(11) It  may  be  unfair  to  exclude  or  hinder  the  consumer’s  right  to  take  legal  action  or  exercise  any  other  legal  remedy.  

71 Before  applying  these  principles  to  contracts  that   limit  the  time  to  bring  Regulation  claims,  it  is  important  to  note  that  terms  that  reflect  the  law  are  not,  in  terms  of  their  substance,  subject   to   the  UTCCRs   (regulation  4).  As   this   includes   laws  providing   for  compensation  to  travellers  as  dictated  by  international  treaties  incorporated  into  UK  law,  and  statutorily  prescribed  terms  and  conditions50,  the  limitation  of  two  years  in  respect  of  Montreal  Convention  claims  cannot  be  impugned  by  UTCCRs’  provisions.    

72 The   starting   point   is   that   the   Regulation   itself   does   not   contain   any   provision  concerning  the  time  limit  for  bringing  an  action,  and  therefore  whether  a  contractual  period  of   two  years   to  bring  a   claim   is   a   fair   period  of   time  has   to  be  assessed  by  comparison   to  what   the  Court  of  Appeal   confirmed   in  Dawson  v   Thomson  Airways  was  the  period  of  limitation  under  the  Limitation  Act  1980:  six  years.    

73 Turning  then  to  the  principles  summarised  above,  provided  an  air  carrier’s  terms  and  conditions  that  purport  to  limit  the  time  period  to  bring  claims  under  the  Regulation  

                                                                                                               50  RWE  Vertrieb  AG  v  Verbraucherzentrale  Nordrhein-­‐Westfalen  eV  (C-­‐92/11).    

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are   expressed   fully,   clearly   and   legibly   and   is   easily   accessible   –   by,   for   instance,  making   it  mandatory   to   look  at   the   terms  and/or   for   the  passenger   to   confirm   the  terms  have  been  read  before  booking  –  the  requirement  of  good  faith  will  have  been  met.    

74 Given  that  a  term  limiting  a  right  to  bring  a  claim  under  the  Regulation  to  two  years  arguably   does   not   operate   disadvantageously   to   the   consumer,   it   is   questionable  whether   it   needs   to   be   given   prominence   over   and   above   any   other   terms   and  conditions.    Provided  such  a  condition  has  its  own  heading,  or  is  otherwise  separated  to  an  extent  from  the  other  terms  and  conditions,  it  will  have  been  given  appropriate  prominence.    

75 On   the   assumption   that   a   condition   limiting   the   time   period   to   bring   a   claim   is  expressed   fully,   clearly   and   legibly,   is   easily   accessible,   and   accordingly   is  incorporated   into   the   contract   at   the   time   of   booking,   it   cannot   be   said   with   any  conviction   that   an   air   carrier   was   taking   advantage   of   the   consumer's   necessity,  indigence,  lack  of  experience,  unfamiliarity  with  the  subject  matter  of  the  contract  or  weak  bargaining  position.      

76 In   taking   into   account   the   nature   of   the   subject   matter   of   the   contract,   and   by  reference  to  all  the  circumstances  existing  when  the  term  was  agreed,  and  to  all  of  the  other  terms  of  the  contract,   it  similarly  cannot  be  said  that  a  condition   limiting  the  ability  of  a  passenger  to  bring  a  claim  within  two  years  is  unfair.    

77 It  is  without  doubt  that  both  passengers  and  air  carriers  alike  wish  speedy  resolutions  to  long  delays  or  cancellations.      It  is  therefore  in  both  parties’  interests  that  there  is  an  expeditious   closure   to  any  dispute   that  arises  and  having  a   comparatively   short  period  of  time  within  which  to  achieve  this  –  in  comparison  to  periods  mandated  by  the  Limitation  Act  1980  –  serves  both  parties.      

78 In  taking  into  consideration  all  the  circumstances  of  the  case,  it  is  important  to  note  that  most  air  carriers’   terms  and  conditions,  certainly   in   respect  of  air  carriage  and  thereafter,   are   modelled   on   the   airline   industry   standard   as   drafted   by   the  International  Air  Transport  Association  (IATA)  in  Recommended  Practice  Note  1724.    In  respect  to  a  time  limitation  clause,  model  article  16.2  provides:  

“Any  right  to  damages  shall  be  extinguished  if  an  action  is  not  brought  within  two  years  of  the  date  of  arrival  at  destination  or  the  date  on  which  the  aircraft  is  scheduled  to  arrive  or  the  date  on  which  the  carriage  stopped.    The  method  

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of   calculating   the   period   of   limitation   shall   be   determined   by   the   law   of   the  Court  where  the  case  is  heard.”  

79 Such  a  term,  or  a  variation  of  it,  is  therefore  a  standard  term  within  the  industry  and  was   drafted   to   take   into   account   the   time   limit   set   out   in   article   35(1)   of   the  Montreal  Convention.    As  pointed  out  by  Jet2  in  its  submissions  to  the  CAA,  the  time  limit   under   the  Montreal   Convention   applies   to   claims   for   death   and  bodily   injury,  which  by  their  very  nature  are  often  more  serious  and  complex  claims  than  claims  for  fixed  compensation  for  delayed  or  cancelled  flights  under  the  Regulation.     It  would  seem  illogical  for  simpler  claims  to  have  a   longer   limitation  period  than  a   limitation  period  for  more  complex  claims  that  has  been  internationally  agreed.51  

80 It  is  also  important  to  remember  that  the  IATA  conditions  of  carriage  were  amended  after  intervention  by  the  Office  for  Fair  Trading  in  1999,  and  therefore  on  their  face  were   considered   fair  under   the   legislation  at   the   time   (which  has   remained   largely  unchanged).    

81 In  respect  of  the  Regulation  itself,  it  is  well  known  that  moves  are  afoot  within  the  EU  legislature  to  amend  the  instrument.    ‘European  Parliament  legislative  Resolution  of  5  February  2014  on  the  Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council   amending  Regulation   (EC)  No  261/2004’   is   the   current   embodiment   of  such  reform.    

82 The  European  Parliament’s  Amendment  128  (adding  Article  16a(2)  to  the  Regulation)  provides  that  if  a  passenger  wishes  to  make  a  complaint  to  an  air  carrier  with  regard  to  his  rights  under  the  Regulation,  s/he  shall  submit  it  within  three  months  from  the  date   on  which   the   flight   was   performed   or   was   scheduled   to   be   performed.     The  proposed  amendment  adds  that  the  submission  of  a  complaint  within  three  months,  and   after   the   expiry   of   that   three-­‐month   period,   shall   be  without   prejudice   to   his  right  to  enforce  his  claims  under  this  Regulation  “within  the  framework  of  the  judicial  system  and  an  out-­‐of-­‐court   resolution”.    However,   the   fact   that  a  passenger  has   to  make  a  complaint  within  three  months   from  the  date  of   the  performed  flight,  with  the  particular  air  carrier  in  question  having  two  months  within  which  to  provide  a  full  answer  to  the  passenger  shows  the  tight  timeline  both  the  EU  Commission  and  the  European  Parliament  envisages  for  resolution  of  disputes  under  the  Regulation.    

                                                                                                               51  As  of  February  2015,  there  are  111  parties  to  the  Convention.  

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83 The   European   Parliament’s   Amendment   130 52  proposes   that   any   complaint   a  passenger  wishes  to  make  to  a  designated  national   ‘out-­‐of-­‐court  dispute  resolution  body’,  about  an  alleged  infringement  of  the  Regulation,  must  make  such  a  complaint  not  less  than  one  year  from  the  date  on  which  s/he  submitted  the  complaint/claim  to  the  air  carrier  concerned  (and  after  the  carrier  has  given  a  full  response  itself).    

84 Amendment  130  further  proposes  that  it  will  be  for  the  designated  national  body  to  set  the  time  limit  for  such  a  complaint,  in  England  and  Wales  this  would  of  course  be  the   CAA.     The   European   Commission’s   original   text   envisaged   a   period   of   not   less  than   two  months   from  the  date  of   the  air   carrier’s  determination  of   the  complaint  before  a  passenger  could  make  a  further  complaint  to  a  designated  national  body.    It  is  unclear  why   the  European  Parliament  sought   to  extend   the  period  as   this  would  mean   a   passenger   having   to   wait   seven   months   after   an   air   carrier   had   rejected  his/her  claim  before  s/he  could  make  a  complaint  to  a  designated  national  body.    It  would  be   surprising   if   this   time   limit   remained   in   the   finalised   text  of   an  amended  Regulation.    

85 Notwithstanding  the  differing  time  limits   in  the  two  versions  of  amendment  130,   in  both   the   Commission’s   and   the   Parliament’s   Amendment   132   the   designated  national   body   has   three   months 53  within   which   to   respond   to   a   passenger’s  complaint.    

86 Playing  out  these  time  lines  then  within  the  context  of  a  two-­‐year  time  limit  to  bring  a   claim   before   the   UK   courts:   in   making   a   complaint/claim   to   the   air   carrier,   the  passenger  has  three  months  from  the  date  of  the  performed  flight,  and  then  a  two-­‐month  period  within  which  to  receive  the  reply.    Assuming  the  air  carrier  responds  on   the   last  day  permitted,   this  would  have  been   five  months   since   the  date  of   the  flight.    If  the  passenger  then  wished  to  make  a  complaint  to  the  national  out-­‐of-­‐court  dispute  resolution  body  s/he  has  to  wait  a  further  7  months  to  do  so,  by  this  stage  a  year  would  have  elapsed  since  the  flight.      The  national  body  then  has  three  months  to   reply.     If   the   national   body   does   not   uphold   the   complaint   then   the   passenger  would  still  have  9  months  within  which  to  file  a  claim  with  the  court.    Given  that  the  passenger  will   have  become   familiar  with   the  nature  of   the  Regulation  and   the  air  carrier’s  defence  by  this  stage,  having  approximately  9  months  within  which  to  file  a  court   claim,   even   without   legal   assistance,   seems   a   reasonable   time   frame   to   be  bound  by.    

                                                                                                               52  Which  adds  further  provisions  to  the  proposed  Article  16(a).    53  Specifically  90  days  in  the  European  Parliament’s  version  of  the  amendment.  

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87 Turning  to  a  comparison  of  the  effect  of  the  contract  with  the  term  and  the  effect  it  would  have  without   it,   it   is   clear,  by   virtue  of   the   judgment   in  Dawson  v  Thomson  Airways,   that   where   there   is   to   be   no   contractual   limitation   period   the   passenger  would   have   six   years  within  which   to   bring   a   court   claim   to   enforce   his/her   rights  under  the  Regulation.      The  central  question  is  whether   losing  the  four  years  under  the   Limitation  Act   is   unfair   to   the   consumer;   for   the   reasons   already  highlighted   it  appears  not.    

88 Would   a   consumer   would   have   agreed   to   a   two-­‐year   time   limit   in   (hypothetical)  individual  contract  negotiations?    Again,   for   the  reasons  elaborated  above   it  seems  likely   they  would,   given   the   relatively   straightforward   nature   of   putting   forward   a  claim  under   the   Regulation,   certainly   in   comparison   to   a   claim   for   death   or   bodily  injury  under  the  Montreal  Convention.    In  essence,  all  a  passenger  is  required  to  do  in   his/her   particulars   of   claim   is   set   out   details   of   their   booking/flight   with   the  defendant  airline  and  the  period  of  delay  or  the  nature  of  the  cancellation.    The  onus  is   then   of   course   upon   a   carrier   to   put   forward   a   defence   of   extraordinary  circumstances  under  article  5(3)  of  the  Regulation.    

89 It   therefore  seems  hard  to  conclude  that   if  a  two-­‐year  time  period  to  bring  a  claim  under   the   Regulation  were   to   be   specifically   brought   to   the   passenger’s   attention  s/he  would  be  surprised  by  it,  or  object  to   its   inclusion  and  press  for   its  deletion  at  the  point  of  entering  into  the  contract.  

90 Returning  to  District  Judge  Henthorn’s  view  in  Drew  v  Ryanair54,  it  is  difficult  to  take  issue  with   his   conclusions   that   a   time   period   of   two   years   is   not   unreasonable   or  unfair.    As  he  observed,  an  air  carrier   is  entitled   to  place  a   reasonable   limit  on   the  time  in  which  any  claim  can  be  made,  and  should  not  have  to  provide  for  contingent  liabilities  in  their  accounts  for  up  to  six  years.    As  the  judge  stated,  a  two-­‐year  period  “gives  passengers  more  than  ample  opportunity  to  bring  a  claim  within  a  reasonable  period”.    This  would   so  even  were   the  Regulation   to  be  amended  and  a   system  of  alternative  dispute  resolution  made  mandatory  as  envisaged  in  the  draft  proposals.    

Do  such  contractual   time   limits  amount   to   infringements  of  article  15  of   the  Regulation?  

 91 Article  15(1)  of  the  Regulation  provides:  

“Exclusion  of  waiver    

                                                                                                               54  See  paragraph  52  above.  

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1.  Obligations  vis-­‐à-­‐vis  passengers  pursuant  to  this  regulation  may  not  be  limited  or  waived  notably  by  a  derogation  or  restrictive  clause  in  the  form  of  carriage.”    

92 District  Judge  Henthorn  in  Drew  came  to  the  following  conclusion55:  

“The  Defendant’s  conditions  do  not  seek  to  exclude  or  limit  the  entitlement  to  compensation  or   the  amount  of  compensation.    They  merely   fix  a  time   limit  by  which  claims  should  be  made  and   in  my  view  that  does  not  amount  to  a  derogation  or  a  restricted  clause.    There  is  no  provision  preventing  passengers  from   claiming   nor   any   attempts   to   limit   the   amount   of   compensation   to  which  they  are  entitled  under  Article  7  of  the  Regulation.”  

93 Jet2  set  out  its  view  on  the  effect  of  article  15  of  the  Regulation  in  its  submission  to  the  CAA  as  follows:  

“…we   note   that   it   has   been   suggested   recently   that   Article   15   of   the  Regulation   limits  an  airline's  entitlement   to  agree  a  period  shorter   than   the  normal  contractual  time  limit.    Article  15  does  not  have  this  effect.  It  prevents  an  airline  from  limiting  or  waiving  ‘obligations’.  The  only  relevant  obligation  in   the  Regulation   is   the  obligation  of   the  airline   to  pay  compensation   in   the  sums  set  out  in  Article  7.    Article  15  prevents  an  airline  from  imposing  a  term  which   reduces   the  extent  of   its  obligation   to  pay   compensation;   it   does  not  prevent   it   from  setting  a  reasonable  period  for  the   lodgment  of  claims.    We  are  unaware  of  any  court  decision  to  the  contrary.”  

94 One   academic   commentator   has   suggested,   however,   that   a   contractual   limitation  clause  might  amount   to  an   infringement  of  article  15  of   the  Regulation56,  although  reasons  for  this  view  were  not  given  in  detail.    

95 As   the   Regulation   itself   does   not   contain   any   time   limits   by  which   claims  must   be  brought,   the   CJEU   was   asked   in  Moré   v   KLM57  to   decide   what   limitation   period  applied.     The   Court   held   that   neither   article   35   of   the   Montreal   Convention   nor  article   29   of   the  Warsaw   Convention   applied58,   as   the   Regulation   fell   outside   the  scope   of   both   conventions.     Instead   it   was   for   the   domestic   legal   system   of   each  

                                                                                                               55  At  paragraph  29  of  the  judgment.    56  Prassl,  Jeremias,  ‘EU  Aviation  Law  before  the  English  Courts:  Dawson,  Huzar,  and  Regulation  261/2004’,  Air  &  Space  Law  journal,  Kluwer  International  Online,  vol.39,  no.6  (2014):  365–384,  at  379.  57  [2012]  (C-­‐  139/11).  58  Both  of  which  stipulate  a  two-­‐year  time  limit  to  bring  claims.  

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Member   State   to   determine   the   time   limits   for   bringing   actions   for   compensation  pursuant  to  the  Regulation,  provided  that  the  domestic  time  limit(s)  observe  the  EU  principles  of  equivalence  and  effectiveness.    

96 The   onus   on   national   courts   is   mirrored   in   Article   19(1),   s.2   of   the   Treaty   of   the  European  Union  which   puts   the   responsibility   for   “providing   remedies   sufficient   to  ensure   effective   legal   protection   in   the   fields   covered   by   Union   law”   on   member  states  through  their  respective  domestic  courts  being  “Union  courts”.59  

97 As  to  the  principles  of  equivalence  and  effectiveness,  in  Comet60,  the  European  Court  of   Justice   (ECJ)61  held   that   time   periods  must   not   render   the   bringing   of   an   action  under  Community  law  “practically   impossible”.   In  Palmisani62,  the  ECJ  held  that  any  substantive   or   procedural   requirements   for   claims   concerning   EU   law  must   not   be  less   advantageous   than   for   similar   claims   that   only   concern   national   law.   In  Francovich63,  the  ECJ  held  that  national  provisions  “must  not  be  so  framed  as  to  make  it  virtually  impossible  or  excessively  difficult  to  obtain  reparation”.64  

98 It   is   to   be   noted   that   in   Germany   the   time   limit   for   bringing   claims   under   the  Regulation   is   three  years.       In  the  Netherlands,   the  Court  of  Amsterdam  held65  that  the   two-­‐year   limitation  period   inserted   into   article   8:183  of   the  Civil   Code   (to   give  effect   to   the   Montreal   Convention)   applied   to   all   air   transport   related   claims,  notwithstanding  the  general  civil  limitation  period  of  five  years  under  article  6:310  of  the  Civil  Code.66  

99 Although  reducing  the  time  period  from  six  years  to  two  years  may  arguably  be  less  advantageous  to  passengers,  for  the  reasons  explained  above  it  appears  unarguable  that   a   two-­‐year   time   period   makes   the   bringing   of   a   claim   under   the   Regulation  “practically   impossible”,   “virtually   impossible   or   excessively   difficult”,   particularly  when  other  EU  Member  States  have  identical  or  similar  time  periods  as  mandated  by  domestic  legislation  or  their  courts.    

                                                                                                               59  European  Consumer  Law,  2nd  Ed.,  2014,  Reich  et  al,  Intersentia,  page  346.  60  [1976]  (C-­‐45/76).  61  As  it  was  then  called.    62  [1997]  (C-­‐261/95).  63  [1991]  (C-­‐6/90  &  C-­‐9/90).  64  Para.43.    65  1  December  2011,  case  ECLI:NL:RBAMS:2011:BU6471.    66  Issue  142,  VII-­‐964,  paragraph  [1017.1].    

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100 Given  that  English  contract  law  has  as  one  of  its  central  tenets  the  idea  that  parties  are   free   to   contract   on   terms   that   they   deem   fit,   provided   they   are   not   unfair   or  illegal,   it   is  doubted  that  an  English  court  would  consider  a  two-­‐year  time  period  to  amount   to   a   derogation   of   article   15   of   the   Regulation,   or   otherwise   offend   the  principles  of  equivalence  and  effectiveness  in  passengers  seeking  redress.    

101 In  summary,  there  can  be  no  sensible  suggestion  that  the  introduction  of  a  two-­‐year  period   within   which   to   make   a   claim   against   an   air   carrier   limits   or   waives   any  obligation   arising   from   the   Regulation.     The   air   carrier’s   obligations   under   the  Regulation  are  in  no  way  been  diminished  by  such  a  limitation  clause,  only  the  period  within   which   a   claim   can   be   brought.       For   the   reasons   already   given,   such   a  limitation  is  not  unfair.  

Are  the  CAA’s  proposed  enforcement  actions  the  correct  approach?  

102 In   its   compliance   report,   the   CAA   gave   the   following   summary   of   the   effect   of  Dawson  v  Thomson  Airways:  

“The  Court  of  Appeal  considered  whether  existing  English  case  law  restricted  the  limitation  period  in  respect  of  bringing  a  compensation  claim  under  EC261/2004  to  2   years.   The  Court   found   that   it   did  not  and   that   for   claims  brought  under  EC261/2004,  the  UK  limitation  period  of  6  years  applied.”  

103 The  report  went  on  to  conclude:  

“This   ruling   [in  Dawson  v  Thomson  Airways]   is   straightforward  and  we  expect  airlines  to  apply  a  6  year  limitation  to  claims  brought  under  EC261/2004.”  

104 In  response  to  being  asked  by  the  CAA  whether  the  airline  provided  a  six-­‐year  time  period   to  bring   claims  pursuant   to   the  Dawson   v   Thomson  Airways   judgment,   Jet2  wrote  as  follows:  

“Jet2.com  applies  a  contractual  limitation  period  of  two  years  as  clearly  set  out  in   its   conditions   of   carriage,   which   are   incorporated   into   every   contract   with  passengers.   The   Dawson   judgment   did   not   consider   the   effect   of   contractual  time   limits   which   are   incorporated   into   conditions   of   carriage   and   only   dealt  with  the  question  of  the  general  limitation  period.  In  Jet2.com’s  case  there  is  an  overriding  contractual  limitation  period  of  two  years.”  

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105 It   is   this   author’s   opinion   that   Jet2’s   view   as   to   the   effect   of  Dawson   v   Thomson  Airways  is  the  correct  one.    In  summary,  the  Court  of  Appeal  in  its  judgment  followed  European   jurisprudence   and   concluded   that   the   six-­‐year   limitation   period   under  section   9   of   the   Limitation  Act   1980   applied   instead   of   the   two-­‐year   period   under  article  35  of  the  Montreal  Convention.  In  English  law,  section  9  of  the  Limitation  Act  1980   provides   that   “an   action   to   recover   any   sum   recoverable   by   virtue   of   any  enactment   shall   not   be   brought   after   the   expiration   of   six   years   from   the   date   on  which  the  cause  of  action  accrued”.        

106 The  Court  was  not   asked   to  decide  whether   a   contractual   limitation  period  of   less  than  six  years  was  permissible;  it  was  simply  asked  to  decide  whether  the  time  limit  on  actions  brought  under  the  Montreal  Convention  applied  to  the  Regulation.    The  Court   found  that   it  did  not,   though   it  made  no  comment  on  whether  a  contractual  period  of  two  years  could  be  capable  of  being  effective  so  as  to  bar  claims  brought  after  this  time.      

107 It  was  hoped  that  after  the  decision  in  Drew  v  Ryanair  the  issue  of  contractual  time  limits  and  compensation  under  the  Regulation  had  attained  a  degree  of  certitude.    It  now  appears  that  unless  the  CAA  changes  its  views  on  taking  enforcement  action,  at  least   one   UK   airline   will   find   itself   defending   its   two-­‐year   time   limit   in   the   higher  courts.    If  the  Authority  is  to  base  its  enforcement  case  on  the  analysis  contained  in  its  report,  it  is  likely  to  face  an  uphill  struggle  in  the  courts.    

108 It  is  somewhat  surprising  to  note  from  the  CAA’s  report  that  after  its  successes  in  the  county  courts  in  respect  of  its  two  year  limitation  period,  in  its  submission  to  the  CAA  Ryanair  confirmed  that  it  would  be  changing  its  limitation  period  to  six  years,  though  at   the   time   of   writing   its   clause   remains   unchanged   and   makes   no   distinction  between  claims  brought  in  the  UK  or  outside.67  

Christopher  Loxton  ©  2015    [The  author  had  no  part  in  advising  on,  or  drafting,  any  of  the  air  carriers’  submissions  to  the  CAA]    Acknowledgments:    

I  am   indebted  to  my  colleagues,   John  Ditchburn  and  Timothy  Salisbury,   for  contributing  their  thoughts  to  this  article.      

                                                                                                               67  http://www.ryanair.com/en/terms-­‐and-­‐conditions/article15/    

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