Op-Ed: “It’s (not) all ‘bout the money: The Court’s ruling in Braathens Regional Aviation” by Anna Wallerman Ghavanini
The Court of Justice has a long history as a champion of effective judicial protection in equal treatment law, starting from the landmark ruling in von Colson and Kamann (14/83) in 1984, in which it established that compensation for victims of discriminatory behaviour must not be merely nominal but adequate in relation to the damage sustained and, in particular, sufficient to have a deterrent effect. This conclusion has subsequently been upheld and refined in a long line of cases on judicial protection in the field of equal treatment law including Marshall (C-271/91), Draehmpaehl (C-180/95)and Arjona Camacho (C-407/14), establishing inter alia that financial compensation cannot be only partial or conditional on fault on the part of the defendant.
On Thursday last week, 25 April 2021, the Grand Chamber of the Court of Justice added to this impressive line of case law through its long-awaited judgment in Braathens Regional Aviation (C-30/19). At 27 months since the case was registered at the Court of Justice, the Court has taken its time to deliberate well beyond its usual turnaround time. However, as we know, good things come to those who wait.
The facts of the case have previously been described in this Insight and will only be briefly set out here. Prior to the departure of a domestic flight in Sweden in July 2015, an individual of South American origin, along with another passenger, was singled out for an additional security check and subsequently removed from the flight, which departed without him. According to the Equality Ombudsman, who brought the case against the airline (Braathens) on behalf the aggrieved person, this treatment amounted to direct discrimination on the basis of his physical appearance and ethnicity.
The Ombudsman sought compensation for the person aggrieved in the amount of 10,000 SEK (approx. 1,000 euros); a sum that may be far from life-changing but nevertheless considerably exceeds the kind of expenses that led the Court to denounce merely symbolic compensation in von Colson and Kamann. Yet, it was clearly small enough for the defendant to estimate the cost of entering a defence to be higher – instead of attempting to prove that its actions had not been discriminatory, Braathens agreed to pay the compensation sought, while nevertheless denying that its behaviour had amounted to unlawful discrimination.
Under the applicable Swedish procedural law, the defendant’s admission of the claim entails that a judgment should be rendered in favour of the applicant solely on the basis of that admission, without any need for the court to examine whether the claim is well-founded. The Ombudsman’s request that the court nevertheless examine the merits of the case in order to give a declaratory judgment to the effect that the individual had indeed been subject to unlawful discrimination was therefore rejected at both first and second instance.
The question that was brought on appeal before the Supreme Court and subsequently referred to the Court of Justice was consequently whether the award of damages, in an amount exceeding a purely nominal value, to a person having been subject to unlawful discrimination can be considered a sufficient remedy, where it was neither admitted nor established that the alleged discrimination had indeed occurred.
Having recalled – at some length – its previous case law on effective remedies in cases of discrimination, the Court answered this question in the negative, holding that national rules preventing the applicant from obtaining a civil court ruling on the existence of discrimination are contrary to Article 7 (defence of rights) and Article 15 (sanctions) of Directive 2000/43, both interpreted in light of Article 47 of the Charter of Fundamental Rights.
In relation to Article 7, the Court held that a right to have the alleged discrimination established by a court if it is not recognised by the defendant follows ‘necessarily’ from the obligation to make available enforcement proceedings to persons claiming to have been discriminated against. This suggests that the term ‘enforcement of obligations’ in that Article must not be interpreted narrowly in a way that excludes declaratory actions. In relation to Article 15, the Court found that the financial sanction provided for by Swedish law, when not paired with an admission or establishment of the discriminatory nature of the defendant’s actions, offered neither full compensation nor effective dissuasion.
The lack of dissuasive effects appears to be borne out by the facts of the case. The defendant’s agreement to pay the damages can only be understood as the outcome of a cost/benefit analysis, whereby the time invested in pursuing a defence, the reputational damage of a trial, and the risk of eventually being ordered to pay the costs outweigh the cost of simply paying the amount sought up front.
As for the compensatory aspect, the Court recalled in paragraph 39 of its judgment that financial compensation for discrimination must ‘enable the loss and damage actually sustained as a result of the discrimination in question to be made good in full’ (emphasis added). Where discrimination has tangible economic effects, such as in the case of unlawful dismissal from gainful employment as was the case for example in Marshall, this requirement of full financial compensation is comparably straightforward. In many other cases, however, the injury caused by discrimination is mainly or wholly moral rather than monetary, meaning that it is difficult to calculate what full compensation actually is and whether it can be provided by financial means. Following the lead of Advocate General Saugmandsgaard Øe, the Court recognised in paragraphs 47 and 49 of its judgment that the purpose of the applicant’s action was mainly to obtain recognition of his position. ‘Adequate compensation must at least to some extent be commensurate to the damage sustained’ is perhaps a principle that can be deduced from the Court’s reasoning.
Arguably, this conclusion represents a shift of focus in the Court’s case law. While its early rulings including and following von Colson were intent on ensuring satisfactory levels of financial compensation, more recent rulings such as Feryn (C-54/07) and Asociatia Accept (C-81/12) have increasingly turned the attention to non-monetary sanctions. This can partially be explained by developments of equality law. It may however also be seen as a recognition of the increasing role of courts and judicial proceedings in the pursuit of collective interests and public goods, as seen inter alia in the recent Urgenda case and the several cases that have come before the Court concerning the protection of online privacy.
In this context, the Court’s rejection of the defendant’s argument, that the Swedish legislation at issue protected party autonomy and promoted amicable settlements, appears well-judged. While there may be no objection in principle to allowing out-of-court settlements in disputes arising from discriminatory behaviour, these cases are different from commercial and many other civil disputes on account of the moral nature of the harm done as well as the imbalance of power between the parties. The ability of a defendant to essentially pay its way out of enforcement proceedings against the wishes of the applicant looks more like a bully’s impunity than an amicable settlement.
In the latter regard, comparison can be made with the Court’s case law in the field of consumer protection, where the (presumed) imbalance between the parties in terms of both knowledge and economic resources has led the Court to demand that national courts take active action to level the playing field. Discrimination cases regularly display the same inequality between the parties as in consumer relations, which arguably might entitle victims of discrimination to the same level of procedural protection. This has been partially recognised by the EU legislature through the creation in equal treatment law of specific burden of proof rules and the requirement on Member States to allow civil society and/or public watchdogs to appear on behalf of individuals claiming to have suffered from unequal treatment. Possibly, legislative interventions such as these can partially explain that the Court chose an approach based on secondary law in conjunction with Article 47 of the Charter over the procedural autonomy approach it often favours in consumer protection cases. It remains to be seen whether the Braathens judgment is the beginning of the development of procedural as well as remedial rights in equal treatment law. At any rate, it is a welcome recognition of the fact that civil justice is about more than money – in cases of unlawful discrimination, and beyond.
Anna Wallerman Ghavanini is Associate Professor of EU law at the University of Gothenburg. Her recent work has been published inter alia in European Papers, European Law Journal, and European Law Review.