Insolvent Tour Operators: CJEU Strengthens Travellers’ Rights

Oct 25, 2024 Benn-Ibler Rechtsanwälte

The Court of Justice of the European Union (CJEU) has clarified whether or not travellers are entitled to the reimbursement of payments already made to an insolvent tour operator if the claim for reimbursement arose before the opening of the insolvency proceedings.

In the case at hand, the defendant insurer had an insurance policy with a travel agent intended to cover the risks associated with the agent’s failure to pay. In March 2020, a consumer signed a contract with the travel agent for a package holiday to Las Palmas de Gran Canaria, Spain. Almost two weeks later, the consumer withdrew from the contract because of a Covid-19 warning notice. The travel agency did not reimburse the consumer for the cost of the holiday as the agency had gone insolvent.

The consumer assigned his claim to the Austrian Federal Chamber of Labour (Bundeskammer für Arbeiter und Angestellte), which then sought reimbursement from the insurance company as the travel agency’s insolvency risk insurer.

As the defendant had refused to reimburse the cost of the trip, the Bundeskammer brought an action before the Handelsgericht Wien (Vienna Commercial Court), which, in turn, referred the following question to the ECJ:

‘Is Article 17 of Directive 2015/2302 (EU Package Travel Directive) to be interpreted as meaning that payments made by travellers to tour operators before the start of a journey are protected only if the journey does not take place because of the insolvency of the tour operator?’

The ECJ first pointed out that Art. 12(2) of the EU Package Travel Directive entitles travellers to a full refund of all sums paid for a package trip if travellers withdraw from the contract before the start of the trip because of unavoidable and exceptional circumstances.

Taking into account the principle of equal treatment, Article 17(1) of the EU Package Travel Directive is to be interpreted as meaning that claims in connection with a cancellation due to unavoidable and extraordinary circumstances prior to the opening of insolvency proceedings are also covered by insolvency protection. In that case, travellers are exposed to the same financial risk as in the case of cancellation due to insolvency and must therefore be afforded the same level of protection.

ECJ C-771/22 (29 July 2024)