Foreign airline can exclude claims for restitution of fees and taxes under English law

A foreign airline can include in its terms and conditions a clause by which English law is applicable on contracts of carriage concluded in Germany. Today, the High-er Regional Court(OLG) Frankfurt/Main delivered a judgment stating that, accord-ing to English law, the restitution of taxes and fees can be excluded by contract if the passenger cancelled the flight and the airline did not have actual expenses.

No. 63/2018

The defendant is an airline with its main office in Luton, England. Flights can be booked online on its internet website, which is also available in German language. The terms and conditions of the defendant regarding its online booking services include the following wording: „….Taxes and fees, which are levied by the airport operator directly from … [name of the airline] shall not be refunded, even if they are calculated on basis of the number of flight passengers.“ (art. 6.1 para. 4 of the terms and conditions). According to art. 6.4, the aforementioned clause does not apply to the British Air Passenger Duty (APD) which is refunded. According to art. 6.1 para. 2 of the terms and conditions, all restitutions are „governed by the applicable laws … of England and Wales …“. Furthermore, the provision is included that to the terms and conditions and all carriage services „the laws of England and Wales“ apply (art. 29 of the terms and conditions).

The plaintiff, who is an association for the protection of consumer interests, takes the position that consumers are inadequately put on a disadvantage by the provision, which states that taxes and fees are not to be refunded following the cancellation of a flight (sec. 307 para. 2 no. 1 of the German Civil Code [BGB]). Accordingly, he filed a law suit against the airline with the request that the aforementioned clause is no longer applied. The Regional Court (LG) Frankfurt/Main decided in favour of the plaintiff.

The appeal against this judgment to the Higher Regional Court (OLG) Frankfurt/Main was successful. The Court decided that the defendant may continue to use the contended clause.
The Court made the following considerations:

The clause in issue is, according to a valid choice of law, governed by the laws of England and Wales and has full effect. The defendant is allowed to make a choice of law in his terms and conditions. The relevant clause complies with the minimum requirement of transparency according to Art 5 of the Rome I Regulation. The clause is sufficiently clear in its content. Having chosen English law, the defendant applied a rule of law in compliance with the restricting requirements of art. 5 para. 2 of the Rome I Regulation. The clause is, furthermore, not unlawfully surprising, as the border crossing nature of air carriage contracts is inherent. In contrast to the view of the Regional Court (LG) Frankfurt/Main, the clause does not contradict the jurisdiction of the European Court of Justice regarding the choice of law in cases of consumer contracts. According to art. 5 of the Rome I Regulation, a specific information regarding the choice of law is not required.

According to the applicable provisions of the laws of England and Wales, the clause does not violate legal provisions protecting consumer interests. According to the legal provisions, a clause is invalid if there is a significant disproportion between the rights and duties of the contractual parties. Taking into consideration relevant English case law, such disproportion of rights and duties is not given regarding the clause in issue. The English courts decided in the past that the full claims for payment is to be upheld in case that the flight passenger cancels the flight by his/her own discretion. The defendant is not required to refund to the plaintiff taxes and fees, even if, following the cancellation of the flight, the defendant has no duty to forward these taxes and fees to the relevant authorities. This principle applies notwithstanding the fact that the defendant is, hereby, put on an advantage compared to the situation in which the contract is fulfilled.

The judgment is not yet final. The plaintiff may apply for allowing an appeal by non-admission complaint to the Federal Court of Justice (BGH).

Higher Regional Court (OLG) Frankfurt/Main, judgment of 13 December 2018, 16 U 15/18
(first instance decision: Regional Court (LG) Frankfurt/Main, judgment of 14 December 2017, 2-24 O 8/17)

The full text of the judgment will soon be available at www.lareda.hessen.de

Further information:

The Rome I Regulation is available in English langue at https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=celex%3A32008R0593

Kontakt für Pressevertreter
Pressesprecherin: Frau Dr. Gundula Fehns-Böer
Richterin am Oberlandesgericht; English version: Dr. Charlotte Rau, stellv. Pressesprecherin, Richterin am Oberlandesgericht
Telefon: 069 1367-8499
Fax: 069 1367-8382
E-Mail: pressestelle@olg.justiz.hessen.de