Richard Campbell examines in this article the CJEU ruling in Tez Tours (C-299/22) which sought to answer that question.
When COVID-19 struck, the world was forced indoors and the impact on the travel industry was manifest as planes were grounded and airports closed. Would-be holidaymakers came to appreciate that the only escape was to the lavish and gossipy world of Netflix’s Bridgerton. With many holidaymakers wanting to terminate their package holidays, Europeans turned to their rights under the Package Travel Directive (Directive (EU) 2015/2302).
Article 12[1] in summary provides:
- A traveller may terminate the package holiday contract at any time before the start of the package.
- Where the traveller terminates the package travel contract under the article, they may be required to pay an appropriate and justifiable termination fee to the organiser.
- The package travel contract may specify reasonable standard termination fees based on:
- The time of the termination of the contract before the start of the package; and
- The expected cost savings and income from alternative deployment of the travel services.
- In the absence of standardised termination fees, the amount of the termination fee must correspond to the price of the package minus the cost savings and the income from alternative deployment of travel services. The organiser must provide a justification for the amount of the termination fee if the traveller so requests.
However, the Article goes onto state that, notwithstanding the above provisions, in the event of “unavoidable and extraordinary circumstances” occurring at the place of the destination or its immediate vicinity and which significantly affect the performance of the package or the carriage of the passengers to the destination, the traveller may terminate the package travel contract before the start of the package without paying any termination fee (and is entitled to a full refund of any payments made for the package but is not entitled to additional compensation.)
The Article also allows the organiser to terminate the package travel contract when they are prevented from performing the contract because of unavoidable and extraordinary circumstances and notifies the traveller of the termination of the contract without undue delay before the start of the package (and similarly on termination the organiser shall provide the traveller with a full refund of any payments made for the package, but is not liable for additional compensation).
How does COVID-19 and the lockdown landscape fit into these rights for both holiday makers and organisers alike?
The Court of Justice of the European Union (CJEU) sought to answer this question in a judgment issued on 29 February 2024 in Tez Tours (C-299/22), following a request for a preliminary ruling from the Supreme Court of Lithuania concerning the interpretation of Article 12(2) of the Directive. As stated in the CJEU’s judgment, the request was made ‘in proceedings between M.D and ‘Tez Tour’ UAB concerning the right invoked by M.D to terminate, without charge, the package travel contract he had entered into with the latter on the grounds of the health risk associated with the spread of COVID-19’. [2]
M.D had entered into a package travel contract on 10 February 2020 with Tez Tours for a family holiday to the United Arab Emirates from 1 to 8 March 2020, with return flights between Vilnius, Lithuania and Dubai, UAE and a seven-night stay in a hotel.
However, on 27 February 2024 M.D told Tez Tours that he wanted to terminate the package travel contract and then use the sums that he had paid on a trip on a future date ‘when the health risk associated with the spread of COVID-19 would have decreased.’
M.D submitted he was entitled to full reimbursement as his termination of the holiday contract was a result of the ‘occurrence, at the place of destination of the package tour or in the immediate vicinity thereof, of unavoidable and extraordinary circumstances which were likely to make it impossible to carry out the tour safely or to transport the passengers to the destination, in particular without exposing them to inconvenience or health risks’. He felt this was evidenced by information about the COVID-19 spread (that was being published in the press and by the relevant authorities) and also the increased number of global infections, flight restrictions and ‘social distancing’ recommendations.
Tez Tours disagreed and submitted that the spread of COVID-19 could not, on the termination of the package contract, be regarded as a circumstance making it impossible to perform the package concerned.
On appeal from M.D, the Lithuanian Supreme Court relied on the CJEU for guidance on the interplay between the pandemic and the conditions in which the existence of “unavoidable and extraordinary circumstances”, within the meaning of Article 12(2), could be relied on by a traveller.
The CJEU was asked to answer the following questions:
- Is it necessary for there to be an official warning from the appropriate authorities of the State of departure and/or arrival to refrain from unnecessary travel and/or classification of the destination (and potentially departure) country as belonging to a risk area?
- When assessing whether unavoidable and extraordinary circumstances exist at the place of destination or its immediate vicinity (i) should account be only taken of objective circumstances (i.e. where there performance becomes both physically and legally impossible) or does it cover cases where performance is not impossible but becomes complicated and/or economically inefficient (in terms of traveller safety) and (ii) are subjective factors relevant (such as the traveller belonging to a higher risk group)?
- Does the fact that the circumstances on which the traveller relies had already arisen or were at least already presupposed/likely when the trip was booked affect in some way the right to terminate the contract without paying a termination fee?
- When assessing whether unavoidable and extraordinary circumstances exist at the place of destination or its immediate vicinity at the time of termination of a package travel contract and whether they significantly affect the performance of the package, does the concept of “the place of destination or its immediate vicinity” cover only the [country of the place of destination] or, taking into account the nature of the unavoidable and extraordinary circumstance, that is to say, a contagious viral infection, also the [country of the place of departure], as well as points related to going on and returning from the trip (transfer points, certain means of transport, and so forth)?
Taking each question in turn the CJEU reached the following conclusions:
Question one
The CJEU took a step back and noted firstly that the definition of “unavoidable and extraordinary circumstances” could be found at point 12 of Article 3 (namely ‘a situation beyond the control of the party who invokes such a situation and the consequences of which could not have been avoided even if all reasonable measures had been taken’). Furthermore, Recital 31 clarified the scope of the concept (namely ‘it may cover for example warfare, other serious security problems such as terrorism, significant risks to human health such as the outbreak of a serious disease at the travel destination, or natural disasters such as floods…which make it impossible to travel safely to the destination as agreed in the package travel contract’).
The Court considered that it could not be inferred from the relevant provisions and recitals that ‘in order to be able to establish the occurrence of ‘unavoidable and extraordinary circumstances’, within the meaning of that provision, it is necessary for the competent authorities to have issued an official recommendation advising travellers against travelling to the area concerned or an official decision classifying that area as a “risk area”’. [32]
Further, the CJEU reminded itself that the Directive aims to harmonise the rights and obligations arising from package travel contracts, and that the conditions for official traveller recommendations to be given from competent local authorities amongst member states are not uniform and therefore to find that Article 12(2) would be subject to adoption of those recommendations ‘is likely to compromise the objective harmonisation pursued by the directive’. [35]
The Court acknowledged that such recommendations may have considerable evidential value (as to circumstances and consequences for performance of the package), and how the evidence is admitted and evaluated is down to the national court, but ‘such recommendations and decisions cannot, however, be given evidential value to the extent that their non-existence would be sufficient to prevent the occurrence of those circumstances from being established’. [37]
Question two
The CJEU reminded itself of the wording of Article 12(2) – which includes ‘significantly affect the performance of the package or carriage…’ – and concluded that the termination right was not subject to the condition that circumstances have arisen which make performance/transfer ‘objectively impossible.’ On the contrary, ‘in accordance with their usual meaning in everyday language, those terms clearly have a broader scope, covering not only the consequences that exclude the very possibility of executing the package, but also those that significantly affect the conditions under which the package is performed.’ [48] The Court felt this was reflected in the aforementioned Recital 31 where, say, risks of terrorism may fall within the scope of Article 12(2), and whilst they might objectively pose a risk to traveller safety, it would not make it “objectively impossible” to perform the package.
As such, the Court considered that a crisis such as the pandemic could be regarded as having ‘significant effects’ on the performance of a package, whilst not necessarily making performance objectively impossible.
Turning to the issue of the relevance of personal factors relating to the individual traveller (e.g. travelling with young children), the Court emphasised that ‘those consequences must be established objectively, in the same way as the circumstances which caused them…[and] there is nothing in the wording of Art 12(2) to suggest that personal factors…should be disregarded in the context of that assessment, in so far as they are objective in nature’. [54/55]
When considering whether Article 12(2) was satisfied at the date of termination, it is not sufficient for the holidaymaker to ‘rely on purely subjective assessments or fears’ [69], nor should the holidaymaker ‘be expected to rely solely on the organiser’s assessment of the feasibility of the performance of the trip in question.’ [70] As such, ‘in order to assess the likelihood and significance of the effects, within the meaning of that provision, it is necessary to take the perspective of an average traveller who is reasonably well-informed and reasonably observant and circumspect’. [71]
In summary, ‘Article 12(2) of Directive 2015/2302 must be interpreted as meaning that the concept of ‘unavoidable and extraordinary circumstances … significantly affecting the performance of the package, or which significantly affect the carriage of passengers to the destination’ of the trip in question, covers not only circumstances which make it impossible to perform that package but also circumstances which, without preventing such performance, mean that the package cannot be performed without exposing the travellers concerned to risks to their health and safety, taking into account, where appropriate, personal factors relating to the individual situation of those travellers. The assessment of such effects must be made from the perspective of an average traveller who is reasonably well-informed and reasonably observant and circumspect on the date of termination of the package travel contract in question’. [72]
Questions three
The CJEU conceded that Article12(2) (and point 12 of Article 3), in relation to ‘unavoidable and extraordinary circumstances’, did not state the situation had to be unforeseeable or non-existent at the time of the package travel contract was entered into, however, the terms seemed to point to situations that at that time did not exist and were unforeseeable.
The Court held that ‘a situation which, on the date of conclusion of the package travel contract, was already known to the traveller concerned or was foreseeable for him or her’ could not be relied on by that traveller as “unavoidable and extraordinary circumstances”, however, this was “without prejudice” to ‘the possibility, given the evolving nature of the situation, that that situation may have undergone significant changes after the conclusion of the contract such as to give rise to a new situation, capable of meeting as such the definition of the concept of ‘unavoidable and extraordinary circumstances’, within the meaning of that provision’. [83]
Question four
Before embarking on an answer to the question, the Court acknowledged that it was accepted that at the time of M.D’s termination COVID-19 had reached the UAE (the place of destination of the trip). Bearing in mind the answers to questions 1 and 3 above (that the COVID-19 spread constituted an unavoidable and extraordinary circumstance for Art 12(2)) it was common ground it occurred ‘at the place of destination’ and that if the courts accept this, then the spread of a serious disease on a global scale must also fall under the scope of the concept of ‘unavoidable and extraordinary circumstances’ as ‘the effects of the latter will also be felt at the relevant travel destination’. [86]
The Court therefore considered the fourth question to be as follows: ‘the referring court seeks to ascertain, in essence, whether Article 12(2) of Directive 2015/2302 must be interpreted as meaning that, in order to determine whether unavoidable and extraordinary circumstances occurring at the place of destination or its immediate vicinity ‘significantly [affect] the performance of the package, or … significantly affect the carriage of passengers to the destination’, effects occurring at the place of departure and at the various places connected with the start and return of the trip in question may also be taken into account’. [89]
The Court was careful to point out that although the effects to be considered under Article 12(2) will likely to be seen at the destination or its immediate surroundings, ‘the fact remains that that provision contains no geographical limitation as regards the place where those effects, caused by such circumstances, must occur in order for them to be capable of being taken into consideration’. [91]
This consideration also had to be read in conjunction with the reality that often package travel contracts included the carriage of passengers and therefore the relevant package travel contract had to, in accordance with Article 5(1)(a)(ii) of the Directive, specify the means, characteristics and categories of transport, the points, dates and times of departure and return, and the duration and places of intermediate stops and transport connections.
The CJEU concluded that it logically followed ‘that, where the effects caused by unavoidable and extraordinary circumstances extend beyond the place of destination to reach, in particular, the place of departure or return or the places of intermediate stops and transport connections, they are likely to affect the performance of the package concerned and must as such be able to be taken into account for the purposes of applying Article 12(2) of Directive 2015/2302’. [93]
Conclusion
Given that litigation arising from terminations of package holidays prior to the package as a result of the COVID-19 is likely to come to the fore as we attempt to move on from the pandemic, the CJEU should be commended for providing such clear guidance and addressing uncertainties around Article 12.
Having said that, practitioners here do not need to be reminded that, as clear and useful a judgment like this may be, it is not binding on the UK courts following Brexit. However, the interpretations provided by the CJEU of an Article that is identical to the wording in the Package Travel and Linked Travel Arrangements Regulations 2018 will, at the very least, provide a good steer to any of the domestic courts attempting to grapple with a Regulation 12 claim.
[1] Implemented in the UK through the Package Travel and Linked Travel Arrangements Regulations 2018, specifically Regulations 12 and 13.
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