Ryanair Ltd v Minister for Transport and Another

• Jurisdiction: Ireland
• Judge: Ms. Justice Finlay Geoghegan
• Judgment Date: 02 April 2009
• Neutral Citation: [2009] IEHC 171
• Court: High Court
• Date: 02 April 2009

[2009] IEHC 171

THE HIGH COURT

[No. 1038 J.R./2008]

Ryanair v Min for Transport & Aer Arann

JUDICIAL REVIEW

COMMERCIAL COURT

IN THE MATTER OF COUNCIL REGULATION 2408/92 (EEC) OF 23 rd JULY, 1992, ON ACCESS FOR COMMUNITY AIR CARRIERS TO INTRA-COMMUNITY AIR ROUTES

BETWEEN

RYANAIR LIMITED

APPLICANT

AND

THE MINISTER FOR TRANSPORT

AND

AER ARANN

RESPONDENTS

EEC REG 2408/92 ART 2

EEC REG 2408/92 ART 4(1)(A)

EEC REG 2408/92 ART 4(1)(D)

EEC REG 2408/92 ART 4(1)(E)

EEC REG 2408/92 ART 4(1)(F)

EEC REG 2408/92 ART 4(1)(H)

EEC REG 2408/92 ART 4(1)(I)

LOWES v COILLTE TEORANTA UNREP HERBERT 5.3.2003 2003/32/7625

LYNCH, STATE v COONEY 1982 IR 337

RSC O.84 r20

EEC REG 2408/92 ART 4

EEC REG 2408/92 ART 4(1)

EEC DIR 92/50

EEC DIR 2004/18

ASSOCIAZIONE NAZIONALE AUTOTRASPORTO VIAGGIATORI (ANAV) v COMUNE DI BARI 2006 ECR I-3303 2006 2 CMLR 63

TELAUSTRIA VERLAGS GMBH & TELEFONADRESS GMBH v TELEKOM AUSTRIA AG 2000 ECR I-10745

EEC REG 2408/92 ART 4(1)(E)(ii)

EEC REG 2408/92 ART 4(1)(E)(i)

PRESSETEXT NACHRICHTENAGENTUR GMBH v AUSTRIA 2008 BUS LR D118

1 JUDGMENT of Ms. Justice Finlay Geoghegan delivered on the 2nd day of April, 2009

2 1. On 9 ^th September, 2008, the High Court (Feeney J.) granted leave to the applicant, Ryanair, to seek an order of certiorari of the decision of the Minister for Transport ("the Minister") to award the Public Service Obligation (PSO) contract for the Knock-Dublin route to Aer Arann and related declarations and ancillary reliefs on the grounds set out at paragraph K of the statement of grounds. The proceedings were admitted to the Commercial List. The Minister has delivered a notice of opposition and fully defended the application. Aer Arann has chosen not to participate in the proceedings.

3 2. The primary challenge of Ryanair is on the basis that the contract was awarded to Aer Arann without any proper tender process in contravention of Council Regulation No. 2408/92 (EEC) and was therefore ultra vires the Minister. Ryanair also challenges the decision, even if made pursuant to a tender process, on the basis that the contract awarded contravenes the minimum frequency and seat requirements for the Knock-Dublin route in notice 2005/C 39/06 and/or is in breach of Regulation 2408/92 by providing for the payment of certain potential additional compensation for the month of October 2008, to that specified in the tender of Aer Arann.

4 3. The Minister objects to the locus standi of Ryanair to challenge the decision, submits the decision made was in accordance with Regulation 2408/92, and the tender process and submits that even if the decision was ultra vires the Minister that as a matter of discretion, the Court should refuse Ryanair the reliefs sought.

5 4. Council Regulation No. 2408/92 (EEC) of 23 ^rd July, 1992, on access for Community air carriers to intra-community air routes ("the Regulation"), provides that a member state, having informed the Commission, may impose a public service obligation in respect of scheduled air services to an airport serving a peripheral or development region within its territory, such route being considered vital for the economic development of the region. Where a member state operates a public service obligation, that obligation may include a requirement that any air carrier intending to operate the route gives a guarantee that it will operate the route for a certain period. The member state may limit access to the route to one carrier. The right to operate such services must be offered by public tender. The member state may reimburse an air carrier which carries out the public service obligation, which reimbursement shall take into account the costs and revenue generated by the service. The Regulation sets out the procedures which, at the material time as to these proceedings, were required to be followed by each EU member state when it granted PSO contracts under the Regulation.

6 5. The tender process is governed by the provisions of the Regulation, the published notices containing the route specifications and the provisions of the invitation to tender. In addition, the parties argue that this tender process is also governed by certain general principles, by analogy with EU public procurement law, such as equal treatment and transparency.

Regulatory Framework

7 6. The Regulation came into force on 1 ^st January, 1993. The Regulation recognised the need to:

"make special provision, under limited circumstances, for public service obligations necessary for the maintenance of adequate air services to national regions".

8 Article 2 defined "public service obligation" to mean:

"any obligation imposed upon an air carrier to take, in respect of any route which it is licensed to operate by a Member State, all necessary measures to ensure the provision of a service satisfying fixed standards of continuity, regularity, capacity and pricing, which standards the air carrier would not assume if it were solely considering its commercial interest".

9 7. Article 4 (1)(a) provides a member state may impose a public service obligation:

"in respect of scheduled air services to an airport serving a peripheral or development region in its territory or on a thin route to any regional airport in its territory, any such route being considered vital for the economic development of the region in which the airport is located".

10 The Commission is required to publish the existence of this Public Service Obligation in the Official Journal of the European Communities ("the Official Journal").

11 8. Article 4 (1)(d) provides that if no air carrier has commenced or is about to commence scheduled air services on a route in accordance with the Public Service Obligation which has been imposed on that route, then the member state may limit access to that route to only one air carrier for a period of up to three years after which the situation shall be reviewed. The right to operate such services shall be offered by public tender, either singularly or for a group of such routes, to any Community air carrier entitled to operate such air services. The invitation to tender shall be published in the Official Journal.

12 9. Article 4 (1)(e) and (f) provide:

13 a "(e) The invitation to tender and subsequent contract shall cover, inter alia, the following points:

14 (f) the standards required by the Public Service Obligation;

15 (ii) rules concerning amendment and termination of the contract, in particular to take account of unforeseeable changes;

16 (iii) the period of validity of the contract;

17 (iv) penalties in the event of failure to comply with the contract.

18 (f) The selection among the submissions shall be made as soon as possible, taking into consideration the adequacy of the service, including the prices and conditions which can be quoted to users, and the cost of the compensation required from the Member State(s) concerned, if any."

19 10. Article 4 (1) (h) and (i) provide:

20 a "(h) A Member State may reimburse an air carrier, which has been selected under subparagraph (f), for satisfying standards required by a Public Service Obligation imposed under this paragraph; such reimbursement shall take into account the costs and revenue generated by the service.

21 (i) Member States shall take the measures necessary to ensure that any decision taken under this Article can be reviewed effectively and, in particular, as soon as possible on the grounds that such decisions have infringed Community law or national rules implementing that law."

22 11. On 16 ^th February, 2005, notices were published in the Official Journal revising PSOs in respect of a number of scheduled air service routes in the State, including the Knock-Dublin route. Notice 2005/C39/06 concerned the Knock-Dublin route and contained the specifications required for that route, including a minimum frequency of one return flight per day, seven days per week, with a minimum of thirty seats each way. Paragraph 2.3 of notice 2005/C39/06 provided that the flight schedules should enable passengers, including passengers on business trips, to make a round trip within the same day. A further notice was published in the Official Journal on 29 ^th January, 2008, notice 2008/C24/05, indicating that Ireland would be revising the PSOs published on 16 ^th February, 2005, including the Knock-Dublin route. This revision contained adjustments to the route specifications, such as the maximum fare, which would take effect from 22 ^nd July, 2008. A further notice, 2008/C25/04, was published in the Official Journal on 30 ^th January, 2008, which related to invitations to tender by Ireland in respect of scheduled air services on a number of routes, including the Knock-Dublin route ("the invitation to tender").

23 12. The invitation to tender announced that there would be a tender process which would be subject to the provisions of the Regulation. Services would commence on 22 ^nd July, 2008.

24 13. At paragraph 6, it was stated that the tenders would be evaluated according to which tender most economically advantageous, while was also taking account of the carrier's capacity to secure the operation of the PSO air service for the duration of the contract term. The deadline for the submission of tenders was 3 ^rd March, 2008.

25 14. Paragraph 2 of the invitation to tender recited that the object of the invitation to tender is the:

"Operation from 22 July 2008 of direct scheduled air services on one or more of the routes listed above in accordance with the public service obligations imposed on the route(s) in question and published in OJ C39 of 16 February 2005, as amended by the notice published in OJ C24 of 29 January 2008."

26 15. Paragraph 2 further provided that airlines could submit either stand-alone...