The Civil Aviation Authority v Ryanair DAC

The compensation exemption for extraordinary circumstances is narrow. A strike by an air carrier’s own employees over pay or employment conditions is inherent in the normal operation of the carrier and is not beyond its actual control. That remains so where a trade union calls the strike, the demands are unreasonable or unachievable, or the dispute is unusual. The court should not conduct a disproportionate inquiry into the merits or reasonableness of the demands. A strike involving an external event, such as action by airport or air-traffic-control staff, may fall within the exemption.

The Civil Aviation Authority brought a Part 8 application under the Enterprise Act 2002 after Ryanair cancelled flights in 2018 because of employee strikes. The High Court rejected Ryanair’s reliance on Article 5(3) and made an enforcement order requiring compensation: [2021] EWHC 1476 (Ch). Ryanair appealed, arguing that trade unions and their demands were external and beyond its control. The CAA maintained that disputes over employees’ pay and working conditions were inherent in operating an airline. The central issue was whether the cancellations were caused by extraordinary circumstances.

The Court of Appeal unanimously dismissed the appeal. Newey LJ gave the leading judgment; Snowden LJ and Lewison LJ agreed.

1. Applicable test. Article 5(3) of the Parliament and Council Regulation (EC) No 261/2004 creates a strictly interpreted exception to the compensation right. The event must be both outside the normal activity of the carrier and beyond its actual control. The fact that strikes appear in recital (14) does not make every strike extraordinary. The pre-withdrawal CJEU authorities remained binding under section 6(3) of the European Union (Withdrawal) Act 2018; later decisions, including Airhelp and CS, could be considered under section 6(2).
2. Employee strikes. A trade union representing the carrier’s employees is internal to the carrier’s activity and is an adjunct of its workforce. Disagreements and collective bargaining disputes over pay or employment conditions, including the risk of industrial action, are inherent in the normal operation of an air carrier. The conclusion does not depend on whether the demands were reasonable or achievable, whether the dispute followed a particular act by the carrier, whether strikes were previously unusual, or whether a union was involved.
3. No merits inquiry. A detailed investigation into the reasonableness of the demands would be inconsistent with the Regulation’s high level of passenger protection and standardised compensation. It would be disproportionate, difficult for passengers to contest, and liable to produce complex litigation.
4. Possible external cases. Strikes by air-traffic controllers or airport staff, or strikes arising from demands only public authorities could satisfy, may constitute extraordinary circumstances. Newey LJ also indicated that a wholly unrelated sympathy strike or action connected with terrorism might qualify. Those boundary cases were not necessary to the decision.

The cancellations resulted from Ryanair employee strikes concerning employment conditions and therefore were not caused by extraordinary circumstances. The Part 8 enforcement order remained in force.

• Court of Appeal (Civil Division) dismissed Ryanair’s appeal against the enforcement order: [2022] EWCA Civ 76.
• High Court of Justice, Business and Property Courts, Business List (ChD) rejected Ryanair’s Article 5(3) defence and made an enforcement order requiring compensation: [2021] EWHC 1476 (Ch).