LITIGATION CASE UPDATE - Accrued EU law rights clarified in BA case

The Legal facts

• Mr. and Mrs. Lipton's flight from Milan to London on 30 January 2018 was cancelled due to the captain's illness shortly before departure.

• They claimed compensation under Regulation 261/2004, but the airline (Cityflyer) refused, citing extraordinary circumstances.

• The UK left the EU on 31 January 2020, followed by an implementation period ending on 31 December 2020 (IP completion day).

• Cityflyer argued that the captain's illness constituted an extraordinary circumstance, relying on cases concerning external events like bird strikes and runway closures.

• The Liptons argued that staff illness is inherent in an airline's operations and not extraordinary, relying on cases concerning mechanical defects.

• On the applicable law post-Brexit, Cityflyer favoured the "Complete Code" analysis treating accrued EU rights as "retained EU law," while the Liptons favoured the "Interpretation Act" an alysis preserving accrued EU rights separately

The ruling:

• A captain's illness that causes a flight cancellation does not constitute an "extraordinary circumstance" under Article 5(3) of Regulation 261/2004, as it is inherent in the normal activity of an air carrier and within its control.

• Accrued causes of action under EU law prior to Brexit are preserved as "retained EU law" under the European Union (Withdrawal) Act 2018, and continue to be enforceable post-Brexit.

• The Supreme Court dismissed Cityflyer's appeal, holding that:

  • The captain's illness did not constitute an "extraordinary circumstance" under Regulation 261, so Cityflyer could not rely on that defence against the Liptons' compensation claim. This a strict interpretation of Article 5(3) in light of the purpose of ensuring a high level of consumer protection. It found that staff illness is inherent in an airline's normal activities and within its control, so cannot be extraordinary.

  • The Liptons' accrued cause of action under Regulation 261 prior to Brexit formed part of "retained EU law" under the EU (Withdrawal) Act 2018, rather than being preserved separately under the Interpretation Act 1978.

• On the applicable law, the Court preferred the "Complete Code" analysis, finding that the EU (Withdrawal) Act 2018 transposed accrued EU rights into "retained EU law" to avoid legal uncertainty. This allowed the Court to interpret such rights under the Act's provisions on the status of CJEU case law.

So what does this outcome mean?

The Court held that the Court of Appeal was wrong to apply the Regulation as amended in 2019 to the claim because it ignored the basic principle of the rule of law that the applicable law is that which is in force at the time an event occurs and therefore, the amended Regulation was not intended to apply to facts which arose before it came into force.