What could tour operators do to protect themselves in the light of X v Kuoni?

James Hawkins has contributed to the latest edition of ABTA’s Travel Law Today magazine, where he looks at What could tour operators do to protect themselves in the light of X v Kuoni?

On 30 July 2021, the Supreme Court handed down its unanimous judgment in the case of X v Kuoni, a case that began  in 2016 in the Birmingham District Registry and was eventually resolved in the claimant’s favour after a reference to the Court of Justice of the European Union (CJEU) in Luxembourg. The facts are by now well known: Mrs X was on a  package holiday to Sri Lanka when a member of the hotel’s maintenance staff (a male called, in the judgements, ‘N’)  offered to guide her to reception and, while purporting to show her a shortcut, raped and assaulted her.

Mrs X’s claim was primarily a contractual claim; it was based on the written express terms of the contract contained in Kuoni’s booking conditions, although since these terms were intended to replicate Kuoni’s liability under the Package Travel, Package Holidays and Package Tours Regulations 1992, the Supreme Court’s decision focused on these  regulations, and the directive that they were intended to implement.

It is beyond the scope of this article to analyse strengths or weaknesses of the Supreme Court’s judgment (and there are certainly topics for discussion provided by the judgment. For instance: the judgment specifically refers, more than once, to the hotel being a four-star hotel when discussing whether N, in offering to guide Mrs X, was providing a holiday service; would this mean that a member of staff in a two- or three-star hotel would be in a different position? On the Supreme Court’s broad interpretation of arrangements falling within a package holiday contract, what acts by a member of hotel staff would not be caught by the term?).

The case of X itself concerned an extreme situation, certainly one that is unusual compared with most claims for injury that arise from a package holiday. It was also a situation that would have been hard, if not impossible, for a tour  operator to prevent: on the factual findings in X, neither the tour operator nor the hotel had any reason to suspect that the perpetrator might commit such an act, and they were expressly acquitted of any direct negligence. In a more usual injury claim, tour operators can audit suppliers or require certain procedures to be in place, but there was nothing practically that could have been done in X’s case. Yet the tour operator was still liable. It was clear from the CJEU’s judgment on the reference in this case, and the reasoning adopted in the Supreme Court’s decision, that consumer protection was the foremost consideration.

One major impact of the decision in X is that a tour operator may be liable even in cases where the hotel would not have been liable if the hotel had been sued in the country where the incident happened. Had Mrs X sued the hotel, the hotel may well not have been held responsible for the criminal acts of its employee – but the tour operator would be liable, irrespective of the hotel’s position. The CJEU and Supreme Court rejected the argument that there should be parity in such circumstances.

This could lead to issues for tour operators regarding indemnities. One can well imagine a situation where a hotel refuses to indemnify a tour operator in such a situation, as the hotel could argue that, as it had done nothing that it could be held liable to the holidaymaker for, why should it have to indemnify the tour operator?

It may, therefore, be necessary to ensure that indemnity clauses in contracts with suppliers are carefully drawn, to make sure they cover liability in such circumstances.

X also greatly restricts the availability of the defence that Kuoni had attempted to invoke: that this was an event that neither the tour operator nor supplier could have foreseen or forestalled even with due care. This defence is not available where a supplier or an employee of a supplier was performing a service under the holiday contract but did so improperly. Culpability of the tour operator or the hotel is, therefore, not relevant: the focus is on whether a holiday service (which, as we have seen, is interpreted broadly) was being performed. Again, one can foresee issues of indemnities if, in order to apply, they require the hotel or other supplier to have been at fault.

Further, tour operators might consider requiring suppliers to impose restrictions on interactions between employees and guests, or more strictly delimit roles and functions of particular staff members. Taking such steps would not provide a defence (as noted above, neither Kuoni nor the hotel could reasonably have taken any further steps themselves – and, while the wording of the equivalent defence under the Package Travel and Linked Travel  Arrangements Regulations 2018 is slightly different compared with the 1992 regulations, there must be a reasonable chance that it would be interpreted in a similar way), nor prevent a determined criminal, but may at least reduce opportunities for such events occurring.

“This Article was written by James Hawkins, Barrister, 3 Hare Court for ABTA’s Travel Law Today (issue 12, [30 November 2021]) and is reproduced by agreement with ABTA. Visit abta.com/travellawtoday to download the magazine”.