Since 2012 there has been a steady increase of claims against airlines in respect of delayed or cancelled flights. Airlines have tried to limit their exposure to claims as in many cases the amount claimed can exceed the actual cost of the flight ticket. COVID has made the question of claims a serios issue for the airlines as there will be outstanding claims which need to be settled when airlines income is seriously reduced.
One of the major defences that is used by the airlines was to include in their terms and conditions a clause restricting the jurisdiction of any claim to the courts of the country where the airline is based. There have been several cases regarding this type of clause, and it is settled law as to when and how this type of clause could be binding on both parties. The European Court of Justice has held that it is for the local courts to establish the question of jurisdiction.
For several reasons over time flight claim companies have been wrestling with the issue of the best way to assist their clients in recoveries and how to minimise their clients costs at the same time maximising their profit.
In several countries flight claim companies have a power of attorney to act for the passenger and thereby enforcing the claim. However, in several jurisdictions enforcing the claim with a power of attorney has raised issues particularly where a court action is necessary to enforce the claim. If an action is brought in the name of the passenger then there is an issue as to who receives the monies, usually the passenger, and then the flight claim company can have issues in respect of recovering its fees. Furthermore, in some jurisdictions it is not permitted for a third-party agent to instruct lawyers or other agents to collect these monies.
The current solution has been for the flight claim company to take an assignment of the claim thereby ensuring in any court action the flight claim company is the claimant. This has led to several airlines to argue that the flight claim company is bound by the terms and conditions including jurisdiction and not by the terms and conditions that might be imposed by any consumer protection law. If this argument was successful, then the airlines could have required all cases be brought in their home jurisdictions. This has been disputed in several cases throughout Europe. The court considered the matter in detail based on the contract between the airline and the passenger; the ability of the parties to negotiate the terms of the contract and on their own laws.
A recent case before the European Court of Justice brought against Ryanair has clarified the position further. The court held in this case that where it was established that the jurisdiction clause was not binding on the passenger because of the provisions of previous cases or local law, then those provisions which restricted the jurisdiction to the courts of airline, where not binding on an assignee of the claim and therefore a claim could be brought in another jurisdiction. Whilst this case is in respect of a Polish claim it does allow the flight claim companies to choose another jurisdiction other than that of the airline if local case law or practise allow it. This will allow them within the present interpretation of the rules to choose the jurisdiction which is more suitable to the claim both in respect of time, cost and the courts treatment of such type of claim.
We do not see this as a major change in the current position as currently many courts have held a clause limiting jurisdiction to be unenforceable, but it does clarify the position of a flight claim company who takes an assignment of a claim so that it can take advantage of local court decisions regarding jurisdiction. As in many cases arguments have been raised in respect of protecting the consumer, and local courts have lent in favour of the consumer. In such cases then the flight claim companies will be able to take advantage of these provisions protecting the consumer.