In a €250 dispute over cancelled flight compensation, the Supreme Court had the opportunity to confirm the effect of Brexit legislation on causes of action that accrued under European Union law before the United Kingdom left the EU, holding in Lipton & Anor v BA Cityflyer Ltd that the European Union (Withdrawal) Act 2018 establishes a complete and comprehensive code on the continuing application and interpretation of EU law, including causes of action accruing pre-Brexit.

The core facts were simple and the primary dispute resolved fairly easily by the five-member panel of Lord Lloyd-Jones, Lord Sales, Lord Burrows, Lady Rose, and Lady Simler. The more difficult question on retained EU law resulted in three judgments released on 10 July 2024, with Lord Lloyd-Jones dissenting from the majority.

In 2018, Mr and Mrs Lipton were booked on a flight from Milan to London with BA Cityflyer. Their flight was cancelled when the captain called in ill and no replacement was found in time. Cityflyer rebooked the Liptons, who arrived in London 2.5 hours later than expected. They then claimed back €250 in compensation under Regulation (EC) 261/2004.

Cityflyer refused to pay, relying on the Regulation 261 provision that no compensation is payable if “the cancellation is caused by extraordinary circumstances which would not have been avoided even if all reasonable measures had been taken”. If the captain’s illness constituted an extraordinary circumstance, Cityflyer would prevail.

At Portsmouth County Court, and at Winchester County Court on appeal, Cityflyer succeeded on its defence. And although the Court of Appeal allowed the Liptons’ further appeal, a further issue was raised over what version of the Regulation applied to the claim, and the extent to which the English courts were bound by certain EU Court of Justice decisions where the claim is heard post-Brexit.

Lord Sales and Lady Rose wrote the lead judgment, joined by Lady Simler. They traced out the legislative history of Brexit involving the European Union (Withdrawal) Act 2018, the European Union (Withdrawal Agreement) Act 2020, the European Union (Future Relationship) Act 2020, and the Retained EU Law (Revocation and Reform) Act 2023. They also noted the Air Passenger Regulations 2019, made under the Withdrawal Act 2018, which made some minor amendments to Regulation 261 in UK domestic law, including by changing the compensation currency from euro to pounds.

In deciding the question of what version of Regulation 261 – the EU text, the EU text as retained by the Withdrawal Act 2018, or the version as amended by the Air Passenger Regulations 2019 – applied to the Liptons’ claim, the parties put forward two competing analytical theories:

• The Complete Code analysis, which holds that the Withdrawal Act 2018 is a complete code by which Parliament dealt comprehensively with the application of EU law in the UK following the conclusion of the implementation period on 31 December 2020. Under this rubric, where a cause of action arises under EU law pre-Brexit, the right to pursue the cause of action is saved as part of the retained EU law itself, subject to any limitations placed on it in the Act.
• The Interpretation Act analysis, which holds that the Withdrawal Act 2018 brought into domestic law the instruments containing the relevant EU law but not any accrued causes of action. Rather, where a cause of action arises under EU law pre-Brexit, the right to pursue the action is saved by the general savings clause at section 16 of the Interpretation Act, subject to any limitations placed on the cause of action under the Withdrawal Act 2018.

The importance of this distinction relates to both subsequent amendments under domestic law and to how courts should treat pre- and post-Brexit decisions of the CJEU. The latter point was a key selling point for Brexiters – that UK litigants would be unbound from distant European judges. To that end, the Withdrawal Act 2018 provides that, after Brexit:

• UK courts may have regard to post-Brexit CJEU judgments but are not bound by them.
• Any question as to the effect of retained EU law is to be decided in accordance with relevant retained case law, including CJEU judgments, but the Supreme Court (and other courts in certain circumstances) is not bound by those pre-Brexit judgments and could depart from them under the same test as it applies in deciding whether to depart from its own case law.

While noting that the decision on the EU law point was strictly obiter, the majority preferred the Complete Code analysis, noting that “Parliament very deliberately intended to address in [the Withdrawal Act 2018] the availability and enforceability of rights arising under EU law in the period before Brexit as well as afterwards. In the light of this approach, it is natural to infer that Parliament’s object was to make comprehensive provision to govern the novel legal situation which Brexit created and to remove and resolve so far as possible the legal uncertainties to which it would give rise.” Accordingly, in dealing with the Liptons’ claim:

• Regulation 261 applied to the claim in the form of the EU text immediately before 31 December 2020 as retained domestic law, and before the Air Passenger Regulations 2019 amendments.
• The Liptons’ cause of action is retained EU law under the Withdrawal Act 2018 and governed by that Act.
• In determining the claim, a court is not bound by post-Brexit CJEU judgments but may have regard to them, and the Supreme Court may depart from any pre-Brexit retained CJEU case law.

Turning to the compensation issue itself, the majority reviewed existing EU case law and applied a two part test to assess whether an event constitutes an extraordinary circumstance: (a) whether the relevant event is inherent in the normal activity of the carrier and (b) whether the carrier has a requisite degree of control in relation to the occurrence of the event and its consequences. The defence will fail where either limb is answered in the positive. Here, Lord Sales and Lady Rose agreed with Coulson LJ below that the non-attendance of the captain due to illness was an inherent part of Cityflyer’s activity and operations as a carrier and “could in no way be categorised as extraordinary”. They dismissed Cityflyer’s appeal.

In a concurring judgment, Lord Burrows set out his own reasoning why he agreed that the Complete Code analysis is correct. Meanwhile, Lord Lloyd-Jones agreed with the rest of the panel on the ultimate disposition of the appeal on the extraordinary circumstances issue but disagreed on the effect of the Withdrawal Act 2018 on the Liptons’ claim. In his view, the majority decision means that the Liptons’ accrued cause of action was transposed into a new body of domestic law at the end of the Brexit implementation period. In contrast, he wrote that the claim was governed by the Regulation 261 as EU law, as it was when the claim accrued. This approach is effectively the Interpretation Act analysis rejected by the majority, under which the Brexit legislation does not make provision for rights and causes of action that accrued prior to Brexit, instead leaving those legal outcomes to the Interpretation Act savings provision.

Although all of this back-and-forth on the Brexit legislation is strictly obiter, it would be unusual to see courts not follow the analysis approved by 4 out of 5 justices of the Supreme Court going forward. Despite that, the Court also noted some issues that remained unresolved in this area:

• While the Court of Appeal erred by applying the amended version of Regulation 261 retrospectively to the Liptons’ claim, Lord Sales and Lady Rose did not rule out the possibility that a retrospective amendment could be made to retained EU law under the Brexit legislation, but that the validity and effect of such a provision must be considered on its particular facts.
• A litigant in the future may wish to argue about the effect of section 29 of the European Union (Future Relationship) Act 2020, which deals with modifications to domestic law arising from the UK-EU Trade and Cooperation Agreement.
• The Court here did not deal with any amendments or other effects introduced by the Retained EU Law (Revocation and Reform) Act 2020, as the parties agreed it was not relevant to this appeal.

Undoubtedly these areas will be explored in future litigation as UK courts continue to deal with the legal complications of Brexit and the retained (or assimilated) EU law.

At the Supreme Court, BA Cityflyer was represented by Akhil Shah KC and Nicolas Damnjanovic of Fountain Court Chambers, and Norton Rose Fulbright LLP. The Liptons were represented by Michael Rawlinson KC of 12 King’s Bench Walk, Max Archer of XXIV Old Buildings, Daniel Isenberg of 11KBW, and Irwin Mitchell LLP in London. The intervener, the Civil Aviation Authority, was represented by Kevin de Haan KC and Michael Coley of Gough Square Chambers. The neutral citation is [2024] UKSC 24.