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Volume 931: debated on Friday 6 May 1977

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11.45 a.m.

I beg to move Amendment No. 37, in page 14, line 31, leave out "which" and insert "or any notice which".

With this it will be convenient to take Amendment No. 38 in page 14, line 37, at end insert—

'.; or
(c) if any service is to be provided wholly or substantially outside the United Kingdom, is authorised or required by the express terms or necessary implication of the law of the country in which the service or the relevant part of the service is to be performed."

Amendment No. 37 is a small drafting point which is commended to the Government, but it must be a matter for parliamentary counsel to decide whether it has any validity. It was thought to be a possible omission, but, as I said, this is a matter for lawyers to agree among themselves.

My prime purpose is to move Amendment No. 38, which raises an issue which was discussed in Committee and which remains a matter of great importance in the context of the Bill. The amendment is intended to limit the liability of those providing services abroad in countries where the provisions of United Kingdom law would not necessarily apply and where, as a result, those providing the services might be under a greater liability to their clients than their contractors would be to them and, therefore, would have no hope of recovering the compensation for which they might be liable in the United Kingdom.

It is clear that this matter applies to all those providing services abroad. By nature of that definition, it must embrace the travel industry providing foreign holidays. It is on behalf of the Association of British Travel Agents, the recognised representative body for the travel industry in this country, that I move the amendment.

The principle of limiting liability in this Bill, which otherwise seeks to make it impossible for liability to be excluded entirely except in certain circumstances on the ground of reasonableness, is already written into the Bill by a clause introduced by the Government in Committee to take account of internationally agreed conventions. That was no doubt due to the need to observe international law. That may be the most important purpose, but it has the subsidiary effect of limiting liability.

In the two principal conventions of which account is taken by Clause 27—the Warsaw Convention for air travel and the Athens Convention for shipping—we see that liability has been limited directly as a result of the need for individual countries to come together and agree a common standard of liability and, therefore, compensation. That principle is recognised in those terms.

This amendment seeks to carry that principle a little further—not in character, but in degree—to those areas where it is not possible to agree an international convention, on matters which would not be proper for such an agreement.

In the Warsaw Convention, for example, there is a need for a common practice to be observed in the carriage of passengers by air throughout the world by international airlines, scheduled or otherwise. There is, therefore, a prime need for countries to agree what is reasonable, but that is not unlimited liability.

The concept of limited liability is not foreign to this country. For a start, it is the basis of our commerce and business. There is a need for limited liability. Under the Warsaw Convention, passengers by air have their potential compensation limited by international law. That is written into the Bill. Accommodation has been made for it and presumably there is no objection to that principle. Why, therefore, should there be any objection to that principle being extended to other services that might involve the risk of death or injury in relatively remote places? That possibility is not covered by the Bill as it stands.

As background to the amendment, I should like to mention that the Association of British Travel Agents does not quarrel with the principle of the Bill. It welcomes and supports it. Indeed, ABTA has already taken action in collaboration with the Director General of Fair Trading to introduce a voluntary code of practice for its members that excludes some of the exemption clauses that had previously existed.

I can give three examples of that. The first is that there should be no exclusion of responsibility on behalf of the tour operator to be diligent in his duties to his client. Secondly, there is a ban on any attempt to avoid responsibility for misrepresentation by the tour operator or his agents. Thirdly, there is a bar on seeking to prevent holidaymakers from making complaints after returning from holiday, provided that the period after return is Jess than 28 days. In these ways, the tour operators, though ABTAs have already taken action to avoid the kind of situation with which the Bill deals.

Earlier, the hon. Member for Hemel Hempstead (Mr. Corbett) raised a point about arbitration. Arbitration has already been carried out through voluntary agreement. Of course, any system of arbitration implies that the arbitrator will find in favour of one party or another. That cannot be held as a criticism of the system of arbitration. The hon. Gentleman might have pointed out that sometimes the arbitrator finds against the complainant, although, to be fair, sometimes the complainant may be in the right and sometimes the other party. That is the principle and essence of arbitration. In all these ways the travel industry has taken steps to display a reasonable degree of responsibility towards its clients. It is, of course, in the industry's own interests to do that.

However, I must return to the particular point that is causing great apprehension and anxiety. If, for example, there was a case of food poisoning that led to the death of a holidaymaker in a foreign country, that might have the following effects. In country A, if a holidaymaker died as a result of poisoning in a hotel contracted by the operator, and under the law of that country there was no limitation to the liability of the hotelier, the tour operator could not rely on a clause in his contract with the client to limit his liability. Therefore, the Bill would not affect that situation. If the same thing happened in country B and if, under the law there, the hotelier's liability was limited, then the tour operator could rely on a clause in his contract with the client to limit his liability to the same level as that of the hotelier. If in country C the hotelier was under no liability whatsoever, the tour operator could rely on a clause in his contract with the client excluding liability. Those circumstances could arise out of a case of food poisoning because an international convention could not be considered to cover that matter. Similarly, a holidaymaker could be killed in a lift or in the coach taking him to his hotel.

It is contended that this amendment is simply a logical extension of Clause 27, because without it a tour operator could be sued in this country and could be liable for greater damages than he could recover from the hotelier abroad. The amendment does not seek to transfer liability but to limit it.

This point was made in a letter of 29th March 1977 that was sent to the Chief Executive of ABTA by the Department of Prices and Consumer Protection. The point was made in relation to air travel and is germane to this matter. It said:
The Bill will not affect the limitations on a carrier's liability to a passenger under the amended Warsaw Convention. Moreover the Bill will not affect the limitations on a tour operator's liability in respect of carriage by air which are provided by the Carriage by Air (Supplementary Provisions) Act 1962. That Act imposes the same limits on the liability of a person who makes an agreement for carriage governed by the amended Warsaw Convention with a passenger, as the 1961 Act imposes on the liability of the actual carrier. Thus tour operators who undertake to carry passengers by air and arrange for another to perform the contract will be under no greater liability than the actual carrier."
That is precisely the purpose that this amendment extends to hoteliers and coach operators abroad. The tour operator's liability should be limited to the level at which he can hope to recover damages from the person to whom he has contracted that service. There is a real problem here for the operator because otherwise he will not be able to escape the provisions of the law of another country.

After the DC10 crash in Paris, because the passengers on that aircraft were international in character their relatives were able to band together and to file a suit in California because they knew that the local law there was particularly generous in such cases. As a result of that, a settlement on handsome terms was reached with the aircraft manufacturers. However, aircraft manufacturers in California are a long way from the individual tour operator in the United Kingdom, who might find the level of compensation—if the Bill is not amended—absolutely penal and unthinkable.

Tour operators would have two alternatives. One alternative would be not to trade in those countries where the law might be said to be deficient by our standards, and where liability is limited. The other choice would be to insure against the possibility of such a calamity. In that case, I imagine that the premium that a tour operator would have to pay to insure against the potential risk of being unable to recover damages in a foreign country would be astronomic. In order to remain in business and to be profitable, the operator would inevitably—as is always the case in matters of consumer protection—have to pass on these premiums, which might be penal, by way of prices.

I put this forward as a fair point for consideration. I doubt that the client would necessarily want that to happen. He might prefer to pay a lower price and to assess his own degree of risk before embarking in a perhaps rather adventurous holiday to one of the less developed countries.

The hon. Gentleman said that the insurance premium in such a case might be penal. Has he received any assessment from an insurance company of what might be involved and how much might be added to the price of, for example, a typical holiday in Spain?

No. I have not been to the insurance companies to inquire about such a case but I am sure that all hon. Members must realise that the premiums would be high because loss of life or injury is involved.

I must mention in passing that the industry is not seeking to avoid responsibility in providing the services that are described in good faith in its brochures. For example, it is now an offence under Spanish law for a hotel to overbook its clients and to put them in another hotel. Tour operators are not seeking to avoid the law on overbooking, because they know that they can recover damages from the hoteliers should such an event occur. However, I am now referring to matters of death and injury. The assessment on a man's life may amount to hundreds of thousands of pounds—as was demonstrated by the damages awarded after the DC10 crash. I am sure that the insurance premiums against such a risk would be considerable and that the price of those premiums, whether small or large and I suspect that they would be more rather than less—would have to be accommodated in the price charged by the operator. 12 noon.

If that is so, the holidaymaker might prefer to take out extra life assurance. When he is travelling by air he knows that under the Warsaw Convention he is covered for a certain amount of compensation, but he has an option. In the old days, someone could put a florin in the slot and get £1,000 worth of extra life insurance and gradually build it up. That was a consumer choice that was available to the holidaymaker. My fear is that, if the Bill goes through without taking account of that, the traveller will be faced with insuring against risk whether or not he likes it, and that might be to his cost.

I ask the Minister to give serious consideration to what I believe is an important point which does not cut across the principle of the Bill, except to the extent that the Government have already cut into that principle by taking account of internationally agreed limits of liability under the Warsaw and Athens Conventions. The Minister has that opportunity and I hope that he will give it further thought, otherwise there could be a serious injustice to those who, in good faith, endeavour to provide services abroad, by running them into risks that are unreasonable and from which they could not exclude themselves under the terms of the Bill.

Let me deal first with the analogy that the hon. Member for Romford (Mr. Neubert) drew between the problems of tour operators and the DC10 crash when damages were recovered in California at a higher rate than they would have been in the United Kingdom. That might be a problem for the manufacturers of aircraft, but I do not think that the hon. Gentleman can pray in aid of the amendment and the problems of tour operators that larger damages were claimed against McDonnell Douglas because it was possible to sue that firm in the United States. Nobody is suggesting—the Bill is not—that tour operators should be liable for larger damages than those for which they would normally be liable under United Kingdom law. I think that the argument about the generous damages given in some American States is irrelevant.

I have heard from ABTA. I under stand that its amendments are designed—I say "designed" because they do not have that effect—to protect travel agents and tour operators where their subcontractors commit torts abroad. It claims that if the travel agent or operator is held to be liable for those torts, he should be entitled to any benefit from any limitation—the hon. Gentleman used the word "limitation"—of the liability which the law of the place of the accident might confer on the sub-contractor.

I said that the amendments were designed to have that effect, but they do not do so. The effect of the amendments is that if a service is to be performed in a foreign country, a contract term or notice exempting the operator from liability—exempting, not limiting—will not be subject to control if it is authorised or required by the law of that country. That would not be an acceptable situation.

The Bill follows the general principles of private international law. Generally, the controls will apply where the law most closely connected with the contract is the law of one of the parts of the United Kingdom, and I see no reason why exemption clauses in travel agents' or tour operators' contracts should be governed in any respect by a foreign law where the law most closely concerned with the contract is the law of England, Scotland, or Northern Ireland.

Let me give one example of the effect of these amendments. Let us suppose that a British tour operator owns and runs a hotel in Greece and includes a term in his contracts with holidaymakers exempting—I emphasise that—him from liability to them. A British holidaymaker, who will usually have made the contract with the operator in Britain, is killed through the negligence of the hotel staff. The effect of these amendments would be that if Greek law authorised terms excluding the liability of hotel owners the tour operator could rely upon the exemption clause, and there would be no reasonableness test at all.

I now turn to what I understand ABTA to be wanting by the amendments. ABTA claims that if the subcontractor of a tour operator causes injury to a holidaymaker, the tour operator should be entitled to any limitation—as the hon. Gentleman properly put it—of liability imposed by the law of the place of the accident. In a letter to me, ABTA said:
"there is, of course, absolutely no question of tour operators or travel agents seeking to evade any liability which is properly theirs."
But that begs the question. If English law lays down rules as to liability, and if according to those rules tour operators are liable, that liability is properly theirs. There are general rules of private international law which determine issues such as these. The Bill controls contract terms and notices. It is not intended to change rules as to liability. I think that the amendments are misconceived, and I hope that the House will reject them.

The hon. Gentleman seemed to pray in aid the exceptions in the Bill in respect of international conventions, but I think that there is a difference in principle. Let us consider the Warsaw Convention. That is law that applies in the United Kingdom and in the foreign place, so the rules are the same in the United Kingdom and in the place abroad, and it is right to preserve those rules. If a holiday is being run anywhere abroad—from Afghanistan to Zanzibar—and there are limitations of liability in those other countries, which by their nature will probably be totally unknown to the person who is booking a holiday, I do not see any reason in principle why English law—and Scottish law for that matter—should not impose a liability according to the law of this country. That will not lead to excessive damages being awarded. It is not the same as the DC10 case.

The travel operators say that
"there is, of course, absolutely no question of tour operators or travel agents seeking to evade any liability which is properly theirs."
The law imposes a liability upon them. I do not think that it is an excessive liability, but it is one which properly belongs to them because they have greater knowledge of the conditions in another country. I think that it would be unwise to alter that proposition.

The amendments have the effect not of altering that proposition but of loosening considerably the protection that would be enjoyed by the holidaymaker by, in some cases, giving total approval to exclusion clauses, whether or not they are reasonable, if they are required or authorised by the law of another country. I hope that the hon. Gentleman will not press the amendments.

I am considerably disappointed with the Minister's reply, not only the terms of it but his failure to grasp the point that I am making, which I do not think is challenged by anything that he said.

International conventions for the carriage of passengers by air are the means by which different standards of liability in different countries where international aircraft operate are accommodated within one common standard. I have already cited a letter from the Minister's Department about how this affects part of the holiday provided abroad, namely, the air travel there and back. This is covered by a convention, and it is therefore already subject to a limitation. It is not being fair to the consumer to contend that he would have unbridled protection against any possible danger or risk that he might encounter, because the liability is limited in terms of air travel.

What ABTA is arguing, and what I am putting to the Minister, is that to carry the holiday that stage further to the activities in the country abroad where the holiday is provided is an extension in logic. It seems illogical that no limitation is to be placed on the liability in that country where the holiday is provided, but there is a limitation on the liability for transporting the passenger from here to that country and back again.

There is this difference in the case of the international convention. It is a convention which the consumer's Government—the United Kingdom Government—have negotiated and to which they have assented. The hon. Gentleman's proposition is that a limitation in a foreign law to which neither the consumer nor his Government have consented should, nevertheless, be prayed in aid by the British travel tour operator who has made a contract that is otherwise governed by British law.

I entirely endorse all that my hon. Friend said. I greatly hope that the hon. Member for Romford (Mr. Neubert) will withdraw his amendment. His analogy with areas in which conventions apply, such as air transport and shipping, is not as valid as he suggested. The circumstances with which we are dealing are those which a person going on holiday to the Lake District or Scotland or Wales might find. He will be concerned with the sorts of buildings that he goes to, the fire precautions, the risk of accidents, the hazards that he might encounter, and the losses that he might suffer.

The chance of our having a convention covering such areas is no doubt one about which the hon. Member and others in the air transport industry are concerned and on which they are working. But the risks here are not as serious as those which prompted nations to get together to deal with the problems of transport by air and sea.

I hope that the hon. Member for Rom-ford will accept that the average British person going on holiday abroad, attracted by the seductive and well-produced literature of the tour operators, will expect to have for himself, his wife and his children a degree of protection that he is clearly not offered. By allowing the Bill to stand as it is, there will be pressure on tour operators to look more closely and actively at the conditions under which their sub-contractors perform abroad. This will benefit those who use their services.

The hon. Member for Peterborough (Mr. Ward) misunderstood my intention in sitting down. I was giving way to the Minister, not concluding my speech.

I believe that there is a failure to extend the principle that lies behind international conventions to the rather more limited area of the services provided by tour operators abroad. I respect that international conventions have come about because of a need to accommodate the widely varying stan-wards that apply in different countries.

My amendment seeks to take account of the different standards in countries where the holiday is to be provided. Whereas in the United Kingdom tour operators would be covered against various risks, the operators are seeking recognition of the fact that they cannot, except by insurance at high rates of premium, cover themselves against the risks abroad.

It is no good contending that the possibility of a person suffering, for example, food poisoning in a foreign hotel leading to death can ever be the subject of an international convention. The possibility is remote. Conventions come about where there is common cause and a common need to cover all passengers in all countries against the risk of fatal accident in an air crash, for example.

What is sought is a reasonable extension of this principle. Perhaps the letter that the Minister quoted should have said not so much
"liability which is properly theirs",
"responsibilities which are reasonably theirs."
The test of reasonabless does not apply to death and injury.

I see that I am making insufficient progress to warrant pressing the amendment. I shall accordingly seek to withdraw it, but I urge the Minister to give some thought to this matter before the Bill goes to another place. I contend that there is still a failure to meet a very simple issue of injustice in the Bill as it affects those who seek in good faith to provide holidays abroad in countries that do not have the same standards as apply in the United Kingdom. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.