Airline passengers in Canada recently scored an important win regarding consumer protection. In International Air Transportation Association v Canada (Transportation Agency), 2024 SCC 30 [International Air], the Supreme Court of Canada (“SCC”) unanimously held that the Canada Transportation Agency’s (the “Agency”) Air Passenger Protection Regulations, SOR/2019-150 [Regulations] were valid regulations that did not violate the Convention for the Unification of Certain Rules for International Carriage by Air, 2242 UNTS 309 [Montreal Convention]. Building on the decision in Thibodeau v Air Canada, 2014 SCC 67 [Thibodeau], the SCC emphasized that the Montreal Convention focuses on individualized compensation, whereas the Regulations are consumer protections offering standardized compensation. Because of this, the court held that there was no conflict between the Regulations and the Montreal Convention.
Facts
In 2018, Parliament passed the Transportation Modernization Act, SC 2018, c 10, which amended the Canada Transportation Act, SC 1996, c 10 [CTA] to authorize the Agency to create regulations in relation to international travel, including flights to, from, and within Canada (International Air, para 10). Subsequently, the Agency adopted the Regulations in 2019, outlining standardized amounts of compensation for international flight delays, cancellations, and denial of boarding due to disruptions that are within a carrier’s control (ss 12(2)(d), 12(3)(d), 12(4)(d), 19, 20). The Regulations also include provisions for refunding baggage fees when the carrier loses or damages passengers’ baggage on international flights (s 23).
Following the adoption of the Regulations, the International Air Transportation Association, the Air Transportation Association of America, and several air carriers that operate in Canada (together, the “Airlines”) challenged the above-noted provisions. Specifically, they argued that the Regulations conflict with the exclusivity principle of the Montreal Convention and are thus ultra vires the Agency’s regulation-making authority under the CTA. (International Air paras 2, 11).
Canada signed the Montreal Convention in 2001 and incorporated it into the Carriage by Air Act, RSC 1985 c C-26, in 2002 (International Air para 9). The exclusivity principle in Article 29 of the Montreal Convention states that “any action for damages” must be in accordance with the convention(International Air para 4).
Judicial History
The Airlines brought their claim in a statutory appeal to the Federal Court of Appeal, which, per s 41 of the CTA, hears appeals from the Agency’s decisions on questions of law or jurisdiction (International Air para 13). The Federal Court of Appeal dismissed the claims brought by the Airlines, except the challenge to the provision regarding temporary loss of baggage. In their decision, de Montigny J.A. held that the compensation in the Regulations does not fall within the meaning of “any action for damages” of the Montreal Convention’s exclusivity principle (International Air para 16). Moreover, cancellation, denial of boarding, and delay are factual and legal concepts that also do not fall within the exclusivity principle. Regarding the temporary loss of baggage, however, the Federal Court of Appeal held that―while it did not violate the Montreal Convention―s 23(2) of the Regulations was ultra vires the CTA. Notably, s 86.11 of the CTA permits the Agency to make regulations regarding flights to, from, and within Canada, including connecting flights. These include areas such as flight cancellation or denial of boarding, and lost and damaged baggage (International Air para 10). However, as noted by the Federal Court of Appeal, s 86.11 does not provide jurisdiction to the Agency to make regulations regarding “temporarily lost” baggage (International Air para 19).
Issue
The only issue before the SCC was whether the provisions in the Regulations regarding minimum compensation to passengers on international flights in delay, cancellation, denial of boarding, and lost and/or damaged baggage situations were ultra vires the CTA (International Air para 21).
Decision
Rowe J., writing for a unanimous court, upheld the Federal Court of Appeal’s decision. The SCC held that the Regulations do not create an “action for damages” and, therefore, do not fall within the scope of the exclusivity principle in the Montreal Convention (International Air para 27). Rather, the provisions outlined in the Regulations create a series of consumer protection measures, which co-exist alongside the Montreal Convention (International Air paras 90-91).
Considering the Scope of the Montreal Convention
In coming to their decision, the SCC considered the scope of the Montreal Convention. The SCC affirmed their prior decision in Thibodeau, where they held that the Montreal Convention is exclusive with the scope of issues it addresses, and it does not regulate all aspects of international carriage by air (Thibodeau para 47). However, the SCC in the present case had to define the scope of the exclusivity principle in the Montreal Convention, which Thibodeau had left open. Thibodeau focused on whether the Official Languages Act fell outside the Montreal Convention; the SCC held that the claim was for individualized damages, and therefore within the scope of the Montreal Convention. Despite this holding, the SCC had left open the difference between individualized and standardized damages in Thibodeau, leaving the issue to be addressed in International Air (International Air para 37).
With reference to the Vienna Convention on the Law of Treaties, Can TS 1980 No 37, foreign jurisprudence, and foreign state practice, the SCC concluded that the “action for damages” in the Montreal Convention is for addressing individualized damages on a case-by-case basis (International Air para 62). Additionally, an action for damages is distinct from standardized compensation, which can be owed identically to all claimants regardless of the harm they may have suffered (International Air para 42).
Considering the Scope of the Regulations
Based on the language of the Regulations and their respective enforcement mechanisms, the SCC held that the Regulations provide standardized compensation and operate as a consumer protection scheme (International Air para 90). The Regulations do not provide individualized damage awards and do not permit carriers to avoid payment though due diligence or contributory defences, such that would be possible through individual damages (International Air para 87).
Because the Regulations do not create an “action for damages” within the scope of the Montreal Convention, the SCC held there was no conflict. Therefore, the Regulations were held to be valid and within the jurisdiction of the Agency.
Analysis
The SCC’s decision clarifies the Agency’s regulatory authority, reaffirming that the recent Regulations on consumer protections are within their jurisdiction. Moreover, the SCC’s decision also highlights that there are gaps in the Montreal Convention that can be covered with additional regulation. By clarifying the scope of the exclusivity principle in the Montreal Convention―something that had been left unanswered in Thibodeau―the SCC ensures greater predictability for both domestic and international airlines operating in Canada.
The ruling underscores the importance of regulatory coherence, minimizing the risk of conflicting obligations for air carriers that operate across multiple jurisdictions. The SCC’s reliance on jurisprudence from the European Court of Justice and the United States when considering the scope of the Montreal Convention offers consistency for airlines operating in multiple jurisdictions. By aligning its reasoning with foreign jurisprudence, the SCC reinforces the importance of a uniform approach to interpreting multilateral treaties, thus reducing the potential for regulatory fragmentation. The decision also signals a broader judicial commitment to maintaining Canada’s adherence to international legal frameworks while ensuring domestic regulatory bodies do not overextend their mandates.
Finally, the decision to uphold consumer protection legislation highlights a shift for Canadian airline passengers. International Air further reinforces consumer protection in air travel and signifies the court’s willingness to hold airlines accountable for their obligations under both domestic and international frameworks. Since the SCC’s holding, new decisions echoing similar sentiments have emerged, such as the British Columbia Supreme Court ordering WestJet to remove limits on compensation to passengers. This example signals growing judicial scrutiny over airline policies that may unfairly disadvantage consumers. With a backlog of 71,000 complaints in the Agency’s system in 2024, it is clear that Canadian passengers are dissatisfied with the current landscape of airline travel. Whether regulators and airlines will feel pressure to improve compliance with consumer protection laws remains to be seen, but for now the Regulations outline the standards they must comply to.
This article was edited by Jeremy Vyn.