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Contractual time limits, compensation and interest under Regulation (EC) 261/2004

25-February-2015
25-February-2015 14:07
in Aviation and Travel
by Christopher Loxton

On 29 January 2015, judgment was handed down in Drew v Ryanair Ltd [1] 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’).

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 condition (in force at the time of booking).

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.”

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.

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.

The case is to be compared with the Scottish case in 2014 of Vergara v Ryanair Ltd [2] 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 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.

At first instance the sheriff had additionally determined that the condition in question was not unfair under either the Unfair Contract Terms Act 1997 or the Unfair Terms in Consumer Contracts Regulations 1999, nor did it amount to infringement of article 15 of the Regulation. These findings were not contested on appeal and therefore were not necessary for Sheriff Principal Lockhart to consider.

The impact of Drew v Ryanair has already been felt in cases concerning other airlines. In a recent case, again in the County Court at Liverpool, Deputy 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.

 

Christopher Loxton

© 2015 Chambers of Lawrence Power, 4 King’s Bench Walk, Temple, London, EC4Y 7DL. Tel: 020 7822 8822.  www.4kbw.net  email jr@4kbw.net

 

[1]Claim no. A00BL660.

[2] 18 July 2014, Ayr Sherrif Court, claim no. 2014CAYR35, found at: www.scotcourts.gov.uk