Matkustaja A v Finnair Oyj (C-385/23)

Contents

Judgment of the Court (Eighth Chamber)13 June 2024^note(Reference for a preliminary ruling — Air transport — Regulation (EC) No 261/2004 — Article 5(3) — Compensation for passengers in the event of long delay or cancellation of flights — Exemption from the obligation to pay compensation — Extraordinary circumstances — Technical failures caused by a hidden design defect revealed by the manufacturer after cancellation of the flight — System for measuring the quantity of fuel in the aircraft)In Case C‑385/23,REQUEST for a preliminary ruling under Article 267 TFEU from the Korkein oikeus (Supreme Court, Finland), made by decision of 22 June 2023, received at the Court on 22 June 2023, in the proceedingsMatkustaja AvFinnair Oyj,THE COURT (Eighth Chamber),composed of N. Piçarra, President of the Chamber, N. Jääskinen and M. Gavalec (Rapporteur), Judges,Advocate General: L. Medina,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:– Matkustaja A, by K. Väänänen, kuluttaja-asiamies, and J. Suurla, johtava asiantuntija,– Finnair Oyj, by T. Väätäinen, asianajaja,– the Finnish Government, by M. Pere, acting as Agent,– the Netherlands Government, by M.K. Bulterman and J.M. Hoogveld, acting as Agents,– the European Commission, by T. Simonen and N. Yerrell, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following

Judgment

1This request for a preliminary ruling concerns the interpretation of Article 5(3) of Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91 (OJ 2004 L 46, p. 1).

2The request has been made in proceedings between Matkustaja A (‘A’), a passenger, and Finnair Oyj, an air carrier, concerning the latter’s refusal to pay compensation to that passenger whose flight was cancelled.

Legal context

3Recitals 1, 14 and 15 of Regulation No 261/2004 state:(1) Action by the [European] Community in the field of air transport should aim, among other things, at ensuring a high level of protection for passengers. Moreover, full account should be taken of the requirements of consumer protection in general.…(14) As under the [Convention for the Unification of Certain Rules for International Carriage by Air, concluded in Montreal on 28 May 1999 and approved on behalf of the European Community by Council Decision 2001/539/EC of 5 April 2001 (OJ 2001 L 194, p. 38)], obligations on operating air carriers should be limited or excluded in cases where an event has been caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken. Such circumstances may, in particular, occur in cases of political instability, meteorological conditions incompatible with the operation of the flight concerned, security risks, unexpected flight safety shortcomings and strikes that affect the operation of an operating air carrier.(15) Extraordinary circumstances should be deemed to exist where the impact of an air traffic management decision in relation to a particular aircraft on a particular day gives rise to a long delay, an overnight delay, or the cancellation of one or more flights by that aircraft, even though all reasonable measures had been taken by the air carrier concerned to avoid the delays or cancellations.’

4Article 5 of that regulation, headed ‘Cancellation’, provides:1.In case of cancellation of a flight, the passengers concerned shall:…(c) have the right to compensation by the operating air carrier in accordance with Article 7, unless:(i) they are informed of the cancellation at least two weeks before the scheduled time of departure; or(ii) they are informed of the cancellation between two weeks and seven days before the scheduled time of departure and are offered re-routing, allowing them to depart no more than two hours before the scheduled time of departure and to reach their final destination less than four hours after the scheduled time of arrival; or(iii) they are informed of the cancellation less than seven days before the scheduled time of departure and are offered re-routing, allowing them to depart no more than one hour before the scheduled time of departure and to reach their final destination less than two hours after the scheduled time of arrival.…3. An operating air carrier shall not be obliged to pay compensation in accordance with Article 7, if it can prove that the cancellation is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.…’

5Article 7 of Regulation No 261/2004, headed ‘Right to compensation’, provides, in paragraph 1:‘Where reference is made to this Article, passengers shall receive compensation amounting to:(a) EUR 250 for all flights of 1500 kilometres or less;(b) EUR 400 for all intra-Community flights of more than 1500 kilometres, and for all other flights between 1500 and 3500 kilometres;(c) EUR 600 for all flights not falling under (a) or (b).…’

The dispute in the main proceedings and the questions referred for a preliminary ruling

6A booked a flight with Finnair from Helsinki (Finland) to Bangkok (Thailand) scheduled for 25 March 2016. That flight was to be operated by an aircraft which had entered into service a little over five months earlier.

7The fuel gauge of that aircraft experienced a technical failure during refuelling shortly before take-off. Taking the view that that failure fundamentally impinged on flight safety, Finnair cancelled the scheduled flight and, as the referring court explains, did not operate the flight until the following day, namely 26 March 2016, using a back-up aircraft. That flight reached its destination some 20 hours late.

8Since the model of the aircraft initially earmarked for the flight was a recent one, the defect in question, which had not occurred before anywhere in the world, was unknown prior to that failure. Consequently, neither the aircraft manufacturer nor the aviation safety authority was aware of the defect prior to that incident and they had therefore been unable to report it.

9Finnair immediately launched an investigation into the cause of the failure affecting the fuel gauge. Approximately 24 hours later, the failure was overcome by emptying the fuel tank and refilling it. The aircraft was then fit to fly again.

10Subsequent, more detailed investigations carried out by the manufacturer of the aircraft in question revealed that the failure was due to a hidden design defect affecting all aircraft of the same type.

11In anticipation of the software update which definitively rectified the failure in February 2017, those aircraft nevertheless continued to fly.

12As a result of Finnair’s refusal to pay A the sum of EUR 600 in respect of the flat-rate compensation provided for in Article 5(1)(c) and Article 7(1)(c) of Regulation No 261/2004, A brought an action before the käräjäoikeus (District Court, Finland). Finnair claimed that the failure at issue constituted an ‘extraordinary circumstance’ within the meaning of Article 5(3) of that regulation and that it had taken all the measures which could reasonably be expected of it.

13That court upheld A’s action, finding that the failure at issue in the main proceedings was indeed due to a design defect which was difficult to predict, but that that failure was inherent in the normal exercise of the activity of an air carrier. The mere fact that the aircraft manufacturer had not given Finnair instructions on how to react in the event of such a failure affecting a new type of aircraft did not make the event in question an exceptional one.

14Finnair brought an appeal against the judgment of the käräjäoikeus (District Court) before the hovioikeus (Court of Appeal, Finland). That court held that the failure affecting the fuel gauge had to be regarded as an ‘extraordinary circumstance’, since it was not inherent in the normal exercise of Finnair’s activity and since, by its nature or origin, it was beyond Finnair’s actual control.

15A brought an appeal before the Korkein oikeus (Supreme Court, Finland), which is the referring court.

16That court wonders whether a technical failure such as that at issue in the main proceedings which affects a new aircraft constitutes an ‘extraordinary circumstance’ within the meaning of Article 5(3) of Regulation No 261/2004.

17More specifically, it has doubts as to whether a technical failure which impinges on flight safety and which is recognised by the manufacturer as having been caused by a hidden design defect affecting all aircraft of the same type, only after the cancellation of the flight, constitutes an event of external origin, within the meaning of the judgment of 7 July 2022, SATA International – Azores Airlines (Failure of the refuelling system) (C‑308/21, EU:C:2022:533), and, therefore, an ‘extraordinary circumstance’ within the meaning of Article 5(3) of that regulation.

18If not, the referring court enquires whether the case-law of the Court relating to the premature failure of certain technical parts can be applied to a hidden design defect which becomes apparent for the first time in a new type of aircraft. It is not unusual for a new aircraft model to have hidden defects during the initial phase of its entry into service.

19In those circumstances, the Korkein oikeus (Supreme Court) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:(1) Can an air carrier rely on extraordinary circumstances within the meaning of Article 5(3) of Regulation No 261/2004 on the sole ground that the aircraft manufacturer discovered the existence of a hidden design defect detrimental to flight safety and affecting the entire aircraft type, even though that discovery was not made until after the flight was delayed and cancelled?(2) If the first question is answered in the negative, and it falls to be examined whether the circumstances in question are the result of events which are inherent in the normal exercise of the activity of the air carrier concerned and are not beyond the actual control of that carrier on account of their nature or origin, is the case-law of the Court of Justice of the European Union on the premature failure of certain technical parts of an aircraft applicable in a case such as that here, in which, at the time when the flight was cancelled, neither the manufacturer nor the air carrier knew the nature of the defect in the new aircraft type at issue or how it could be rectified?’

Consideration of the questions referred

20By its two questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 5(3) of Regulation No 261/2004 must be interpreted as meaning that the occurrence of an unexpected and unprecedented technical failure affecting a new aircraft model recently put into service which results in the air carrier cancelling a flight is covered by the concept of ‘extraordinary circumstances’, within the meaning of that provision, where the manufacturer of that aircraft recognises, after the cancellation of that flight, that that failure was caused by a hidden design defect concerning all aircraft of the same type and impinging on flight safety.

21It should be recalled at the outset that, where a flight is cancelled, Article 5(1) of that regulation provides that the passengers concerned have the right to compensation from the operating air carrier, in accordance with Article 7(1) thereof, unless they have been informed of the cancellation beforehand within the deadlines laid down in Article 5(1).

22Article 5(3) of that regulation, read in the light of recitals 14 and 15 thereof, releases an air carrier from that obligation to pay compensation if the carrier can prove that the cancellation is caused by ‘extraordinary circumstances’ which could not have been avoided even if all reasonable measures had been taken and, where such circumstances do arise, that it adopted measures appropriate to the situation, deploying all its resources in terms of staff or equipment and the financial means at its disposal, in order to prevent that situation from resulting in the cancellation or long delay of the flight in question (see, to that effect, judgment of 23 March 2021, Airhelp, C‑28/20, EU:C:2021:226, paragraph 22 and the case-law cited).

23Since Article 5(3) constitutes a derogation from the principle that passengers are entitled to compensation, and given the objective pursued by Regulation No 261/2004, which is, as is apparent from recital 1 thereof, to ensure a high level of protection for passengers, the concept of ‘extraordinary circumstances’ within the meaning of Article 5(3) must be strictly interpreted (see, to that effect, judgment of 17 April 2018, Krüsemann and Others, C‑195/17, C‑197/17 to C‑203/17, C‑226/17, C‑228/17, C‑254/17, C‑274/17, C‑275/17, C‑278/17 to C‑286/17 and C‑290/17 to C‑292/17, EU:C:2018:258, paragraph 36 and the case-law cited).

24In that regard, it should be borne in mind that the concept of ‘extraordinary circumstances’ within the meaning of Article 5(3) of Regulation No 261/2004 refers to events which, by their nature or origin, are not inherent in the normal exercise of the activity of the air carrier concerned and are beyond that carrier’s actual control; those two conditions are cumulative and their fulfilment must be assessed on a case-by-case basis (see, to that effect, judgment of 23 March 2021, Airhelp, C‑28/20, EU:C:2021:226, paragraph 23 and the case-law cited).

25Thus, unless the two cumulative conditions referred to in the preceding paragraph are met, technical failures do not constitute in themselves ‘extraordinary circumstances’ within the meaning of Article 5(3) of Regulation No 261/2004 (see, to that effect, judgments of 22 December 2008, Wallentin-Hermann, C‑549/07, EU:C:2008:771, paragraph 25, and of 12 March 2020, Finnair, C‑832/18, EU:C:2020:204, paragraph 39).

26It is in that context that it is necessary to assess whether an unexpected and unprecedented technical failure affecting a new aircraft model recently put into service, which is shown, after the cancellation of a flight, to have been caused by a hidden design defect concerning all aircraft of the same type and impinging on flight safety, is capable of constituting an ‘extraordinary circumstance’ within the meaning of Article 5(3) of Regulation No 261/2004.

27In the first place, it must be determined whether a technical failure displaying the characteristics mentioned in the preceding paragraph is capable of constituting, by its nature or origin, an event which is not inherent in the normal exercise of the activity of the air carrier.

28In that regard, the Court has held that, in the light of the specific conditions in which carriage by air takes place and the degree of technological sophistication of aircraft, since the functioning of aircraft inevitably gives rise to technical problems, breakdowns or the premature and unexpected failure of certain aircraft parts, air carriers are confronted as a matter of course in the exercise of their activity with such problems (see, to that effect, judgment of 4 April 2019, Germanwings, C‑501/17, EU:C:2019:288, paragraph 22 and the case-law cited).

29It follows therefrom that the resolution of a technical problem caused by a breakdown, a failure to maintain an aircraft or the premature and unexpected failure of certain aircraft parts is considered to be inherent in the normal exercise of the activity of the air carrier (see, to that effect, judgments of 22 December 2008, Wallentin-Hermann, C‑549/07, EU:C:2008:771, paragraph 25; of 17 September 2015, van der Lans, C‑257/14, EU:C:2015:618, paragraphs 41 and 42; and of 12 March 2020, Finnair, C‑832/18, EU:C:2020:204, paragraph 41).

30However, technical failures in a situation in which the manufacturer of the aircraft comprising the fleet of the air carrier concerned, or a competent authority, reveals, after those aircraft entered into service, that the aircraft are affected by a hidden manufacturing defect impinging on flight safety, are not inherent in the normal exercise of the activity of the air carrier and, therefore, are capable of falling within the concept of ‘extraordinary circumstances’ (see, to that effect, judgments of 22 December 2008, Wallentin-Hermann, C‑549/07, EU:C:2008:771, paragraph 26, and of 17 September 2015, van der Lans, C‑257/14, EU:C:2015:618, paragraph 38).

31In the present case, as is apparent from the order for reference, it has been established that the technical failure was caused by a hidden design defect concerning all aircraft of the same type and impinging on flight safety, with the result that it must be held that that event is not, in accordance with the case-law cited in the preceding paragraph, inherent in the normal exercise of the activity of the air carrier.

32In the second place, it is necessary to decide whether a technical failure displaying the characteristics referred to in paragraph 26 above must be regarded as constituting an event entirely beyond the actual control of the air carrier concerned, that is to say, an event over which the air carrier has no control (see, to that effect, judgment of 23 March 2021, Airhelp, C‑28/20, EU:C:2021:226, paragraph 36).

33It is true that, as a matter of principle, technical failures or breakdowns are not beyond the actual control of the air carrier, since their prevention or repair are part of the responsibility that falls on that air carrier to ensure the maintenance and proper functioning of the aircraft it operates for business purposes (judgment of 17 September 2015, van der Lans, C‑257/14, EU:C:2015:618, paragraph 43). However, the situation is different in the case of a hidden defect in the design of an aircraft.

34First, although it is for the air carrier to ensure the maintenance and proper functioning of the aircraft it operates for business purposes, it is questionable whether, where a hidden design defect is revealed by the manufacturer of the aircraft in question or by the competent authority only after the cancellation of a flight, it actually falls within the remit of that carrier to identify and correct that defect, with the result that the carrier cannot be considered to exercise control over the occurrence of such a defect.

35Secondly, it is apparent from the case-law of the Court relating to the concept of ‘extraordinary circumstances’ within the meaning of Article 5(3) of Regulation No 261/2004 that events whose origin is ‘internal’ must be distinguished from those whose origin is ‘external’ to the air carrier, and only the latter are capable of falling outside the actual control of that carrier. The concept of ‘events of external origin’ encompasses events which result from the activity of the air carrier and from external circumstances which are more or less frequent in practice but which the air carrier does not control because they arise from an act of a third party, such as another air carrier or a public or private operator interfering with flight or airport activity (judgment of 7 July 2022, SATA International – Azores Airlines (Failure of the refuelling system), C‑308/21, EU:C:2022:533, paragraph 25 and the case-law cited).

36It is therefore necessary in the present case to determine whether the notification or recognition by the manufacturer, after the air carrier’s decision to cancel a flight, of the existence of a hidden design defect which affects an aircraft and is liable to impinge on flight safety is capable of constituting an act of a third party which interferes with the carrier’s air activity and, therefore, of constituting an event of external origin.

37In that regard, it should be noted that it does not follow from the case-law cited in paragraphs 30 and 35 above that the Court makes the classification of a hidden design defect as an ‘extraordinary circumstance’ subject to the condition that the aircraft manufacturer or the competent authority must have revealed the existence of that defect before the technical failure caused by that defect occurred. The point in time at which the link between the technical failure and the hidden design defect is revealed by the aircraft manufacturer or the competent authority is irrelevant, since that defect existed at the time of the cancellation of the flight and the carrier had no means of control to correct it.

38The classification of a situation such as that at issue in the main proceedings as an ‘extraordinary circumstance’ within the meaning of Article 5(3) of Regulation No 261/2004 is consistent with the objective of ensuring a high level of protection for air passengers pursued by that regulation, as recital 1 thereof makes clear. That objective means that air carriers must not be encouraged to refrain from taking the measures necessitated by such an incident by prioritising the maintaining of punctuality of their flights over the objective of safety (see, by analogy, judgments of 4 May 2017, Pešková and Peška, C‑315/15, EU:C:2017:342, paragraph 25, and of 4 April 2019, Germanwings, C‑501/17, EU:C:2019:288, paragraph 28).

39In the light of the foregoing, the answer to the questions referred is that Article 5(3) of Regulation No 261/2004 must be interpreted as meaning that the occurrence of an unexpected and unprecedented technical failure affecting a new aircraft model recently put into service which results in the air carrier cancelling a flight is covered by the concept of ‘extraordinary circumstances’, within the meaning of that provision, where the manufacturer of that aircraft recognises, after that cancellation, that that failure was caused by a hidden design defect concerning all aircraft of the same type and impinging on flight safety.

Costs

40Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (Eighth Chamber) hereby rules: Article 5(3) of Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91,must be interpreted as meaning that the occurrence of an unexpected and unprecedented technical failure affecting a new aircraft model recently put into service which results in the air carrier cancelling a flight is covered by the concept of ‘extraordinary circumstances’, within the meaning of that provision, where the manufacturer of that aircraft recognises, after that cancellation, that that failure was caused by a hidden design defect concerning all aircraft of the same type and impinging on flight safety.