Press and Information Division

PRESS RELEASE No 48/1996

8 October 1996

Judgment of the Court of Justice in Joined Cases C-178/94, C-179/94, C-188/94 and C-190/94
Erich Dillenkofer and Others v Federal Republic of Germany

MEMBER STATES' LIABILITY FOR FAILURE TO IMPLEMENT THE EEC DIRECTIVE ON PACKAGE TRAVEL

IMPORTANT: This Press Release, which is not binding, is issued to the Press by the Press and Information Division. The summary of the judgment which follows should be read in the context of the judgment as a whole. For further information or for a copy of the judgment, please contact Tom Kennedy - tel: (00352) 4303-3355.

  1. THE COURT HAS RULED THAT:

    1. Failure to take any measure to transpose a directive in order to achieve the result it prescribes within the period laid down for that purpose constitutes per se a serious breach of Community law and consequently gives rise to a right of reparation for individuals suffering injury if the result prescribed by the directive entails the grant to individuals of rights whose content is identifiable and a causal link exists between the breach of the State's obligation and the loss and damage suffered.

    2. The result prescribed by Article 7 of Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours entails the grant to package travellers of rights guaranteeing a refund of money paid over and their repatriation in the event of the organizer's insolvency; the content of those rights is sufficiently identifiable.

    3. In order to comply with Article 9 of Directive 90/314, the Member State should have adopted, within the period prescribed, all the measures necessary to ensure that, as from 1 January 1993, individuals would have effective protection against the risk of the insolvency of the organizer and/or retailer party to the contract.

    4. If a Member State allows the package travel organizer and/or retailer party to a contract to require payment of a deposit of up to 10% towards the travel price, with a maximum of DM 500, the protective purpose pursued by Article 7 of Directive 90/314 is not satisfied unless a refund of that deposit is also guaranteed in the event of the insolvency of the package travel organizer and/or retailer party to the contract.

    5. Article 7 of Directive 90/314 is to be interpreted as meaning that the security’ of which organizers must offer sufficient evidence is lacking even if, on payment of the travel price, travellers are in possession of documents of value and that the Federal Republic of Germany could not have omitted altogether to transpose Directive 90/314 on the basis of the Bundesgerichtshof's advance payment’ judgment of 12 March 1987.

    6. Directive 90/314 does not require Member States to adopt specific measures in relation to Article 7 in order to protect package travellers against their own negligence.’

  2. THE EEC DIRECTIVE ON PACKAGE TRAVEL, PACKAGE HOLIDAYS AND PACKAGE TOURS

    3. Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours was adopted on 13 June 1990. The purpose of the Directive, according to Article 1 thereof, is to approximate the laws, regulations and administrative provisions of the Member States relating to package travel, package holidays and package tours sold or offered for sale in the territory of the Community. Article 7 provides: The organizer and/or retailer party to the contract shall provide sufficient evidence of security for the refund of money paid over and for the repatriation of the consumer in the event of insolvency.

    Article 9 requires Member States to bring into force the measures necessary to comply with the Directive before 31 December 1992.

  3. LATE TRANSPOSITION BY THE FEDERAL REPUBLIC OF GERMANY

    4. On 24 June 1994, the German legislature adopted a Law implementing the Directive. That Law introduced into the Bürgerliches Gesetzbuch (German Civil Code, the BGB’) a new provision, Paragraph 651k, subparagraph 4 of which provides: Apart from a deposit of up to 10% of the travel price, subject, however, to a maximum of DM 500, the organizer may demand or accept payment towards the travel price before completion of the travel only if he has given the traveller a document of security’. The Law entered into force on 1 July 1994. It applies to travel contracts which were concluded after that date and under whose terms the travel was to commence after 31 October 1994.

  4. FACTS OF THE CASE

    5. The plaintiffs purchased package holidays. Following the insolvency in 1993 of the two operators through whom they had booked their holidays, they either never left for their destination or had to return from their holiday at their own expense. Having failed to obtain reimbursement of the sums they had paid to the operators or of the expenses they incurred in returning home, they brought actions for compensation against the Federal Republic of Germany in the Landgericht Bonn. They claim that if Article 7 of the Directive had been transposed into German law within the prescribed period, that is to say by 31 December 1992, they would have been protected against the insolvency of the operators from whom they had purchased their package travel. They rely inparticular on the judgment of the Court of Justice of 19 November 1991 in Joined Cases C-6/90 and C-9/90 Francovich and Others.

  5. THE REFERENCE FOR A PRELIMINARY RULING

    6. The Landgericht Bonn found that German law did not afford any basis for upholding the claims for compensation but, having doubts regarding the consequences of the Francovich judgment, it decided to stay the proceedings and refer to the Court for a preliminary ruling twelve general questions on State liability under Community law in relation to the EEC Directive on package travel. On the basis of the Court's replies the Landgericht will reach its own final decision on the individual cases pending before it.

  6. THE COURT'S REASONING

    1. Conditions under which a Member State incurs liability

      2. The Court refers to its judgments on the individual's right to reparation of damage caused by a breach of Community law for which a Member State can be held responsible (judgments in Francovich (19 November 1991), Brasserie du Pêcheur and Factortame (5 March 1996), British Telecommunications (26 March 1996), and Hedley Lomas (23 May 1996). According to those judgments, individuals who have suffered damage have a right to reparation where three conditions are met:

      1. The rule of law breached must have been intended to confer rights on individuals;
      2. The breach must be sufficiently serious;
      3. There must be a direct causal link between the breach of the obligation resting on the State and the damage sustained by the injured parties.

      As regards the EEC Directive on package travel, the Court finds as follows:

      1. The purpose of Article 7 is to protect consumers, who are to be reimbursed or repatriated in the event of the insolvency of the organizer from whom they purchased the package travel. The result prescribed by Article 7 of the Directive entails granting package travellers rights which guarantee the refund of money they have paid over and their repatriation in the event of the organizer's insolvency. The persons to whom rights are granted under Article 7 are sufficiently identified as being consumers as defined by Article 2 of the Directive. The same holds true of the content of those rights (see above). In those circumstances, the purpose of Article 7 of the Directive must be held to be that of granting individuals rights whose content is determinable with sufficient precision;

      2. Failure to take any measure to transpose a directive in order to achieve the result it prescribes within the period laid down for that purpose constitutes per se a serious breach of Community law.

    2. The measures required for proper transposition of the Directive

      1. One of the national court's questions concerned the Bundesgerichtshof's 'Vorkasse-Urteil’ ('advance payment’ judgment) of 12 March 1987 (BGHZ 100, 157), which annulled travel organizers' general business conditions in so far as they required travellers to pay a deposit equivalent to 10% of the travel price without receipt of documents of 'value’.

        The Landgericht asked whether the objective of consumer protection pursued by Article 7 of the Directive was satisfied if the Member State allowed the travel organizer to require a deposit of up to 10% towards the travel price, with a maximum of DM 500, before handing over to his customer documents which the national court describes as

      2. documents of value’, namely documents evidencing the consumer's right to the provision of the various services included in the travel package (by airlines or hotel companies) [e.g. flight tickets or hotel vouchers].

        The Court explained that the purpose of Article 7 of the Directive is to protect the consumer against the risks defined by that provision arising from the insolvency of the organizer. It would be contrary to that purpose to limit that protection by leaving any deposit payment uncovered by the security for a refund or repatriation. The Directive contains no basis for any such limitation of the rights guaranteed by Article 7. So a national rule allowing organizers to require travellers to pay a deposit will be in conformity with Article 7 of the Directive only if, in the event of the organizer's insolvency, refund of the deposit is also guaranteed.

      3. The Landgericht also asked whether the 'security’ of which organizers must provide sufficient evidence, in accordance with Article 7 of the Directive, is lacking even if, on payment of the travel price, travellers have documents of value [e.g. flight tickets, hotel vouchers].

        The Court answered in the affirmative, since the protection which Article 7 guarantees to consumers could be impaired if they were compelled to enforce credit vouchers against third parties who are not, in any event, required to honour them and who are likewise themselves exposed to the risks consequent on insolvency.