ECJ Gives Judgment in X v Kuoni: No ‘Unforseeable Event’ defence for Deliberate Acts of Hotel Employees

19th March 2021 by Tom Collins

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The European Court of Justice (ECJ) has handed down its much anticipated judgment in X v Kuoni Travel Ltd (Case C-578-19). As expected, the ECJ largely concurred with the opinion of Advocate General Szpunar, delivered in November last year. The decision deals a significant blow to tour operators in limiting the circumstances in which they are able to avoid liability for the acts and omissions of employees of their suppliers

The factual and procedural background, together with a summary of AG Szpunar’s opinion is set out in my earlier article here.

The ECJ’s decision

The salient points are set out below.

1. An employee is not a ‘supplier of services’

The ECJ concluded that an employee of a supplier of services ‘cannot himself be classified as a supplier of services, within the meaning of Article 5 of Directive 90/314 as he has not concluded any agreement with the package travel organiser but merely performs work on behalf of a supplier of services’.

2. An organiser may be liable for the acts/omissions of an employee of a supplier of services, where they constitute improper performance of an obligation under the contract

The ECJ had been asked to assume, for the purposes of its decision, that: (1) a member of maintenance staff conducting a guest to reception was within the scope of the ‘holiday arrangements’ contracted for and (2) the rape and assault constituted improper performance of the contract.

The Court held that:

• Where the obligations arising from a package travel contract are performed by the employees of suppliers of services, the performance or failure to perform certain actions by those employees may constitute non-performance/improper performance of the obligations arising from the package travel contract.
• That non-performance/improper performance, although caused by acts of employees of a supplier of services, is such as to render the organiser liable.
• In the present circumstances ‘a travel organiser such as Kuoni may be held liable to a consumer such as X for improper performance of the contract between the parties, where that improper performance has its origin in the conduct of an employee of a supplier of services performing the obligations arising from that contract’.

3. The deliberate act of an employee of a supplier of services is not an ‘event’ which could not be ‘foreseen or forestalled’.

The exemption from liability provided by article 5(2)(iii) of Directive 90/314 refers to situations in which the non-performance or improper performance of the contract is due to an event which ‘the organiser or the supplier of services, even with all due care, could not foresee or forestall’.

The Court held that an organiser may rely on the exemption: (i) even if the event is not unusual, provided it cannot be foreseen; or (ii) even if it is not unforeseeable or unusual, provided it cannot be forestalled.

The Court however went on to conclude that:

• The ‘event’ is not the same thing as a force majeure (which constitutes a separate ground for exemption from liability).
• The grounds for exemption from liability listed in article 5(2) contain specific instances in which non-performance/improper performance is not attributable to the organiser/supplier of services (e.g. where failures are attributable to the consumer or a third party). Those instances reflect the aim of the Directive that an organiser/supplier of services should be exempt where they are not at fault for the failure.
• ‘That absence of fault means that the event which cannot be foreseen or forestalled referred to in the third indent of Article 5(2) of Directive 90/314 must be interpreted as referring to a fact or incident which does not fall within the sphere of control of the organiser or the supplier of services.’
• Since (for the reasons under point II above) ‘the acts or omissions of an employee of a supplier of services, in the performance of obligations arising from a package travel contract, resulting in the non-performance or improper performance of the organiser’s obligations vis-à-vis the consumer fall within that sphere of control, those acts or omissions cannot be regarded as events which cannot be foreseen’.

Comment

The emphatic rejection of the ‘unforeseeable event’ defence where loss is caused by the deliberate act of an employee of a supplier means the focus of the enquiry will now be on whether the particular act was in performance of a contractual obligation or a service ancillary to one. What those obligations are and what evidence will suffice to prove that the employee was performing them, or purporting to do so, will vary from case to case. The Supreme Court is however, likely to provide guidance on these issues when the case returns to it later in the year.

The full judgment is available here.

Tom Collins is a barrister at 1 Chancery Lane, London
He can be contacted at TCollins@1chancerylane.com

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