Compensation for delays remains in effect: Supreme Court upholds Air Passenger Protection Regulations

The Supreme Court of Canada (SCC) has released its decision in International Air Transport Association v. Canada (Transportation Agency).

The Canadian Transportation Agency (CTA) adopted the Air Passenger Protection Regulations (the APPRs) in 2019. These regulations provide minimum standards of air travel for consumers. The APPRs also mandate airlines to compensate travellers in certain situations that include but are not limited to:

• Flight delays within the airline’s control;
• Boarding issues and denials;
• Lost or damaged baggage; and
• Flight cancellations.

Since the APPRs were introduced, airlines and air industry groups in Canada and around the world have questioned whether the mandate for compensation provided for in the APPRs was enforceable.

The SCC has now answered that question in the affirmative, confirming that the APPRs’ mandatory compensation scheme is legal and binding.

Background

In its recent decision, the SCC dealt with whether the APPRs could force airlines to compensate passengers for certain international flight disruptions.

The APPRs require airlines to provide standard compensation to passengers for international flights if the delay was within the airline’s control. The compensation payments also apply for lost or damaged baggage, cancellations and denials of boarding in certain situations.

The airline industry, led by the International Air Transport Association (IATA), maintained that the compensation scheme was wholly illegal because Canada is a party to an international convention for air travel known as the “Montreal Convention.” 

This is an international treaty Canada signed in 2001 and is integrated into Canadian law. At Article 29, the Montreal Convention reads: 

Basis of Claims

In the carriage of passengers, baggage and cargo, any action for damages, however founded, whether under this Convention or in contract or in tort or otherwise, can only be brought subject to the conditions and such limits of liability as are set out in this Convention without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights. In any such action, punitive, exemplary or any other non-compensatory damages shall not be recoverable.

The IATA (alongside major international carriers including Lufthansa, British Airways, and Air Canada) argued that the compensation scheme in the APPRs could not be effective because Article 29 of the Montreal Convention already dealt with compensation for damages. The IATA argued that the Court should recognize the exclusivity principle in Article 29, and set aside the parts of the APPRs related to international air travel.

Instead, the SCC unanimously upheld the APPRs.

Parallel Flight Path

The ruling in this case turned on specific language in the APPRs and the Montreal Convention.

Justice Rowe of the SCC clarified that although the Montreal Convention has exclusive command of the matters that it addresses within Article 29, it does not deal comprehensively with all aspects of international carriage by air.

The SCC found that the Montreal Convention states that “any action for damages” must adhere to the conditions and liability limits it outlines. The SCC emphasized that the APPRs oversee something different: requiring standardized compensation for certain airline conduct is not an action for damages.

Justice Rowe stated that damages awards “are ‘individualized” in that they seek to compensate the plaintiff for the loss suffered as a result of an injury caused by another.”  The APPRs, however, may be owed to each and every claimant “irrespective of the harm (if any) they have suffered.”

It follows that standardized compensation under the APPRs for delays, cancellations, and boarding issues is not covered by the Montreal Convention because it is not necessarily tied to the individual harm suffered by each specific claimant.

Ultimately, the Court allowed both laws to stand as they do not conflict with each other; rather, the laws run parallel:

The bargain at the centre of the Montreal Convention remains undisturbed: passengers continue to enjoy certain evidentiary presumptions on proof of damage…[and] carriers remain shielded from unlimited liability arising from actions for damages related to claims for death or bodily injury, damage or loss of baggage and cargo, and for delay.

Key Takeaways

The APPRs and their compensation scheme are poised to stay in place without further challenge in the courts. Despite the far-reaching effects of the Montreal Convention, it does not exclusively deal with every international air carriage issue. It stands to reason that other gaps can be covered by additional legislation.

Finally, this ruling adds to the SCC’s history of interpreting laws in a manner that erases potential conflicts in adjacent laws passed by Parliament. As the SCC notes, the APPRs and the Montreal Convention can operate side-by-side, given that they deal with compensation for two different things. Every word matters in legislation, and parties need to be aware of that when trying to argue about the applicability of one law versus another.