Home or away: Where should parties bring claims?

Compensation and assistance to passengers, in the event of denied boarding and cancellation or long delays of flights, has received much press over the last couple of years. In a recent judgment, van der Lans v KLM (Case C-257/14), the European Court of Justice (CJEU) has reaffirmed that the pendulum is not airside.

Ms van der Lans had bought a flight from ?Quinto, Ecuador, to Amsterdam, which was delayed for 29 hours due to the discovery of defective components in the plane. KLM maintained that ?the defects had arisen ‘spontaneously’ despite ?the usual routine maintenance and, as a result, ?the incident amounted to an ‘extraordinary circumstance which could not have been avoided even if all reasonable measures had been taken’. ?It followed naturally, therefore, that KLM was not liable and not required to compensate the passenger. Van der Lans sought answers from the court as to the interpretation of ‘extraordinary circumstances’.

KLM maintained that the components (an engine fuel pump and hydro-mechanical unit) ?had not exceeded their average lifetime, and that spares were not available locally in Ecuador and had to be flown out. Van der Lans relied on the matter of Wallentin-Hermann v Alitalia (Case C-549/07), where the court held that the resolution of technical problems is inherent in the exercise activity of the air carrier and therefore cannot be classified as extraordinary circumstances. However, that case also stated technical defects could qualify if, for example, the manufacturer of the aircraft indicated an aircraft might be affected by a hidden defect which impinged on safety or by acts of terrorism.

The manufacturer of the aircraft in this case had not given any such indications and the fleet (similar aircraft under the same badge) was not grounded.

The court concluded that the prevention of a breakdown or the repairs occasioned by it, including the replacement of a prematurely defective component, was not beyond the actual control of the carrier since the carrier is required to ensure the maintenance and proper functioning of the aircraft. A technical problem cannot fall within the definition of extraordinary circumstances.

The conclusion supports the move away from the airlines’ aim of introducing fault elements to the Flight Delay Compensation Regulation 2004, which was previously rejected by the home courts. Passengers can add more weight to their arguments when seeking compensation for delays, although it is suspected that airlines will continue to contest those weight limits.

Jurisdictional gateways

Applications are regularly made to serve proceedings out of the jurisdiction. One of the central requirements is for the applicant to evidence that they have a ‘good arguable case’ in seeking to bring such a claim, reflected in one of the gateways set out in practice direction 6B of the Civil Procedure Rules (CPR). This was reviewed in Brownlie v Four Seasons Holdings Inc [2015] EWCA Civ 665.

The respondent had been injured and her husband killed in a road traffic accident in Egypt while on a sightseeing excursion. They were both British citizens living in the UK. The hotel that organised the excursion was owned by a Canadian company.

The respondent brought proceedings in the UK to recover damages in contract and tort. In respect of the latter, three claims arose: for her own injuries, for her loss of dependency, and for the loss and damage suffered by her husband.

The respondent was given permission to serve proceedings on the hotel in Canada, out of the jurisdiction, on a without notice application. The company successfully applied to set aside that permission and the respondent successfully appealed that decision. The issues raised were in relation to whether the judge had erred in holding the respondent had a good arguable case that the hotel was the other party to the contract, that the contract for the excursion was made in England, and that the damage occurred in the jurisdiction.

It is well established that any application ?to serve outside the jurisdiction must satisfy three requirements: there is a real issue to be tried (low threshold), there is a good arguable case, and England is the proper place to bring the claim. In relation to the good arguable case, the test is not on the balance of probabilities (as this would be akin to undertaking a pre-trial assessment of the merits) but a lower threshold having consideration for the fact that a litigant should not be forced to defend litigation in a jurisdiction to which they ought not to be made subject. The test is often referred to as the ‘Canada Trust gloss’: ‘“Good arguable case” reflects in that context that one side has a much better argument on the material available’ (Canada Trust Co v Stolzenberg (No 2) [1998] 1 WLR 247). 

In Brownlie, the court considered that the Canada Trust gloss had been correctly applied ?and the judge was entitled to give the company’s evidence little weight; its appeal was therefore rejected. In relation to the contract issues, the ?court determined that the respondent had a good arguable case as her contract for the excursion, which the respondent had arranged over the telephone with the hotel’s concierge, had been made with the company and in England. However, with regard to the tort claims, although there was a direct cause of action in respect of the dependency claim under the Fatal Accidents Act 1976, the respondent could not show that the damage was sustained within the jurisdiction (following article 4 of Rome II, which provides that ‘the law applicable should be determined on the basis ?of where the damage occurs’), and as such any remaining tort claims would have to be brought ?in Egypt.

Practitioners are reminded that the bringing ?of foreign jurisdictional claims requires careful analysis and consideration as to the facts, their relationship, and therefore the correct forum.

England or Scotland?

In Cook v Virgin Media Ltd and others [2015] EWCA Civ 1287, the court held that when determining whether the appropriate jurisdiction for a civil claim was Scotland or England and Wales, Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters did not apply and the court could invoke the principle of forum non conveniens to determine jurisdiction.

The appellants lived in Scotland and had suffered injuries there but decided to issue and serve negligence claims against the respondents in England. The latter were companies duly registered in England and Wales. The respondents pleaded ?to the substantive claims and asserted that the Scottish courts were the correct courts to hear the claims. Nevertheless, in one of the claims, the respondent admitted liability.

The most important issue that arose on appeal was whether the doctrine of forum non conveniens can apply in a purely domestic context where the competing jurisdictions are England and Scotland – that is, does an English court have the power to strike out a claim on the grounds that the more appropriate forum is Scotland?

The appellants submitted, first, that the court had no power to do so under Regulation 44/2001; second, that even if the regulation did not apply, a parallel regime was present in UK law by virtue of the Civil Jurisdiction and Judgments Act 1982; and, lastly, that in any event the respondents had failed to seek redress by way of CPR11.

The court determined that the regulation did not apply as the proceedings were purely domestic and internal to the UK. Had the regulation applied, it was determined that articles 2 (people domiciled in a member state will be sued in the courts of that member state) and 60 (companies are naturally domiciled where there statutory seat (registered office) is based) would have precluded the operation of the doctrine in any event. 

In relation to the 1982 Act, the appellants sought to persuade the court that section 49 of the Act, which expressly preserves the doctrine in domestic cases, permitted the doctrine to be applied provided it was not inconsistent with the regulation. But its application could not be inconsistent in purely domestic cases where it did not apply. By retaining specific powers to stay, strike out, or dismiss proceedings in section 49, ?it was determined that the lawmakers had intentionally concluded that such powers ?should remain.

Finally, in relation to the CPR issue, while acknowledging that it was perhaps unfortunate to strike out a case in which the defendant had admitted liability, the court concluded there were no grounds of appeal to state that the court was outside its powers in determining to invoke those powers provided by the rules. In essence, the court had the power to make such an order. Although there was obiter discussing whether the better course of action would have been to stay the proceedings rather than strike out, that was not subject to the appeal decision.

It remains, therefore, that those who bring claims need to consider carefully where they are brought.

Dr Julian Morris is a partner at Plexus Law @Plexus_Law www.plexuslaw.co.uk