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Supreme Administrative Court of Lithuania
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SACL Supports Compensations for Tourists’ Losses

SACL Supports Compensations for Tourists’ Losses
2017-07-24

In its ruling of 8 May 2017, the Supreme Administrative Court of Lithuania (SACL) stated that the provisions of Council Directive No 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours (the ‘Directive’) related to the compensation of losses incurred by tourists due to the insolvency of a travel organizer were improperly transposed into the Lithuanian law, and having established that the non-contractual liability of a state is recognized in the case-law of the Court of Justice of the European Union (the ‘CJEU’), ruled to award the applicant compensation for pecuniary damage.

In the administrative case in question, a dispute arose over compensation for pecuniary and non-pecuniary damage resulting from the improper transposition of the provisions of the Directive into the national law by Lithuania. In the proceedings, it was established that the applicant and the travel organizer Freshtravel UAB concluded an agreement on tourism services. The travel organizer became insolvent and, therefore, failed to organise the travel. As the applicant was refunded only part of the amount paid for the package travel, he filed a lawsuit for damages. The applicant asserted that the provisions of the Directive were improperly transposed into the Law on Tourism of the Republic of Lithuania (the ‘Law on Tourism’); however, the court of first instance in its ruling disregarded the obligation to directly refer to the provisions of the Directive.

Having studied the current legal regulation, the Judicial Panel of SACL, in essence, upheld the statement of the applicant. The Judicial Panel pointed out that, according to Article 7 of the Directive, the organizer and/or retailer party to the contract must provide sufficient evidence of security for the refund of money paid over and for the repatriation of the consumer in the event of insolvency. In its interpretation of the Article, the CJEU stated that the said article places the travel organizer under an obligation to have sufficient security for the refund of money paid over and for the repatriation of the consumer in the event of insolvency or bankruptcy, the purpose of that security being to protect consumers against the financial risks arising from the insolvency or bankruptcy of the travel organizer.

The Judicial Panel ruled that the travel did not take place as the travel organizer became insolvent and the applicant received only a partial refund because the guarantees of fulfilment of obligations established in Article 8 of the Law on Tourism were insufficient. The legal regulation established by the national law did not ensure full compensation for losses incurred by tourists in the event of the organizer‘s insolvency as required in Article 7 of the Directive, meaning that the tourist‘s (the applicant‘s) rights were not protected. Therefore, the Judicial Panel of SACL ruled that Lithuania improperly transposed and implemented Article 7 of the Directive.

Having assessed the established circumstances, the Judicial Panel stated that in this case the right of the tourist to get full refund of the money paid for the travel in the event of the organizer‘s insolvency, as provided for in the Directive, was not ensured. As a result the applicant incurred pecuniary damage of EUR 594.02 – the direct loss which must be compensated by the State.

The Judicial Panel, however, did not establish conditions under which the applicant could be awarded non-pecuniary damage incurred as a result of unlawful actions. The Judicial Panel pointed out that a change in the applicant‘s holiday plans was not a consequence of the improper transposition of the provisions of the Directive, which, as the applicant said, caused him inconvenience and emotional distress. In addition, the applicant failed to prove that the improper transposition of the Directive as such caused him severe trouble.

For more information please visit the website of the Supreme Administrative Court of Lithuania at www.lvat.lt. Administrative case No eA-990-502/2017. Please provide a reference to the website when citing or otherwise disseminating this information.