The First Judgment on Regulation 29

The First Judgment on Regulation 29

It is no secret that at least two package organisers have brought high value claims against Ryanair off the back of the pandemic.  These claims concern flights, forming part of package holidays, that were cancelled by Ryanair.  The organisers were obliged to refund their customers in full, as required under the Package Travel Regulations (PTRs), despite having paid Ryanair for flights that never took place! Thus begging the question, “Can the organiser recover these flight costs from Ryanair?”

We are now one step closer to the answer, as the High Court yesterday handed down Summary Judgment in the claim against Ryanair by ‘On The Beach’.  In this article, Nick Parkinson, explores this decision and its implications to the travel industry.

What is a Summary Judgment?

A Summary Judgment is a court judgment, given at an early stage, without a full trial of the issues. In this instance, On the Beach applied for ‘Summary Judgment’ on the basis that, they argued, Ryanair had no real prospect of successfully defending the claim based on the arguments, and evidence, presented so far. 

The Key Issue In Dispute – Regulation 29

The primary focus, in both claims brought against Ryanair, is whether or not Regulation 29 of the PTRs creates a cause of action which enables package organisers to bring a claim against one of their suppliers in circumstances where the supplier has contributed to the cancellation of (or significant changes to) the package.  In other words, if the package organiser has to refund their customers, and this is partly (or wholly) due to the actions of one of their suppliers, can they recover some (or all) of the monies paid to that supplier?

Regulation 29 states “the organiser or retailer may seek redress from any third parties which contributed to the event triggering compensation, a price reduction or other obligations”.

Package organisers argue that Regulation 29 allows them to bring a claim against their suppliers in these circumstances.  Ryanair, however, filed a defence in response to both claims brought against them.  They argued Regulation 29 did no such thing!

Given the complexity of the issues before the Judge, it has to be said that ‘On The Beach’s’ application for Summary Judgment was a bold move, but did it pay off?

The Outcome?

It certainly did!  The Judge agreed with On The Beach, concluding that “Regulation 29 does, as a matter of principle, provide … a right of redress”.  Further, Ryanair were ordered to refund OTB a total sum of just over £2M (plus legal costs). 

A key distinction was, however, made between bookings where Ryanair had refunded travellers directly, and did so before OTB issued refunds for the package holiday.  For those bookings, the Judge did not make a finding either way, indicating that those claims were not suitable for ‘Summary Judgment’ and would need to proceed to a ‘full trial’.

What Does This Mean For The Industry?

It is too soon to be sure, because it remains to be seen whether or not Ryanair will appeal the Summary Judgment handed down by the High Court on 31st October 2023.  For now, the Judgment is, however, binding on the County Courts (where most claims are brought).  It is also likely to be very persuasive on any similar claims which are still proceeding, or are contemplated, against Ryanair on similar facts.  Being the first Judgment by any court in the UK, and probably the EU, on this issue – it is certainly a big step in the right direction for those package organisers seeking redress against their suppliers when “things go wrong”.

Regulation 29 Is Much Bigger Than Ryanair

It is important to emphasise that Regulation 29 is not only relevant to claims against Ryanair, or airlines.  Regulation 29 can be used to bring claims against any supplier that contributes to the cancellation of (or significant changes to) a package holiday.  Those suppliers could be accommodation suppliers, other transport providers (train, coach, ferries etc) or excursion providers. 

Ryanair are, however, notorious for their reluctance to enter into supplier agreements with package organisers.  Is Regulation 29 powerful enough to ‘cut through’ any agreed terms with suppliers that limit or exclude the suppliers’ liability?  The short answer is “probably not”, but it is certainly not a foregone conclusion.

The Government’s Call For Evidence on the PTR’s

It is also worth mentioning that Regulation 29 features in the Government’s ongoing ‘call for evidence’ with a view to implementing post-Brexit changes to the PTRs.  The possibility of future challenges over Regulation 29 could rumble on:  Ryanair could appeal the recent decision, other claims could end up in the higher courts (Court of Appeal or Supreme Court) or Judges could simply disregard the recent Judgment on the basis that “the facts are different”.  The Call For Evidence therefore presents an opportunity for the Government to “put this issue to bed” once and for all.  It could even go further, and consider imposing obligations on suppliers which take priority over any standard terms issued by suppliers seeking to exclude or limit their liabilities. 

Can Travlaw Help?

Travlaw are no stranger to high value claims brought under Regulation 29, and the recent Judgment certainly makes it a more attractive prospect for other package organisers to make similar claims.  Should you feel that one of your suppliers (airline or otherwise) has contributed to the cancellation of (or significant changes to) a package holiday – feel free to get in touch!

This article was originally published on: 1 November 2023

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