—

Mr Espada Sánchez and Others, by C. Chulio Purroy and D. Miró García, abogados,

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Iberia Líneas Aéreas de España SA, by J. Fillat Boneta and M. Fillat Torné, abogados,

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the German Government, by T. Henze and J. Kemper, acting as Agents,

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the European Commission, by S. Pardo Quintillán and K. Simonsson, acting as Agents,

1

This reference for a preliminary ruling concerns the interpretation of Article 22(2) of the Convention for the Unification of Certain Rules for International Carriage by Air, concluded in Montreal on 28 May 1999, signed by the European Community on 9 December 1999 and approved on its behalf by Council Decision 2001/539/EC of 5 April 2001 (OJ 2001 L 194, p. 38; ‘the Montreal Convention’).

2

The reference has been made in proceedings between, on the one hand, Mr Espada Sánchez, Ms Oviedo Gonzáles and their two children (both minors), Lucía and Pedro, and, on the other, the airline Iberia Líneas Aéreas de España SA (‘Iberia’), concerning the damage resulting from the loss of checked baggage in the context of a flight operated by that company.

3

In the third recital in the preamble to the Montreal Convention, the States Parties to that convention ‘recognis[e] the importance of ensuring protection of the interests of consumers in international carriage by air and the need for equitable compensation based on the principle of restitution.’

4

The fifth recital in that preamble states:

‘…collective State action for further harmonisation and codification of certain rules governing international carriage by air through a new Convention is the most adequate means of achieving an equitable balance of interests …’.

5

Paragraph 3 of Article 3 of the Montreal Convention, which is entitled ‘Passengers and baggage’, provides:

‘The carrier shall deliver to the passenger a baggage identification tag for each piece of checked baggage.’

6

Paragraphs 2 and 4 of Article 17 of that convention, which is entitled ‘Death and injury of passengers – damage to baggage’, provide:

‘2.   The carrier is liable for damage sustained in case of destruction or loss of, or of damage to, checked baggage upon condition only that the event which caused the destruction, loss or damage took place on board the aircraft or during any period within which the checked baggage was in the charge of the carrier. However, the carrier is not liable if and to the extent that the damage resulted from the inherent defect, quality or vice of the baggage. In the case of unchecked baggage, including personal items, the carrier is liable if the damage resulted from its fault or that of its servants or agents.

…

4.   Unless otherwise specified, in this Convention the term “baggage” means both checked baggage and unchecked baggage.’

7

Paragraph 2 of Article 22 of that convention, which lays down the ‘limits of liability in relation to delay, baggage and cargo’ provides, in the version applicable at the material time:

‘2. In the carriage of baggage, the liability of the carrier in the case of destruction, loss, damage or delay is limited to 1 000 Special Drawing Rights for each passenger unless the passenger has made, at the time when the checked baggage was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless it proves that the sum is greater than the passenger’s actual interest in delivery at destination.’

8

The Montreal Convention entered into force, so far as the European Community is concerned, on 28 June 2004.

9

Recital 1 in the preamble to Decision 2001/539 states:

‘It is beneficial for European Community air carriers to operate under uniform and clear rules regarding their liability for damage and that such rules should be the same as those applicable to carriers from third countries.’

10

Article 1 of Regulation (EC) No 2027/97 of the Council of 9 October 1997 on air carrier liability in respect of the carriage of passengers and their baggage by air (OJ 1997 L 285, p. 1), as amended by Regulation (EC) No 889/2002 of the European Parliament and of the Council of 13 May 2002 (OJ 2002 L 140, p. 2) (‘Regulation No 2027/97’), states:

‘This Regulation implements the relevant provisions of the Montreal Convention in respect of the carriage of passengers and their baggage by air and lays down certain supplementary provisions …’.

11

Article 3(1) of Regulation No 2027/97 is worded as follows:

‘The liability of a Community air carrier in respect of passengers and their baggage shall be governed by all provisions of the Montreal Convention relevant to such liability.’

12

Recital 12 in the preamble to Regulation No 889/2002 states that ‘[u]niform liability limits for loss of, damage to, or destruction of, baggage and for damage occasioned by delay, which apply to all travel on Community carriers, will ensure simple and clear rules for both passengers and airlines and enable passengers to recognise when additional insurance is necessary.’

13

On 1 August 2008, Mr Espada Sánchez, Ms Oviedo Gonzáles and their two children, both minors, boarded a flight from Barcelona (Spain) to Paris (France) operated by the airline Iberia. The baggage of that family of four had been packed into two suitcases, which were lost during the flight and have not been recovered.

14

Accordingly, the four passengers seek damages from Iberia, pursuant to Article 22(2) of the Montreal Convention, in the amount of EUR 4 400, corresponding to 4 000 Special Drawing Rights (‘SDR’), that is to say, 1000 SDR per passenger.

15

By judgment of 18 March 2010, the Juzgado Mercantil (Commercial Court) No 2, Barcelona, upheld their claim in part and ordered Iberia to pay the sum of EUR 600 together with interest at the statutory rate.

16

The Audiencia Provincial de Barcelona (Provincial Court, Barcelona), hearing the appeal against that judgment, is uncertain as to how to interpret Article 22(2) of the Montreal Convention. It notes in that connection that the possibility cannot be ruled out that, under Article 22(2) of that convention, read in the light of Article 3(3) thereof, only a passenger who has obtained the baggage identification tag referred to in Article 3(3) is entitled to compensation in the case of loss of baggage.

17

In those circumstances, the Audiencia Provincial de Barcelona decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

18

By its questions, which should be examined together, the referring court asks in essence whether Article 22(2) of the Montreal Convention, read in conjunction with Article 3(3) of that convention, must be interpreted as meaning that the right to compensation and the limits to the carrier’s liability in the event of the loss of baggage apply also to a passenger who claims that compensation by virtue of the loss of baggage checked in in another passenger’s name.

19

First of all, it should be recalled that Article 3(1) of Regulation No 2027/97 provides that the liability of a Community air carrier in respect of air passengers and their baggage is to be governed by all provisions of the Montreal Convention relevant to such liability.

20

Since the provisions of that convention have been an integral part of the EU legal order from the date on which the convention entered into force, the Court has jurisdiction to give a preliminary ruling concerning its interpretation, in accordance with the rules of interpretation of general international law, which are binding on the European Union (see, to that effect, Case C-386/08 Brita [2010] ECR I-1289, paragraphs 39 to 42, and Case C-63/09 Walz [2010] ECR I-4239, paragraphs 20 and 22 and the case‑law cited).

21

In respect of that last point, the Court has held that, even though the Vienna Convention on the Law of Treaties of 23 May 1969 does not bind either the European Union or all its Member States, that convention reflects the rules of customary international law which, as such, are binding upon the EU institutions and form part of the legal order of the European Union (Brita, paragraph 42).

22

Article 31 of the Montreal Convention accordingly states that a treaty is to be interpreted in good faith in accordance with the ordinary meaning to be given to its terms in their context and in the light of its object and purpose (Case C-70/09 Hengartner and Gasser [2010] ECR I-7233, paragraph 36 and the case‑law cited, and Walz, paragraph 23 and the case‑law cited).

23

It follows, essentially, from Article 17(2) of the Montreal Convention that a carrier is liable, inter alia, for damage sustained in the event of loss of baggage. Article 22(2) of that convention provides, in particular, that ‘[i]n the carriage of baggage, the liability of the carrier in the case of … loss … is limited to 1 000 [SDR] for each passenger …’

24

It is apparent from the provisions referred to in the preceding paragraph that it is the damage sustained in the event of loss of baggage carried which engages the air carrier’s liability and that it is the passenger who is entitled, within the limits laid down, to compensation for the damage sustained.

25

In addition, it is apparent from Article 17(2) of the Montreal Convention that the air carrier is liable for damage linked to the loss of any of the baggage belonging to the passengers, whether checked or unchecked. That finding is also confirmed by the use, without additional clarification, in Article 22(2) of the Montreal Convention, of the term ‘baggage’, defined in Article 17(4) of that convention as meaning – unless otherwise specified – ‘both checked baggage and unchecked baggage.’

26

That interpretation cannot be called in question by Article 3(3) of the Montreal Convention, which provides that ‘[t]he carrier shall deliver to the passenger a baggage identification tag for each piece of checked baggage.’ Contrary to the assertions made by Iberia and the European Commission, that provision – as the German Government has correctly argued – merely imposes on an air carrier an obligation to ensure that checked baggage is identifiable and cannot support the inference that the right to compensation in the event of loss of baggage and the limits placed on that right, referred to in Article 22(2) of the convention, apply solely for the benefit of passengers who have checked in one or more pieces of baggage.

27

Thus, when read together, the relevant provisions of the Montreal Convention must be interpreted as meaning that an air carrier must be considered liable to pay a passenger compensation to the extent that that passenger has sustained damage in the form of the loss of items belonging to him, where those items were placed in baggage checked in in the name of another passenger on the same flight and that baggage was lost. Consequently, not only a passenger who has checked in his own baggage in person, but also a passenger whose items were placed in the baggage checked in by another passenger on the same flight, is granted an individual right to compensation by the Montreal Convention where those items are lost, in accordance with the conditions laid down in the first sentence of Article 17(2) of that convention and within the limits laid down in Article 22(2) thereof.

28

That conclusion is supported, moreover, by the objectives which governed the adoption of the Montreal Convention.

29

In that connection, it should be noted that the third recital in the preamble to the Montreal Convention recognises ‘the importance of ensuring protection of the interests of consumers in international carriage by air and the need for equitable compensation based on the principle of restitution’. Those two objectives would necessarily be called in question if a passenger whose items were placed in baggage checked in by another passenger on the same flight could not obtain individual compensation for the damage which he has sustained as a result of their loss.

30

Moreover, given those objectives, the parties to that convention decided to establish a system of strict liability which implies, none the less, that an ‘equitable balance of interests’ be maintained, in particular as regards the interests of air carriers and of passengers (see Walz, paragraphs 31 and 33). In order to maintain such a balance, the Montreal Convention makes provision for the liability of air carriers to be limited in certain situations – in particular, in accordance with Article 22(2) of that convention, in the case of destruction, loss, damage or delay of baggage – with the resulting limitation of compensation to be applied ‘per passenger’ (see Walz, paragraph 34).

31

That would not be the position if items belonging to a passenger, placed in baggage belonging to another passenger and checked in by the latter, had to be regarded as excluded from the right to compensation provided for under the Montreal Convention, on the ground that the baggage had not been checked in by that first passenger.

32

Besides, it cannot validly be argued that granting a right to compensation under Article 22(2) of the Montreal Convention to a passenger whose items were in baggage checked in by another passenger would compromise the equitable balance of interests in that it would impose a very heavy compensatory burden on air carriers – which would be difficult to determine and calculate – and would be liable to undermine, if not paralyse, the economic activity of those carriers, thereby breaching the convention.

33

In that connection, it should first of all be noted that granting such a right in no way prevents air carriers from being able to identify and calculate clearly, in respect of each passenger, the burden of compensation liable to be imposed upon them.

34

Next, that potential burden cannot be regarded as undermining or paralysing the economic activity of those carriers. It must be emphasised that the liability limits referred to in paragraph 29 above operate for the benefit of air carriers and that, as regards baggage, the limit laid down constitutes, pursuant to Article 22(2) of the Montreal Convention, a maximum limit for compensation, which cannot therefore accrue automatically and in full to any passenger losing his baggage. In addition, pursuant to Article 17(2) of that convention, the carrier is not liable if and to the extent that the damage ‘resulted from the inherent defect, quality or vice of the baggage’.

35

Lastly, it should be recalled that, for the purposes of the compensation provided for under Article 22(2) of the Montreal Convention, it is for the passengers concerned, subject to review by the national court, to establish to the requisite legal standard the contents of the lost baggage and the fact that the baggage checked in in another passenger’s name did in fact contain items belonging to another passenger on the same flight. In that connection, the national court may have regard to the fact that those passengers are members of the same family, that they bought their tickets together or that they checked in at the same time.

36

In the light of the foregoing, the answer to the questions referred is that Article 22(2) of the Montreal Convention, read in conjunction with Article 3(3) of that convention, must be interpreted as meaning that the right to compensation and the limits to a carrier’s liability in the event of loss of baggage apply also to a passenger who claims that compensation by virtue of the loss of baggage checked in in another passenger’s name, provided that that lost baggage did in fact contain the first passenger’s items.

37

Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

Article 22(2) of the Convention for the Unification of Certain Rules for International Carriage by Air, concluded in Montreal on 28 May 1999, signed by the European Community on 9 December 1999 and approved on its behalf by Council Decision 2001/539/EC of 5 April 2001, read in conjunction with Article 3(3) of that convention, must be interpreted as meaning that the right to compensation and the limits to a carrier’s liability in the event of loss of baggage apply also to a passenger who claims that compensation by virtue of the loss of baggage checked in in another passenger’s name, provided that that lost baggage did in fact contain the first passenger’s items.