Wednesday, 6 May 2015

7th Circuit finds direct claims under EU Reg. 261/2004 unenforceable in the US

The US Court of Appeals for the 7th Circuit found in the case Volodarskiy et al. vs Delta Airlines, Inc. that claims of passengers under the European Regulation (EC) No 261/2004 on passenger rights in cases of flight delay and cancellation are unenforceable in the US, as long as they are not incorporated in the airline’s general terms of carriage. Such claims can only be enforced before the courts of the EU Member States.

The Court arrived at this conclusion after examining the enforcement procedures foreseen in the Regulation, taking into account the combination of its wording (Arts 15 and 16) with its preamble (recital 22), which contains its legislative purpose. Since the Regulation obliges EU Member States to establish enforcement authorities, while passengers can also seek relief from national courts, the Court held that the Regulation is meant to be enforced by administrative authorities and courts only within the EU Member States.

Furthermore, the Court found that such conclusion is reinforced by fundamental principles of EU law, i.e. the principle of subsidiarity and the principle of legal certainty, combined with international comity. The principle of subsidiarity permits the EU to legislate in areas outside its exclusive competence, only if legislative action at the EU-level would be more effective. However, enforcement of the EU rules has been left to the Member States. As to legal certainty, this principle would risk being undermined, if a US court ruled on an unclear EU legal instrument. Such ruling, in addition, could offend principles of international comity.

The judgment is also interesting because of the Court’s comment that plaintiffs filed the suit in the US, in order to access the US class action system, which has no equivalent in the European legal orders (p. 5 of the judgment), and the subtle suggestion that the claim could have been dismissed under the forum non-conveniens doctrine, had the defendants asked for such dismissal (pp. 8 and 17).   

This is the first appellate judgment following a series of decisions by US district courts in Illinois on the same subject. All decisions were in favor of the airlines that had not explicitly incorporated the provisions of Reg. 261/2004 in their general terms, although some devisions mentioned also other grounds, such as the implied preemption of the claims by the 1978 Airline Deregulation Act.

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