In summary.

A special exception to the usual right to compensation was created by a recent ECJ judgment, where it considered hypothetically that ‘hidden manufacturing defects’ might be exceptional circumstances allowing a carrier a defence to compensation claims.

The real meaning of these words has never been tested in any court of record. However lower courts (in the UK at least) have not allowed it. I suspect it is on the level of the 787 battery fire problems myself.

The wider statement of that judgment, which went against the airline, was to say that technical problems will not normally be considered exceptional circumstances.

If there really was a ‘hidden manufacturing defect which impinges on flight safety’, you might expect all the airplanes of this type to be immediately grounded until they can be fully repaired. In your case, there is no plan to fix it until next year.

For these reasons I suspect that Finnair’s defence would not stand if you took them to court.

Your right to compensation.

Your right to compensation is created by EC Regulation 261/2004. It was intended to dissuade carriers from cancelling flights at short notice when they were underbooked.

In the text of the Regulation, the right only appears in the event of cancelled flights and not in the case of delays, but in the cases of Sturgeon v. Condor and Air France v. Folkerts, the European Court of Justice held that a delay of three or more hours must be interpreted as though it were a cancellation.

On those grounds, the Court (Fourth Chamber) hereby rules:

[…]

2. Articles 5, 6 and 7 of Regulation No 261/2004 must be interpreted as meaning that passengers whose flights are delayed may be treated, for the purposes of the application of the right to compensation, as passengers whose flights are cancelled and they may thus rely on the right to compensation laid down in Article 7 of the regulation where they suffer, on account of a flight delay, a loss of time equal to or in excess of three hours, that is, where they reach their final destination three hours or more after the arrival time originally scheduled by the air carrier.

However, your right to compensation does not arise in the event of unforeseeable circumstances. The court continued, essentially restating Article 5 (3) of EC 261/2004,

Such a delay does not, however, entitle passengers to compensation if the air carrier can prove that the long delay was caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken, namely circumstances beyond the actual control of the air carrier.

[Article 7 is where the compensation scheme based on flight distances is defined.]

Technical problems are not usually exceptional circumstances.

The European Court of Justice, and several national courts, have found that technical problems are simply every day activities in the business of running an airline. Another ruling in the Sturgeon judgment is that—

3. Article 5(3) of Regulation No 261/2004 must be interpreted as meaning that a technical problem in an aircraft which leads to the cancellation or delay of a flight is not covered by the concept of ‘extraordinary circumstances’ within the meaning of that provision, unless that problem stems from events which, by their nature or origin, are not inherent in the normal exercise of the activity of the air carrier concerned and are beyond its actual control.

The meaning of that last sentence has kept courts and advocates busy for the last few years. In England and Wales, the famous case is Huzar v. Jet2, which says that technical problems, even unexpected ones, are not beyond the airline’s ‘actual control’: the words ‘actual control’ relate to matters such as terrorism or volcanoes, not manufacturing problems.

36. […] As the CJEU recognised in paragraph 24 of Wallentin-Hermann, difficult technical problems arise as a matter of course in the ordinary operation of the carrier’s activity. Some may be foreseeable and some not but all are, in my view, properly described as inherent in the normal exercise of the carrier’s activity. They have their nature and origin in that activity; they are part of the wear and tear. In my judgment, the appellant’s submissions fail to give proper effect to the language of the exception. It distorts the meaning of limb 1 in defining it by reference to limb 2, and thereby renders it superfluous. It makes an event extraordinary which in common sense terms is perfectly ordinary.

I am not so familiar with the case law in other EU member states, but a Google search may reveal some more history.

‘Hidden manufacturing defects’.

Eventually in 2015, the European Court of Justice heard the case of van der Lans v. KLM. There are two key paragraphs in that judgment.

First the Court makes absolutely clear that routine technical problems are not exceptional circumstances.

37. Since the functioning of aircraft inevitably gives rise to technical problems, air carriers are confronted as a matter of course in the exercise of their activity with such problems. In that connection, technical problems which come to light during maintenance of aircraft or on account of failure to carry out such maintenance cannot constitute, in themselves, ‘extraordinary circumstances’ under Article 5(3) of Regulation No 261/2004.

However, the Court goes on to say.

38. Nevertheless, certain technical problems may constitute extraordinary circumstances. That would be the case in the situation where it was revealed by the manufacturer of the aircraft comprising the fleet of the air carrier concerned, or by a competent authority, that those aircraft, although already in service, are affected by a hidden manufacturing defect which impinges on flight safety. The same would hold for damage to aircraft caused by acts of sabotage or terrorism.

(My emphasis.) You can see now why the air carriers are so keen to present all of their technical problems as though they arise from hidden manufacturing defects: it gives them a quick way out.

Back to your question.

The question is really, is the design defect in your case the kind of serious flaw that was contemplated by the ECJ in the case of van der Lans v. KLM?

The full expression in paragraph 38 must be read: “hidden manufacturing defect which impinges on flight safety”. The defects are also considered next to air piracy and terrorism. The remainder of the judgment makes clear that other technical problems are not exceptional circumstances. Indeed the problem that Ms. van der Lans faced was a faulty fuel pump, similar to your circumstances.

My personal view is that the ‘hidden manufacturer defects’ exception was created in consideration of the Boeing 787 battery fire problems, not of the many minor software problems that happen every day.

Yet as Finnair admits, it has no plans to replace this part (or update the software) until next year. Therefore I suggest that it can hardly be impinging on flight safety.

There are numerous organizations that will be happy to fight your case for you (in exchange for a fee if they win) if you do not wish to bring a court action yourself. You may wish to consult them for more advice on this situation.