I INTRODUCTION

In Germany, 35 airports offer scheduled passenger services. Frankfurt is the largest German airport in terms of both the number of flights (about 475,537 in 2017) and the number of passengers (about 64.5 million in 2017). In terms of the number of passengers, Frankfurt Airport is the fourth-largest airport in Europe, after London Heathrow, Paris Charles de Gaulle and Amsterdam Schiphol. The second-largest German airport is Munich (about 404,505 flights and nearly 44.6 million passengers in 2017) and the third is Düsseldorf (about 221,635 flights and 24.6 million passengers in 2017).2

The airports Berlin (Schönefeld and Tegel), Bremen, Dresden, Düsseldorf, Erfurt, Frankfurt/Main, Hamburg, Hannover, Cologne/Bonn, Leipzig/Halle, Munich, Münster/Osnabrück, Nuremberg, Saarbrücken and Stuttgart are coordinated airports as per Regulation (EC) No. 95/93.3 The slots are allocated by Airport Coordination Germany (FHKD), which is an independent non-profit organisation financed by German airlines and airports.

The Federal Aviation Office (LBA) is the German civil aviation authority and the competent authority for registering aircraft except for sports aircraft such as ultralight gliders and paragliders. At the end of 2017, in Germany, 753 aircraft with a maximum take-off weight (MTOW) of over 20 tons were registered with the LBA, 37 aircraft with an MTOW of 14 to 20 tons and 219 aircraft with an MTOW between 5.7 and 14 tons. As to single-engine aircraft, 6,527 were registered with an MTOW below 2 tons and 174 with an MTOW between 2 and 5.7 tons. There were 219 multi-engine aircraft with an MTOW of under 2 tons registered and 391 with an MTOW between 2 and 5.7 tons.4

On 31 December 2017, 126 air carriers had an operating licence in Germany; in 2016 there were 128.5 On 31 December 2017, 1,421 foreign air carriers had traffic rights to and from Germany.6 In 2017, 1,824 ramp checks were undertaken on foreign aircraft by the LBA.7

Germany has concluded agreements pursuant to Article 83 bis of the Convention on International Civil Aviation with Italy, Austria, Sweden, Spain and Portugal to facilitate the operation of German-registered aircraft within foreign air carriers and the operation of foreign-registered aircraft within German air carriers.8

As to passenger rights, in 2017 the LBA received 3,211 complaints from passengers in respect of Regulation (EC) No. 261/2004 (3,075 in 2016), of which 1,368 (42.6 per cent) were because of cancellations, 1,629 (50.7 per cent) because of delays, 207 (6.4 per cent) because of denied boarding and seven (0.2 per cent) because of downgrading.9

Of the airlines against which complaints were addressed, 1,777 (55.3 per cent) complaints concerned German air carriers, 1,047 (32.6 per cent) concerned European air carriers and 387 (12.0 per cent) concerned air carriers from third countries.10

Germany is a Member State of the European Union, therefore EU regulations apply directly and national law is in accordance with EU directives. This chapter will only address aspects of national German law and practice.

II LEGAL FRAMEWORK FOR LIABILITY

i International carriage

Germany is a party to the main following multilateral agreements relating to international carriage:

  1. Convention on International Civil Aviation (Chicago) – 8 June 1956;
  2. International Air Services Transit Agreement (Chicago) – 8 June 1956;
  3. Convention on the international recognition of rights in aircraft (Geneva) – 5 October 1959;
  4. Convention for the unification of certain rules relating to international carriage by air (Warsaw) – 29 December 1933;
  5. Protocol to amend the Warsaw Convention (The Hague) – 1 August 1963;
  6. Convention, supplementary to the Warsaw Convention, for the unification of certain rules relating to international carriage by air performed by a person other than the contracting carrier (Guadalajara) – 31 May 1964;
  7. Convention for the unification of certain rules relating to international carriage by air (Montreal) – 28 June 2004; and
  8. Convention on offences and certain other acts committed on board aircraft (Tokyo) – 16 March 1970.11
ii Internal and other non-convention carriage

In Germany, liability in respect of non-convention carriage is governed by the German Air Traffic Act (LuftVG). This law is also applicable for damage on the ground (i.e., damage suffered by third parties caused by the operation of an aircraft).

Under Article 45, Paragraph 1 of the LuftVG, the air carrier is strictly liable in the case of death or injury of a passenger caused by an accident on board the aircraft, respectively during boarding or disembarking. Under Article 45, Paragraph 2, the carrier's liability is limited to 113,100 special drawing rights (SDR) per passenger unless the damage was caused by a negligent act or omission of the carrier or another third person.

Up to 113,100 SDR, the air carrier cannot exclude itself unless there was contributory negligence on the part of the passenger.

If domestic carriage (within Germany) is carried out by an air carrier of the European Union, it is not the LuftVG but Regulation (EC) No. 889/2002 that applies.

The LuftVG also rules liability in the case of passenger delay, baggage delay and damage to baggage. The airline is not liable in the case of delayed transportation if all measures were taken to avoid the damage or if it was impossible to take such measures. Further, in the case of delay, liability is limited to 4,694 SDR per passenger.

In the case of damage to or loss of checked baggage, the carrier is strictly liable. Liability is limited to 1,131 SDR per passenger. In the case of damage to hand luggage, the carrier is only liable if the damage was caused by the carrier's negligence.

Liability in respect of non-convention carriage of cargo is ruled in the German Commercial Code (HGB). Under Article 431, Paragraph 1 HGB, the carrier's liability is limited to 8.33 SDR per kilogram. However, this liability can be unlimited in the case that the damage was caused by wilful misconduct with the knowledge that damage would probably result.

iii General aviation regulation

The LuftVG (as described in Section II.ii) also governs liability in the operation of helicopters and microlights during carriage within Germany.

Furthermore, the LuftVG also applies to international carriage performed free of charge by a non-EU carrier.

iv Passenger rights

In Germany, passenger rights are mainly governed by EU regulations, especially Regulation (EC) No. 261/2004 and the Montreal Convention.

German legal provisions dealing with passenger rights

The German legal provisions dealing with passenger rights are Article 44 et seq. of the LuftVG. Article 44 clearly states that the European and international provisions on passenger rights prevail over the German provisions as far as they are applicable.

In case of a delay to the passenger or his or her baggage, according to Articles 46 and 47 LuftVG, the passenger is entitled to compensation for the loss he or she had because of the delay unless the air carrier proves that it and its servants and agents took all measures that could reasonably be required to avoid the damage or that it was impossible for it or them to take such measures. The limits of liability are 4,694 SDR in case of the delay of a passenger and 1,131 SDR in the case of baggage delay, unless the damage was caused intentionally or grossly negligent.

According to Article 48a LuftVG, in the case of carriage to be performed by various successive carriers, only the carrier that performed the carriage during which the delay occurred is liable for damages, save in the case where, by express agreement, the first carrier has assumed liability for the whole journey. In the case of delayed baggage the first, the last and the operating carrier are liable for damages. These carriers are jointly and severally liable to the passenger.

The limitation period under Article 49a LuftVG corresponds with Article 35 of the Montreal Convention and is two years upon arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.

German enforcement body concerning Regulation (EC) No. 261/2004

The LBA is the German enforcement body of Regulation (EC) No. 261/2004.

Upon passenger complaints or their own investigations concerning a potential breach of Regulation (EC) No. 261/2004, the LBA commences a regulatory offence procedure against the air carrier, sends them a letter in which the alleged breach is put forward and requests the air carrier's comments. If the air carrier cannot prove extraordinary circumstances or any other justification for the delay or cancellation, or if the air carrier does not pay compensation to the passenger upon the LBA letter, the LBA will impose a fine on the air carrier of up to €25,000.

Despite the Sturgeon decision of the European Court of Justice (ECJ) of 19 November 2009 (C-402/07 and C-432/07), the LBA did not pursue air carriers in respect of non-payment of compensation of delayed flights, arguing that Regulation (EC) No. 261/2004 does not provide a legal basis for compensation in case of delays to the effect that non-payment of compensation in case of delays is not a breach of the Regulation and thus not a regulatory offence that incurs a fine.

However, following the ECJ decision of 23 October 2012 (cases C-581/10 and C-629/10), the LBA decided in March 2013 that it will also follow the above-mentioned ECJ decisions and pursue air carriers if compensation is not paid in the case of delays.

Conciliation concerning passenger rights

On 1 November 2013, a new conciliation instrument came into force in Germany to avoid court proceedings in the case of delays, cancellations and denied boarding as well as baggage claims. A framework for voluntary conciliation has been created that passengers can make use of if an airline does not satisfy their claims within two months. Claims of up to €5,000 will be dealt with by the conciliation institutions. The conciliation proceedings are free of charge for the passenger.

v Other legislation

As under European law, under German law to avoid dominant market positions the cartel authority can control company growth in respect of the merging of companies.

The most important pieces of legislation in this regard are the German Act against Restrictions on Competition and the German Act against Unfair Practices.

German cartel law fully applies to aviation-related companies (e.g., airlines).

A violation of the law against unfair competition can result in the obligation to pay compensation to competitors and also in an administrative fine.

Product liability is regulated by the German Product Liability Act as well as the German Civil Code (see Section VII.iii).

III LICENSING OF OPERATIONS

i Licensed activities

As Germany is a Member State of the EU, Regulation (EC) No. 1008/2008 applies and licensed activities are governed by this Regulation (see also the European Union chapter).

Under Regulation (EC) No. 1008/2008, air carriers from EEA Member States are entitled to operate flights within the Community. A special application or notification is not required. This also applies to air carriers from Switzerland.

However, Regulation (EC) No. 1008/2008 does not apply to the following undertakings:

  1. foreign carriers based outside the EEA; and
  2. carriers based in Germany that operate round-trips or carry passengers or cargo by hot-air balloon.

See Section III.iii for the requirements foreign carriers must fulfil to obtain permission to operate in Germany.

ii Ownership rules

In Germany, ownership rules are governed by Regulation (EC) No. 1008/2008 (see also the European Union chapter).

iii Foreign carriers

Pursuant to Article 15 of Regulation (EC) No. 1008/2008, air carriers from EEA Member States and from Switzerland are authorised to exercise the right to operate on routes within the Community and are no longer required to submit a separate application.

Scheduled air traffic

In respect of scheduled air traffic, air carriers from non-EEA Member States have to obtain an operating licence under Article 21a LuftVG from the LBA prior to commencing scheduled air services from and to Germany. Foreign carriers must provide the following when applying for permission to operate in Germany:

  1. articles of association;
  2. excerpt from the commercial register;
  3. latest annual report or details on the board of management and the composition of the capital;
  4. flight schedule;
  5. flight schedule – code-share flights only;
  6. a complete list of the fleet with details of the capacity of the individual aircraft including:
    • if necessary, a leasing contract;
    • certificate of registration;
    • certificate of airworthiness; and
    • noise certificate;
  7. an Operating Permit Questionnaire including proof of maintenance of the aircraft in compliance with the ICAO;
  8. third-party legal liability insurance;
  9. liability insurance covering damage to persons, baggage, cargo and damage caused by delay;
  10. declaration of the authorised appointed recipient;
  11. air operator certificate with a validity of at least one year;
  12. designation of the air carrier by the government of the state of registry for scheduled air services between the state of registry and Germany or vice versa;
  13. estimate of the traffic volume to be expected on the planned route for the first year of operation;
  14. aviation security plan; and
  15. in case of carrying cargo or mail: ACC3-designation according to Regulation (EC) No. 300/2008 for third-country airports that do not have equivalent security standards.12
    Non-scheduled air traffic

    An entry permission must be requested for commercial flights of non-EEA air carriers to and from Germany.

    The permission for entry will only be granted if the state registry of the air carrier submitting the application grants entry to German air carriers in the same way (reciprocity clause).

    The following documents must be provided (in German or English) together with the application form:

    1. charter agreement;
    2. operating licence including air operator certificate with operation specifications (aircraft listing);
    3. third-party legal liability insurance;
    4. liability insurance covering damage to persons, baggage, cargo and damage caused by delay;
    5. certificate of registration;
    6. certificate of airworthiness;
    7. noise certificate;
    8. operating permit questionnaire or TCO-approval;
    9. declaration concerning an authorised recipient in Germany;
    10. aviation security plan; and
    11. in case of carrying cargo or mail: ACC3-designation according to Regulation (EC) No. 300/2008 for third country airports that do not have equivalent security standards.13
    Fifth freedom flights

    Proof must be brought to the LBA that German air carriers are neither prepared nor in a position to conduct the flights (declaration of non-availability). This proof is not required for cargo air services conducted by EEA air carriers. In the case of air carriers from EEA Member States with an accredited branch in Germany, a declaration of non-availability need not be submitted.14

    Flights on a commercial basis for other purposes (aerial work, flight with balloons, local flights) – air carriers from non-EEA Member States

    For these types of flights, entry is not permitted without explicit entry permission.

    The following documents must be provided to the LBA:

    1. proof of relevant permission by the state of registry to perform the activity applied for;
    2. third-party legal liability insurance;
    3. liability insurance covering damage to persons, baggage, cargo and damage caused by delay;
    4. certificate of registration;
    5. certificate of airworthiness;
    6. noise certificate; and
    7. declaration of non-availibility of the German companies.15
    Flights on a commercial basis for other purposes – air carriers from EEA Member States

    According to Regulation (EC) No. 1008/2008, air carriers from Member States of the EEA are allowed to operate traffic rights on routes in the intra-community air traffic in the EEA. A separate application or notification is no longer necessary. This applies also for air carriers from Switzerland. Until an agreement between the EU and Switzerland with regards to the approval of cabotage operations comes into force, Swiss aviation companies cannot be granted cabotage rights in Germany.16

    IV SAFETY

    i Safety requirements for operators

    In Germany, safety issues are largely governed by EU regulations.

    The national rules governing air traffic safety are primarily the German Air Traffic Regulation (LuftVO), the Regulation for the Operation of Aircraft (LuftBO) and the Regulation on the Examination of Aircraft (LuftGerPV).

    Article 1 LuftVO determines that every participant in air traffic must act in such a way that safety of the air traffic is guaranteed and that no one is endangered or harmed.

    In respect of safety matters, the LuftVO determines, inter alia, the rights and obligations of the pilot in command, including the right to decide in respect of the operation of the aircraft and to undertake all measures during flight, take-off and landing that are necessary. Article 6 indicates the minimum safe altitude of 300 metres or 1,000 feet above the highest obstacle within 600 metres over cities, densely populated areas, crowds, industrial plants, scenes of accidents and disaster zones; and 150 metres or 500 feet in other cases. According to Article 12, a distance of at least 150 metres must be kept from buildings or other obstacles (except during take-off and landing) to avoid collisions. Article 13 regulates the overtaking, the making of way and the avoidance of collisions in the air. Article 17 determines which lights an aircraft has to use between sunset and sunrise. Article 28 et seq. contain the rules on visual flight and Article 36 et seq. contain the rules on instrument flight.

    The LuftBO applies only as far as EU regulations do not apply and to (1) aircraft that are registered in the German aircraft register; (2) aircraft for which the Federal Republic of Germany has assumed responsibility; and (3) aircraft that are registered in a different country but have a German approval for round-trip flights without intermediate stops or hot-air balloon flights. The LuftBO and the third implementation regulation of the LuftBO stipulate the equipment to be carried on board an aircraft (such as safety belts, signals, oxygen systems, life vests, an airspeed indicator, two barometric altimeters, a variometer, a gyro, a magnetic compass, a first-aid kit and a fire extinguisher), depending on the intended flight type (visual flight or instrumental flight, flights over water, flights over land, etc.). As to the crew, the LuftBO stipulates that crew members shall not exceed the age of 60. The pilot must have sufficient knowledge concerning the route and the airports he or she uses. He or she must be examined twice per year in respect of his or her capability to operate an aircraft, especially concerning emergencies. Furthermore, the crew must be trained for emergencies both on the ground and in the air. They also have to be trained regularly in the usage of rescue and safety devices.

    The LuftGerPV regulates the requirements and the procedure of the examination of aircraft concerning their airworthiness in terms of development, manufacturing and maintenance as far as Regulations (EC) No. 216/2008, No. 748/2012 and No. 2042/2003 are not applicable. The examination is made by way of a type inspection (in the case of the development and manufacture of the aircraft) and by control of maintenance measures or verified maintenance checks. In most cases, the LBA is the authority competent to issue the certificate of airworthiness.

    ii Accident reporting

    Under Article 5 LuftVO, accidents of civil aircraft must be reported immediately to the German authority for the investigation of accidents and disruptions, the Federal Bureau of Aircraft Accident Investigation (BFU) by the pilot, a crew member or the owner of the aircraft. Incidents that endanger or could endanger an aircraft, its passengers or third persons must be reported to the LBA (Article 5b LuftVO). A danger to the air traffic must be immediately reported by the pilot to the competent air traffic control (ATC) (Article 20 LuftVO).

    Under German law, accident investigation and reporting is governed by the Law on the Investigation of Accidents and Disruptions in the Operation of Civil Aircraft (FlUUG), which is the transposition of Directive 94/56/EC into German law.

    The FlUUG applies to accidents and disruptions that occur in the Federal Republic of Germany and applies to:

      1. accidents in which:
        • a person suffers a fatal or severe injury on board or in connection with an aircraft; and
        • an aircraft has suffered damage because of which the aircraft's performance, its structural strength or flight characteristics are impaired and the reparation involves considerable efforts or a replacement of the damaged part;
      2. disruptions that impair or could impair the safe operation of a flight;
      3. fatal injuries; and
      4. severe injuries, especially if an accident:
        • requires a hospital stay of more than 48 hours within seven days as from the injury;
        • entails bone fractures (except simple fractures of fingers, toes or nose);
        • entails lacerations with severe bleeding or injuries of nerves, muscles or tendons;
        • entails damages to inner organs; or
        • entails second- or third-degree burns or of more than 5 per cent of the body surface.

    The BFU establishes a report on every investigation in which, inter alia, the details of the accident or disruption, the aircraft concerned, the external circumstances, the results of the investigations and the discovery of the (potential) cause of the accident or disruption are indicated. When establishing the report, the BFU may hear the operator of the aircraft, the manufacturer, the crew, representatives of foreign states, ATC and the German Meteorological Service. The BFU may also request assistance, information, documents and equipment from other states for conducting the investigation.

    V INSURANCE

    Insurance requirements for air carriers and aircraft operators are set out in Regulation (EC) No. 285/2010 amending Regulation (EC) No. 785/2004 of 21 April 2004.

    This Regulation applies to all air carriers and to all aircraft operators flying within, into, out of or over the territory of a Member State to which the Regulation applies. Air carriers and aircraft operators shall be insured in accordance with this Regulation as regards their aviation-specific liability in respect of passengers, baggage, cargo and third parties. The insured risks shall include acts of war, terrorism, hijacking, acts of sabotage, unlawful seizure of aircraft and civil commotion.

    For liability in respect of passengers, the minimum insurance cover shall be 250,000 SDR per passenger. For liability in respect of baggage, the minimum insurance cover shall be 1,131 SDR per passenger in commercial operations. For liability in respect of cargo, the minimum insurance cover shall be 19 SDR per kilogram in commercial operation. These figures, however, do not apply with respect to flights over the territory of the Member States carried out by non-Community air carriers and by aircraft operators using aircraft registered outside the Community that do not involve a landing on, or take-off from, such territory.

    In respect of liability for third parties, the minimum insurance cover per accident, for each and every aircraft, depends on the MTOW. For instance, the minimum insurance for an aircraft with an MTOW of less than 500,000 kilograms would be 500 million SDR and for an aircraft with 500,000 kilograms or more, the minimum insurance would be 700 million SDR.

    The Member States shall ensure that air carriers and aircraft operators comply with this Regulation. Member States may request evidence of compliance with the insurance requirements laid down in this regulation.

    With regard to Community air carriers, sanctions for infringement of this Regulation may include the withdrawal of the operating licence. With regard to non-Community air carriers, the sanctions may include refusal of the right to land on the territory of a Member State.

    If the aircraft operator is not a Community carrier, the minimum insurance cover has to be in accordance with Article 37 LuftVG. The figures are the same as in Article 7 of Regulation (EC) No. 785/2004 (i.e., it depends on the MTOW).

    With an aircraft hull insurance the interest of the owner in the maintenance of the asset value can be insured. The insurer must pay for loss or damage to the aircraft up to the agreed insurance sum.

    Another (not mandatory) type of insurance is aviation accident insurance. The insurer must pay the agreed sum to a passenger or to the employees of the air carrier on a strict basis (i.e., without clarifying whether or not the requirements for the liability of the air carrier are fulfilled (as would be the case in mandatory liability insurance)).

    VI COMPETITION

    i Relevant competition provisions and their implementation

    When several market participants act on a saturated, competitive market, there is a risk – and it is the natural aspiration of the companies concerned – of reducing competition or even to restrict competition completely.

    Considering the vast number of air carriers worldwide, the high pressure on pricing and the considerably increasing costs (especially in the past few years), one can only confirm that civil air transport is a very competitive market.

    At first sight, it appears to be a logical consequence that airlines have always been the addressee of European and German competition and cartel laws. The applicability of European competition and cartel regulations is, however, not as self-evident as one may think; in fact, it was only clarified by way of a judgment of the ECJ of 30 April 1986 (Nouvelles Frontières), Case C-209–213/84.

    The applicable EU stipulations are Article 101 et seq. of the Treaty on the Functioning of the European Union (TFEU) as well as Regulation (EC) No. 1/2003, whereas the relevant German law is the Act against Restraints on Competition (GWB).

    Article 101 Paragraph 1 TFEU contains a general prohibition of agreements and practices that restrict competition, whereas Paragraph 2 stipulates that 'any agreements of decisions prohibited pursuant to this Article shall be automatically void'. In the field of aviation law, these restrictions are mainly relevant in the case of agreements and cooperations of any kind between several airlines, for example concerning code-sharing, strategic alliances or agreements on tariffs.

    According to Article 102 TFEU, 'any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it' is prohibited 'as incompatible with the internal market in so far as it may affect trade between Member States'. In the field of aviation, violations of this provision could be seen in connection with frequent flyer programmes, interlining or in the case of certain commission regulations for travel agencies.

    In Germany, as well as these EU stipulations, the provisions of the GWB apply, which also aim to ensure functioning and effective competition by preventing restrictions to competition.

    However, upon entry into force of Regulation (EC) No. 1/2003 on 1 May 2004, German competition law was largely adapted to European competition law, except in the field of merger control.

    However, it is stipulated in Article 22 GWB that the GWB provisions remain applicable next to the Articles 101 and 102 TFEU. Yet, according to Article 3 Paragraph 2 of Regulation (EC) No. 1/2003 and Article 22 Paragraph 2 GWB, the application of German competition law may not lead to results different from Articles 101 and 102 TFEU.

    Consequently, Article 1 GWB, which stipulates that 'agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade and which have as their object or effect the prevention, restriction or distortion of competition' are prohibited (prohibition of cartels), also applies to airlines within Germany.

    Additionally, Article 18 et seq. GWB determine the prohibition of the abuse of a dominant market position and other practices restricting competition, as does Article 102 TFEU.

    ii Cooperation agreements between operators

    With this background, cooperation between airlines is vetted on the basis of the aforementioned standards as to whether they lead to an illegal restriction of competition or whether they are an abuse of a dominant market position.

    For example, pursuant to Article 101 TFEU and Article 1 GWB, price-fixing agreements concerning passenger tickets or cargo rates are considered to be a violation of the cartel prohibition. If the airlines come to agreements on the calculation of tariffs that then lead to the fixing of a price, this may already be considered as a violation of the cartel prohibition.

    Also, capacity agreements are an infringement against European and German competition law as such agreements lead to an artificial shortage of choice concerning certain routes.

    However, cooperation agreements that have no or only a small influence on the market are permissible.

    For this reason, code-sharing agreements are not per se illegal as they do not necessarily restrict competition. Therefore, when considering the legality of a code-sharing agreement, the individual agreement and its effects on competition must be taken into account. However, even if such a code-sharing agreement leads to a restriction of competition, this does not mean that the cooperation agreement is necessarily illegal; especially since the Commission generally finds the effect of code-sharing agreements positive. As far as the airlines are prepared to make concessions in other areas – such as the release of slots or the provision of interline offers – code-sharing agreements that restrict competition may nevertheless be permissible.

    iii Criminal liability for breaches of cartel law

    Because they are largely alike, German and European competition law have in common that they address undertakings and associations of undertakings and thus not the individuals who act for them.

    Under German law, violations of competition law are not considered and pursued as criminal offences but as administrative offences. Under German law, administrative offences can only be committed by natural persons and not by undertakings.

    However, a violation of competition law can only be committed by an undertaking (as stipulated in Article 101 TFEU). Therefore, this violation of competition law must be attributed to the individual, as provided in Articles 33 et seq. and 81 GWB in connection with Article 9 of the German Act of Administrative Offences (OWiG), to come under individual liability. An individual can be subject to a fine of up to €1 million.

    Additionally, as the individual acted on behalf of the undertaking, the individual's act can be attributed to the undertaking, with the result that the undertaking's liability is assumed.

    Articles 30 and 130 OWiG provide for such attribution of the individual's act to the undertaking so that, in the case of violations of competition law, a separate fine can be imposed on the undertaking (and also on the individual).

    According to Article 81, Paragraph 4 GWB the amount of the fine against the undertaking can be up to 10 per cent of the undertaking's turnover from the previous business year.

    Under German competition law, the focus is to sanction the undertakings involved in a violation of competition law as they are the profiteers of the infringement not the individuals acting for these undertakings. Therefore, the German Federal Cartel Office has usually only pursued the undertaking and not the individual.

    VII wrongful death

    See Section VI.

    viii ESTABLISHING LIABILITY AND SETTLEMENT

    i Procedure

    In the German aviation sector, the vast majority of cases are settled out of court. The conditions of the settlement are usually negotiated by the parties' lawyers. As a rule, the releasee wishes to obtain a release signed by the releasor. In German legal practice, the releases are relatively short. In most of the cases, they consist of no more than one to three pages. The release should state the facts that gave rise to the claim, the extent of the release and discharge and the governing law. In many cases, releases are only to be signed by the releasor. From a legal point of view, the signed release is an offer of the releasor to the releasee for the conclusion of a settlement agreement. This offer is accepted by the releasee by payment of the settlement amount. However, some releasors prefer a settlement agreement signed by both the releasor and the releasee. The settlement agreement is a binding contract. Should the releasee fail to pay the settlement amount after the settlement agreement has been signed by both sides, the releasor is entitled to bring an action against the releasee based on the signed settlement agreement.

    If the settlement negotiations fail, the claimant has to initiate proceedings before the claim becomes time-barred. Under German law, the standard limitation period is three years. It commences at the end of the year in which the claim arose; and the obligee obtains knowledge of the circumstances giving rise to the claim and of the identity of the obligor, or would have obtained such knowledge if he or she had not shown gross negligence (Article 199 of the German Civil Code (BGB). If negotiations between the obligor and the obligee are in progress in respect of the claim or the circumstances giving rise to the claim, the limitation period is suspended until one party refuses to continue the negotiations. The claim is statute-barred three months after the end of the suspension, at the earliest (Article 203 BGB). The action is to be brought before the court at the place of the defendant's residence or head office, unless the parties to the litigation have validly agreed on the jurisdiction of another court. Actions based on rights in property against the person who has no residence or head office in Germany can be brought before the court at the place where the defendant has assets such as an office, a bank account, property, etc.

    For complaints arising from tort, the court in the jurisdiction of which the tortious act was committed shall have jurisdiction (Article 32 of the German Civil Procedure Code). For complaints arising from tort, the claimant has the choice between the court at the place of the defendant's residence or head office and the court in the jurisdiction in which the tortious act was committed.

    If more than one person is responsible for the damage arising from a tort, then they are jointly and severally liable (Article 840 BGB). This means that the claimant can choose whether he or she brings action only against one, several or all liable parties. If the claimant sues more than one party for the same damage and the court holds these persons liable as joint and several debtors, it is up to the claimant to decide from which of these liable parties he requests payment of the full amount of damages awarded by the court. The defendants will then have to agree on the share of liability internally. Should they not be able to do so, they can initiate proceedings to clarify this issue.

    ii Carriers' liability towards passengers and third parties

    Carriers' liability towards passengers is governed by European legislation. To the extent that European legislation does not apply as in the case of a domestic, non-commercial flight, the claim can be based on the LuftVG, which contains liability rules that are consistent with the European liability rules.

    Carriers' liability towards third parties is governed by Article 33 LuftVG, if German law applies. Article 33 stipulates the strict liability of the aircraft operator in the case of death, bodily injury or damage to persons or objects. Article 33 does not apply to persons or objects on board the aircraft. The liability under Article 33 is strict liability without any exception or any possibility of exculpation. The liability under Article 33 is limited depending on the weight of the aircraft. In the case of an aircraft with a weight of more than 500,000 kilograms, the operator's liability is limited to 700 million SDR. In the case of death or injury of a person, the liability is limited to €600,000.

    If the death or injury of a passenger or third party resulted from a criminal act such as bodily injury or death caused by negligence or involuntary manslaughter committed by an individual, such individual maybe faced with criminal persecution. Only individuals can be held criminally liable, not companies. However, criminal liability of an individual may result from an organisational fault.

    iii Product liability

    In Germany, the Product Liability Act applies under which the manufacturer can be strictly liable if the product caused death, injury or damage.

    The maximum liability in the case of personal injury is limited to €85 million. The claim becomes time-barred in three years.

    The manufacturer is not liable if it did not put the product on the market or if the product did not have the defect when it was put on the market. A defect to the product is assumed under the Product Liability Act when it is not as safe as one can reasonably expect.

    Also, the party who puts a product on the market for the purpose of selling or renting it to someone can be regarded as the manufacturer under the Product Liability Act (e.g., an importer).

    Besides the Product Liability Act, liability can be engaged under the German law of tort, although this requires at least negligence.

    Under German law, there is a legal duty to maintain safety. In this respect the manufacturer has the duty to survey the product with a view to possible risk. If such a risk is detected, the manufacturer has to take the necessary measures to avoid damage. As under the Product Liability Act (e.g., the importer of an aircraft also has the same duties).

    Liability is also possible in the case of defective instruction, fabrication and instruction.

    Under the German law of tort, no liability limits apply. Material damages and also moral damages may be recoverable.

    iv Compensation
    Compensable types of loss or damage – injuries on board

    In the case of an injury on board, the injured passenger is entitled to the following positions.

    Reimbursement of medical costs

    Should the injured person have had any expenses in connection with their medical treatment (e.g., costs for medicine, doctor's fees, transportation costs to see a doctor) they are entitled to reimbursement of these costs.

    The expenses for medical treatment made by their health insurance must be reimbursed to the health insurance company (i.e., both the passenger and the health insurance company have their own right to claim).

    Damages for pain and suffering

    Depending on the severity of the accident and the injury, the injured person can be entitled to damages for pain and suffering. The amount of damages strongly depends on the extent of the injury, the number and severity of the operations, the duration of the medical treatment, the duration of the inability to work, psychological consequences, the factual consequences and the question of whether the injured passenger has permanent damages.

    The amounts can range between about €500 (e.g., for burns because of spilled coffee) and €20,000 (e.g., for permanent damage leading to disablement).

    Loss of income

    If the injured passenger was not able to work because of their injury, he or she is entitled to payment of his or her income to the extent that it is not paid to him or her by his or her insurer. However, if the insurer pays sickness benefit to the injured passenger, the insurer is entitled to claim for reimbursement from the air carrier.

    The right to payment of income exists for the complete time in which the injured passenger is not able to work.

    However, the injured passenger is obliged to mitigate the damage as much as possible. If the injured passenger is no longer able to work in his or her profession at all because of the injury, he or she is obliged to find another job that corresponds with his or her abilities or that he or she can adapt to, or to work part-time.

    Should special training or special equipment be necessary for the new job, the injuring party is obliged to pay for this as well.

    Fatal accidents

    Under German law and legal practice, in the case of a fatal accident, the following four types of loss or damage are compensable to the dependants of a deceased passenger.

    Pre-death pain and suffering

    The heirs of the deceased passenger are entitled to compensation in respect of the passenger's justified claim for pre-death pain and suffering. The heirs may be determined by a last will. If there is no last will the legal heirs are determined by law. Basically, under German law the spouse inherits 50 per cent, and children (one or more together) the other 50 per cent. Only if there are no children would the legal heirs be the parents and siblings in addition to the spouse.

    The amount of compensation granted by German courts for pre-death pain and suffering is determined by how long the suffering lasted before the person died. For example, the Federal Court of Justice (Germany's highest civil court) ruled that in the case of an accident where a person was severely injured and died a few seconds after the accident, no compensation for pain and suffering can be claimed. On the other hand, the fact that the deceased person had mortal fear or that he or she had an early death leads to an increase in the compensation amount.

    It is crucial for the amount of compensation whether the injured passenger was conscious and aware of the life-threatening situation or whether he or she was in a state of unconsciousness or insensitiveness until his or her death. If the death of the person does not occur immediately upon the event of the accident, but the process of dying only takes a very short time in which the injured person does not reacquire his or her cognitive abilities, compensation is not granted at all as the bodily injury is not considered as an immaterial impairment requiring financial compensation.

    There have been judgments awarding compensation from €500 (death several minutes after an accident) up to €20,000 (death 36 hours after brutal mistreatment).

    Funeral expenses

    The heirs of the victim who are obliged to bear the funeral expenses are entitled to reimbursement of the funeral expenses. Reimbursable funeral expenses usually are the expenses for:

    1. the funeral undertaker;
    2. the 'normal' mourning ceremony and the subsequent funeral meal;
    3. the tombstone;
    4. the establishment of the grave; and
    5. death notices and thank-you cards.

    In a normal case, the reimbursable funeral expenses will not exceed €20,000. However, if the victim was a well-known person with a wider sphere of activity or influence the reimbursable funeral expenses may exceed €20,000.

    Loss of maintenance

    If the victim was legally obliged to pay and actually paid maintenance, the dependant is entitled to compensation for the loss of such maintenance. Dependants that are entitled to such a claim for loss of maintenance are usually the spouse, children that are still minors and in some cases also the parents. The more the victim earned, and the younger the spouse and children were at the time of death, the higher the claim for loss of maintenance.

    Moral damages

    Until the new Paragraph 3 of Article 844 of the BGB came into force on 22 July 2017, under German law, the loss of a close relative in an accident did not automatically justify a claim for moral damages. Only under certain rather strict circumstances the next-of-kin of a deceased were entitled to compensation for nervous shock. This is a claim in tort.

    Such compensation for nervous shock was granted by German courts only if the three following preconditions were fulfilled:

    1. the claimant must be the next-of-kin of the injured or deceased. Next to family members, the fiancé or the life partner of the injured or deceased can also be entitled to compensation for nervous shock;
    2. the claimant must suffer a severe psychical impairment owing to the injury or death of his or her family member or his or her partner. In cases of 'normal' mourning, compensation is not granted by the courts. To receive compensation, the claimant must prove an impairment of health that considerably exceeds the impairments that family members as indirectly affected persons usually suffer from such psycho-pathological deficits during a longer period; and
    3. the event causing the injury or death of the person must objectively be a sufficient cause for the mental distress of the family member. According to the court rulings, severe injuries or the death of a person is considered sufficient even if the family member did not witness the accident but was only notified of the severe injuries or the death.

    In various court decisions, compensation was declined because the impairments put forward were not considered as ailments because the claimant was not a family member of the deceased.

    In cases in which compensation was granted from the courts, the compensation amounts were, for example, the following; in all cases, the claimants proved extraordinary mental impairments over a long period:

    1. €2,500 was granted to a mother in 1994 whose 17-year-old daughter was stabbed and killed before her eyes by a young man the girl rejected;
    2. €4,500 each was granted to the parents of a 12-year-old boy who was struck dead by a gravestone in 1997, although contributory negligence of the boy was assumed;
    3. €5,000 each was granted to two children who witnessed their mother being shot and killed in 1998;
    4. €10,000 was granted to a father whose daughter was killed in a car accident in 1998;
    5. €30,000 and €15,000 were granted in 1995 to the parents of three children who were all killed in a car accident. The difference of the sums is based on the different severity of impairments suffered by each of the parents; and
    6. €20,000 each (i.e., a total of €80,000) was granted by the Federal Court of Justice in 2006 to the parents and siblings of an 11-year-old boy who drowned in a deficiently maintained swimming pool.

    As can be seen from these examples, the amounts granted by German courts for nervous shock have increased over the years. Furthermore, according to our experience, it appears that German courts are now more inclined to assume the prerequisites of nervous shock to be fulfilled.

    The amendment of Article 844 of the Civil Code (see Section X.i) now grants a statutory right to damages for pain and suffering to the next-of-kin of the deceased or injured person. Whereas the persons to be counted among the close relatives has now been stipulated by law, the above mentioned further prerequisites (severe psychical impairment and objective cause for mental distress) still have to be fulfilled.

    State-funded social security system

    In Germany, a state-funded social security system exists. Health insurance and accident insurance are the crucial types of insurance in connection with air accidents. Most of the insurance companies are institutions under public law and are partly state-funded.

    Under German social security law, insurers can recover costs from third parties, especially the injuring party.

    ix Voluntary reporting

    To the best of our knowledge, there are no voluntary reporting initiatives in Germany.

    X the year in review

    i New statutory right to damages for pain and suffering for surviving dependants

    On 22 July 2017, Article 844 of the BGB and various other laws were amended by a new paragraph granting the surviving dependant a direct right to damages for pain and suffering.

    The new Article 844 Section 3 reads as follows:

    The person liable must pay the surviving dependant, who, at the time of the injury, was in a special personal close relationship with the person killed, appropriate monetary compensation for the mental suffering caused to the surviving dependant. A special personal relationship of proximity is presumed if the surviving dependant was the spouse, life partner, parent or child of the person killed.

    In the past, surviving dependants did not have a direct right to damages for pain and suffering under the BGB but only under very strict prerequisites (see Section VIII.iv). With the new law, it will be easier for the dependant survivors to claim for compensation for mental suffering.

    ii Decision of the German Federal Court of Justice: non-refundable tickets are non-refundable

    On 20 March 2018, the German Federal Court of Justice rendered a landmark decision. It held a clause in an airline's terms and conditions valid according to which a ticket is non-refundable.

    In the case decided by the Federal Court, the passengers claimed for refund of the full ticket price from the airline after they had cancelled their booking owing to the illness of one of the passengers. In the terms and conditions of the airline, it said, concerning these tickets 'A cancellation of the booking is not possible. The unused taxes and charges are refundable. The international/national charges are not refundable.' Upon the cancellation of their booking, the airline refunded the taxes and charges but not the fare to the passengers.

    The Federal Court decided that this clause is valid under German law. It held that the exclusion of the right to cancel the booking is not unfair for the passengers. The expenses an airline saves because of the booking cancellation are rather low as the costs of an airline are mainly fixed costs concerning the flight itself, which are hardly reduced if an individual passenger does not take the flight. The Federal Court further takes the view that a passenger who does not wish to pay the higher ticket price for a flexible booking guaranteeing a refund of the fare in the case of a booking cancellation, can cover the risk of illness by taking out the relevant insurance.

    The Federal Court concluded that the exclusion of the right to cancel the booking and the aim to facilitate the performance of a contract of carriage does not put the passenger at an unreasonable disadvantage.

    The Federal Court thus decided in favour of the airlines and contrary to the Regional Court Frankfurt that had made high demands on airlines in terms of evidence on whether the flight was fully booked and which expenses the airline had saved by not transporting the passenger. Before the decision of the Federal Court, non-refundable tickets were, in many cases, actually refundable if the airline could not prove that the flight was fully booked or if it had saved other expenses in connection with the passenger's booking cancellation.

    xi OUTLOOK

    The ECJ will soon render a preliminary ruling on a case referred to it by the Regional Court Berlin.17

    In this case, the passengers had booked a three-leg flight from Berlin via Madrid and San José to San Salvador with an online travel agency. The first leg from Berlin to Madrid was operated by Iberia Express, the second leg from Madrid to San José was operated by Iberia and the third leg from San José to San Salvador was operated by Avianca. The passengers had assigned their rights to the German claim company flightright who put forward a claim for compensation under Regulation (EC) No. 261/2004 amounting to €600 per passenger towards Iberia Express as the delay on this first flight caused the long delay of the passengers at their final destination.

    In the first instance, the Local Court Wedding dismissed flightright's claim on the ground that Iberia Express only operated the flight from Berlin to Madrid, but not the other flights. Moreover, the passengers had not booked their flights with Iberia Express to the effect that Iberia Express was not involved in the booking and planning of the entire journey. The first instance court took the view that Iberia Express was responsible only for the delay on the flight from Berlin to Madrid. Since this flight was only delayed by 59 minutes, the court held that compensation is not due.

    Upon flightright's appeal, the Regional Court Berlin referred the case to the ECJ with the following question:

    Can a right to compensation under Article 7 of Regulation No 261/2004 also exist in the case where a passenger does not catch a directly connecting flight after a relatively minor delay in arrival, with the result that there is a delay in arrival at the final destination of three hours or more, but the two flights were operated by different air carriers and the booking was made through a tour operator who carried out the booking of the entire flight journey via another air carrier?

    On 6 June 2018, the Advocate General has provided his opinion, taking the view that compensation is due in such a case.

    It remains to be seen which view the ECJ will take, however it can be expected that it shares the view of the Advocate General.


    Footnotes

    1 Peter Urwantschky, Rainer Amann, Claudia Hess and Marco Abate are partners at Urwantschky Dangel Borst PartmbB.

    3 Pursuant to the German Regulation on the Implementation of Airport Coordination (FHKV).

    17 flightright GmbH v. Iberia Express SA (C-186/17).