Force majeure – when the unexpected happens
The following article is by Rhys Griffths, Partner, fieldfisher for Travel Law Today 4th ed. which can be downloaded from ABTA's Member zone and read here.
Find out more about the new Package Travel Regulations at our forthcoming seminars:
It has been a terrible year for holiday disruption, with ABTA’s news service constantly bringing us advice about the latest terrorist attacks, natural disasters, civil unrest and strikes, to name but a few. These events bring chaos to holidaymakers, ranging from uncertainty about the viability of forward bookings to life-threatening situations in resort.
Sadly, ABTA and its Members are well accustomed to dealing with such incidents, taking the lead in keeping customers safe, bringing them home and rearranging forward bookings. Typically, the driver for such action is not a concern about legal exposure but a genuine desire to put the customer’s interests first, often taking a financial ‘hit’ in so doing. Perhaps this is why there is such a paucity of reported cases dealing with the obligations of tour operators towards their customers in the event of such disasters, or as we lawyers call it, when there is an event of force majeure.
The Package Travel Regulations 1992 (PTR) and the new Package Travel Directive (PTD) both contain specific rules which apply when there is an event of force majeure, although there are differences. This article shall explore some of these differences.
The definition remains (roughly) the same.
The PTR defines force majeure as “unusual and unforeseeable circumstances beyond the control of the party by whom this exception is pleaded, the consequences of which could not have been avoided even if all due care had been exercised.”
In the event of such unusual and unforeseeable circumstances, the PTR allows tour operators to make significant changes to the package holiday pre-departure, or to cancel, without having to compensate the customer. The tour operator is also released from any liability for a failure to provide the package holiday contracted for, although the tour operator will still have to give prompt assistance to any customers in difficulty in resort. The intention of the PTR is clear: tour operators should help customers affected by an event of force majeure, but they should not be liable to compensate the customer because ultimately it is not the tour operator’s fault.
The definition of force majeure under the New PTD is slightly different. It is this: “unavoidable and extraordinary circumstances means 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.”
We therefore have “extraordinary” instead of “unusual”, but this is unlikely to represent any material difference in practice. What is more interesting is use of the word “unavoidable” instead of “unforeseeable”, which at first glance appears to represent a significant change. It appears to suggest that tour operators can claim force majeure even if the relevant incident was foreseeable when the holiday was sold, provided that it was unavoidable.
That does not feel right, particularly because it would allow tour operators to sell packages they suspected would end in disaster and then claim relief from their various obligations on grounds of force majeure. It seems far more likely that a court would consider “unavoidable” to include within it an element of unforeseeability. To put it another way, a foreseeable event is always avoidable – either by putting in place some contingency plan, or by simply not selling the package in the first place.
Similar relief for the tour operator in the event of force majeure
In the event of such unavoidable and extraordinary circumstances as described above, the new PTD again allows the tour operator to make significant changes to the package holiday pre-departure, or to cancel, without having to compensate the customer. Similarly, a customer will not be entitled to claim compensation against the tour operator for a failure to provide the services contracted for if that failure was caused by unavoidable and extraordinary circumstances.
We also find use of force majeure in two other parts of the new PTD. The tour operator will not be liable for any booking errors caused by unavoidable and extraordinary circumstances. Also, where unavoidable and extraordinary circumstances make it impossible for the tour operator to fulfil its obligation to bring home the customer, the tour operator may limit the costs of having to put up the customer in accommodation to three nights per person (although there are certain carve-outs, for instance this rule does not apply to persons with reduced mobility).
Importance of carefully drafted booking conditions
One of the most commonly talked-about but misunderstood provisions in the new PTD is the right for the customer to cancel the package pre-departure, with a full refund and without having to pay a cancellation fee, in the event of force majeure “occurring at the place of destination or its immediate vicinity”. At first glance, this would appear to provide very wide-ranging “free cancellation” rights for the customer. It would appear to allow customers to cancel even where the relevant event does not impact on the resort itself, but somewhere else which is within “its immediate vicinity”.
A closer look at the new PTD reveals that the position is not quite that stark. In fact, the force majeure event must also significantly affect the performance of the package or the carriage of passengers to the destination.
Accordingly, even if an event of force majeure occurs at the destination itself, it must be one which has a significant impact on the tour operator’s ability to provide the package before the customer can exercise the free cancellation rights. This additional requirement is important and tour operators should ensure that this finds its way into the booking conditions, as without it the customer cancellation rights are far broader than they are under the new PTD.
It is a feature of the travel industry that disasters will occur from time to time which will impact on the tour operator’s ability to provide the package holiday. The PTR has always recognised that, in these situations, tour operators should be released from some of their package obligations. This concept continues under the new PTD, although there are some subtle differences which I would urge tour operators to ensure are reﬂected carefully in their booking conditions.