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The Weekly Roundup: the Continuing Impact of Covid-19 on the Travel Industry

Articles | Mon 30th Mar, 2020

It’s been a busy week in travel law, even if no one has been able to do any actual travelling. The team at 1 Chancery Lane summarise some of the most noteworthy developments.

The New Extension to the Personal Injury Pre-Action Protocol

On 25th March 2020 there was a collective sigh of relief in response to the announcement that the Association of British Insurers and solicitors representing Claimants had agreed a new Extension to the Personal Injury Pre-Action Protocol, the text of which is as follows:

“Extension to the Personal Injury Protocol in England and Wales

A protocol is agreed and immediately put into effect. This will involve, for a minimum of 4 weeks (until the 20th of April) with a joint review in the week commencing the 13th of April, the following:

  1. An agreement that all limitation dates in all personal injury cases are frozen and claimants undertake to respond constructively to defendant requests for extension of time to serve a Defence;
  2. An escalation process whereby any issue arising by a party’s failure to act in accordance with the agreement in 1. above and which cannot immediately be resolved between the parties is referred to an email and/or telephone ‘hotline’ specifically established for this situation; and
  3. A commitment that the email and telephone hotline will be monitored regularly and referred to senior people within the respective organisations who will be able to make a swift decision as to whether the stance being taken should be adjusted in light of prevailing circumstances.”

The reasoning behind the Extension is clear. The more challenging the times, the greater the need for co-operation between parties; and these are undoubtedly challenging times. The signatories to the Extension have agreed to put aside any differences they may have, and in exchange for an agreement to allow those representing Claimants more time in which to consider whether to issue proceedings, Defendants’ representatives will have a longer period within which to consider their response to any claims which are issued and served.

In the author’s view, this is an eminently sensible approach. It is in nobody’s interests for Claimants’ solicitors to be forced to issue claims whilst still becoming familiar with the logistics of remote and flexible working; or, indeed, for Defendants’ solicitors to have to file and serve Defences whilst their clients, particularly those based overseas, may be struggling with the same issues, and, in the case of those based in the hardest hit areas, with even more pressing difficulties.

The ABI’s website provides a link to the signatories to the Extension, and it is hoped that the illustrious names listed there will be applauded for this pragmatic solution. Quite what the Civil Procedure Rules Committee makes of this rather unusual extension to the rules remains unknown, at least to the author; but in her opinion it would be advantageous to everyone involved in civil litigation if the collaborative approach taken by these signatories could be taken by all parties involved in any claims, at least in these challenging times, which are arguably quite difficult enough as it is.

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.

WARNING! The Application of the Extension in Montreal Convention Claims

For the vast majority of personal injury claims governed by section 11 of the Limitation Act 1980, the provision of the new extension to the Protocol relating to limitation creates no difficulty. The time-bar imposed by section 11 is plainly a procedural one, the effect of which is to bar the remedy but preserve the underlying cause of action, leaving parties free to extend it by consent. The same, it is submitted, must also be true of the two year limitation period imposed by the Athens Convention, which although not subject to the discretionary power to extend under section 33 of the 1980 Act (Higham v Stena Sealink (1996) 1 WLR 1107) is nonetheless properly characterised as a procedural time-bar: South West SHA v Bay Island Voyages (2016) QB 503, albeit with a long-stop of 3 years under Article 16.

However, the position is different under the two year limitation period prescribed by the Montreal Convention 1999. Article 35 is drafted in the clearest possible terms:

“The right to damages shall be extinguished if an action is not brought within a period of two years, reckoned from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped”.

Accordingly, this is a substantive and not a procedural limitation period. After two years, the cause of action itself is extinguished. As Lord Wilberforce explained in Aries Tanker Corporation v Total Transport (1977) 1 WLR 185 (considering Article III, rule 6 of the Hague Rules):

“It is a time bar of a special kind, viz., one which extinguishes the claim . . . not one which, as most English statutes of limitation (e.g. the Limitation Act 1939 . . .) . . . do, bars the remedy while leaving the claim itself in existence. . . . The charterers’ claim, after May 1974 and before the date of the writ, had not merely become unenforceable by action, it had simply ceased to exist . . .”

If a cause of action has ceased to exist, can an insurer’s agreement to ‘freeze’ it or otherwise extend it, have any effect?

The German Supreme Court (the Bundesgerichtschof) has held that under that Country’s law, such an agreement will bind the parties: Case ZLW 299 (7 May 1963). However, it is submitted that the same is unlikely to be the case under English law.

McGee on Limitation contains the following analysis of Article 29 of the Warsaw Convention, which is in similar terms:

The Convention contains no provisions relating expressly to the possible extension of the two-year period, although art.29 provides that the method of calculating the running of time is left to the domestic law. It may be argued that this serves to incorporate the domestic-law rules on extension of time. If that argument is accepted, the result must be that all the rules of the domestic law on extension are incorporated, not just those relating to fraud. It is submitted, however, that rules as to extension of time are not properly described as rules on calculating the running of time. The only rules which merit that description are those which determine, for example, whether parts of a day are included in the calculation”.

By contrast, Article 16 of the Athens Convention provides in terms that the law of the court seized shall govern ‘grounds of suspension and interruption’, reinforcing the conclusion that the two Conventions do not have the same effect.

In Morris v KLM (2002) AC 628 Lord Hope observed that:

“From the point of view of the carrier too, however, there are significant advantages in the system laid down by the (Montreal) Convention. A principal consequence of that system is the exposure of the carrier to liabilities without the freedom to contract out of them. But it defines those situations in which the compensation is to be available, and it sets out the limits of liability and the conditions under which claims to established liability, if disputed, are to be made. A balance has been struck between these competing interests, in the interests of certainty and uniformity.”

If there is no freedom to contract out of the Convention, it is difficult to see why an agreement contained in a protocol can in any way ‘bind’ the parties.

What of equity? Surely the doctrines of estoppel or waiver will come to the rescue of the Claimant acting in good faith? The decision of the Eady J in Laroche v Spirit of Adventure (2008) EWHC 788 would suggest not. In that case the Claimant had sued a company which, at the time of the hot air balloon flight in which he was injured, had not existed. He applied after two years to substitute the correct defendant. One of the arguments deployed was that it would be unconscionable for the Defendant to be able to rely on the time-bar and that it should be estopped from doing so. Eady J rejected this argument:

71. […]It is already quite apparent that it is not open to a carrier and passenger to contract out of the exclusive regime imposed by the Warsaw Convention, or by the Non-International Rules, where they would otherwise be applicable. It is thus relevant to have regard to the decision of the Court of Appeal in Keen v. Holland [1984] 1 All ER 75.

  1. In that case, the defendant knew throughout that the plaintiffs were unwilling to grant a tenancy that would attract the protection of the Agricultural Holdings Act 1948, and both parties believed that the tenancies granted effectively produced that result. Nevertheless, it was held that the defendant was not estopped from invoking the protection of the Act, since the terms of s.2(1) were mandatory, once the factual situation contemplated came into existence, and could not be overridden by an estoppel. As Oliver LJ observed at p. 82:

“The terms of s.2(1) are mandatory once the factual situation therein described exists, as it does here, and it cannot, as we think, be overridden by an estoppel even assuming that otherwise conditions for an estoppel exist … We agree with the judge that, having regard to the purpose of the 1948 Act, it cannot be said to be unconscionable for the tenant who is protected by it to rely on the protection which the statute specifically confers on him. Once the protection attaches, the jurisdiction to grant possession is exercisable only subject to the statutory provisions and it is a little difficult to see how the parties can, by estoppel, confer on the court a jurisdiction which they could not confer by express agreement.”

  1. Likewise here, it seems clear that just as the parties could not exclude the regime contained in the Non-International Rules, so too they could not be permitted to do so by estoppel. This doctrine does not provide a route whereby the Claimant can bring an action in negligence or breach of contract; nor could it enable him to import a three-year limitation period which would otherwise not apply.”

The decision in Laroche was upheld by the Court of Appeal on different grounds and should therefore be regarded as good law.

Of course, these are extraordinary times and it may well be that a sympathetic court would navigate a route through this maze in the interests of achieving ‘justice’. However, there are plainly powerful arguments available to a Defendant faced with an argument that a cause of action that has ceased to exist remains ‘frozen’ and can be resurrected.

The prudent litigator would be well advised to give serious consideration to issuing all claims under the Montreal Convention before the expiry of two years and thereafter to seek to agree a stay of proceedings for as long as reasonably required.

About the author

Jack Harding was called to the Bar in 2004 and he too has been highly listed in the legal directories in travel law for many years. He co-writes Saggerson on Travel Law and Litigation, and with his particular interest in aviation law is regularly asked to advise airlines, airports and tour operators on a range of issues, including matters arising from the operation of the Montreal Convention.

Mutti to the Rescue: the TUI Bailout

As we all know, the travel industry has been hit hard in recent weeks. With the collapse of Thomas Cook fresh in our memories, and all the associated turmoil, there has been a sense of inevitability that more will follow in the near future. The World Travel and Tourism Council warned up to 50 million jobs could be lost because of the pandemic and Hays Travel, the UKS’s largest travel agency chain, has furloughed the majority of its workforce in the past few days.

There is, however, a glimmer of hope. In a move that will hopefully induce mimicry elsewhere, the world’s largest tour operator TUI AG is on the cusp of securing nearly 2 billion euros in government aid. It has reached an agreement with Germany’s state-owned KfW development bank which is expected to be signed off shortly. Interestingly, as part of KfW’s special program the bank itself would provide 80% of the loans, with the remaining 20% to come from commercial banks. Share prices rallied slightly in the wake of the news, though have still taken a considerable beating over the past month (down nearly 10%).

For travel lawyers this bailout is a double blessing. Of course the principal hope is that the company will remain solvent and able to satisfy liabilities arising from litigation. The other, as indicated before, is that other governments will take note and similarly prop up domestic travel industries. One fears otherwise that by 2021 the global industry will be harmed irrevocably.

For now TUI is good for its money and we can proceed happily with the bringing and defending of claims. I wonder whether this news will encourage claimants to seek expedient resolutions of claims, to get their money while they still claim, rather than engage in lengthy protracted litigation running the risk that TUI folds before they achieve an enforceable settlement or determination.

Oh to be a travel lawyer…

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.

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