Aer Lingus v The Minister for Finance ; The Minister for Finance v Aer Lingus Ltd; The Minister for Finance v Aer Lingus Ltd ;The Minister for Finance v Comhfhorbairt (Gaillimh) t/a Aer Arann; The Minister for Finance v Ryanair Ltd; Ryanair Ltd v The Revenue Commissioners
| Jurisdiction | Ireland |
| Judge | Mr Justice Max Barrett |
| Judgment Date | 17 April 2018 |
| Neutral Citation | [2018] IEHC 198 |
| Date | 17 April 2018 |
| Court | High Court |
| Docket Number | Record No. 2013/7517P Record No. 2013/3287P Record No. 2013/3288P Record No. 2013/3285P Record No. 2013/3286P Record No. 2012/6736P |
AND
AND
AND
and
AND
AND
AND
[2018] IEHC 198
Record No. 2013/7517P
Record No. 2013/3287P
Record No. 2013/3288P
Record No. 2013/3285P
Record No. 2013/3286P
Record No. 2012/6736P
THE HIGH COURT
A. THE AER LINGUS PROCEEDINGS
B. THE AER LINGUS/AER ARANN PROCEEDINGS
C. THE AER ARANN PROCEEDINGS
D. THE RYANAIR PROCEEDINGS
Finance – Practice & Procedure – Air travel tax – S.55 (2)(b) of the Finance (No. 2) Act 2008 – Regulation (EC) No 1008/2008 – Arts. 40.3.2 & 43 of the Constitution – Art. 108 of the Treaty on the Functioning of the European Union (TFEU) – Recovery of State aid – Modular trial.
Facts: The dispute between the parties pertained to the levy of air travel tax by the State of Ireland on commercial airlines operators at two different rates. Upon the complaint filed by the airlines operators, the Court of Justice of the European Union held that the levy of differentiated tax was unlawful and the State was entitled to recover the difference between the lower rate and the standard rate of tax. The State parties defendants now sought an order for the recovery of the State aid along with an order for directing the airlines operators to particularize the amount that the airlines operators alleged was owed to the State. The airlines operators also sought an order for splitting the trial into two modules namely, liability and quantum. One of the airlines sought an order for the amendment of its pleadings by way of defence, a right to set off any restitution entitlements in relation to the unlawful tax.
Mr. Justice Max Barrett refused to grant the desired reliefs to both the parties. The Court, however, allowed the relevant airline to amend its pleadings but declined to engage in the sequencing of the trial. The Court noted that since the issues between the parties were complex and the quantum of amount could not be particularized; thus, the modular trial would frustrate an efficient and timely resolution of the various issues presenting. The Court also observed that the intention of the parties to refer the matter to the Court of Justice of European Union could not be ignored, given the existence of a large number of issues between the parties. The Court found that the directions asked by the State for the particularization of amount of money was not feasible. The Court observed that the airlines operators were not required to identify the background material provided to their experts as it would breach the privileged relationship between the airlines and their advisors.
i) The Parties.
The parties to the various proceedings scarcely require introduction. The State parties are well-known. Each of Aer Lingus and Ryanair is a prominent commercial airline incorporated in Ireland. The involvement of Aer Arann perhaps requires a little more explanation. An Irish airline operator that now trades as Stobart Air, at all relevant times for the purposes of the proceedings to which it is party it had a franchise agreement with Aer Lingus pursuant to which Aer Arann operated certain of Aer Lingus' domestic regional services; it is therefore a co-defendant together with Aer Lingus in the Aer Lingus/Aer Arann State aid recovery proceedings.
(ii) The Facts.
It is necessary to outline certain of the background facts.
a. Introduction of Tax and Investigation by European Commission.
All of the above-entitled proceedings arise because of s.55(2)(b) of the Finance (No. 2) Act 2008. The effect of s.55(2)(b) was to levy from airline operators a tax of €2 per departing passenger in the case of flights to a destination no more than 300km from Dublin Airport, and a tax of €10 per departing passenger for all other flights (the "differentiated air travel tax"). All flights to destinations within the State fell within the €2 tax band. Outside the State, the only destinations covered by the €2 tax band were Northern Ireland, the western side of Great Britain, and the Isle of Man.
Sometime after the commencement of the differentiated air travel tax, the tax became the subject of two separate investigations by the European Commission, it seems following on complaint being made by Ryanair that the tax was contrary to the Treaty provisions on the freedom to provide services, Regulation (EC) No 1008/2008 of the European Parliament and of the Council of 24 September 2008 on common rules for the operation of air services in the Community (Recast) (O.J. L293, 31.10.2008, 3), and an unlawful State aid to the benefit of Aer Arann.
b. Letter of Formal Notice and Related Events.
On 18th March 2010, the European Commission issued a letter of formal notice to Ireland, in which it took the position that the differentiated air travel tax breached Article 56 TFEU and Regulation 1008/2008. (A letter of formal notice is a preliminary step by the European Commission pursuant to Article 260 TFEU in infringement proceedings against a Member State. In general, if the European Commission is satisfied with the response by a Member State to such a letter of formal notice – because the Member State indicates that it intends to amend national legislative provisions in order to remedy any such breach – the Commission will typically then "close its file" on the matter).
Following on from the European Commission's letter of formal notice, the differentiated air travel tax was replaced, by s.48 of the Finance Act 2011, with a single rate €3 tax applicable from 1st March, 2011, to every departure of a passenger from an airport within Ireland, regardless of distance travelled. Thereafter, on 16th June 2011, the European Commission announced by Press Release IP/11/734 (' Irish air travel tax: Commission welcomes overhaul of discriminatory charges; closes infringement case') that it had closed its investigation of the onetime differentiated travel tax.
c. State Aid.
On 25th July 2012, the European Commission, following investigation, issued a State aid decision addressed to Ireland, stating its view that, by virtue of the €2 tax remitted by certain airline operators pursuant to s.55(2)(b), as opposed to the €10 tax remitted by other airline operators, Ireland had put into effect a State aid in breach of Art.108(3) TFEU which, the Commission contended, was incompatible with the internal market. In the decision the European Commission contended that the unlawful aid arose by virtue of the lower tax being remitted by some airline operators (who were therefore deemed to be beneficiaries of the allegedly unlawful State aid). Following on the issuance of this decision each of Aer Lingus and Ryanair issued separate applications for annulment of same. They were each successful before the General Court. However, on appeal by the European Commission to the Court of Justice, that court, on 21st December, 2016, set aside the General Court's judgments and upheld the State aid decision, affirming that the State aid to be recovered from the relevant airline operators amounts to the difference between the lower rate of the air travel tax and the standard rate of €10 levied on each passenger (so a net €8 per passenger).
d. The Restitution Proceedings.
Aer Lingus.
On 19th July, 2013, Aer Lingus issued the above-entitled proceedings (Record No 2013/7517P) together with a statement of claim seeking repayment of the unlawfully paid tax at the upper rate during the relevant period when the unlawful differentiated tax was imposed from 30th March 2009 to 1st March 2011. In particular Aer Lingus claims that the differentiated travel tax imposed by s.55(2)(b) of the Act of 2008 was unlawful in that it imposed a higher tax on the operation of intra-Union air transport services than on domestic services. To that end, Aer Lingus claims that s.55(2)(b) of the Act of 2008 breached its rights under the TFEU, the Charter of Fundamental Rights of the European Union, the Constitution and Regulation 1008/2008. Further or alternatively, Aer Lingus claims for loss and damage consequent upon the said alleged breaches, including Francovich damages.
Ryanair.
On 9th July, 2012, Ryanair instituted its restitution proceedings by way of plenary summons. In those proceedings, Ryanair seeks damages, including Francovich damages allegedly caused by the differentiated travel tax paid during the period between 30th March, 2009, and 1st March, 2011 (to which Ryanair gives the shorthand phrase "the period of differential rate") and restitution of the said differentiated travel tax on the basis that it constituted (i) an unjustifiable interference with the property rights of Ryanair in breach of Arts. 40.3.2 and 43 of the Constitution, (ii) an unjustified breach of Regulation 1008/2008, (iii) an unjustified breach of Ryanair's rights to the free movement of service under Art.49 (for the period until December 2009) and Art.56 TFEU (for the period thereafter), and (iv) an unjustified interference with Ryanair's right to conduct a business and/or property under Art.16 and/or Art.17(1) of the Charter of Fundamental Rights of the European Union.
Aer Arann.
On 6th October, 2015, Aer Arann entered into a settlement agreement with ( inter alia) the Minister for...
To continue reading
Request your trial
-
Ireland v Comhfhobairt (Gaillimh) t/a Aer Arann; Ireland v Aer Lingus Ltd
...issue of liability more broadly. The background to these proceedings is identified in Aer Lingus v. Minister for Finance and ors, etc. [2018] IEHC 198, paras. 2-16. Perhaps the only additional point to note in the context of these proceedings is that the Court of Justice gave judgment on 21......
-
Why do lower courts refer in the absence of a legal obligation? Irish eagerness and Dutch disinclination
...referring a lot (Hogan, Humphreys).52. (IR) People over Winds [2017] IEHC 171 (Barrett J.), para. 21 (C-323/17); compare: Aer Lingus [2018] IEHC 198(Barrett J.), para. 46.53. (IR) H.I.D. [2013] IEHC 146 (Cooke J.), para. 31 (C-175/11).54. (IR) Lofinmakin [2011] IEHC 116 (Cooke J.), para. 6;......