Since the start of the COVID-19 pandemic, a number of questions have arisen concerning the fate of a party’s obligations under a contract. Many of the answers to these questions lie in the notion of force majeure, a legal concept to which the current pandemic could well correspond.
As we mentioned in our March 23 article, force majeure allows a debtor to be released from its contractual obligations when certain criteria are met. Can an airline refuse to refund tickets to customers whose flights have been cancelled as a result of the COVID-19 measures?
This issue is of great importance to many Canadians, not only because of the high cost of air travel, but also because the major players in the transport industry still don’t seem to have taken a position on whether or not refunds will be granted.
On March 25, the Canadian Transportation Agency issued a press release in which it stated, referring in particular to the Canada Transportation Act and the Air Passenger Protection Regulations, that “the various legislative, regulatory and pricing provisions have been drafted for relatively localized short-term disruptions. None have been envisaged for the kinds of massive worldwide flight cancellations that have occurred in recent weeks, as a result of the pandemic”. [1]. To compensate for the flight cancellations, the Agency recommended that air carriers provide their customers with a travel credit valid for the next 24 months, a reasonable solution which has been adopted by most Canadian air carriers.
However, the application of this measure by airlines could have legal consequences for them, particularly when considered in relation to the provisions of the Civil Code of Quebec.
Air carriers are bound by an obligation of result [2]. Proof of force majeure rendering performance of their obligation impossible is therefore the only way to be released from their obligation. Thus, when an air carrier is forced to cancel a flight due to force majeure, it must, by application of this legal regime, refund the prices paid by customers for the services not provided [3].
Although reimbursement is the rule in such cases, it doesn’t seem to be the solution being considered by the airline industry at the moment. Consumers can still benefit from ticket refunds by requesting a chargeback from the credit card issuer with which they made the purchase, through travel insurance or via the Compensation fund for travel agent customersif applicable.
It will therefore be interesting to see how the courts apply the legal regime of force majeure to the situation of airlines offering credit only to their customers. A wave of airline reimbursements would undoubtedly have a considerable impact on an industry that is already struggling in the current climate. Three class action suits have already been filed across the country by citizens with airline tickets or travel packages that were cancelled due to the COVID-19 crisis.
[1] https://www.otc-cta.gc.ca/fra/message-concernant-credits
[2] 2037 C.c.Q.
[3] 1694 C.c.Q.
