C-140/97

OPINION OF MR SAGGIO — CASE C-140/97

OPINION OF ADVOCATE GENERAL SAGGIO delivered on 25 June 1998 *

1. The present case affords this Court a The relevant legislation further opportunity to interpret Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and pack- age tours (hereinafter 'the Directive'). 1 In 2. As this Court has already made clear, 2 this matter, the Court is asked first of all to the purpose of the Directive is, as stated in clarify whether travel offered at a reduced its Article 1, to approximate the laws, price to the subscribers of a newspaper falls regulations and administrative provisions of the Member States relating to packages within the scope of the Directive, particu- sold or offered for sale in the territory of larly where the payment demanded from the Community. those travelling is referable to just one part of the package. If the Directive is applic- able, the Court is then asked to ascertain whether the failure to transpose, within the prescribed time-limit, a single article of the Directive (Article 7) constitutes, in and of 3. Article 2 is devoted to definitions. The importance of this provision in resolving a itself, a serious and clear breach of Com- substantial proportion of the questions munity law such as to render the Member referred for a preliminary ruling prompts State liable for loss or damage caused to me to cite it at length. Under Article 2(1), individuals as a result of that failure to 'package' means 'the pre-arranged combi- transpose. Finally, the Court is asked to nation of not fewer than two of the determine whether a Member State may following when sold or offered for sale at plead exceptional and unforeseeable cir- an inclusive price and when the service cumstances connected with the conduct of covers a period of more than twenty-four a third party (in this case, the organiser of hours or includes overnight accommoda- 'package' travel) to break the causal nexus tion: between its own conduct and the loss or damage caused, and thereby exonerate itself.

4. The subsequent paragraphs of Article 2 6. The Directive was transposed into Aus- of the Directive contain further definitions trian law by a series of legislative provi- relating to the parties to the contractual sions. Significantly, for the purposes of relationship. 'Organiser' means 'the person resolving the questions referred for inter- who, other than occasionally, organises pretation, Article 7 of the Directive was packages and sells or offers them for sale, implemented by the Reisebüro-Sicherungs- whether directly or through a retailer'. verordnung — (Order concerning insur- 'Retailer' means 'the person who sells or ance bonds held by travel agencies) of offers for sale the package put together by 15 November 1994. 3The Order applies the organiser', and finally 'consumer' only to 'package' holidays booked after means 'the person who takes or agrees to 1 January 1995 with a departure date not take the package ("the principal contrac- before 1 May 1995. Paragraph 3(1) of the tor"), or any person on whose behalf the Order provides that the travel organiser principal contractor agrees to purchase the must, by entering into a contract of insur- package ("the other beneficiaries") or any ance with an insurance company author- person to whom the principal contractor or ised to operate in Austria, guarantee the any of the other beneficiaries transfers the traveller (a) the refund of money paid over, package ("the transferee")'. where the travel services have not been provided, whether wholly or in part, as a result of the organiser's insolvency and (b) the refund of the costs of repatriation incurred as a result of the organiser's insolvency. Paragraph 3(2) provides that 5. The next provision of importance here is the sum insured must be at least 5% of the Article 7 of the Directive, the interpretation organiser's business turnover in the corre- of which is expressly requested and which sponding quarter of the previous calendar provides that 'the organiser and/or retailer party to the contract shall provide sufficient evidence of security for the refund of 3 — In BGBl No 881 of 15 November 1994, p. 6501.

9. The plaintiffs before the national court booked their trips between 19 November 7. The plaintiffs before the national court 1994 and 12 April 1995. Some intended to are all subscribers to an Austrian daily travel alone, others with one of more newspaper, the Neue Kronenzeitung. In companions. The holidays were to take November 1994, the company publishing place 10 April and 23 July 1995, according the newspaper decided to offer subscribers, to the booking. as a reward for their loyalty, a holiday under an arrangement with the travel agency Arena-Club-Reisen. It consisted of four or seven day stays in foreign tourist resorts, including flight with on-board refreshments, airport-hotel-airport trans- 10. The offer was far more successful than fers, overnight accommodation with break- the organisers had anticipated. Whilst the fast, in a double or single room (the latter travel agency had planned a flight capacity on payment of a supplement) and a tour in of 30 000, bookings were made by no

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'(1) Does the protection afforded by Arti- cle 7 of Council Directive 90/314/EEC 11. It appears from the order for reference of 13 June 1990 on package travel, that, in the absence of statutory require- package holidays and package tours ments, no guarantee was provided in ("the Directive") extend to travel for respect of the payments made by the three which the principal contracting party plaintiffs who had booked their trips dur- must, on the basis of the contract, only ing 1994. Two of them consequently pay sought to assert their rights as creditors in the insolvency proceedings relating to the organiser, but to no avail. The guarantee referred to in the November 1994 Order operated, however, in favour of the other three plaintiffs who, after 1 January 1995, (a) the airport security tax (departure booked trips to be made after 1 May 1995. tax) and a single room supplement, For these customers, a bank guarantee in if he travels alone, excess of ÖS 4 000 000 had been provided, yet this still covered only 25.38% of the travel costs paid in advance by the plain- tiffs. or

12. In the cases pending before the national court, all the plaintiffs have accordingly asked that the Austrian State be held liable (b) the airport security tax (departure for having failed to fulfil its obligation tax), if he travels with one or more under the Treaty promptly and faithfully to accompanying persons paying the implement the Directive. They therefore full price,

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and nothing in respect of the flight and If the answer to question 3 is in the accommodation in a multiple occupancy negative : room?

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(cover) on the basis of his fore- The first and second questions referred for casted turnover, a preliminary ruling

14. With the first two questions, the Aus- trian court is essentially asking this Court to clarify whether the Directive covers the trips booked by the plaintiffs in the pro- ceedings before it. Doubt arises, according to the order for reference, from the fact (c) do not in this connection take into that, in this case, the trips were offered as a account any increase in the orga- 'free gift' to the subscribers of a daily niser's turnover during the current newspaper, with the result that the princi- year, and pal contracting party was not required to pay any sum which could, under normal market conditions, be considered proper consideration for the travel offered.

main proceedings were given away, not the requirement for harmonisation, 5from sold, to the subscribers to the daily news- the 21st recital, which deals with the paper. In support of its argument the obligation upon the organiser set out in Austrian Government maintains that both Article 7, and from the 22nd recital, the context and the wording of the Direc- according to which the provisions for the tive show that for there to be a 'package' protection of the consumer are in the there must be a close relationship between nature of minimum rules which may only the services offered by the organiser or be derogated from to create more stringent retailer of the holiday and the consideration provisions, it is to be inferred that the main demanded of the consumer. This means concern behind this harmonisation initia- that the consumer must be asked to pay a tive is to promote effective protection, of a price which corresponds to the value of the high level, of consumer rights.

It is also significant that the legal basis on 17. I do not find the interpretation which the Directive was adopted is Arti- advanced by the Austrian Government cle 100a of the Treaty, the third paragraph convincing for a number of reasons. It of which requires that harmonisation mea- should be observed at the outset that interpretation of the Directive must always be informed by the general principle that, in cases of doubt, its provisions must be interpreted as far as possible in favour of the party to whom protection is intended to be given, in this case the consumer of 5 — The eighth recital notes the disparities between the 'rules

package. The eleventh recital concerns the obligation to provide information imposed by the Directive on the 4 — See paragraphs 33 to 39 of the judgment in Dillenkofer, and organiser or retailer of the holiday. sections 11 to 14 of the Opinion of Advocate General 6 — Articles 3 and 4 are concerned with obligations upon the Tesauro. I believe that this principle of interpretation in the organiser and retailer of the holiday prior to conclusion of most favourable sense to the consumer is also confirmed by the contract and with events which alter the relationship.

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sures in the field of consumer protection be contained in the recital just mentioned can based upon a high level of protection. 7 have no connection with the Directive's objective ambit of application, and can therefore not be used to limit its scope.

only. Nor, contrary to what the Austrian were required to make only a reduced Government maintains, can any different payment will in turn limit the damage or conclusion be drawn from the wording of loss sustained in the event of the organiser's the ninth recital. The purpose of that recital insolvency and, consequently, any liability is solely to emphasise the importance of on the part of the State in the event of its introducing a harmonisation measure to having failed to implement the Directive tackle existing disparities between national properly or at all, but I do not think it is legal provisions with respect to methods of correct to infer from this that the services in protecting consumers of tourist services. question should be excluded altogether Those disparities, it is made clear in the from the scope of the Directive.

The provisions just mentioned were not in force at the time the Directive was adopted. However, they 8 — The national court observes in its order for reference that, in do help to show increasing attention on the part of this case, the subscribers 'evidently paid for their "free trip" Community legislation to the interests of consumers. by paying for accompanying persons'.

23. As to the second question, I do not 21. Further, it should be noted that it think it necessary to say very much. The follows, so to speak, from the simple reality fact that the tourist services in question of the situation that the tourist services in were offered in the context of a misleading issue fall within the scope of the Directive. promotional campaign, which was The consumers suffered an economic loss in expressly held by the Austrian Courts to that the sums they paid in advance, albeit infringe competition law, does not alter the small in comparison with the economic terms of the question. Indeed, the recogni- value of the trips, were not recovered at all tion of the misleading nature of the offer, or only to an insignificant extent. It was to presented by the newspaper as 'free' whilst this end that, in the first instance, they in fact it was not, serves at most to confirm resorted to the system set up by the that the tourist service in question was in Austrian Government for the specific pur- fact offered for sale for valuable considera- pose of guaranteeing the result prescribed tion and so could not fail to fall within the by Article 7 of the Directive, a system from scope of the Directive.

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The third question

26. With the third question, the national 28. That said, I think that the answer to the court is essentially asking this Court to question must be in the negative. Article 9 clarify whether Article 7 of the Directive of the Directive requires Member States to has been properly implemented in Austrian adopt the necessary measures to comply law, bearing in mind that the national with all the provisions of the Directive by measure transposing the Directive, no later than 31 December 1992. In the although published within the time-limit, case of Austria, the prescribed time-limit, only allow consumers to avail themselves under the terms of the Act of Accession, of the system of guarantees in respect of was 1 January 1995. The obligation to trips which were booked after 1 January introduce the necessary implementing mea-

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29. Furthermore, confirmation of this pro- The answer to this question is particularly posed solution can be found in the judg- important in the present case, as some of ment in Dillenkofer, cited above. In that the plaintiffs in the main proceedings judgment the Court, having been invited by booked and paid for their trips before the the German Court to rule upon a similar expiry of the time-limit prescribed for question to that asked by the Landesgericht transposing the Directive, whereas their Linz, had occasion to state, at paragraph departures were scheduled for after 1 Jan- 50, that 'in order to ensure full implemen- uary 1995. tation of Article 7 of the Directive, the Member States should have adopted, within the prescribed period, all the mea- sures necessary to provide purchasers of package travel with a guarantee that, as 31. It should be noted at the outset that the from 1 January 1993, they would be Directive does not expressly specify refunded money paid over and be repatri- whether or not the rules it sets out are also ated in the event of the organiser's insol- to be applied to contracts which are already vency'. in the course of being performed at the time of transposition. Rather, it limits itself to defining, by means of the general form of wording used in Article 9, the obligation on the part of Member States to put into 30. It nevertheless remains to define the effect, within a given time, the measures extent of the obligation referred to in necessary in order to comply with the Article 9 mentioned above and in the Directive.

32. I am of the opinion that the protection contractual relationships especially, of a which Article 7 of the Directive affords high level of protection of the interests of consumers does apply to travel agreements consumers. 11 which were concluded prior to the afore- mentioned critical date but which were to be performed after that date. The introduc- tion of the new regime, which altered the contractual relationship to the detriment of the organiser and/or retailer of the tourist service, establishes a new general rule of conduct, as from the date upon which the Directive is required to be transposed, for the person who carries on that particular 34. Given that the protection provided for business. by Article 7 is expressive of an interest worthy of special protection under Com- munity law, it would appear quite justifi- able to assume that, as from the final date for transposition of the Directive, contracts which are already in existence — but to be

agreement. I have already had occasion to a deterioration in the contractual position analyse the text and preamble of the of the 'stronger' of the parties to the Directive and in particular the different agreement. Of the two conflicting interests, contractual positions of the various parties that of maintaining the synallagmatic rela- to the mandatory relationship, and to make tionship arising from the agreement con- it clear that, although formally we are cluded and that of protecting the weaker dealing with a harmonisation measure party to the bargain, it is clear that under Article 100a of the Treaty aimed at Community law has meant to favour the completing the internal market, the princi- latter, and this, moreover, is quite in pal objective of the Directive is quite accordance with the trend of national laws plainly that of protecting the consumer.9 in this field. This approach is further confirmed by the more general orientation of Community law in favour of the consumer. This parti- 11 — See Council Directive 84/450/EEC of 10 September 1984 cular legislative policy is borne out by relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning various express provisions. I refer not only misleading advertising (OJ 1984 L 250, p. 17), Council Directive 87/102/EEC of 22 December 1986 for the to the rules set out in the Treaty and approximation of the laws, regulations and administrative mentioned earlier,10 but also to a volumi- provisions of the Member States concerning consumer credit (OJ 1987 L 42, p. 48), Council Directive 93/13/EEC nous body of legislation which has as its of 5 April 1993 on unfair terms in consumer contracts (OJ 1993 L 95, p. 29), Directive 97/7/EC of the European objective the achievement, in the context of Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts (OJ 1997 L 144, p. 19), Directive 97/55/EC of the European Parliament and of the Council of 6 October 1997 amending Directive 84/450/EEC concerning mislead- 9 — See point 17 above. ing advertising so as to include comparative advertising

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35. The proposed solution, it should be 37. Consequently, I find that in implement- explained, is also wholly in conformity ing the Directive, the Member State was with the letter of the provision which, as required to provide the protection referred already mentioned, is limited to imposing to in Article 7 even in the case of contracts upon the organisers and/or retailers of already in existence when the time allowed package services an obligation to furnish for implementing the Directive expired. As certain guarantees to the consumer of regards the case before us, the Austrian tourist services as from the date set out in State should have guaranteed, as from the the Directive, without distinguishing time-limit of 1 January 1995, the refund of between 'new' contracts and those already charges paid and the repatriation of the in existence. The protection must therefore consumer in the event of the organiser's be provided in every case where services fall insolvency, in the case of all tourist travel within the scope of the Directive and are to past or future, quite independently of the be enjoyed after the expiry of the time-limit date on which the contract was concluded. for transposition, and other factors, like the booking date or the date of payment, are irrelevant.

The fourth question

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Article 7. Nevertheless, I do not think that there exists a causal nexus between the one can draw from this the inferences breach of the obligation imposed upon the suggested by the Austrian Government. It Member State and the damage sustained by need merely be observed, in order to the injured party. 13 Although it is true that, dispose of its objection, that, although it in case-law after the Francovich decision, is true that at the material time the German the Court made it clear that, in order for it State had not adopted any internal mea- to be possible for a Member State to be sures to implement the directive, in the held liable, the breach of Community law Dillenkofer case the sole issue was whether in question must be sufficiently serious and the German State was liable for damage clear, 14 in the Dillenkofer judgment it caused to individuals as a result of the stated that 'where a Member State fails, failure to implement Article 7.

Note also that, in relation to Article 7 of the Directive, the presence of the aforementioned conditions has already been recognised by the Court in Dillenkofer, cited above. 14 — See Joined Cases C-46/93 and C-48/93 Brasserie du pêcheur and Factortame and Others [1996] ECR 1-1029, paragraphs 50 to 55 and Case C-392/93 British Tele- communications [1996] ECR I-1631, paragraphs 38 to 42. 15 — The Court was thus able to find that there was a sufficiently serious and clear breach in the case in question 41. Thus, in order to establish liability on (paragraph 23), although none was mentioned in Fran- covich. the part of a Member State, it is sufficient

42. Lastly, it is appropriate to emphasise that the tendency of the case-law of this Court relating to the liability of Member States for breach of Community law, wher- The fifth question ever a breach of the duty promptly and faithfully to implement a Community directive is concerned, is to guarantee compensation for damage sustained by individuals as a result of their being unable, because of the failure to implement the 44. The fifth question concerns the way in directive, to exercise a right conferred upon which Article 7 of the Directive was actu- them by the provisions of the directive. Any ally transposed into Austrian law. It is well other considerations must therefore be to remember that some of the plaintiffs in excluded from the assessment of the ser- the main proceedings, because of the dates iousness of the Member State's conduct, of their bookings and the planned schedule including those which relate to the Member for the trips, were able to avail themselves State's general conduct in relation to its of the system of guarantees laid down by duty to implement all the provisions of a the order transposing the Directive, albeit directive. These are considerations which they obtained only minimal satisfaction of have a bearing upon the relationship their rights. The national court thus won- between Member States and the Commu- ders whether the objective pursued by the

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provision in question is achieved when unable to obtain a full refund of the money national legislation does no more than they had paid over. impose upon travel organisers the burdens prescribed by the Austrian legislation.

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solution on the merits. It is sufficient to which is quite normal and predictable in observe that the result which Article 7 of the economic sector in question, such as a the Directive requires Member States to significant increase in the number of book- achieve is both clear and precise: security ings as compared with the turnover in the for the full refund of money paid over by preceding year. the consumer in respect of a package trip. It is true that the Member States are allowed considerable latitude in selecting the means of achieving this end, but those means must prove themselves to be effective in attaining the aforementioned objective. In other words, it follows from the wording of Article 7, as interpreted by the Court in its judgment in Dillenkofer, that Member States enjoy a certain discretion solely with 49. Further, the absence of measures to respect to the choice of the specific methods monitor the conduct of travel organisers is of achieving an objective which is clearly also of importance, given that, in its defined by the text of the provision. The judgment in the Dillenkofer case, this methods chosen will then be considered to Court stated that 'Article 7 would not have be in conformity with the objective if they been fully implemented if, within the actually enable consumers to recover sums prescribed period, the national legislature paid over or to be repatriated. had done no more than adopt the necessary legal framework for requiring organisers by law to provide sufficient evidence of secur- ity'. 19

The sixth question namely the travel organisers and the pub- lisher of the newspaper. The Austrian Government therefore considers that no causal nexus can be established, because 5 1 . By its sixth and final question the the legislature could not have foreseen national court asks this Court whether the exceptional events connected with the con- liability of a Member State for a breach of duct of a third party, such as the acceptance Community law can be precluded or lim- of a higher number of bookings than the ited where that State proves the existence of financial capacity of the Arena-Club-Reisen unlawful acts on the part of a third party agency allowed. (in the present case, the organiser of the package travel), or of a wholly exceptional and unforeseeable increase in risk. The point to be clarified is, therefore, whether the causal nexus between the conduct of a Member State and the damage or loss 54. I cannot share that view. If the Direc- sustained by an individual can be broken tive is concerned with imposing upon by the above-mentioned factors. Member States an obligation to provide for a system for the protection of consu- mers that will provide them with security in the event of the insolvency of the organisers or retailers of package services, it is clear 52. In this connection, it should be said that that concern has the specific aim of first of all that it is for the national court to protecting consumers as the weak parties to ascertain whether or not the conditions the contract against precisely the sort of which must exist for an obligation to arise conduct adopted by Arena-Club-Reisen. on the part of a Member State to make The causal nexus which, it is submitted, good damage caused by a breach of Com- exists between the failure to transpose the munity law are satisfied. It follows that it Directive properly or at all and the damage also falls to the national court, which has sustained by individuals is certainly not direct knowledge of the facts of the case, to thrown into doubt by unlawful or impru- assess whether a causal nexus exists dent conduct on the part of the travel between the unlawful conduct ascribed to organiser. This is because it is specifically the Member State and the damage sus- on the premise that imprudent conduct or tained by individuals. even exceptional or unforeseeable events can occur, that the Directive lays down the special system of protection set out in Article 7. The Austrian State should there- fore have taken the necessary measures to 53. That said, the Austrian Government protect consumers against precisely the sort argues that the damage sustained by the of conduct that was adopted by Arena- consumers resulted exclusively from the Club-Reisen. The system chosen, however, imprudent conduct of parties who had did not prove itself capable of ensuring the nothing to do with the Austrian State, result prescribed by the Directive.

(b) only the airport security tax (departure tax), if he travels with one or more accompanying persons paying the full price.

(2) Such travel falls within the scope of the Directive even when it is offered by large-circulation daily newspapers of a Member State exclusively to their subscribers as part of a misleading advertising campaign.

(3) Article 7 of the Directive precludes a Member State from prescribing, when implementing the Directive, the guarantee of the consumer rights set out in that provision only in the case of trips booked after 1 January 1995 with a departure date not before 1 May 1995. I - 3520

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(4) The failure to transpose within the prescribed time-limit only Article 7 of the Directive constitutes, in and of itself, a serious and clear breach of Community law such as to give rise to a right to compensation for individuals where they have suffered economic loss because of that infringement.

(5) The objective pursued by Article 7 of the Directive is attained only where consumers of package travel services can obtain the full refund of money paid over, irrespective of the implementing measures actually adopted by the national legislature.