As we all brace for Lockdown2, the team at 1CL has been searching for silver linings. First, we’ll all have more time to think about all things Brexit related; stand by for further 1CL briefings and webinars on the topic. Secondly, we’ll be able to respond to the Client Survey you considerately helped us with a couple of weeks ago. Modesty forbids us from dwelling on the agreeable things you generously said about us (‘witty’? you’re too kind), but suffice to say that we’ll be covering the topics you requested as soon as we can. And lastly, of course, we’ll be able to dust off the 1CL Sean Connery box set and fire up the 1CL popcorn machine for a bit of The Man Who Would Be King.
The Hunt for Re(fun)d October: The Great Refund Saga Continues…
The Competition and Markets Authority (CMA) will find itself with a great swathe of new powers come 23:01 on 31st December this year when the transition period formally comes to an end, and they enhance or assume new competences and enforcement powers with respect to UK antitrust, merger and consumer protection law. As regards the latter, there has been a great deal of focus this year (for obvious reasons) on protection of disappointed holiday purchasers, and the CMA can clearly be seen to be sharpening its teeth in this area. Following an initial warning in July, and an agreement with TUI UK in September, the CMA have now published undertakings given by Virgin Holidays pursuant to section 219 of the Enterprise Act 2002.
By these undertakings, which are said not to amount to an admission of infringement of the law (although it is fairly clear in that respect that the emperor is not wearing any clothes), Virgin Holidays and Virgin Atlantic have now said that holidays cancelled before 1st September 2020 would be refunded in full by the end of last week, while holidays cancelled between 1st September and 31st October will be repaid by 20th November. Thereafter, somewhat graciously, Virgin have agreed to comply with law and refund holidays cancelled after 1st November within 14 days.
This seems at first glance like a victory for the consumer, inspiring confidence in the paternalistic pushings and influence of a regulator keen to impress at a time when state aid (under the CMA’s future purview) is an issue critical to EU-UK talks – but is it really? Virgin customers had already had assurances that they would receive refunds for cancelled holidays, but that in some cases they might have to wait up to 120 days. Using that number, we can assume that any cancelled holiday before the beginning of July will already have been refunded, and these undertakings primarily concern those holidays from July onwards. At the beginning of July the FCO had just lifted its warning against non-essential travel for 67 destinations, and the two week quarantine rule was due to be lifted for holiday makers from 10th July. More holidays were going ahead and so naturally we can expect there to be fewer people in the cohort of refundees from July and August who will now benefit from this commitment from Virgin, and indeed the earlier groups will barely see the 120 day timeframe reduced. For those who have had holidays cancelled in September and October (presumably a smaller number in any event) in some cases might find themselves waiting for up to 80 days until the 20th November.
Perhaps, then, the commitment the CMA has managed to extract from a major market player is a little weak, albeit clearly a step in the right direction. The section 219 undertakings have the advantage of being enforceable in court should Virgin default on them, pursuant to section 215 of the Enterprise Act 2002. This is not something to wish for, but it might well be a forum in which the regulator can demonstrate that it is up to some of the new challenges it will face in the New Year.
About the Author
Tom Yarrow was called in 2018. Before joining chambers Tom was a civil servant working in various government departments, including as a policy advisor on the UK-EU Withdrawal Agreement at the Department for Exiting the European Union. During pupillage he worked with the Government Legal Department, practising in public law in the fields of public international law, justice and security, human rights and immigration. He has regularly appeared in judicial review proceedings for the Secretary of State for the Home Department, and as a member of the Attorney General’s ‘junior junior’ scheme, he is able to take instructions directly from government clients. He now practises in all of chambers’ practice areas and is an enthusiastic and valued member of the travel team.
Never Say Never Again: Lockdown2 and Travel Restrictions
The new restrictions announced on 31st October include the avoidance of all non-essential travel, with a prohibition on holidaying either in the UK or abroad, although business travel is permitted. Essentially, people with holidays due to commence between 5th November and 2nd December will not be able to take them.
Those already on holiday are entitled to continue with their holidays as booked, and any attempt on the part of the tour operator to repatriate holidaymakers early will constitute a breach of Regulation 15 of the Package Travel and Linked Travel Arrangements Regulations 2018, attracting a price reduction (ie a refund) and compensation. Pursuant to Regulation 15, compensation will not be payable if the tour operator can show that early repatriation was necessary due to the unforeseeable or unavoidable actions of the government, or unavoidable and extraordinary circumstances. Whether Lockdown2 was unforeseeable is a rather moot point; scientists, commentators and politicians have been predicting it for some weeks. Whether it is an extraordinary circumstance might also be arguable, given that it has happened before, is happening across Europe, and appears to be one of the tools for containing the pandemic that come most readily to the hand of government. Time will tell what the courts will make of these arguments.
Those due to embark on holidays between 1st and 4th November can, technically, still do so; but it is to be expected that their return flights will be disrupted by the inevitable upheaval in flight scheduling. Pursuant to Regulation 13, the tour operator may cancel the holiday prior to departure due to unavoidable and extraordinary circumstances, and if it does so, a full refund is payable, but no compensation. This is, of course, subject to the same arguments about avoidability and extraordinary circumstances.
Holidaymakers who took advantage of the travel corridor to the Canary Islands announced a week ago in order to book a holiday commencing between 5th November and 2nd December are in the most unfortunate position of all. They, along with all would-be travellers due to depart during this period, will not be able to take their holiday due to the prohibition on non-essential travel. They are, however, entitled to a refund under Regulation 13; but no compensation is payable.
Those holidaymakers brave enough to make travel arrangements with suppliers directly, rather than booking a package, have even more to fear than the disappointment of missing out on a holiday. If their flights are not operated, they will be entitled to a refund pursuant to Articles 5 and 8 of the Denied Boarding Regulations (Regulation (EC) 261/2004); but some flights will continue to operate, if only in order to repatriate existing holidaymakers from the point of destination. In those cases, the holidaymaker is not entitled to a refund, notwithstanding the fact that he or she cannot take up the seat on the aircraft. Clearly in those circumstances the holidaymaker cannot use the accommodation booked; but again, if that accommodation can be made available to him or her, it may very well be that no refund is due from the supplier. This bold cohort of travellers may also find that in the case of travel insurance taken out after March of this year, no cover is provided in the event of Covid-related cancellation, compounding their woes still further.
The CMA appears to believe that in the case of domestic accommodation bookings holidaymakers need have no fears:
“A consumer will generally be entitled to a refund when they have paid money in advance for services or goods that cannot be provided because of the coronavirus pandemic.”
But is this (non-binding) advice accurate? If as a result of a change in the law it is unlawful for a holidaymaker to use accommodation (whether domestic or abroad) booked between lockdowns, there is surely a good argument that such force majeure clauses as the accommodation contract may feature will be engaged. Even if not, the doctrine of frustration could be pleaded as justification for the retention of at least some of the booking price. It is far from clear why the CMA does not appear to take these possibilities into account.
Whatever the true position, one thing is absolutely clear; the second lockdown will be as fraught with difficult legal niceties as the first, albeit for slightly different reasons. And as disgruntled holidaymakers lose still further confidence in travel providers, it is increasingly vital that something is done to support the industry as it faces gradual annihilation through repeated changes in government policy.
About the Author
Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at 1 Chancery Lane, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. She was recently named Best Lawyers’ Travel Lawyer of the Year 2020/2021 and the Lawyer Monthly Women in Law Awards 2020: Personal Injury.
It may feel as if the rest of the world is grinding to a halt, but the Lord Chief Justice has released a statement emphasising that ‘it is vital for the well-being of the country that the administration of justice continues to operate’, and reiterating that we as lawyers are key workers. The judiciary are reminded that they ‘must continue to make full use of’ remote hearings so that ‘cases can be dealt with as soon and as efficiently as possible’, which we take to be a welcome indication that the court closures of April and May of this year are not being contemplated this time around. We anticipate that judges will be much more reluctant to adjourn trials in particular than in the first lockdown, unless there is Just Cause to do so.