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Claiming the Costs of Being the Boss – Employers’ Delay Damages under the Montreal Convention

20-May-2016 18:36
in Contract
by John Ditchburn

In February, the European Court of Justice gave a ruling in Air Baltic Corporation AS v Lietuvos Respublikos specialiuju tyrimu tarnyba (C-429/14) on the interpretation of Articles 19, 22 and 29 of the Montreal Convention 1999. The ECJ ruled that under the Convention, where an aircraft carrier has concluded a contract with an employer to carry its employees as passengers, the carrier is liable to the employer for damage caused by delay to the flight.


The Facts


Lietuvos Respublikos specialiuju tyrimu tarnyba (“the Lithuanian Investigation Service”) bought tickets for flights with Air Baltic for two of its agents travelling on official business. The agents were due to leave Vilnius at 9.55am on 16 January 2011 and arrive in Baku at 10.40pm on the same day, changing at Riga and Moscow. Due to a delay to a connecting flight, the agents landed in Baku a day later than scheduled and the Lithuanian Investigation Service was required to pay them travel expenses and state social security contributions. The Lithuanian Investigation Service sought to recover these sums from Air Baltic under Article 19 of the Montreal Convention, which provides that a carrier is liable for “damage occasioned by delay in the carriage by air of passengers, baggage or cargo”.


Before the domestic courts in Lithuania, Air Baltic argued that under Article 19, a carrier was only liable to its passengers and could not be liable to legal persons such as the Lithuanian Investigation Service. The Lithuanian Investigation Service, on the other hand, argued that Article 19 made the carrier liable to anyone who was a party to the contract for international carriage and who sustained damage following delay.


The dispute eventually came before the Lithuanian Supreme Court, with the first and second instance courts finding for the Lithuanian Investigation Service, and the following question was referred to the ECJ for a preliminary ruling:


Are Articles 19, 22 and 29 of the Montreal Convention to be understood and interpreted as meaning that an air carrier is liable to third parties, inter alia to the passengers’ employer, a legal person with which a transaction for the international carriage of passengers was entered into, for damage occasioned by a flight’s delay, on account of which the applicant (the employer) incurred additional expenditure connected with the delay (for example, the payment of travel expenses)?


The Lithuanian Supreme Court also referred a second question in the event that the first question was negative, asking whether a third party may have an alternative basis for bringing a claim against an air carrier.


The ECJ’s Decision


In its decision, the ECJ analysed the wording of Article 19 and found that there was nothing to specify who needed to have suffered the relevant damage in order for the article to apply. The ECJ also reviewed the scope and application of the Montreal Convention, as set out in Article 1(1) and the preamble, and found that the aim of the Convention was to protect the interests of consumers in relation to the international carriage of persons, baggage or cargo. It was held that the concept of “consumer” was not to be confused with the concept of “passenger”, and that therefore a carrier could be liable to contracting parties who may not themselves have been travelling. Thus, Article 19 was held to apply to an employer who contracted with an air carrier for the international carriage of its employees and who suffered damage as a result of delay in that carriage.


The ECJ held that the amount for which a carrier would be liable to an employer was limited to the amount set out in Article 22(1) for each passenger. Therefore, an employer could not recover more per employee than an individual passenger claiming for damage following a delay.


Given the answer to the Lithuanian Supreme Court’s first question, the second question was not considered by the ECJ.


The ECJ has emphasised that the Montreal Convention acts to protect any party to a contract for international carriage, whether or not it is a passenger itself. While the decision of the ECJ may open the door to similar claims from employers, air carriers will still be protected by Article 22(1) and will not have to pay any more than they do for individual passengers claiming under Article 19.


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