Risk of Industrial Action is a Fact of Business Life - Court of Appeal Ruling

Strike action that grounded an airline's planes did not amount to an 'extraordinary circumstance' that justified passengers being denied compensation after their flights were cancelled. In reaching that conclusion, the Court of Appeal observed that industrial action is a risk inherent in running a business.

After voting in favour of industrial action, the airline's pilots went on strike. The action followed a breakdown in negotiations between the carrier and the pilots' trade union. Mediation eventually led to resolution of the dispute, but not before numerous flights had to be cancelled. Acting in the interests of disrupted passengers, the Civil Aviation Authority launched proceedings against the airline.

Following a hearing, a judge issued an enforcement order against the airline under the Enterprise Act 2002. The order required the airline to compensate passengers in respect of cancelled flights in accordance with Regulation (EC) No 261/2004. The judge rejected the airline's argument that it should not bear financial responsibility for the cancellations because the strike represented an 'extraordinary circumstance' within the meaning of the Regulation.

Dismissing the airline's challenge to that outcome, the Court observed that external events that may be viewed as an extraordinary circumstance include a bird strike on an aircraft, a sudden mechanical fault for which an airline is not responsible or a flight cancellation arising from the behaviour of an unruly passenger. The strike did not, however, fall into that category.

The Court noted that employers often face disagreements or conflicts with all or part of their workforce. The risk of strike action did not arise from an external source and was inherent in the airline's normal business activities. The question of where fault lay for the breakdown of negotiations was not relevant, nor did it matter that the union was independent and had its own structure, external of the airline.

The Court acknowledged that, in certain circumstances, strikes are capable of being an extraordinary circumstance. That might, for example, be the case where a strike arose from demands that only a public authority could satisfy or where a sympathy strike was called for reasons wholly unrelated to an employer's activities. However, no such external factors were in play on the facts of the case.