The immediate impact of the pandemic might
be on the wane, but the legal battlefield continues. In HDI Global and MS
Amlin Insurance (Joined
Cases C-771/22 and C-45/23), the CJEU analysed the implications of insolvency
on consumers’ right to a refund after validly cancelling a package trip under
the Package Travel Directive (Directive
(EU) 2015/2302).
In both cases, the consumers booked package
trips with their travel organisers and paid in full. Due to the spread of Covid-19,
the consumers cancelled their bookings on the grounds of ‘unavoidable and
extraordinary circumstances’ as per Art. 12(2) of the Directive, entitling them
to a full refund. However, the organisers became insolvent before issuing the
refunds. Though Article 17(1) of the Directive does mandate the provision of
security for insolvency protection, its wording seems to require a causal link
between the non-performance and the organiser’s insolvency for the consumer to
benefit. Questions thus arise as to whether its coverage should extend to those
consumers who cancelled their trips before the insolvency occurred. Art. 17(1) reads:
Member States shall ensure that
organisers established in their territory provide security for the refund of
all payments made by or on behalf of travellers insofar as the
relevant services are not performed as a consequence of the
organiser’s insolvency. […] (emphasis added)
The CJEU first reiterated the methods of
interpreting EU law: ‘account must be taken not only of its wording, but also
of its context, the objectives pursued by the rules of which it is part and,
where appropriate, its origins.’ Moreover, ‘where the meaning of a provision of
EU law is absolutely plain from its very wording, the Court cannot depart from
that meaning’. (para 56) The CJEU then continued its reasoning in accordance
with this formula.
Starting with the wording. The term ‘relevant
services’ can only cover ‘travel services’, or it can indicate a broader scope,
covering other services such as refunds (paras 58-59). Due to this ambiguity,
the wording of Art. 17(1) does not provide an absolutely plain meaning (para
60). The CJEU thus further engaged with the provision’s context, objectives and
origins.
- Contextual interpretation: The CJEU interpreted Art. 17(1) of the Directive within its
broader context, considering other paragraphs of the same provision, related
provisions and the recitals of the Directive. In particular, Art. 17(2) of the Directive
requires the security to be effective and to cover reasonably foreseeable costs
(para 64). In light of recitals 39 and 40, the CJEU states that any refund of
payment is a foreseeable amount of payment which may be affected by the travel
organiser’s insolvency (para 68). Otherwise, the effectiveness of consumers’
right to termination under Article 12(2) would be compromised, and consumers
would be dissuaded from exercising their rights (paras 69-70). Lastly, Art. 5
of the Directive requires the travel organiser to inform the consumer that ‘if
the organiser … becomes insolvent, payments will be refunded’. This information
would be misleading if Art. 17(1) excludes consumers’ refund claims arising
before insolvency (para 73). - Teleological interpretation: One of the main objectives of the Directive is to ensure a high
level of consumer protection in EU package travel policy (para 74). In this
light, given that Directive
90/314, the predecessor of the current Package Travel Directive, did not
exclude travellers’ refund claims from insolvency protection, a restrictive
interpretation of Art. 17(1) would constitute a reduction in the level of
consumer protection (para 79). - Historical interpretation: The CJEU consulted the legislative history of Art. 17(1) but did
not find it helpful (para 80).
Finally, the CJEU also highlighted that
secondary EU law must be interpreted consistently with primary EU law as a
whole, including the principle of equal treatment (para 82). This principle
requires that comparable situations must not be treated differently unless
objectively justified (para 83). The situations involved are (1) travellers
whose package travel cannot be performed due to insolvency and (2) travellers whose
refund claims following termination cannot be fulfilled. These situations are
comparable because in both cases travellers are exposed to the financial risks
entailed by the organiser’s insolvency (para 87), and there appears to be no
justification for treating them differently (para 89).
In conclusion, the CJEU ruled that the
security under Art. 17(1) applies to a traveller who has terminated the contract
before insolvency but has not received the refund. Consumers can rest assured –
while your trips might not go as planned, your refunds are secure. This
decision will surely be welcomed by consumer rights advocates. Insurers are not
too exposed either, as the ‘reasonable foreseeability’ criterion still serves to
protect their interests.
