Opinion
Cruise passenger contractual rights: Developments from Ruby Princess class action
3rd Nov 2022
Cruise passenger contractual rights were examined by the Federal Court of Australia in September 2021 as part of the Ruby Princess class action litigation. That decision allowed the almost 700 United States (US) passengers to remain part of the 2,600 passenger class action being brought in Australia for compensation arising from the COVID-19 outbreak on the cruise line’s March 2020 voyage.[i]
Fast forward to September 2022 and the Full Court of the Federal Court has allowed the cruise line’s appeal in Carnival plc v Karpik (The Ruby Princess).[ii]
As a result, US passengers on the Ruby Princess are banned from being part of the Australian class action.
In reaching its decision, the Court carefully examined the cruise booking process to determine whether certain terms and conditions had been incorporated into the contract. It also examined the fairness of exclusive jurisdiction clauses and class action waiver clauses.
The case therefore has far reaching implications for consumers and travel lawyers.
Cruise passenger contractual rights turn on booking process
The March 2020 Ruby Princess voyage had passengers from various home countries. Princess’ bookings for North American passengers had US terms and conditions. These terms and conditions included two important clauses:
- an exclusive jurisdiction clause that litigation over cruise disputes could only be brought in California; and
- a class action waiver clause preventing dissatisfied passengers from participating in a class action.
In 2021, the Federal Court found that the US terms and conditions had not been incorporated into the contract. However, in 2022, after carefully examining the booking process, the Full Court of the Federal Court reached a different view.
The lead US passenger in the class action, Mr Ho, booked his cruise through a travel agent. The travel agent and Princess had a ‘Strategic Sales Agreement’ that set out the terms and conditions under which travel agents could make bookings.
The Federal Court of Appeal found that the travel agent was Mr Ho’s agent. When the travel agent used Princess’ POLAR booking system and made Mr Ho’s booking, Mr Ho was fixed with the travel agent’s knowledge of Princess’ terms and conditions regardless of whether he had personal knowledge of them.
Further, the Full Court of the Federal Court found that Princess offered its cruises for sale, and the travel agent accepted the offer in respect of Mr Ho’s Ruby Princess booking.
As an ‘advanced ticket’ sale, the Court found that Princess’ offer was to carry Mr Ho on the cruise subject to the terms and conditions of the ticket. As long as Princess did all that was reasonably necessary to bring the terms and conditions to Mr Ho’s attention after he made a payment, he could reject or accept them once he had reasonable opportunity to consider them.
The Court found that Mr Ho had been given reasonable opportunity to consider the terms and conditions. He had been directed to a path to access them shortly after making the booking, however, he had not chosen to do so until he logged into the ‘Cruise Personaliser’.
It was found that Mr Ho had accepted the US terms and conditions when clicking through them to access the ‘Cruise Personaliser’. This was some nine months after making the booking.
Mr Ho was therefore bound by the US terms and conditions that his travel agent knew about, but he had not read or been directed to them at the time he made a payment.
Was the exclusive jurisdiction clause unfair?
Few clauses affect cruise passenger contractual rights as much as exclusive jurisdiction clauses. These clauses determine where a passenger can litigate a dispute with the cruise line.
The Federal Court had previously found that, if validly incorporated, the exclusive jurisdiction clause would not have been an unfair contract term under s24 of The Australian Consumer Law (ACL). However, it had found that there were other strong reasons for not enforcing it.
In the appeal, Allsop and Derrington JJ confirmed the validity of the exclusive jurisdiction clause. In particular the court gave little or no weight to the public policy arguments against a foreign court deciding a case under the Australian Consumer Law in Epic Games Inc v Apple Inc,[iii] which the first instance judge had considered.
Justice Rares was in the dissenting minority. In his view, the exclusive jurisdiction clause should not be enforced. This was on the basis that while its existence forms a strong ground for Australian courts to refuse to exercise the court’s jurisdiction, it does not exclude or oust the jurisdiction of the Australian courts. In his view, the Australian Federal Court was not a clearly inappropriate forum despite the exclusive jurisdiction clause and the clause should not have been enforced.
Was the class action waiver clause unfair?
Australians have the ability to bring class actions in the Federal Court under pt IVA of the Federal Court of Australia Act 1976 (Cth). However, the US terms and conditions had a class action waiver clause forbidding passengers from participating in a class action.
The Federal Court of Appeal examined whether the class action waiver clause was an unfair term under the ACL. Examples of unfair contractual terms include: ‘a term that limits, or has the effect of limiting, one party’s right to sue another party’ (s25(k)).
However, the Federal Court of Appeal found that the examples of clauses in s25 of the ACL ‘may’ be unfair rather than necessarily ‘are’ unfair and that the clause was neither unfair nor against public policy.
However, it should again be noted that Mr Ho was a North American resident, and class action waiver clauses are accepted in the US. Whether the same decision would be found if an Australian consumer argued that a class action waiver clause was unfair remains to be seen.
Implications for Australian travellers and travel agents
This decision reinforces the importance of Australian travellers asking for and reading the terms and conditions that apply to their booking. Cruise passenger contractual rights are governed by the passenger’s booking contract. Passengers can be bound by terms and conditions even if they have not read them and after payment has been made.
If a particular clause, like a cancellation clause or a refusal to board clause on pregnancy or medical grounds, would change the passenger’s decision to travel, that passenger needs to inform themselves of the terms and conditions as soon as possible.
Given that a travel agent’s knowledge is fixed to its clients, responsible travel agents should also be open and transparent about booking conditions and provide these to clients.
If a passenger has been injured on a cruise or holiday and is seeking compensation but finds that they are facing an exclusive jurisdiction clause, it is important to get legal advice.
While this latest Full Court of the Federal Court decision relates to an overseas resident bringing a claim in Australia, the judgment suggests a climate in favour of corporations rather than individual consumers when it comes to assessing the fairness of contractual terms.
In contrast, other jurisdictions such as England and Wales are clear that exclusive jurisdiction clauses that force consumers to travel long distances and use unfamiliar procedures are unfair, and therefore not valid under local unfair contract rules. It is unfortunate that Australia does not have a more consumer-friendly approach and name foreign exclusive jurisdiction clauses as an example of unfair contract terms in s25 of the ACL.
This is an edited version of an article first published by Victory Travel & Cruise Lawyers
The ALA thanks Victoria Roy for this contribution.
Victoria Roy is principal solicitor at Victory Travel & Cruise Lawyers, a boutique law firm specialising in bringing compensation claims for Australians injured overseas, in aircraft accidents and in cruise ship accidents. She is also Secretary of the NSW Branch of the ALA and Chair of the ALA’s Travel Law Special Interest Group.
The views and opinions expressed in this article are the authors’ and do not necessarily represent the views and opinions of the Australian Lawyers Alliance (ALA).
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