2021/06/24 – 25 Cdo 1271/2021 (summary)

Judgment of the Supreme Court of 24. 6. 2021, Ref. No. 25 Cdo 1271/2021
[Article 5(3) of the Regulation (EC) No 261/2004, compensation paid by the operating air carrier, extraordinary circumstance]y

In the present case, the claimant booked two flights with the defendant company which were both cancelled due to a strike by the defendant's cabin crew members. As a result, the claimant sought compensation. Both, the court of first instance and the appellate court, found in favour of the defendant company. They held that the defendant was not obliged to pay the compensation to the claimant as the strike was to be considered an extraordinary circumstance which could not have been avoided even if all reasonable measures had been taken, in accordance with Article 5(3) of the Regulation (EC) No 261/2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91 (hereinafter the “Regulation”). In the judgment of the appellate court, a reference was made to recital 14 of the Regulation which states that a strike may constitute such an extraordinary circumstance. The claimant lodged an extraordinary appeal to the Supreme Court against the lower instance court decisions.

The Supreme Court thus had to address the question whether the strike by the air carrier's employees constituted an extraordinary circumstance which could not have been avoided even if all reasonable measures had been taken within the meaning of Article 5(3) of the Regulation and which would therefore exempt the defendant from its obligation to compensate the claimant for the cancelled flights. The Supreme Court considered this question as acte éclairé and based its assessment on two decisions of the Court of Justice of the European Union (hereinafter “CJEU”), the case of Helga Krüsemann and Others v. TUIfly GmbH, No. C-195/17 and others, and the case of Airhelp Ltd. v. Scandinavian Airlines System Denmark – Norway – Sweden, No. C-28/20.

In Helga Krüsemann and Others v. TUIfly GmbH, the CJEU recalled that the Regulation aims at ensuring a high level of protection for passengers. Consequently, the concept of “exceptional circumstances” within the meaning of Article 5(3) of the Regulation must be interpreted restrictively. The CJEU held in this decision that the circumstances referred to in recital 14 of the Regulation are not necessarily and automatically grounds of exemption from the obligation to pay compensation provided for in Article 5(1) of the Regulation. The CJEU concluded that it is therefore necessary to assess if two cumulative conditions for an “extraordinary circumstance” in the meaning of Article 5(3) of the Regulation have been fulfilled. As “extraordinary circumstances” are considered such events which, by their nature or origin, are not inherent in the normal exercise of the activity of the air carrier concerned and are beyond its actual control. In this case, the CJEU did not classify the so-called wildcat strike (a spontaneous absence of a significant part of flight crew staff members), which was a reaction to the announcement of a corporate restructuring process, as an extraordinary circumstance in the meaning of Article 5(3) of the Regulation. The CJEU saw the restructuring and reorganisation of an undertaking as a part of the normal management. The wildcat strike at issue was not regarded as beyond the actual control of the air carrier concerned.

Based on the above-mentioned reasons, the Supreme Court concluded that a duly declared strike (as in the present case) by employees concerning circumstances in the sphere of the air carrier does not constitute an “extraordinary circumstance”. The Supreme Court believed that if the CJEU did not consider a wildcat strike (which happened spontaneously and the air carrier’s possibility to react was therefore rather limited) an “extraordinary circumstance”, it would consider a duly declared strike as such even less so.

Moreover, the Supreme Court deemed the CJEU decision Airhelp Ltd. v. Scandinavian Airlines System Denmark – Norway – Sweden apt for the case at hand. In this decision, the CJEU held that measures relating to the working conditions and remuneration of the employees of an operating air carrier fall within the normal management of the activities of that carrier. The CJEU also adjudicated that a strike, the aim of which is limited to obtaining from the air transport undertaking an increase in the salaries of pilots, changes to their working schedules and greater predictability in terms of working hours therefore constitutes an event that is inherent in the normal exercise of that undertaking’s activity, particularly where such a strike is organised in accordance with the law. Additionally, the strike was also foreseeable. As a result, the employer essentially had the means to prepare for the strike and possibly to mitigate its consequences, so the employer retained a certain degree of control over the events. The CJEU therefore concluded that only circumstances over which the operating air carrier has no control should be considered an “extraordinary circumstance” in the meaning of Article 5(3) of the Regulation. The CJEU stated that a strike of the employees of an operating air carrier cannot be regarded as an “extraordinary circumstance” within the meaning of Article 5(3) of the Regulation if that strike is connected to demands relating to the employment relationship between that carrier and its employees which can be resolved through management-labour dialogue within the undertaking. This applies even if the strikers’ demands are unreasonable or disproportionate. The CJEU clarified that by the strikes referred to in recital 14 of the Regulation, the EU legislator was referring to strikes which are external to the activities of the air carrier concerned, in particular, strikes by air traffic controllers or airport staff, as such strikes are not within the scope of the carrier's activities and are thus beyond its actual control. A strike initiated and followed by the operating air carrier’s employees may only exceptionally constitute an “extraordinary circumstance” according to the CJEU. That is in the case that it is based on demands which only the public authorities can meet and which are therefore beyond the actual control of the air carrier concerned.

The Supreme Court found the conclusions of the CJEU case-law to be suitable for the present case. Therefore, it quashed the decisions of the lower instance courts and remanded the case. The lower courts were supposed to focus in particular on the demands of the striking employees of the defendant. Specifically, if those raised demands which only a public authority could meet, it would be the only case where the “exceptional circumstance” could be found and the defendant would not be obliged to pay compensation. On the other hand, if the demands concerned own sphere of the defendant, there is no room for “exceptional circumstances” in the meaning of Article 5(3) of the Regulation.