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Covid-19 Spain: Alternative resolution for air transportation disputes, an imminent reality?

  • Market Insight 29 April 2020 29 April 2020
  • UK & Europe

  • Coronavirus

The coronavirus pandemic is showing that it has the same ability to spread as it does to devastate when it comes to the different economic sectors in our country: tourism, industry, financial, and now, judicial. In this context, the CGPJ takes a stand and proposes the urgent implementation of an alternative system for the resolution of disputes through AESA regarding claims of air passengers.

Covid-19 Spain: Alternative resolution for air transportation disputes, an imminent reality?

April 20, 2020, the General Council of the Judiciary proposed to the Ministry of Justice an Emergency Plan for the Administration of Justice, aimed at taking measures to streamline the return to the judicial activity, and in order to minimize the work overload that our Courts and Tribunals will have after the lifting of the State of Emergency.

Among the thirteen measures proposed, and taking up an old initiative whose completion has been pending due to the subsequent governments in recent years, the CGPJ proposes the implementation of an alternative dispute resolution system (ADR, by its English acronym) by which the State Aviation Safety and Security Agency (AESA) is assigned the study and resolution of most of the claims of air transport passengers (those that are under the application of Regulation (EC) No. 261/04 1, which represent the vast majority of cases). In relation to this, let us remember that Spain is one of the European countries with the highest number of passenger claims, and that these claims severely collapse our Courts and Tribunals 2.

It should be noted that in 2013, the European Directive on alternative resolution of consumer disputes was enacted3, and it was implemented in our country through Law 7/2017, of November 2nd, regarding the alternative dispute resolution of consumer disputes4; and that based on these rules, in 2018, the Ministry of Development published a Draft Order to regulate the ADR system that would be entrusted to AESA 5.

The CGPJ now suggests the urgent implementation of the proposed system in 2018, whose main characteristics are the following: (i) a free and voluntary system for consumers, who must have previously made a claim to the airline; (ii) the mandatory submission of the airline to this system’s procedure; (iii); the binding nature of the AESA’s resolution –which must be issued in 90 days– for the airline, but not for the passenger; (iv) in the event of disagreement, the right to appeal against the resolution issued through the contentious-administrative route; and (v) AESA's sanctioning power in the event of non-compliance with the resolution by the airline.

The purpose of this article is not to dwell on the criticisms that may be made of the Draft Order - we do invite you to read a thorough analysis made by Professor Irene Nadal Gómez in "The alternative resolution of consumer disputes, Aranzadi, 1st Edition, September 2018." Rather, this article aims to analyze the momentum and convenience of the proposal that is currently on the table at the Ministry of Justice.

In first place, although in our opinion the Royal Decree-Law should not be the instrument to articulate a modification of this depth in our system, it seems reasonable to accept that, due to the situation caused by Covid19, there is an urgent and extraordinary need required by article 86 of the Constitution to use such legislative mechanism. Consequently, and although we believe that this matter should have been regulated in another way, we understand the reasons that lead the CGPJ to propose its modification through the Royal Decree-Law.

Regarding the content of the CGPJ Proposal, we must point out that it establishes three important modifications to the Draft Order, consisting of: (i) the resolution is binding on both parties; (ii) the passenger must first exhaust the AESA’s procedure before going to the Court; and (iii) the Commercial Courts will be the judicial body before which the resolutions issued by AESA may be appealed.

As for the first modification of the proposal, there is no apparent reason that justifies that the airline must bear the verdict of AESA but that the passenger, on the other hand, does not have to. In fact, the AESA technicians who will resolve the disputes will be equally fair to both parties and, most importantly, forcing the airline to defend itself twice under the same facts –and with the consequent cost– lacks any justification.

In addition to the above, if this mechanism is intended to reduce work for the Administration, it would be illogical to allow passengers to claim before AESA and, later or simultaneously, before the Courts, as this will double –as it is currently happening– the workload and cost for public services.

Secondly, the requirement to initially exhaust the procedure before AESA -thereby preventing the filing of the claim before the Court- directly constitutes, in our opinion, the only way to achieve an effective discharge of the workload that the Judicial System bears. Indeed, if filing the claim with AESA was optional, passengers would surely continue to seek protection of their rights in court, rendering the CGPJ's attempt to alleviate their workload useless.

As for the third limitation between the proposal and the draft, we consider that it would require an amendment to Organic Law 6/1985 on the Judiciary and Law 39/2015 of Administrative Procedure -perhaps temporarily through a transitional provision-, in order to endow the Commercial Courts with competences in a matter that, by nature, is reserved to the contentious jurisdiction (since AESA's decision will be administrative).

In relation to the above, it should be noted that by allowing a change of jurisdiction under appeal, we would not be faced with a remedy in the strictest legal sense; rather, we would somehow be before a new procedure, in which the Commercial Courts would resolve again the dispute on the merits, applying its own criteria. This solution seems correct to us, since it is evident that the commercial courts have the knowledge of the subject matter and therefore, it is to be expected that its resolutions would be more accurate than those of the contentious courts –to whom the subject matter is foreign– although the disparity in criteria that currently exists also constitutes a problem that, sooner rather than later, must be solved.

On the other hand, it is necessary that the rule exactly defines what the scope of the binding is, along with its potential appeal or challenge, and if, where appropriate, the approach of taking the judicial route (regardless of what jurisdiction it is) will mean the end of the AESA’s procedure, or if, on the other hand, it will initiate sanctioning proceedings –provided for in the Draft– for the airline, if the airline decides to appeal the AESA’s decision and not compensate the passenger in the voluntary period stipulated for this purpose. Let us not forget that the minimum penalty would be €4,500, which certainly fits poorly with the principle of proportionality, in view of the amounts of the disputes to be resolved through this procedure (€250, €400 and €600).

Leaving aside the proposal put forward by the CGPJ, the question arises as to whether AESA is sufficiently prepared and structured to face the magnitude of the work entrusted to it. Regarding its preparation, we are referring to its structure and personnel, not to its technical-aeronautical knowledge; mainly to the impartiality criteria required by Article 6 of the aforementioned Directive, which is especially relevant when, as in our case, the same body has been assigned both the observance of passenger rights and the resolution of the ADR mechanism in case of non-compliance.

And in terms of its size we must point out that, in 2019, AESA handled more than 40,000 passenger claims and that, according to the Council, the Spanish courts accepted 60,000-70,000 lawsuits of this type, and so, AESA will have to face probably more than 100,000 claims each year.

As if these numbers were not high enough, it must also be taken into account that since the start of the State of Emergency, more than 97,000 flights have been cancelled in our country, which, on an average of 150 passengers per flight, would mean the existence of 14 million affected passengers –and potentially complainants in the short term– . It should also be borne in mind that the majority of claims today are filed through online mediation platforms, and that many take advantage of the imperfections of our procedural regulation and the collapse of the courts, so we should ask ourselves how will AESA protect itself against these attitudes.

This being said, there are certain aspects that could be very positive if the ADR system were to be implemented in our country. However, those will largely depend on how things are executed from now on. Among these, it is worth highlighting the eradication of the disparity in judicial resolutions with identical circumstances that we face on a daily basis, and that the use of technological systems –such as the electronic platforms– can help modernize and expedite the resolution of these matters, reducing the administrative workload, speeding up the resolution of matters and centralizing the claims in a single technical body who knows well the "jargon" and all aeronautical operations.

To finish, we must emphasize the importance of the decisions that will be made by the Executive and the Legislative bodies regarding this issue from now on. After all, we are facing a large problem that moves millions of euros and could negatively affect the viability of the -already damaged- aeronautical industry in our country, as would happen for example, with the implementation of a disproportionate sanctioning regime or by forcing the airlines to defend themselves twice on these matters and bear such costs accordingly.

For all the above, and from the inevitable scepticism we feel by the rush behind this formal decision – after seven years from the European Directive, three from the Law and two from the first draft of the project– we, Clyde & Co., remain alert to the next steps taken by the Executive and the Legislative bodies in this matter.

1  Regulation 261/2004, of February 11, which establishes common rules on compensation and assistance to air passengers in case of denied boarding and cancellation or long delay of flights. 
2  According to the CGPJ's own report, the balance of 2019 ended with a 346% of workload for the Courts, and the courts of first instance were at 150% of their capacity. In addition, almost 70,000 claims related to air transport have been filed, of which 70% -80% would be affected by this measure. 
3  Directive 2013/11/EU of the European Parliament and of the Council of May 21, 2013, on the alternative resolution of consumer disputes, which amends Regulation (EC) No 2006/2004 and Directive 2009/22/CE 
4  Law 7/2017, of November 2, incorporating to the Spanish legal system the Directive 2013/11 / EU, of the European Parliament and of the Council, of May 21, 2013, on the alternative resolution of disputes for consumer disputes. 
5  http://www.fomento.es/NR/rdonlyres/2D5A3CF7-46ED-433D-B127-4703B1410BDB/148613/OM_ADR_audienciaweb.pdf

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