The European Union's top court has said that Ryanair has to pay out compensation to passengers that were stranded because the 2010 volcano eruption in Iceland.

The European Court of Justice said today that airlines face an obligation to provide care, even in such "extraordinary circumstances" as the eruption of the Eyjafjallajokull volcano.

The eruption left millions of passengers stranded because it was too dangerous to fly through the ash clouds.

The court gave its opinion after an Irish passenger was stranded in southern Portugal for a week during the crisis and demanded compensation of almost €1,130.

Ryanair has said it paid out €26.1m to stranded passengers, but it has refused many claims, citing their "excessive" cost.

The court said passengers can only claim "reasonable" costs.

The ruling will affect all air carriers in the European Union.

The ruling arises from a case taken by Denise McDonagh of Terenure, Dublin, who was a passenger on a Faro to Dublin flight scheduled for 17 April 2010, which was cancelled following the volcanic eruption.

Flights did not resume until 22 April 2010 and Ms McDonagh was not able to return to Dublin until 24 April 2010.

During that period, Ryanair did not provide her with any care and she argued that the airline was obliged to pay her expenses corresponding to the costs of meals, refreshments, accommodation and transport.

The Dublin Metropolitan District Court, the court before which the case was brought, asked the Court of Justice whether the closure of airspace as a result of a volcanic eruption comes under the notion of "extraordinary circumstances".

The European Court ruled: "An air carrier must provide care to passengers whose flight has been cancelled due to extraordinary circumstances, such as the closure of airspace following the eruption of the Eyjafjallajökull volcano.

"EU law does not provide for a temporal or monetary limitation on that obligation."

Speaking on RTE's Drivetime, Ryanair spokesman Stephen McNamara said the ruling means the airline's €2 "ash cloud levy" will have to remain in place.

"Effectively what the statement from the Commission said today is that airlines owe it to the passenger to charge them more in order to cover these kinds of eventualities.

"So what they've actually said is that Ryanair are right to have a levy in place, now we don't think that it is right to have a levy in place.

"We don't think that passengers that travel today, who experience no interruption should subsidise people in six, or ten or 12 months time, simply because the insurance companies have gotten away with this act of God claim," he said.

In a statement earlier, Ryanair said it regrets the decision of the European Court which now allows passengers to claim for flight delays which are ''clearly and unambiguously outside of an airline’s control''.

The airline pointed out that the travel insurance companies escaped liability by claiming that the ash cloud was an ‘act of God’.

''Today’s decision will materially increase the cost of flying across Europe and consumer airfares will increase as airlines will be obliged to recover the cost of these claims from their customers,'' the company said.

It also added that the decision in today’s case has no retrospective impact for Ryanair as all other ‘ash’ related claims have been settled with passengers.