Plaintiffs entered into identical travel contracts with a travel agency for the same journey. Before the journey, however, the travel agency became insolvent and the journey was cancelled. However, as a result of a cap determined with respect to the insured sum, only 22% of the full amount of the deposits and fees paid by the plaintiffs had been refunded to them. The cap, which was based legally on the applicable national laws implementing the Directive, allowed defendant I, as a contractual insurance company to refund only a fragment (22%) of the deposits and fees.
The plaintiffs demanded compensation from the defendants stating that defendant I infringed the applicable laws by not refunding the full amount, and that defendant II infringed EU laws by implementing the Directive improperly.
The first instance court rejected the claims, stating that defendant I acted in line with applicable laws, and that the implementation measures applied by defendant II were sufficient.
Plaintiffs appealed the first instance decision, but the second instance court upheld the decision against defendant I. However, the second instance court reversed the first instance judgement against defendant II. The second instance court held that the national laws implementing the Directive had allowed the limitation of the security referred to in Article 7 of the Directive, but such limitation is incompatible with the purpose of the Directive. By allowing such system, defendant II had not implemented the Directive properly, infringed EU laws, and caused direct harm to the plaintiffs. Therefore, the second instance court held that defendant II shall compensate the plaintiffs for the damage arising directly out of the improper implementation of the Directive.