Last week we reported that after a catastrophic four months cruise operators had finally been able to restart sailing, albeit initially in a fairly limited way. This week the FCO administered what can only be described as a kick in the ballast to an already beleaguered industry. Not to be outdone, the CMA has donned its knuckledusters and is eying tour operators still embroiled in the Great Refund Saga. Meanwhile, HMCTS plans to clear its massive hearings backlog by listing cases out of hours and at weekends, prompting some at the Bar to call for a barristerial strike. We at 1 Chancery Lane are unlikely to don the 1CL donkey jackets just yet, but we do wonder whether government departments will be holding themselves to the high standards they appear to expect of the travel industry, both in terms of health and safety and in relation to turnaround times.
Brace Yourselves: Expert Warns of a Sharknado of Claims
We reported last week on HMCTS’ plans to list cases ‘creatively’ to deal with the backlog caused by the lockdown measures. This week a past president of the London Solicitors’ Litigation Association, Tony Guise, has warned of an oncoming ‘tsunami’ of claims (did we say sharknado? Sorry. That was pure clickbait). He thinks the civil justice system could be overwhelmed by the end of the year, not least because when the stay on housing possession hearings ceases at the end of August it is anticipated that a huge backlog of those claims will be released. A month ago HMCTS’ figures showed that almost 25,0000 civil hearings had been adjourned due to the lockdown. Even now, if you write to Manchester Civil Justice Centre you will have to wait ten weeks before staff will be able to respond to you; and it is said that there are over 6,000 items of unanswered correspondence lying around in the Birmingham County Court office.
All of this is bad enough; but when one considers how many claims arising out of Covid-19, lockdown and furlough are likely to be issued in the coming months, the scale of the problem appears really quite daunting. As well as the inevitable furlough and redundancy employment claims, there will be claims arising from the provision of inadequate personal protective equipment and unsafe working practices, clinical negligence claims, and of course the implications of the Great Refund Saga.
Mr Guise, who is director of a company providing online management of ADR, unsurprisingly recommends the use of…ADR…to help clear the backlog. But let us not be too cynical about this. He may well have a point. For those of us whose trials were adjourned in the early days of lockdown, and who are now seeing them relisted a year later, it is worth engaging with the other party to the litigation to explore the possibility of disposing of claims to everyone’s mutual advantage. The last thing Claimants who thought they would see an end to litigation in Spring 2020 want is for the process to drag on for another year; but equally, tour operators already overwhelmed by claims for refunds could really do without hundreds of historic claims staying on their books for an additional twelve months. It is all too easy for litigators to fall into the mindset that claims will be fought to trial, particularly when so many trials have been adjourned at the last moment; but in the current circumstances we need to think more creatively than ever.
Naturally, we at 1CL recommend the use of counsel at every conceivable opportunity; readers, having agreed that we would not be cynics today, will readily appreciate the selfless reasons that prompt us to do so. It is sometimes the case that solicitors, loss adjustors and case workers, having fought against each other valiantly for months, find it difficult to establish common ground in a case, whereas counsel, who commonly act for both Claimants and Defendants, and who deal with the same small group of cross border specialists in most of these cases, may find it easier to do so. Either way, it is worth considering whether ADR, whether by way of RTSM, mediator, or just informal counsel to counsel exploratory chat, might be a good way of disposing of cases which might otherwise take another year to resolve, with all the attendant litigation risk that involves, for both parties.
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.
the FCO’s nuclear strike
A figurative strike, of course, but a strike of devastating impact nonetheless. Earlier this week the FCO advised against all cruise ship travel – updating its previous advice which had been in respect of only those passengers over the age of 70 – a decision it said was based on medical advice from Public Health England.
This comes as bad news to cruise operators who have sustained considerable losses since the imposition of lockdown, and suffered harmful notoriety as a result of a number of ships which became hotbeds for infection at the beginning of the pandemic. As covered previously in the 1CL Weekly Roundup, a number of high profile lawsuits have been instigated.
Inevitably the cruise operators’ analyses of financial viability, and stress testing, would have assumed some degree of parity with other parts of the travel industry such as airlines. Given that international travel is still to open, and flights resuming, the cruise operators will feel hard done by. There are media reports of individuals in the industry being very angry about the decision (albeit not expressed publicly), and there are serious concerns about the security of the 40,000 people employed in the sector.
Some have wondered at the logic behind the uniformity of the advice, which does not distinguish between very small boutique boats and the enormous behemoth ships carrying many thousands of passengers. Moreover there are others who are frustrated because – they say – cruise ships are doing a good job of making travel safe for passengers, including the imposition of temperature checks and social distancing on board.
the cruise expert safety panel
This significance of this update is somewhat less immediate in light of the above, at least from a British perspective, but will be important and interesting once cruise travel finally does get going again.
The companies Royal Carribean Group and Norweigan Cruise Line Holdings, which together own nine major cruise lines, have formed a panel of experts (the ‘Healthy Sail Panel’) to produce “enhanced cruise health and safety standards”. The panel features big names, including a former governor of Utah and US Secretary of Health and Human Service, and the ex-administrator of the US Food and Drug Administration, and covers specialisms including public health, infectious disease, biosecurity, hospitality and maritime operations experts. They are tasked with developing open recommendations for cruise lines to safely resume operations.
The logic behind the move must surely be to improve consumer confidence in the safety of cruise travel in light of the pandemic, and encourage governments to give the green light for cruise travel. Clearly the FCO didn’t get the memo…..
From a litigator’s point of view, a few interesting questions arise about the status and weight of these recommendations. Will they be treated as industry ‘gold standard’ (i.e. best practice), or the general minimum standards for what a reasonable cruise operator must do for passenger safety? This will of course depend to a degree on how specific the recommendations are, and how onerous. One may wonder whether their contravention could form the basis of an Athens Convention claim, and whether they will come to be treated by courts as the ‘local standards’. It seems unlikely, however, any such recommendations will be treated – in any formal legal sense – as local standards. The parallel to draw here is that of Federation of Tour Operator Standards, which were categorically rejected as having legal force by Richards LJ in Evans v Kosmar Villa Holidays  1 WLR 297. Similarly in Goldbournv v Balkan Holidays  WLUK 453, the Court of Appeal rejected essentially the same argument in a skiing context, in respect of the handbook issued by the Federation Internationale de Ski. It seems more plausible, however, that these recommendations could be helpful evidence when assessing alleged ‘fault’ or ‘neglect’ by a cruise carrier, in a claim brought under the Athens Convention.
About the Author
One of the more junior members of the team, Richard Collier was called to the Bar in 2016. Before that, he had worked as a Judicial Assistant to Lord Justice Jackson in the Court of Appeal. He is now instructed by solicitors for both Claimants and Defendants in cross border disputes, package travel and other related claims.
Travel Refunds and the Threat of Regulatory Enforcement
We have written extensively in recent months on the topic of holiday refunds in the time of Coronavirus. This week in Parliament Liz Saville Roberts MP asked (by way of a written question)
“what steps [the Chancellor] is taking to ensure that holiday insurance companies do not insist that claimants first file for a chargeback claim before they pay out on claims; and what discussions he has had with representatives from the Financial Conduct Authority and Competition and Markets Authority on that matter?”
The response from the treasury was that as travel insurance only covers losses which cannot be recovered from elsewhere, consumers should first:
“contact travel providers […] for reimbursement. In the next instance, credit card providers would provide a refund under Section 75 of the Consumer Credit Act 1974 if the payment was made by credit card and cost was over £100 per unit […] The Financial Conduct Authority has published guidance for firms handling consumer claims during the Covid-19 crisis. Where consumers have two potentially valid avenues of redress against regulated firms (for example, from an insurer and credit provider) there is nothing in their rules that stops an insurer, credit provider or other regulated firm settling the claim in full (so long as there is no disadvantage to the consumer in this) and, where appropriate, seeking to claim back from the other firm involved.
The FCA will be consulting in the coming weeks on guidelines so that in future their expectations of firms and the choices for consumers will be clearer. More broadly, the FCA has said that, in light of COVID-19, insurers must consider very carefully the needs of their customers and show flexibility in their treatment of them.”
Having received over 17,500 complaints, the Competition and Markets Authority has now published an open letter to all firms involved in organising package holidays for UK consumers. The advisory letter makes clear that the CMA expects providers to
- offer full cash refunds in accordance with consumer statutory rights;
- provide clear information to consumers/not mislead consumers as to their statutory rights;
- be easy to contact for consumers seeking to exercise their statutory rights, or to discuss other travel concerns.
The letter concludes:
“While the CMA is not beginning enforcement action against your company at present, we continue to monitor the complaints and intelligence that we are receiving.”
In contrast to other areas (such as insurance coverage, where the FCA has recently issued proceedings to clarify the law on “Business Interruption” insurance policies), there is no uncertainty over the law on refunds for cancelled holidays. The refunds failure stems from the current liquidity crisis for travel firms affected by the pandemic. As such, it seems likely that enforcement action will be necessary (at least in relation to a significant number of firms) before consumers receive the refunds they are due, but that ultimately many consumers may have to seek recompense from their credit card providers or from insurers should their travel firms prove insolvent.
Readers seeking a more detailed analysis of these issues should turn to the recent article by Jack Harding of 1CL and Lee Hills of Mayo Wynne Baxter, to be found here:
About the Author
Called in 2011, prior to pupillage Conor Kennedy spent two years working with a leading insurance law firm, gaining experience across regulatory, employment, leisure, travel and public sector teams. He has a varied civil practice and is accredited for Direct Access instruction, but has a particular interest and expertise in claims involving fundamental dishonesty.
Japanese theme parks have finally re-opened, but on one condition: rollercoaster riders are being asked to scream ‘inside their hearts’, and not in the more traditional manner, due to concerns about the spread of Covid-19 contaminated droplets. Apparently Japanese thrill-seekers are finding it difficult to comply with the guidance, which is in contradistinction with American theme parks, which merely require guests to have their temperature checked, wear masks and maintain social distancing. Happily, of course, we stoic Brits would never do anything so emotionally undisciplined as to scream in public, so the 1CL trip to Chessington World of Adventure can safely go ahead