Current regulations and recent Brazilian court precedents impacting airline passenger claims in Brazil

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Neil Montgomery

Montgomery & Associados, São Paulo

Neil.montgomery@montgomery.adv.br

Larissa Paganelli Torelli

Montgomery & Associados, São Paulo

Larissa.torelli@montgomery.adv.br

Brazil infamously continued to rank, in 2019, as the country with the highest number of airline passenger claims.[1] This, unfortunately, raises operating costs for airlines, which are ultimately passed on to the passenger in the form of higher air ticket prices.

Most passenger claims are brought against airline companies before small claims courts (referred to by their acronym JEC) because such courts provide a faster procedure and, therefore, a quicker outcome than normal civil state courts. Claims of up to 40 minimum wages can be filed with the JEC, with claims of up to 20 minimum wages not even requiring the assistance by a lawyer.[2] In most of these claims, passengers seek indemnification for not only actual property damages but also, very frequently (and more importantly) ‘ moral’ damages (due to pain and suffering) deriving from the application of strict liability, as provided for by Article 14 of the Brazilian Consumer Protection Code (which is notoriously strict). It follows from the foregoing that airlines are liable for damages purportedly inflicted on passengers regardless of fault. Only in extreme situations, which are not interpreted as inherent risks to their businesses, will they be exempt from liability.

At this point, it is important to note, specifically with regard to international air transportation, that Brazil is a signatory to the Warsaw Convention, subsequently amended by the Montreal Convention, Article 19 of which provides that the carrier will only be liable for flight cancellations, flight delays or luggage loss if it does not provide the necessary support to avoid damages. Such international treaties, therefore, adopt subjective liability. Thus, passengers must be prove that the air carrier failed to provide full support after the air transportation service was not properly rendered.

In the context of the foregoing, in March 2017, the Brazilian Federal Supreme Court (STF) established general repercussion precedent number 210,[3] establishing that, pursuant to Article 178 of the Brazilian Federal Constitution, the provisions of the Montreal Convention must be applied to international air transportation cases and, in default, the Brazilian Consumer Protection Code. During such judgment session, the STF Justices considered that the indemnification limits provided in Article 21 of the Montreal Convention did not encompass moral damages, but only the actual/property damages.

This understanding has generated contradictory decisions in the first and second courts of instance, many times putting aside the conventional provisions, such as inter alia the two-year statute of limitation for a passenger to bring a claim against the airline company. The above-mentioned STF precedent does not also seem to have solved the problem of moral damage applications, since 2019 surveys confirm that the number of passenger claims continued to increase in Brazil.

In any event, the STF ruling was very well welcomed by the airline industry and the expectation was that it would contribute to greater legal security for players and, consequently, encourage the entrance of new players into the Brazilian market, thereby increasing supply and lowering air ticket prices. Indeed, in 2019 and in the first months of 2020 (prior to the Covid-19 pandemic), an increased number of legacy and low cost airlines announced their plans to start flying to Brazil. The Federal Government further tried to boost the positive vibes running through the market by urging Congress to enact Law No. 13,842/2019,[4] which fully lifted restrictions on the participation of foreign capital in Brazilian domestic airlines.

It is also important to mention two important precedents from the other high court in the nation’s capital – the Superior Court of Justice (STJ), both reported by Justice Nancy Andrighi,[5] in November of 2018 and in August of 2019, respectively. The STJ ruled that an extraordinary consequence resulting from flight delays (for both domestic and international air travel) and the loss of luggage must be duly evidenced by the plaintiff/passenger to trigger the air carrier’s liability for moral damages. These precedents seem to be in line with the Montreal Convention and its subjective liability rules and also with the academic construction that moral damages require the evidencing of concrete suffering triggered by a psychological consequence or a relevant impact on the person. These decisions, although not binding, have already been observed by certain first instance courts in Brazil.[6]

Other recent state court precedents may also add to legal security for the industry and, consequently, attract other airlines. For example, the state courts of São Paulo, Paraná and Mato Grosso do Sul[7] have ruled that the law of the country where purely domestic air routes were flown by a Brazilian resident purchasing a ticket exclusively for such routes on a foreign carrier with a presence in Brazil, and not Brazilian law, must govern the relationship between the Brazilian passenger and the foreign airline company, thereby putting aside the application of the Brazilian Consumer Protection Code.

These precedents are significant for the promotion of the airline industry in Brazil because if the foreign airline is aware that its domestic law, which is already known to it, will be considered to regulate complaints filed by passengers in respect of their domestic (cabotage) flights, there are fewer risks in offering their services to Brazilian passengers, thereby reducing operating costs.

The following excerpt from one such decision favouring Argentine low cost carrier Flybondi is a good example of how the Brazilian Judiciary is starting to rule differently in relation to such foreign cabotage routes:

 ‘At this point, it is worth mentioning that the ticket purchased was for a domestic flight in the Argentine territory, therefore not integrating a leg or stopover of an international flight, i.e., the delay did not originate in Brazilian territory, as well as there is no news that the air tickets were purchased in Brazil. However, the mere fact that the defendant has a branch in São Paulo is insufficient to establish that the flight was operated in Brazilian territory.

Thus, the provisions of Article 9 of the LINDB, whereby the law of the country in which the obligation was constituted must be applied, would determine that the law applicable to the case at hand is Argentine law’.

With a view to further assisting the airline industry, one of the most impacted by the Covid-19 pandemic, the Brazilian Federal Government issued the Provisional Measure No. 925/2020, in March of 2020, providing emergency measures for Brazilian civil aviation. Some decisions recently issued by state courts have already upheld such measures: on 5 August 2020, Provisional Measure No. 925/2020 was finally converted into Law No. 14.034/2020, which, in addition to confirming the rules laid down by such Provisional Measure, amended several articles of the Brazilian Aeronautical Code (namely Articles 251-A, 256 and 264 thereof). As far as the air carrier’s liability is concerned, the new legal provisions seem to adopt subjective liability, since the establishment of indemnification of moral damages now requires an effective demonstration of the occurrence of the damages and their extension. A list of events not triggering the carrier’s liability for flight delays caused by unforeseeable circumstances/force majeure was introduced into such new legal provisions, namely:

• adverse weather conditions;
• non-availability of airport infrastructure;
• pandemic events preventing or restricting air transportation, and
• determinations by civil aviation authorities or other public bodies which restrict the service.

All these facts, however, must be supervening, unpredictable and unavoidable. I n all of them, the airline must still offer material support, assistance and other alternatives, such as reimbursement, rebooking etc.

It follows from the above that the last few years have seen important updates in Brazilian regulations and court precedents relative to the liability of air carriers, the consequences of which are not limited to bailing the industry out (due to the unprecedented crisis faced in the Covid-19 pandemic) but also include a necessary cooperation that aims to reduce the number of passenger claims, to guarantee legal certainty and, ultimately, promote greater competition and better services for all Brazilian passengers.

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