Opinion of the Advocate-General
1 The present case affords this Court a further opportunity to interpret Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours (hereinafter `the Directive'). (1) In this matter, the Court is asked first of all to clarify whether travel offered at a reduced price to the subscribers of a newspaper falls within the scope of the Directive, particularly where the payment demanded from those travelling is referable to just one part of the package. If the Directive is applicable, 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 itself, a serious and clear breach of Community law such as to render the Member State liable for loss or damage caused to individuals as a result of that failure to transpose. Finally, the Court is asked to determine whether a Member State may plead exceptional and unforeseeable circumstances connected with the conduct of a third party (in this case, the organiser of `package' travel) to break the causal nexus between its own conduct and the loss or damage caused, and thereby exonerate itself.
The relevant legislation
2 As this Court has already made clear, (2) the purpose of the Directive is, as stated in its Article 1, to approximate the laws, regulations and administrative provisions of the Member States relating to packages sold or offered for sale in the territory of the Community.
3 Article 2 is devoted to definitions. The importance of this provision in resolving a substantial proportion of the questions referred for a preliminary ruling prompts me to cite it at length. Under Article 2(1), `package' means `the pre-arranged combination of not fewer than two of the following when sold or offered for sale at an inclusive price and when the service covers a period of more than twenty-four hours or includes overnight accommodation:
(a) transport;
(b) accommodation;
(c) other tourist services not ancillary to transport or accommodation and accounting for a significant proportion of the package'.
The provision goes on to state that `the separate billing of various components of the same package shall not absolve the organiser or retailer from the obligations under this Directive'.
4 The subsequent paragraphs of Article 2 of the Directive contain further definitions relating to the parties to the contractual relationship. `Organiser' means `the person who, other than occasionally, organises packages and sells or offers them for sale, whether directly or through a retailer'. `Retailer' means `the person who sells or offers for sale the package put together by the organiser', and finally `consumer' means `the person who takes or agrees to take the package ("the principal contractor"), or any person on whose behalf the principal contractor agrees to purchase the package ("the other beneficiaries") or any person to whom the principal contractor or any of the other beneficiaries transfers the package ("the transferee")'.
5 The next provision of importance here is Article 7 of the Directive, the interpretation of which is expressly requested and which provides that `the organiser and/or retailer party to the contract shall provide sufficient evidence of security for the refund of money paid over and for the repatriation of the consumer in the event of insolvency'.
Lastly, Article 9 requires Member States to bring into force the measures necessary to comply with the Directive before 31 December 1992. In the case of the Republic of Austria, however, under the Act of Accession of the Republic of Austria, the Republic of Finland and the Kingdom of Sweden, the time-limit fixed for implementation was 1 January 1995.
6 The Directive was transposed into Austrian law by a series of legislative provisions. Significantly, for the purposes of resolving the questions referred for interpretation, Article 7 of the Directive was implemented by the Reisebüro-Sicherungsverordnung - (Order concerning insurance bonds held by travel agencies) of 15 November 1994. (3) The Order applies only to `package' holidays booked after 1 January 1995 with a departure date not before 1 May 1995. Paragraph 3(1) of the Order provides that the travel organiser must, by entering into a contract of insurance with an insurance company authorised to operate in Austria, guarantee the traveller (a) the refund of money paid over, 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 the sum insured must be at least 5% of the organiser's business turnover in the corresponding quarter of the previous calendar year, or 10% if the organiser takes deposits of more than 10% of the price of the travel or the balance of the price more than ten days prior to departure. In the first year of business, the sum insured must be calculated on the basis of the organiser's estimated turnover. Finally, it should be noted that Paragraph 4 of the Order permits the organiser to cover the risk also by providing an irrevocable and unconditional bank guarantee issued by a credit institution authorised to conduct business in Austria, or by way of a declaration of guarantee issued by a body governed by public law, under which the guarantor undertakes to provide the benefits to which the traveller is entitled under a contract of insurance which complies with Paragraph 3.
The facts of the case and the questions referred for a preliminary ruling
7 The plaintiffs before the national court are all subscribers to an Austrian daily newspaper, the Neue Kronenzeitung. In November 1994, the company publishing the newspaper decided to offer subscribers, 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 transfers, overnight accommodation with breakfast, in a double or single room (the latter on payment of a supplement) and a tour in the company of a German-speaking tour guide.
8 Under the terms of the offer, subscribers were only asked to pay the Austrian airport tax of ÖS 40 per person and the Greek airport tax of ÖS 280 per person. Subscribers travelling alone were required to pay a single room supplement of ÖS 500 per night. Persons accompanying subscribers, on the other hand, were required to pay the full price as set out in a brochure annexed to the offer. Accordingly, the publisher distributed vouchers to subscribers which they could use to book a trip, choosing from a variety of dates. The subscriber would then receive a booking confirmation from the company organising the travel, to which a deposit of 10% of the sum due from him was to be paid within ten days of the confirmation, the balance being payable no later than ten days before departure.
9 The plaintiffs before the national court booked their trips between 19 November 1994 and 12 April 1995. Some intended to travel alone, others with one of more companions. The holidays were to take place 10 April and 23 July 1995, according to the booking.
10 The offer was far more successful than the organisers had anticipated. Whilst the travel agency had planned a flight capacity of 30 000, bookings were made by no fewer than 52 260 subscribers with a further 33 041 people travelling as companions. The organiser consequently encountered serious operational difficulties as no more places were available on board flights, and these difficulties led in turn to financial problems. On 4 July 1995, insolvency proceedings were instituted upon application by the company Arena-Club-Reisen itself. As a result of the organiser's insolvency, two of the plaintiffs were unable to take their holidays, while the other four had already had their holidays cancelled due to the lack of available places. All the plaintiffs, however, had paid the whole cost of the trip.
11 It appears from the order for reference that, in the absence of statutory requirements, no guarantee was provided in respect of the payments made by the three plaintiffs who had booked their trips during 1994. Two of them consequently 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, booked trips to be made after 1 May 1995. For these customers, a bank guarantee in 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 plaintiffs.
12 In the cases pending before the national court, all the plaintiffs have accordingly asked that the Austrian State be held liable for having failed to fulfil its obligation under the Treaty promptly and faithfully to implement the Directive. They therefore asked for the State to be ordered to pay damages corresponding to the amounts paid over and unrecovered following the insolvency of the company which organised the travel.
13 The Landesgericht (Regional Court) Linz decided to refer to this Court the following questions for a preliminary ruling:
`(1) Does the protection afforded by Article 7 of Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours ("the Directive") extend to travel for which the principal contracting party must, on the basis of the contract, only pay
(a) the airport security tax (departure tax) and a single room supplement, if he travels alone,
or
(b) the airport security tax (departure tax), if he travels with one or more accompanying persons paying the full price,
and nothing in respect of the flight and accommodation in a multiple occupancy room?
(2) Does such travel fall within the Directive's scope of application even when it is offered by the largest circulation daily newspaper in a Member State as a free gift exclusive to subscribers as part of an anti-competitive advertising campaign?
If the answers to questions 1 and 2 are in the affirmative:
(3) Has Article 7 of the Directive been transposed in time if the national rules published on 15 November 1994 are to be applied only to package travel booked after 1 January 1995 with a departure date not before 1 May 1995, particularly
(a) in view of the fact that Austria became part of the European Economic Area on 1 January 1994, and
(b) in view of Austria's accession to the European Union on 1 January 1995?
If the answer to question 3 is in the negative:
(4) Does the failure to transpose a single article of the Directive (Article 7) within the prescribed time-limit constitute, in and of itself, a serious and clear breach of Community law such as to give rise to a right to compensation for loss or damage caused to individuals, where the Member State has made adequate provision within the time-limit to transpose all other provisions of the Directive?
(5) Is Article 7 of the Directive to be interpreted as meaning that the objective of that article is not achieved where national rules
(a) for the cover of risk only require an insurance contract or bank guarantee with a sum insured (cover) of 5% or more of the organiser's business turnover in the corresponding quarter of the previous calendar year,
(b) only require the organiser, in his first year of business, to determine the amount of the sum insured (cover) on the basis of his forecasted turnover,
(c) do not in this connection take into account any increase in the organiser's turnover during the current year, and
(d) do not impose any duty upon the Member State to verify the existence of the requisite security.
(6) Is there a direct causal nexus between late or incomplete transposition of Article 7 and any loss or damage caused thereby to the consumer, such as to render the Member State liable to reimburse unsecured payments in full, even where the Member State can show unlawful conduct on the part of the organiser (a third party) or an exceptional and unforeseeable increase in risk as the cause (or an essential contributory cause) of the loss or damage?'
The first and second questions referred for a preliminary ruling
14 With the first two questions, the Austrian court is essentially asking this Court to clarify whether the Directive covers the trips booked by the plaintiffs in the proceedings before it. Doubt arises, according to the order for reference, from the fact that, in this case, the trips were offered as a `free gift' to the subscribers of a daily newspaper, with the result that the principal contracting party was not required to pay any sum which could, under normal market conditions, be considered proper consideration for the travel offered.
15 I would begin by saying that the conditions laid down by the Directive to establish whether given tourist services fall within its scope are, I find, satisfied for each of the plaintiffs in the main proceedings. There is no doubt that these were package services within the meaning of Article 2(1) of the Directive, in that the trips in question included flights, accommodation and other tourist services not ancillary to the first two, including the tour in the company of a German-speaking tour guide.
16 It is less obvious, however, whether the conditions laid down by the first part of that provision and by Article 1 of the Directive are met. The Austrian Government disputes that, in the present case, package services sold or offered for sale at an inclusive price in the territory of the Community are in point. In its view, the holidays booked by the plaintiffs in the main proceedings were given away, not sold, to the subscribers to the daily newspaper. In support of its argument the Austrian Government maintains that both the context and the wording of the Directive show that for there to be a `package' there must be a close relationship between the services offered by the organiser or retailer of the holiday and the consideration demanded of the consumer. This means that the consumer must be asked to pay a price which corresponds to the value of the service as a whole and which is calculated by reference to that service, even if the payment does not necessarily cover all of the costs.
17 I do not find the interpretation advanced by the Austrian Government convincing for a number of reasons. It 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 tourist services. This conclusion is reached on the basis of a systematic analysis of both the text of the Directive and its objectives and also in the light of its preamble. (4) From the eighth to 11th recitals, which refer to the requirement for harmonisation, (5) from the 21st recital, which deals with the obligation upon the organiser set out in Article 7, and from the 22nd recital, according to which the provisions for the protection of the consumer are in the nature of minimum rules which may only be derogated from to create more stringent provisions, it is to be inferred that the main concern behind this harmonisation initiative is to promote effective protection, of a high level, of consumer rights. The text of the Directive as a whole, and of Articles 3 to 8 especially, (6) contains provisions which are clearly directed to a wide-ranging protection of the rights of the weaker party to the travel agreement. With regard to the particular provision referred to in the questions referred for a preliminary ruling, the Court has already held that `the purpose of Article 7 is that of protecting consumers against the financial risks arising from the insolvency of the organiser'. It is also significant that the legal basis on which the Directive was adopted is Article 100a of the Treaty, the third paragraph of which requires that harmonisation measures in the field of consumer protection be based upon a high level of protection. (7)
18 That said, it must then be pointed out that the text of the Directive contains nothing to imply that tourist services do not fall within its scope where the price paid by the consumer does not correspond to the economic value of the services offered in return, or where the monetary consideration demanded from the consumer is imputed to one part of the `package' only. Nor, contrary to what the Austrian Government maintains, can any different conclusion be drawn from the wording of the ninth recital. The purpose of that recital is solely to emphasise the importance of introducing a harmonisation measure to tackle existing disparities between national legal provisions with respect to methods of protecting consumers of tourist services. Those disparities, it is made clear in the recital, deter consumers from buying those services outside their own Member State, and to a greater extent than is the case in relation to other services, given `the special nature of the services supplied in a package which generally involve the expenditure of substantial amounts of money in advance'. It is therefore clear that the explanation contained in the recital just mentioned can have no connection with the Directive's objective ambit of application, and can therefore not be used to limit its scope.
19 There can, on the other hand, be no doubt that the tourist services offered by the newspaper were sold in the context of a relationship which was clearly contractual in nature or that the price demanded as payment was an inclusive price paid in advance by the consumers. This is the case as regards both the subscribers who intended travelling alone (who were asked to pay only the single room charge and the airport taxes) and those who made bookings for themselves and their companions (who had to pay only the airport taxes). Admittedly, the fact that these consumers were required to make only a reduced payment will in turn limit the damage or loss sustained in the event of the organiser$s insolvency and, consequently, any liability on the part of the State in the event of its having failed to implement the Directive properly or at all, but I do not think it is correct to infer from this that the services in question should be excluded altogether from the scope of the Directive. I also think that, with regard to those subscribers who intended to take up the offer along with their companions, the fact that it was the subscriber who was asked to pay the full price, which was then formally attributed to the companions, is not without significance. (8) Those travelling as companions could not have taken part in the trips offered by the newspaper without the intervention of a subscriber, and from this it can ultimately be said, in accordance with the opinion expressed by the United Kingdom Government, that in cases of this sort the `package' must be considered as a unit: the price paid by the subscriber, whether it is attributed to the subscriber himself or to his companion(s), acts as consideration for the participation of both in the holiday offered for sale by the organiser. From this perspective, it is indisputable that what are concerned are tourist services which fall within the scope of the Directive.
20 I should add that, for all the plaintiffs, the fact that the payment was attributed to just one or two of the services offered (either the flight alone, or the flight and the overnight accommodation), does not alter the terms of the question. If it did, the organiser of package travel would, as the United Kingdom Government has observed, be able to prevent the rules for the protection of consumers from applying simply by attributing the payment of the price to a single part of the package.
21 Further, it should be noted that it follows, so to speak, from the simple reality of the situation that the tourist services in issue fall within the scope of the Directive. The consumers suffered an economic loss in that the sums they paid in advance, albeit small in comparison with the economic value of the trips, were not recovered at all or only to an insignificant extent. It was to this end that, in the first instance, they resorted to the system set up by the Austrian Government for the specific purpose of guaranteeing the result prescribed by Article 7 of the Directive, a system from which they indeed benefited, but only to a minimal extent.
22 Finally, the interpretation proposed here is confirmed by the fact that the trip was offered to subscribers to the Austrian daily newspaper within the framework of a wide-ranging contractual relationship between the publisher and the consumer, in the context of which the trip took on a complementary role in relation to subscription to the newspaper. Far from being simply a sort of `free gift' to the consumer, the trip in fact assigned a significant promotional, and therefore economic value, in that it was clearly intended to help maintain the existing contractual relationship with the subscribers to the newspaper and to promote the newspaper's image in the eyes of third parties.
23 As to the second question, I do not think it necessary to say very much. The fact that the tourist services in question were offered in the context of a misleading promotional campaign, which was expressly held by the Austrian Courts to infringe competition law, does not alter the terms of the question. Indeed, the recognition of the misleading nature of the offer, presented by the newspaper as `free' whilst in fact it was not, serves at most to confirm that the tourist service in question was in fact offered for sale for valuable consideration and so could not fail to fall within the scope of the Directive.
24 Nor do I think any greater merit can be attached to the other objection raised by the Austrian Government to the effect that the travel offered in the case in point does not fall within the scope of the Directive because the offer was only addressed to a well defined group of persons (the subscribers to the newspaper). The scope of the Directive is clearly not limited to tourist services which are offered to a potentially unlimited number of consumers, it being sufficient that they are sold or offered for sale within the territory of the Community at an inclusive price, and that they include at least two of the components listed in Article 2(1).
25 For the reasons stated, I find that the tourist services in point in the main proceedings fall within the scope of the Directive.
The third question
26 With the third question, the national court is essentially asking this Court to clarify whether Article 7 of the Directive has been properly implemented in Austrian law, bearing in mind that the national measure transposing the Directive, although published within the time-limit, only allow consumers to avail themselves of the system of guarantees in respect of trips which were booked after 1 January 1995 and for which the date of departure was not earlier than 1 May 1995.
27 It should be said first of all that, in considering this matter, reference should be made to the date (1 January 1995) by which the Austrian State was required to implement the Directive by virtue of the Act of Accession to the European Union. The fact that Austria was required to comply with the same rules as from 1 January 1994 because it was a party to the Agreement on the European Economic Area, is, on the other hand, clearly irrelevant. It is not for the Court of Justice of the European Communities but for the EFTA Court to interpret the text of the Directive for the purpose of appraising Austria's conduct during the period prior to its accession to the European Union. The following analysis is therefore limited to evaluating the way in which Austria decided to implement within its own legal system the obligation arising from the Act of Accession to introduce the necessary measures to comply with the Directive by 1 January 1995.
28 That said, I think that the answer to the question must be in the negative. Article 9 of the Directive requires Member States to adopt the necessary measures to comply with all the provisions of the Directive by no later than 31 December 1992. In the case of Austria, the prescribed time-limit, under the terms of the Act of Accession, was 1 January 1995. The obligation to introduce the necessary implementing measures to guarantee consumers enjoyment of the rights set out in Article 7 is therefore incumbent upon the Member States as from the date by which the Directive should have been transposed. It is specifically from that date that the organiser and/or the 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. Such security should therefore have been available to consumers under Austrian law as from 1 January 1995 in respect of all tourist services which fall within the scope of the Directive and of which consumers intended to avail themselves as from that date. Postponement of protection to 1 May 1995 - by reference to the date on which the trip is taken - is not, therefore, permitted by the text of the Directive.
29 Furthermore, confirmation of this proposed solution can be found in the judgment in Dillenkofer, cited above. In that judgment the Court, having been invited by the German Court to rule upon a similar question to that asked by the Landesgericht Linz, had occasion to state, at paragraph 50, that `in order to ensure full implementation of Article 7 of the Directive, the Member States should have adopted, within the prescribed period, all the measures necessary to provide purchasers of package travel with a guarantee that, as from 1 January 1993, they would be refunded money paid over and be repatriated in the event of the organiser's insolvency'.
30 It nevertheless remains to define the extent of the obligation referred to in Article 9 mentioned above and in the provisions of the Act of Accession to introduce the measures necessary in order to comply with the Directive within the prescribed time-limit. As regards Article 7, clarification is required as to whether the obligation is satisfied when a Member State does no more than ask organisers to provide security for the refund of money paid over and the repatriation of consumers in the case of tourist services (falling of course within the scope of the Directive) which are booked and purchased after expiry of the time-limit for transposition, or whether the protection afforded to the consumer must extend to all trips undertaken or to be undertaken after the critical date (1 January 1995, in the present case) regardless of the booking date or the date on which the package services are purchased.
The answer to this question is particularly important in the present case, as some of the plaintiffs in the main proceedings booked and paid for their trips before the expiry of the time-limit prescribed for transposing the Directive, whereas their departures were scheduled for after 1 January 1995.
31 It should be noted at the outset that the Directive does not expressly specify whether or not the rules it sets out are also to be applied to contracts which are already 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 effect, within a given time, the measures necessary in order to comply with the Directive.
32 I am of the opinion that the protection which Article 7 of the Directive affords consumers does apply to travel agreements which were concluded prior to the aforementioned critical date but which were to be performed after that date. The introduction 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 business.
33 The nature of the provision in question militates in favour of this interpretation, for it expresses an interest which is deserving of special protection under Community law, namely that of providing security for the weaker party to the package travel agreement. I have already had occasion to analyse the text and preamble of the Directive and in particular the different contractual positions of the various parties to the mandatory relationship, and to make it clear that, although formally we are dealing with a harmonisation measure under Article 100a of the Treaty aimed at completing the internal market, the principal objective of the Directive is quite plainly that of protecting the consumer. (9) This approach is further confirmed by the more general orientation of Community law in favour of the consumer. This particular legislative policy is borne out by various express provisions. I refer not only to the rules set out in the Treaty and mentioned earlier, (10) but also to a voluminous body of legislation which has as its objective the achievement, in the context of contractual relationships especially, of a high level of protection of the interests of consumers. (11)
34 Given that the protection provided for by Article 7 is expressive of an interest worthy of special protection under Community law, it would appear quite justifiable to assume that, as from the final date for transposition of the Directive, contracts which are already in existence - but to be performed later - between a travel organiser and a consumer can, with respect to the services yet to be provided, undergo automatic adaptation as a result of the new legislative framework. And this is so even if (as has been noted) such adaption involves a deterioration in the contractual position of the `stronger' of the parties to the agreement. Of the two conflicting interests, that of maintaining the synallagmatic relationship arising from the agreement concluded and that of protecting the weaker party to the bargain, it is clear that Community law has meant to favour the latter, and this, moreover, is quite in accordance with the trend of national laws in this field.
35 The proposed solution, it should be explained, is also wholly in conformity with the letter of the provision which, as already mentioned, is limited to imposing upon the organisers and/or retailers of package services an obligation to furnish certain guarantees to the consumer of tourist services as from the date set out in the Directive, without distinguishing between `new' contracts and those already in existence. The protection must therefore be provided in every case where services fall within the scope of the Directive and are to be enjoyed after the expiry of the time-limit for transposition, and other factors, like the booking date or the date of payment, are irrelevant.
36 Finally, it should be noted that the interpretation of Article 7 given in the judgment in Dillenkofer, in which the Court stated that `in order to ensure the full implementation of Article 7 of the Directive, the Member States should have adopted, within the prescribed period, all measures necessary to provide purchasers of package travel with a guarantee that, as from 1 January 1993, they would be refunded money paid over and be repatriated in the event of the organiser's insolvency' (12) is no bar to the proposed solution. The guarantee in point must therefore be provided, according to the Court, as from the final date for transposing the Directive, whereas the date on which the travel contract is entered into - and it may, of course, have been concluded earlier - was of no significance for the grounds of the judgment.
37 Consequently, I find that in implementing the Directive, the Member State was required to provide the protection referred to in Article 7 even in the case of contracts already in existence when the time allowed for implementing the Directive expired. As regards the case before us, the Austrian State should have guaranteed, as from the time-limit of 1 January 1995, the refund of charges paid and the repatriation of the consumer in the event of the organiser's insolvency, in the case of all tourist travel past or future, quite independently of the date on which the contract was concluded.
The fourth question
38 With the fourth question, the national court is essentially asking this Court to clarify whether the failure to adopt the measures necessary in order to transpose Article 7 of the Directive constitutes, in and of itself, a serious and clear breach of Community law, where the Member State has duly implemented all other provisions of the Directive.
39 I think that the question must be answered in the affirmative. The evaluation of a Member State's performance of its duty to implement a directive within the period prescribed cannot be reduced to a purely quantitative question. Nor does it seem to me permissible to `grade' the provisions of a directive according to a scale in order to assess whether a breach committed by a Member State is serious or not. The only thing that matters once it is established that a Member State has failed to comply with its obligation of transposition, even with respect to a single provision of a directive, is the presence of the three requirements which, according to the case-law of the Court, must be satisfied for it to be found that a State is under an obligation to make good damage sustained by individuals as a result of the breach of Community law. First, it is necessary that the provision in the directive which has not been implemented is one which aims to confer rights upon private individuals, that the content of such rights can be clearly identified on the basis of the provisions of the directive, and that there exists a causal nexus between the breach of the obligation imposed upon the Member State and the damage sustained by the injured party. (13) Although it is true that, in case-law after the Francovich decision, the Court made it clear that, in order for it to be possible for a Member State to be held liable, the breach of Community law in question must be sufficiently serious and clear, (14) in the Dillenkofer judgment it stated that `where a Member State fails, in breach of the third paragraph of Article 189 of the Treaty, to take any of the measures necessary to achieve the result prescribed by a directive within the period it lays down, that Member State manifestly and gravely disregards the limits on its discretion'. (15) The failure to take necessary measures to transpose a directive therefore constitutes in itself a serious and clear breach of Community law.
40 On the other hand, it is also true that, in the case just cited, the Court did refer to the fact that no steps had been taken to achieve the result prescribed by the directive in question. In the case before us now, the Member State whose conduct is in issue points out, on the contrary, that it promptly took the necessary steps to implement all of the provisions of the Directive other than Article 7. Nevertheless, I do not think that one can draw from this the inferences suggested by the Austrian Government. It need merely be observed, in order to dispose of its objection, that, although it is true that at the material time the German State had not adopted any internal measures to implement the directive, in the Dillenkofer case the sole issue was whether the German State was liable for damage caused to individuals as a result of the failure to implement Article 7. Thus the reference in the passage from the judgment just quoted to the failure to take any measure by way of implementation must be linked to the measures necessary to achieve that particular result, namely the grant to consumers of the right to recover money paid over and the right to repatriation in the event of the insolvency of the organiser or retailer of the trip.
41 Thus, in order to establish liability on the part of a Member State, it is sufficient (provided, of course, that the other three requirements mentioned are also satisfied) that loss or damage is caused by a failure to implement even a single provision of a directive. The fact that the Member State promptly and correctly complied with the obligations imposed upon it by other provisions of the directive does not prevent its breach of Community law from being serious and clear and such as to give rise to a right for individuals to compensation for damage sustained. The other provisions of the Directive might indeed have no connection with the right conferred upon the individual by the provision which has not been transposed, and it would therefore be paradoxical to conclude that the individual's right to compensation for damage could be made conditional upon the Member State$s conduct in relation to other provisions which have no bearing upon the individual$s legal position and thus the subject-matter of the dispute.
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, wherever 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 directive, to exercise a right conferred upon them by the provisions of the directive. Any other considerations must therefore be excluded from the assessment of the seriousness of the Member State's conduct, including those which relate to the Member State's general conduct in relation to its duty to implement all the provisions of a directive. These are considerations which have a bearing upon the relationship between Member States and the Community, but they have nothing to do with the protection of the individual with respect to specific conduct on the part of the Member State which is prejudicial to the individual's rights.
43 Having regard to the above considerations, I propose that the Court answer the fourth question put to it by the Landesgericht Linz to the effect that the failure to implement, within the prescribed time-limit, even a single article (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 who have sustained loss or damage as a result of that failure on the part of the Member State.
The fifth question
44 The fifth question concerns the way in which Article 7 of the Directive was actually transposed into Austrian law. It is well to remember that some of the plaintiffs in the main proceedings, because of the dates of their bookings and the planned schedule for the trips, were able to avail themselves of the system of guarantees laid down by the order transposing the Directive, albeit they obtained only minimal satisfaction of their rights. The national court thus wonders whether the objective pursued by the provision in question is achieved when national legislation does no more than impose upon travel organisers the burdens prescribed by the Austrian legislation.
45 In this connection, it must be said at once that this Court has already had occasion to observe that it follows from the very wording of Article 7 of the Directive that, `this provision prescribes, as the result of its implementation, an obligation for the organiser to have sufficient security for the refund of money paid over and for the repatriation of the consumer in the event of insolvency'. (16) In implementing this provision, Member States were therefore required to introduce, within the prescribed time-limit, all necessary measures to ensure the complete effectiveness of the provision and thus the attainment of the result prescribed by it. (17) In other words, it follows from the wording of Article 7, as interpreted by the Court, that the Member States have an obligation of result: that of guaranteeing, independently of the means employed, to purchasers of package travel the refund of money paid over and their repatriation in the event of the organiser's insolvency. To answer the question, it is therefore sufficient to note that the objective of Article 7 of the Directive has not been attained in that the consumers who brought the main action, whilst activating the system of security prescribed by the Austrian legislature (purportedly) to implement the provision, were unable to obtain a full refund of the money they had paid over.
46 Nor do I think that, in justification of the conduct of the Austrian State, it can be held that the breach of Article 189 of the Treaty imputable in this case to that State, and consisting in a failure to create effective instruments to guarantee the rights set out in Article 7 of the Directive, is not a sufficiently serious and clear breach of Community law and therefore not such as to render the State liable for damage or loss caused to individuals. (18) The Austrian Government observes in this regard that, in light of the information available to it at the time of transposing the Directive, it was able to form the honest belief that measures such as those prescribed by the order of 1994 could be sufficient to guarantee the result prescribed by Article 7 of the Directive.
47 For all that this is in principle a matter for the national Court to decide, I nevertheless believe that this Court possesses all the necessary information to propose a solution on the merits. It is sufficient to observe that the result which Article 7 of the Directive requires Member States to achieve is both clear and precise: security for the full refund of money paid over by 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 respect to the choice of the specific methods of achieving an objective which is clearly defined by the text of the provision. The methods chosen will then be considered to be in conformity with the objective if they actually enable consumers to recover sums paid over or to be repatriated.
48 The specific arrangements furnished by the Austrian legislature were clearly inadequate, and indeed proved themselves so when the consumers sought to enforce the rights accorded them by Article 7 of the Directive. So much is clear in that the Austrian order, as the Commission rightly noted, calls for a guarantee which is limited in terms of both the amount of cover and the way in which that cover is calculated, bearing in mind that the amount of cover is calculated on the basis of the agency's business turnover in the preceding year or, in the case of new operators, on the basis of the turnover forecasted by the operator himself. The system laid down by the Austrian order therefore appears structurally incapable of accommodating an event which is quite normal and predictable in the economic sector in question, such as a significant increase in the number of bookings as compared with the turnover in the preceding year.
49 Further, the absence of measures to monitor the conduct of travel organisers is also of importance, given that, in its judgment in the Dillenkofer case, this Court stated that `Article 7 would not have been fully implemented if, within the prescribed period, the national legislature had done no more than adopt the necessary legal framework for requiring organisers by law to provide sufficient evidence of security'. (19)
50 I think therefore that one can simply reply to the fifth question referred by the Austrian court by stating that the objective pursued by Article 7 of the Directive is attained only if the consumer of package travel obtains the full refund of money paid over, the implementation measures specifically adopted by the national legislature to ensure that that objective is attained being wholly irrelevant, so long as they prove themselves effective for that purpose.
The sixth question
51 By its sixth and final question the national court asks this Court whether the liability of a Member State for a breach of Community law can be precluded or limited where that State proves the existence of unlawful acts on the part of a third party (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 sustained by an individual can be broken by the above-mentioned factors.
52 In this connection, it should be said first of all that it is for the national court to ascertain whether or not the conditions which must exist for an obligation to arise on the part of a Member State to make good damage caused by a breach of Community law are satisfied. It follows that it also falls to the national court, which has direct knowledge of the facts of the case, to assess whether a causal nexus exists between the unlawful conduct ascribed to the Member State and the damage sustained by individuals.
53 That said, the Austrian Government argues that the damage sustained by the consumers resulted exclusively from the imprudent conduct of parties who had nothing to do with the Austrian State, namely the travel organisers and the publisher of the newspaper. The Austrian Government therefore considers that no causal nexus can be established, because the legislature could not have foreseen exceptional events connected with the conduct of a third party, such as the acceptance of a higher number of bookings than the financial capacity of the Arena-Club-Reisen agency allowed.
54 I cannot share that view. If the Directive is concerned with imposing upon Member States an obligation to provide for a system for the protection of consumers that will provide them with security in the event of the insolvency of the organisers or retailers of package services, it is clear that that concern has the specific aim of protecting consumers as the weak parties to the contract against precisely the sort of conduct adopted by Arena-Club-Reisen. The causal nexus which, it is submitted, exists between the failure to transpose the Directive properly or at all and the damage sustained by individuals is certainly not thrown into doubt by unlawful or imprudent conduct on the part of the travel organiser. This is because it is specifically on the premise that imprudent conduct or 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 therefore have taken the necessary measures to protect consumers against precisely the sort of conduct that was adopted by Arena-Club-Reisen. The system chosen, however, did not prove itself capable of ensuring the result prescribed by the Directive.
55 On the basis of all the foregoing considerations, I therefore propose that the Court give the following answers to the questions put to it by the Landesgericht Linz:
(1) The protection referred to in Article 7 of Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours extends to travel for which the principal contracting party must pay
(a) the airport security tax (departure tax) and a single room supplement, if he travels alone, or
(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.
(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.
(6) There is a causal nexus between late or incomplete transposition of Article 7 of the Directive and any loss or damage caused to the consumer, even where there has been imprudent conduct on the part of the travel organiser or an exceptional increase in risk.
(1) - OJ 1990 L 158, p. 59. The Directive, and Article 7 in particular, have already been interpreted by the Court in Joined Cases C-178/94, C-179/94, C-188/94, C-189/94 and C-190/94 Dillenkofer and Others [1996] ECR I-4845, and in Case C-364/96 Verein für Konsumenten-information [1998] ECR I-2949.
(2) - See paragraph 3 of the judgment in Dillenkofer, cited above.
(3) - In BGBl No 881 of 15 November 1994, p. 6501.
(4) - See paragraphs 33 to 39 of the judgment in Dillenkofer, and sections 11 to 14 of the Opinion of Advocate General Tesauro. I believe that this principle of interpretation in the most favourable sense to the consumer is also confirmed by the judgment in Verein für Konsumenteninformation, cited above, in particular at paragraphs 18 to 23 where the Court interpreted broadly the scope of application of the consumer$s right to the refund of money paid over and to repatriation, `having regard to the objectives of the Directive, in particular those of Article 7' (paragraph 20).
(5) - The eighth recital notes the disparities between the `rules protecting consumers' in the different Member States. The ninth recital focuses on the special nature of the services supplied to consumers in a package, and in particular on the fact that consumers generally have to pay out substantial amounts of money. The tenth recital says that the consumer should have the benefit of the protection introduced by the Directive irrespective of whether he is a direct contracting party, a transferee or a member of a group on whose behalf another person has concluded a contract in respect of a package. The eleventh recital concerns the obligation to provide information imposed by the Directive on the organiser or retailer of the holiday.
(6) - Articles 3 and 4 are concerned with obligations upon the organiser and retailer of the holiday prior to conclusion of the contract and with events which alter the relationship. In both cases, the law governing the contractual relationship clearly expresses a bias in favour of the contractual position of the consumer. The same can be said of Articles 5 and 6 which deal with obligations upon the organiser or retailer of the holiday with regard to the performance phase of the contract.
(7) - It is worth adding that Article 3(s) of the Treaty provides that the Community$s actions should include a contribution to the strengthening of the protection of consumers and that Article 129a states that the Community should contribute to the achievement of a high level of protection of consumers through, inter alia, measures adopted pursuant to Article 100a. The provisions just mentioned were not in force at the time the Directive was adopted. However, they do help to show increasing attention on the part of Community legislation to the interests of consumers.
(8) - The national court observes in its order for reference that, in this case, the subscribers `evidently paid for their "free trip" by paying for accompanying persons'.
(9) - See point 17 above.
(10) - See footnote 5 and the text referred to therein.
(11) - See Council Directive 84/450/EEC of 10 September 1984 relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising (OJ 1984 L 250, p. 17), Council Directive 87/102/EEC of 22 December 1986 for the approximation of the laws, regulations and administrative provisions of the Member States concerning consumer credit (OJ 1987 L 42, p. 48), Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (OJ 1993 L 95, p. 29), Directive 97/7/EC of the European 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 misleading advertising so as to include comparative advertising (OJ 1997 L 290, p. 18).
(12) - See paragraph 50 of the judgment in Dillenkofer, cited above.
(13) - See Joined Cases C-6/90 and C-9/90 Francovich and Others [1991] ECR I-5357, paragraphs 38 to 46. 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 I-1029, paragraphs 50 to 55 and Case C-392/93 British Telecommunications [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 (paragraph 23), although none was mentioned in Francovich.
(16) - See paragraph 34 of the judgment in Dillenkofer.
(17) - Paragraphs 50 to 52 of the judgment in Dillenkofer.
(18) - See paragraphs 40 to 46 of the judgment in British Telecommunications, cited above. In that case, the Court held that Article 8(1) of Council Directive 90/531/EEC relating to adjudication procedures for public tenders in the so-called `excluded sectors' was `imprecisely worded and was reasonably capable of bearing, as well as the construction applied to it by the Court in [that] judgment, the interpretation given to it by the United Kingdom in good faith and on the basis of arguments which are not entirely devoid of substance' (paragraph 43).
(19) - Paragraph 51 of the judgment cited.
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