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Tuesday 5 February 2013

(Regressively) Back to the Future

It would be nice to think that the law and politics had made some progress since the time of King Charles I, but a judgement of the European Court last week makes me wonder.

During the English Civil War, a man by the name of Jane was chucked off his land by marauding Royalist forces. Not unreasonably you might think, Jane elected not to pay rent to his landlord, Paradine as a result. Paradine sued and won. There was an absolute obligation on Jane to pay.

More enlightened attitudes began to prevail in the nineteenth century as the courts began to develop the doctrine of frustration. The concept was fairly simple and is pretty much the same today as it was then: if some unforeseen event renders contractual performance impossible or so radically alters the purpose of the original contract, the contract may be set aside. It’s not easy to claim that a contract has been frustrated, and it is certainly not intended to get commercial people out of bad bargains. It exists to relieve contractual counterparties from otherwise strict obligations in extremis.

Fast forward to 2010.  For a few days in April, a volcano in Iceland erupted, spewing clouds of ash into European airspace. The authorities decided that this was jolly hazardous to aircraft and closed whole swathes of the skies to air traffic.  Flights throughout Europe were summarily cancelled on mass.  There can be no better example of a frustrating event in action you might think. It’s impossible for the airline to honour air tickets. Give the passengers their money back and no harm done. Such is life.

Not so.

For the European Union introduced regulations, EU 261 which the European Court of Justice last week, in the case of Denise McDonagh v Ryanair Ltd [2013] EUECJ c-12/11 (31 January 2013) decided meant that when ‘extradordinary circumstances’ occur resulting in the cancellation of flights, then whilst passengers are not entitled to compensation, they are entitled to expect that airlines should provide them with ‘care and assistance’ (meals, accommodation and a few phone calls) free of charge until such time as they can get back on the plane.

‘Extraordinary circumstances’ are not defined in the regulations, so the Court decided that if anything out of the ordinary occurs, then airlines have to cough up.  All this because apparently, airline passengers need, ‘a high level of protection.’  From what, it is not clear. Poor Ms McDonagh wasn’t stranded in some nasty hostile hell hole, riven by war and strife. Rather she was stuck in the Algarve. Perfectly nice in fact you might think, so much so that looking after herself whilst she was delayed in her travels was a bit on the costly side (If only she could have claimed on her travel insurance – I expect the insurance company tried to wriggle out of paying up for acts of God!). Moreover, the Court acknowledged that had she been stuck on her lounger, clutching a useless, bus, ferry or rail ticket instead of her useless air ticket, then she wouldn’t have needed such a high level of protection after all. In fact, she would have needed no level of protection, as bus, rail and ferry operators don’t have to fork out like airlines: Perhaps bus, rail and ferry passengers in future should get compensation under EU law for being stupid enough not to travel by plane.

Often when a Court is faced with applying an iniquitous law, it makes its true feelings known in the judgement, suggesting it is a matter for the authorities to sort out, regretting that the Court’s hands are tied. There is no sense of any such feelings in this case, in fact the tone is unrepentant, the Court concluding that if airlines are aggrieved, there is nothing to stop them hiking their ticket prices in future to cover their increased costs.

I’m no spokesman for Ryanair or any other carrier, but the result in this case represents everything for which the vaunted European project gets a bad name. The smug arrogance of the assumption that big business should pay for some imagined, wholly illusory injustice.  A kind of command economy socialism from a bygone era which completely misunderstands what is meant by the common good.  A bad law which will do nothing but ensure that air travel rapidly becomes once more the preserve of the rich and which is totally contrary to the real public interest.

Bruce Jones

MH Corporate

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