Hogan Lovells successfully represents Air Canada against Flightright in unfair competition proceedings
Led by its Hamburg partner Dr. Morten Petersenn and the lawyers Dr. Benedikt Lüthge and Charlotte Reimers, Hogan Lovells successfully represented the international airline Air Canada in a dispute against Flightright GmbH regarding unfair competition law. The dispute concerned the airline's general tariff regulations. Flightright had complained that Air Canada initially only accepted compensation claims from passengers directly. Flightright had obtained a preliminary injunction against this practice, which the Higher Regional Court of Duesseldorf, in the course of the dispute, considered to be legally undetermined and thus unenforceable. In the further course of the dispute, Flightright waived all claims relating to the preliminary and main proceedings.
In the court proceedings at hand, the German company Flightright GmbH and Air Canada were confronting each other. Flightright is a legal-tech company whose business model consists of having passengers assign (or authorize) possible compensation claims against airlines on a commission basis in order to enforce them against the airlines. With 51 million passengers in 2018 and approximately 30,000 employees, the Canadian airline Air Canada is Canada's largest airline and one of the 20 largest airlines in the world.
In terms of legal content, the proceedings were characterised by two thematic complexes. From a substantive law viewpoint, it was of decisive importance whether the practice based on a tariff provision, according to which passengers had to first demand compensations claims directly from the airline, constituted an unfair breach of law within the meaning of Section 3a of the German Act against Unfair Competition in combination with the EU Flight Compensation Regulation No 261/2004 and/or an unfair and targeted obstruction of competitors within the meaning of Section 4 No. 4 of the German Act against Unfair Competition. Air Canada – as well as other airlines – had established the respective provision in order, among other things, to ensure a personal, prompt and satisfactory procedural solution for the assertion of compensation claims for their passengers and to ensure clear and transparent conditions in the processing of the flight contract. Flightright felt that it was at a competitive disadvantage because passengers first had to assert their claims with the airline before they could assign them to Flightright.
It was also disputed between the parties whether a specific competitive relationship existed and whether – due to the strong international references of the case – German law was applicable at all and German courts had jurisdiction. From a procedural point of view, special questions arose in the field of enforcing titles and the necessary level of determination of a preliminary injunction.
In September 2018, Flightright first obtained a preliminary injunction against Air Canada. By order of the District Court of Duesseldorf, Air Canada was prohibited from rejecting claims for compensation which were initially not asserted by the passengers themselves but directly by Flightright, with reference to the contested General Terms and Conditions. Air Canada appealed against the preliminary injunction, but withdrew its appeal after the District Court of Duesseldorf indicated that it would reject the appeal. In October 2018, Flightright filed a petition with the District Court of Duesseldorf for contempt of court based on a violation of the interim injunction, which the court granted.
In 2019, Hogan Lovells took over the representation of Air Canada and filed an appeal against the contempt of court order of the District Court of Duesseldorf. The Higher Regional Court of Duesseldorf granted the appeal and overturned the decision of the District Court. It stated that the prohibition requested by Flightright was not sufficiently determined in procedural terms and therefore not enforceable. From the preliminary order's prohibition, it was not clear in which cases there is domestic action under the title that is prohibited for Air Canada and when not.
Already in June 2019, Flightright had filed a parallel action for injunction with the District Court of Duesseldorf, also based on a violation of unfair competition law. After Hogan Lovells had replied to the complaint by filing a response brief, inter alia, referring to the order of the Higher Regional Court of Duesseldorf, Flightright withdrew the lawsuit in May 2020. In June 2020, Flightright also waived its rights under the preliminary injunction of September 2018 and all claims arising from the facts underlying the June 2019 lawsuit.
Hogan Lovells Team for Air Canada
Dr. Morten Petersenn (Partner), Dr. Benedikt Lüthge (Associate), Charlotte Reimers (Associate).