The exam time was less than the students expected
I would hope this is unusual because it's not very nice to the students.  Students deserve to know in advance how much time will be given for the exam. And in my experience, they usually do know this quite far in advance.

It doesn't make sense to me that the figure mentioned in
the instructor's e-mail would refer to how long the room was booked (which is not something that the students would care about) rather than how much time would be given for the exam.

Another thing that doesn't make sense to me is why, when the instructor realized that the students thought they would have three hours for the exam, he didn't just keep quiet and let them have the three hours.

However, I don't know what you mean by a "protocol how to deal with it." You could certainly let the instructor know that you are unhappy about this aspect of the exam.  But is there something that you think the instructor should do at this point to improve the situation?

Also, what does it mean to say that 90% of the students failed the exam?  It's not necessarily a bad thing if 90% of the students got a numerical score below 60% on the exam, but it would be a very bad thing if 90% of the students got an 'F' grade in the course.