2. Miss Thea Gahan had booked with Emirates to travel from Manchester to Dubai (the first leg) and then from Dubai to Bangkok (the second leg). Her first leg was delayed so that she arrived in Dubai 3 hours and 56 minutes late, missing her connecting flight, and finally arrived in Bangkok 13 hours and 37 minutes late. At first instance, she was awarded compensation under Article 7 of the Regulation in respect of the first leg but the second leg was discounted, meaning Miss Gahan only recovered €300 and not €600. Miss Gahan appealed on the basis that her final destination was Bangkok, at which she arrived more than 3 hours late, and therefore she was entitled to recover €600.

3.In the second of the joined cases, the Buckley family had booked with Emirates to travel from Manchester to Sydney via Dubai. Their first leg was delayed by 2 hours 4 minutes so that their second leg was automatically rebooked and they arrived in Sydney a further 16 hours and 39 minutes late. In contrast to Miss Gahan, the Buckleys were successful at first instance and Emirates appealed.

4. The Court of Appeal had to consider:
(1) whether compensation for the second leg of the journey in each case was awardable under Regulation (EC) No 261/2004 (“the Regulation”); and
(2) as a result of arguments made by Emirates, whether there was jurisdiction under the Regulation itself; and
(3) if so, whether it was excluded by the Montreal Convention. Section 19 of the Montreal Convention, of which the EU and UK are signatories, limits liability for damage caused by delay [20] – [24].

Connecting flights and delay

5. The Court of Appeal allowed Miss Gahan’s appeal and dismissed Emirate’s so that compensation was available for both legs in both cases. The Court started with the basic proposition that:
‘… where a carrier provides a passenger with more than one flight to enable him to arrive at his destination, the flights are taken together for the purpose of assessing whether there has been three hours or more delay.’ [73]

6. Accordingly, what counted was the delay in a passenger reaching their final destination. This was based on EU jurisprudence from Sturgeon v Condor Flugdienst GmbH [2009] ECR 1-10923 (C-402/07 and C-432/07), and from Air France SA v Folkerts [2013] (C-11/11), in both of which the Court of Justice for the European Union (“CJEU”) held that compensation under Article 7 of the Regulation was to be quantified by reference to the delay in arriving at the passengers’ final destination. In the case of directly connecting flights, a passenger’s final destination was the destination of the last flight (Article 2(h)).

11. As an alternative submission, Emirates had argued that there was no jurisdiction to award compensation under the Regulation, since the Montreal Convention took precedence.

12. The Court made two preliminary points before deciding the issue:

a. As stated in Council Decision 2001/539: (1) the EU exercises competence to regulate the activity of carrier’s activities within the EU, including those of non-Community carriers; whereas (2) the UK has competence in relation to non-Community carriers outside the EU [83].

b. The Montreal Convention is not a pre-accession treaty to which Article 351 TFEU applies. It was ratified after the UK joined the EU. The relevance of this was questionable given the principle that Member State institutions should not act to prevent or hinder the performance by the EU of its international obligations [83].

13. Following Dawson v Thomson Airways Ltd [2015] WLR 883, the Court noted that:

‘… the jurisprudence of the CJEU as to the meaning of [the] Regulation … is binding on this Court even though it conflicts with jurisprudence of the Supreme Court and House of Lords.’ [86]

14. Although it was true that Dawson concerned a Community carrier, the principle was the same:

‘… a point of international law decided by the CJEU was binding on the national court if it was a necessary step in reaching a conclusion as to the meaning of an EU regulation.’ [86]

15. The Court found that it was bound by Lord Toulson’s findings at paragraphs 59 and 66 of Stott v Thomas Cook Tour Operators Ltd [2014] AC 1347 that any issue as to the compatibility of the Regulation with the Montreal Convention had to be determined in accordance with EU law [60]. That meant the Court was similarly bound by Nelson v Deutsche Lufthansa AG [2012] (C-581/10) in which the CJEU had held that there was no overlap in scope between the Montreal Convention and the Regulation since the damage dealt with under each was different. The former provided for individual damage to be proved on a case-by-case basis. The latter dealt with fixed compensation for inconvenience which was identical for all passengers on a given flight [31]-[32].

16. Despite rejecting Emirates’ and IATA’s arguments, the Court expressed concern that the CJEU had decided in Nelson the meaning of damage for the purpose of the Montreal Convention without considering any international jurisprudence on the point. Although the Court concluded that it was barred by Stott, and the supremacy of EU law, from considering this issue for itself. The Court went so far as to question whether the CJEU might have been ultra vires in determining the question in Nelson so that it might not be binding on Member States [89], however, the potential for a reference to the CJEU on this issue was a matter for another day [88].