British Airways could face a multi-million-pound bill after agreeing to compensate two passengers for cancelled flights, it is reported.
The Times newspaper said the airline had agreed to pay £430 to the passengers who were stranded in Cape Town, South Africa, on February 2 after industrial disputes with cabin crew led to strikes that affected thousands of travellers.
BA had reportedly been negotiating with the claimants and Netherlands-based claims handling company EUclaim for several months and had argued that a clause in the EC regulation on passenger rights meant that it did not have to pay compensation.
The airline insisted that both the claimants and EUclaim signed a confidentiality agreement, but EUclaim has refused to abide by the agreement and has informed BA that it will be applying for the case to be heard in a Dutch court.
The company, which told The Times it had been contacted by 400 other BA passengers, hoped to establish a legal precedent that would strengthen other compensation claims.
"We have settled this claim for a handful of people with the Dutch company EUclaim BV without admitting liability," BA said.
"As normal in these circumstances there is a confidentiality clause attached. We are surprised that EUclaim BV say they intend to take this matter to the Dutch courts, as we believe it has been settled and EUclaim BV paid directly."
Article 5 of the EC regulations, which were introduced in February 2004, states that passengers who have their flights cancelled or replaced at short notice are entitled to compensation unless the cancellation is the result of "extraordinary circumstances".
EUclaim chief executive Hendrik Noorderhaven said on the company's website: "A strike caused by failing collective labour agreement negotiations cannot be seen as an extraordinary circumstance, particularly as in this instance the BA cabin crew strike action had been publicly announced."
But BA spokeswoman Amanda Allen said: "The strike does count as an extraordinary circumstance, and under the EU compensation rules that is one of the situations that prevents us from having to pay compensation."
