This blog post was written by Patrick Vincent KC and Max Archer.

In this action On the Beach Ltd (OTB) and associated companies sought to recover from Ryanair sums for which OTB was liable to its customers pursuant to the Package Travel and Linked Travel Arrangements Regulations 2018 (the PTRs).

The judgment determined summary judgment/strike out applications by both sides.

Many interesting issues were considered but this Blog concentrates on the most interesting – whether Regulation 29 of the PTRs confers a right of action on PTR organisers and retailers. In this case OTB essentially wanted Ryanair to cover OTBs outlay to customers under the PTRs when it had cancelled holidays because Ryanair had cancelled flights forming part of those holidays.

Mr Nigel Cooper KC, sitting as a High Court Judge in the Commercial Court, determined that Regulation did indeed confer such a right of action.

Regulation 29 of the PTRs states:

Right of redress

29.  Where an organiser or, in a case under regulation 27, a retailer—

(a)        pays compensation,

(b)        grants a price reduction, or

(c)        meets the other obligations incumbent on the organiser or the retailer under these Regulations,

the organiser or retailer may seek redress from any third parties which contributed to the event triggering compensation, a price reduction or other obligations.

The purpose of the Regulations was to implement the Package Travel Directive, Article 22 of which provides that:-

In cases where an organiser or, in accordance with the second subparagraph of Article 13(1) or Article 20, a retailer pays compensation, grants price reduction or meets the other obligations incumbent on him under this Directive, Member States shall ensure that the organiser or retailer has the right to seek redress from any third parties which contributed to the event triggering compensation, price reduction or other obligations

The practical utility of the Judge’s decision as between these particular parties is understandable. But there are a few reasons why it seems a surprising result.

  • The “third parties” could be anyone, anywhere. A sick aeroplane passenger whose illness causes the cancellation of a flight, triggering an obligation to pay compensation. A driver who causes an accident thus rendering a holidaymaker to be “in difficulties” thus triggering the holiday organiser’s Regulation 18 obligation to provide assistance (which may not be monetary in nature).
  • The Regulation as interpreted by the Judge appears to create no-fault liability for anyone who might be said to have contributed to the relevant event.
  • To the extent that the decision was based on an interpretation of the Package Travel Directive it is far from clear that the Directive intended to create a new cause of action. It is even less clear why the court thought it appropriate to construe the Regulation in parallel with an attempt to construe the Directive. It seems doubtful that the Directive fell for consideration at all. The purported right of action created by Article 22 does not appear to be a right of a kind recognised by European Court or any domestic court within the meaning of Section 4 of the Withdrawal Act, and did not qualify as “retained EU Law” within the meaning of section 6.
  • Was it really the intention of the legislature to create a brand new cause of action outside of the existing contractual and non-contractual rights between parties? With words as wishy-washy as “may seek redress”?

It is rarely the purpose or intention of EU law to interfere with the laws governing civil liability in its Member States. Where it does so – in the interests of consumer protection – it uses much clearer language. For example, the direct right of action enjoyed by the victim of a traffic accident against a vehicle’s insurer (a completely new cause of action in the UK) was required by Article 3 of the Fourth Motor Insurance Directive 2000/26/EC:-

“Each Member State shall ensure that injured parties referred to in Article 1 in accidents within the meaning of that provision enjoy a direct right of action against the insurance undertaking covering the responsible person against civil liability.”

When implementing the Directive, the UK legislature did not just copy and paste the wording of that Directive (as appears to have happened in the Package Travel Regulations). Carefully worded legislation created this new cause of action in the form of the European Communities (Rights against Insurers) Regulations 2002. Those Regulations provided that the insurer “would be liable to” the victim.

It seems likely that the legislature would have taken similar care if it had thought that the PTRs were creating a new species of no-fault liability enforceable against the world.

Taken at face value neither the Package Travel Directive nor the PTRs clearly created a right of action. If they created anything it was a right to seek redress. Not a right to redress. The insertion of the word “seek” is important. You may have a right to seek something but that does not confer a right to find it. A more natural interpretation is that the provision is intended to preserve the right to seek redress using the tools available in each particular member state – that member state’s law in relation to civil liability.

It has to be remembered that Community law uses its own language and concepts which may not have the same meaning in the various Member States – see CILFIT  [1982] ECR 3415 CJEU and Customs and Excise v ApS Samex [1983] 1 All ER 1042. It may appear otiose, as the judge considered in this case, to limit the language in this case to preserving an existing right – in the UK. But in the law of other member states similar rights may be affected by the Directive and so need to be preserved.

The question of whether the Directive intended to create a right of action would, pre-Brexit, have been a classic candidate for referral to the ECJ. That course is no longer available. But it would be surprising if it did. Whether it did or not it is very hard to see that the wording of Regulation 29 can have the drastic effect found by the court in this case.

Spencer Turner Cross-Border

Leave a Reply