Beiträge

Legal fees and no-reply email addresses

Many questions of our airline clients concern legal fees demanded by passengers and under what circumstances these fees must be paid. Especially when letters of notice are sent to no-reply email addresses and subsequently lawsuits are filed, there are often uncertainties. The aim of today´s article is to briefly illustrate the Austrian system concerning the reimbursement of legal fees and to answer the question if legal fees must be paid when a letter of notice has merely been sent to a no-reply email address.

Airlines are often confronted by letters of notice sent by a lawyer with which not only a ticket reimbursement or compensation payment is demanded, but also legal fees for the lawyer´s work. Such legal fees must only be paid if the involvement of a lawyer was necessary for the passenger. This is the case if, e.g., the passenger already contacted the airline himself, but the airline refused to pay the demanded amount or did not react to the passenger´s query. Additionally, according to court practice, it can be necessary to involve a lawyer if the airline fails to inform the passenger about his rights granted by the Regulation 261/2004 (in violation of Article 14 of this regulation).

In Austrian court proceedings, the prevailing party is entitled to receive a reimbursement of its legal fees by the opponent (in case of a partial victory: on a pro rata basis). These legal fees are calculated in accordance with the Lawyers Tariffs Act (Rechtsanwaltstarifgesetz), regardless of any possible separate agreement between lawyer and client regarding the remuneration.

However, also these legal fees are only reimbursed if the respective actions (e.g., filing a lawsuit) have been necessary. If the passenger (or his lawyer) did not contact the airline before filing a lawsuit, the airline can refuse to pay his legal fees and even demand reimbursement for its own legal fees if it acknowledges and pays the passenger´s claim at the first moment possible.

The Commercial Court Vienna had to deal with a case in which the passenger did not contact the airline first and his lawyer sent a letter of notice only to a no-reply email address used by the airline. The lawyer ignored the standardized reply email that asked him to use another email address for his query and filed a lawsuit. Subsequently, the airline acknowledged and paid the claim without undue delay, refused to pay the passenger´s legal fees and demanded reimbursement for its own legal fees. The Commercial Court Vienna decided in the airline´s favor (case number: 60 R 42/21p).

The breakdown of an airport´s refueling system constitutes extraordinary circumstances

On 7 July 2022, the European Court of Justice (ECJ) decided that the breakdown of an airport´s refueling system constitutes extraordinary circumstances within the meaning of Article 5 (3) of Regulation 261/2004 (case C-308/21).

In its reasoning, the ECJ once more pointed out the criteria it regards relevant when it comes to extraordinary circumstances: the events that occurred must not be inherent in the normal exercise of the activity of the air carrier concerned and they must be beyond the air carrier´s actual control.

Regarding the first criterion, the ECJ stated that, in principle, refueling operations fall within the scope of the normal exercise of an air carrier´s activity and that, therefore, a technical issue arising during the refueling would not be suitable to constitute extraordinary circumstances. However, a general failure in the refueling system managed by the airport must be treated differently than a technical issue that, by its nature, is only confined to a single aircraft. Therefore, the ECJ came to the conclusion that such general failures of the refueling system are not inherent in the normal exercise of the activity of the air carrier concerned.

Regarding the second criterion, the ECJ once again highlighted the importance of the distinction between “internal” and “external” events, whereas only “external” events are regarded to be beyond the air carrier´s actual control. Therefore, if the refueling system at an airport is managed by this airport or a third party, a general breakdown of this system is regarded to be beyond the air carrier´s control.

Since both criteria of extraordinary circumstances are met, the ECJ decided that the general breakdown of an airport´s refueling system constitutes extraordinary circumstances. Therefore, the respective air carrier is not obliged to pay compensation to the passengers, provided that all reasonable measures were taken.

Strikes because of an authority´s decision constitute extraordinary circumstances

On 30 June 2022, the district court Schwechat ruled in three cases we are handling for a client that strikes of the ground handling staff are extraordinary if the reason for such strikes is an authority´s decision. The court argues that such strikes that are based on demands that can only be fulfilled by authorities (and not the airline itself) are beyond the airline´s control.

These rulings are in line with the ECJ´s ruling C-28/20, in which the ECJ mentioned: “If, however, such a strike originates from demands which only the public authorities can satisfy and which, accordingly, are beyond the actual control of the air carrier concerned, it is capable of constituting an ‘extraordinary circumstance’ […]”

Therefore, airlines are not obliged to pay compensation (Art 7 of Reg 261/2004) if flights are cancelled or significantly delayed due to such strikes, provided that all reasonable measures in connection therewith are taken.

The relevance of stopovers in connection with the Regulation 261/2004

In February 2022, the European Court of Justice (ECJ) rendered two decisions regarding the relevance of stopovers in connection with jurisdiction (C-20/21) and the scope of the Regulation 261/2004 (C‑451/20).

In case C-20/21, a passenger booked a flight from Warsaw to Male with a stopover in Frankfurt (single booking). The first flight leg (from Warsaw to Frankfurt) was delayed and, therefore, the passenger missed the second flight leg (from Frankfurt to Male). Subsequently, the passenger sued the airline in Frankfurt.

The ECJ ruled that the court in Frankfurt has no jurisdiction, because due to Frankfurt merely being a stopover, it must not be regarded as “place of performance” which would be necessary to establish jurisdiction.

In case C-451/20, a passenger booked a flight from Chişinău (Moldova) to Bangkok with a stopover in Vienna (single booking). The first flight leg (from Chişinău to Vienna) was cancelled less than seven days prior to the scheduled departure and the passenger was rebooked to fly from Chişinău to Bangkok with a stopover in Istanbul. The passenger then sued the airline in Schwechat (competent court for Vienna airport).

The ECJ ruled that the Regulation 261/2004 is not applicable in this case since both the place of departure and the place of arrival are located outside the European Union. The fact that the planned stopover in Vienna is located inside the European Union does not lead to this case falling within the Regulation´s scope.

On a side note: in case C-559/16 the ECJ already clarified that the distance mentioned in Article 7 (1) of the Regulation 261/2004 relates to the distance calculated between the first point of departure and the final destination. Therefore, also in this regard stopovers are not of relevance according to the ECJ.

New place of jurisdiction for passenger claims in Austria

As of May 1st, 2022, Austrian law provides for a new place of jurisdiction for passenger claims based on Regulation 261/2004. According to the new provision, a passenger may choose to initiate proceedings before the court in whose jurisdiction the respective flight´s place of arrival or place of departure is located.

This new provision is applicable in cases in which Brussels I Regulation (recast) does not apply (i.e., when the air carrier is located outside the EU) and aims to provide for an equal treatment of such air carriers and those located in a member state of the EU. Until now, passengers were in many cases not able to initiate proceedings against an air carrier located outside the EU, unless the Austrian Supreme Court decided that initiating proceedings where the air carrier is located would be an unreasonable burden for the respective passenger.

What changes of a scheduled departure time qualify as cancellation?

On 21 December 2021 the European Court of Justice (ECJ) rendered two decisions regarding the question whether certain changes of a scheduled departure time qualify as cancellation within the meaning of Article 5 of Regulation 261/2004.

In case C-395/20, a flight from Düsseldorf to Antalya that was initially scheduled to depart at 13:20 was postponed to depart at 16:10. The ECJ decided that because the departure time was postponed by less than three hours, the flight must not be regarded as being cancelled.

In case C-263/20, a flight from Palma de Mallorca to Vienna that was initially scheduled to depart at 14:40 was brought forward to depart at 08:25. The ECJ decided that because the departure time was brought forward by more than one hour, the flight must be regarded as being cancelled (leading to the consequences stipulated in Articles 7, 8 and 9 of Regulation 261/2004).

On a side note: in this case the ECJ also stated that it is not sufficient for an airline to merely inform the intermediary through which a flight was booked about the changes of the scheduled departure time two weeks in advance to comply with Article 5 (1) (c) (i) of Regulation 261/2004 and to avoid being obliged to pay a compensation – even if the passenger´s contact details were not disclosed to the airline.

Compensation payments must be deducted from immaterial and material damages

In one of its rare rulings regarding the Regulation 261/2004, the Austrian Supreme Court decided in the case 4 Ob 177/21i that compensation payments an airline paid to a passenger in accordance with Article 7 of the regulation must be deducted from further claims for immaterial and material damages asserted by the passenger.

While the regulation sets forth certain passenger rights (Art 7: compensation, Art 8: reimbursement or re-routing, Art 9: care), other claims a passenger may assert (e.g. damages for a hotel booking or a rental car that he could not use) must be based on national law.

In the case at hand, the passenger claimed that the compensation payment aims only to reimburse him for the inconveniences linked to a denied boarding/cancellation/long delay and, therefore, must only be deducted from immaterial damages. However, the Austrian Supreme Court clarified that in such cases the compensation payment must also be deducted from material damages like expenses for a hotel booking or a rental car.

Payments to the credit card account used for the ticket purchase are not sufficient

The regional court Korneuburg decided in the cases 22 R 171/21h, 22 R 196/21k and 22 R 210/21v that while Article 7 (3) of Regulation 261/2004 does not generally prevent payments to be made to credit card accounts used by passengers, it must be assessed in accordance with applicable national law whether such payments relieve an airline from its obligation to pay.

If Austrian law applies, it is not sufficient if an airline pays the amount in dispute (i.e., mainly a ticket refund or a compensation payment) to the credit card account a passenger used to pay for his/her tickets. The regional court argued that only payments made to an account the passenger disclosed vis a vis the airline for refund purposes are regarded sufficient to relieve the airline from its obligation to pay.

These rulings especially have an impact on cases in which it is uncertain whether a passenger already received a payment or when exactly he/she received the payment. To comply with these rulings, it would be advisable to either have passengers specify the account they demand a payment to be made to during the refund application process or to contact the specific passenger before issuing a payment.

airline, aviation, passenger claims

What we do: Passenger Claims

For several years now, we have been assisting our clients in handling claims related to Regulation (EC) 261/2004, better known as “Passenger Claims”. With our many long-established connections to the aviation sector, we specialize in providing first-class support to our airline partners.

Which cases are we mostly handling?

Normally, passenger claims are mainly for compensation under Article 7 of Regulation 261/2004. However, in the wake of the Covid-19 pandemic and the resulting massive increase of flight cancellations, the number of ticket refunds cases increased substantially. This being said, we represent airlines in connection with other claims, too, such as passenger claims for damages under the Montreal regime and claims arising from the provisions of Austrian law.

What is challenging about passenger claims?

Although the claimed amounts are usually rather low, the complexity of the cases and the effort required of airlines defending them is often quite substantial. While it is often difficult to explain the very specific procedures and terms (e.g. Oplogs) to the courts, it is necessary to do so, in order to convince judges that the airline took all reasonable measures to avoid cancellation or delay. Recently, we’re observing a trend among Austrian judges – undoubtedly encouraged by the rather strict preliminary rulings of the ECJ – to demand increasingly detailed explanations of the extraordinary circumstances and, above all, of the reasonable measures taken by the airline in each case.

As legal representatives of airlines, our task is to identify missing information and to try to obtain it not only from our clients, but also through our own active research of the METAR and flight data, for example. In addition to that, we of course continuously monitor the newest developments of the case law in the area of Passenger Claims and constantly improve our argumentation.

How do we cooperate with our clients?

Bearing in mind the special challenges posed by Passenger Claims, we usually offer a customized fee agreement for each client. Such agreements may cover all Passenger Claims (for a monthly lump sum) or be limited to handling individual cases (for a lump sum per case). Lastly, some clients choose to request our advice on individual issues on the basis of an hourly rate.

Especially at the beginning of the cooperation with a new client, we make sure to determine which claim handling procedure would be most suitable and efficient for the client and we are also happy to organize workshops for our clients’ claim handling team. This is because a well-trained team and optimized processes are the basis of successful and efficient claim handling.

Based on our cooperation in the area of Passenger Claims, our clients also regularly seek our assistance in other areas as well, including baggage and cargo claims, aircraft damage, matters of labor law as well as residence and work permits. We offer customized fee agreements also with regard to these issues.

What are the chances of succeeding from the airlines‘ point of view?

As an airline, you are always fighting an „uphill battle“ when it comes to Passenger Claims. For this reason, we recommend fighting only in those cases where it is really worth your while – not least in order to create as many positive precedents as possible and to avoid creating negative precedents in Austria.

If – based on the available evidence – a case must be classified as “weak”, reacting too slowly or incorrectly will only cause unnecessary costs, which often exceed the claimed compensation itself. With an experienced and agile legal team at your side, such costs can easily be avoided.

How do we efficiently handle “mass claims”?

Our experience shows that a combination of speed, flexibility and know-how is essential, especially when it comes to Passenger Claims. It is often necessary to decide very quickly how to proceed in a large number of cases. Quickly handling these cases is especially crucial in order to avoid unnecessary legal proceedings and the costs associated with them.

In order to be able to handle the cases in a high-quality and yet efficient manner, you need a specialized and well-coordinated team. At Weisenheimer, we rely on a young and very committed team with established and well-proven procedures, who make sure to keep constant and close contact with our clients‘ claim handling teams. Lawyers and paralegals work closely together and use automated processes in order to handle cases as efficiently as possible, not unlike many claim agencies such as Flightright and Fairplane. Of course, with the difference that the representation of airlines is associated with significantly more effort compared to the representation of passengers.

Our Passenger Claims team is supervised and supported by Weisenheimer partner Martina Flitsch, who has been following the development of Passenger Claims for more than 25 years, first as in-house counsel and later as head of the legal department of an airline and subsequently as an attorney. Based on her long experience, Martina is very familiar with the airlines´ needs and thus can ensure that the cooperation between our team and the airline meets the highest standards.

 

The Aviation Team of Weisenheimer Legal

aviation, Weisenheimer legal, team, passenger claims