Latest development in EU legislation – national implemention issues 21st IFTTA Conference Sao Paulo, Brasil, 2-6 October, 2009 Dr Gyenizse Dorottya Hungary Ministry of Local Government Tourism Department

Topics The implementation of 2006/123/EC Directive on services in the internal market Proposal for a new directive on consumer rights Overview of the latest Hungarian legislation and national implementation process

2006/123/EC Directive on services in the internal market Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market is in force since 27th December 2006 after 3 years preparatory process. Implementation period: till 31th December, The Directive falls under the framework of the 'Lisbon Strategy' and proposes four main objectives for creating an internal services market: to ease freedom of establishment for providers and the freedom of provision of services in the EU; to strengthen rights of recipients of services as users of the latter; to promote the quality of services; to establish effective administrative cooperation among the Member States.

2006/123/EC Directive on services in the internal market Scope The services covered by the Directive: business services such as management consultancy, certification and testing; facilities management, including office maintenance; advertising; recruitment services; the services of commercial agents, legal or fiscal advice; real estate services such as estate agencies; construction, including the services of architects; distributive trades; the organisation of trade fairs; car rental; and travel agencies. Consumer services are also covered, such as those in the field of tourism, including tour guides ; leisure services, sports centres and amusement park.

2006/123/EC Directive on services in the internal market The Directive requires the Member States to examine and, if need be, simplify the procedures and formalities applicable to accessing a service activity and to exercise them. In particular, the Directive includes: putting in place points of single contact at which a provider may complete all the necessary formalities to fulfil various duties and the obligation to make this possible on-line. In order to facilitate the establishment and free movement of services throughout the European Union, the Directive: - lays down a legal obligation requiring the Member States to cooperate with the relevant authorities of other Member States in order to ensure efficient control of service activities in the Union while avoiding a multiplication of monitoring. - constitutes the basis for developing an electronic system for the exchange of information between Member States, which is vital for establishing effective administrative cooperation between them.

2006/123/EC Directive on services in the internal market Main important provisions Definitions - Service" means any self-employed economic activity, normally provided for remuneration - "Member State of establishment" means the Member State in whose territory the provider of the service concerned is established - "Member State where the service is provided " means the Member State where the service is supplied by a provider established in another Member State Possibilities for providing services: I. By establishment II. Cross-border services (movement of services)

2006/123/EC Directive on services in the internal market I. Freedom of establishment for providers Member States shall not make access to a service activity or the exercise thereof subject to an authorisation scheme unless the following conditions are satisfied: (a) the authorisation scheme does not discriminate against the provider in question; (b) the need for an authorisation scheme is justified by an overriding reason relating to the public interest; (c) the objective pursued cannot be attained by means of a less restrictive measure, in particular because a former inspection would take place too late to be genuinely effective.

2006/123/EC Directive on services in the internal market II. Free movement of services Member States shall respect the right of providers to provide services in a Member State other than that in which they are established. The Member State in which the service is provided shall ensure free access to and free exercise of a service activity within its territory. Member States shall not make access to or exercise of a service activity in their territory subject to compliance with any requirements which do not respect the following principles: (a) non-discrimination: the requirement may be neither directly nor indirectly discriminatory with regard to nationality or, in the case of legal persons, with regard to the Member State in which they are established; (b) necessity: the requirement must be justified for reasons of public policy, public security, public health or the protection of the environment; (c) proportionality: the requirement must be suitable for attaining the objective pursued, and must not go beyond what is necessary to attain that objective.

Problems of the national implementation regarding tourism services – travel activities Hungarys implementation: - Maintain pre-authorization (licence) for travel actvities in case of establishment (public interest: consumer protection, financial security concerning 90/314/ECC) - Notification in case of cross-border services – not a pre- condition (DANGER!) Difficulties in implementation in lack of common interpretation at Community level Free movement of services: cross-border providers – problems with Member States different professional requirements and systems (eg. requirements for travel agencies, inspection of existing different financial guarantee systems) What is establishment? (eg. infrastructre, time condition…) Internet selling!

Hungarian implementation process General implementation process (general rules) Act on services adopted by the Parliament June, 2009 : general legal framework on services, definitions, authorization schemes, proceedings etc. Act on administration procedures amended by the Parliament June, simplification in proceedings, customer interests, electronic ways etc. Acts on modification of the effected legal acts and regulations (according to the screening) – by Parliament, by Government, by Ministers (till the end of December 2009) – TOTAL NEW SYSTEM for authorities and stakeholders Cross border service: pursue service activity without establishment, on temporary or casual basis Establishment: pursue economic activity permanently and constantly setting up business establishment, branch or store etc. – authorities must evaluate case by case (quite difficult in implementation, uncertain situations)

Proposal for a new Directive on consumer rights Under negotiation – Commissions proposal, Council debate (latest full version, July, 2009) Incorporates 4 Directives in force: on doorstep selling, distance selling, unfair terms and sales of goods – horizontal level Contains provisions on common definitions, pre-contractual information, consumer information and right of withdrawal in distance and off-premises contacts, unfair contract terms The Directive will apply to sales and service contracts concluded between the trader and the consumer Full harmonisation: will considerably increase legal certainty for both consumers and business. Both consumers and business will be able to rely on a single regulatory framework based on clearly defined legal concepts regulating certain aspects of business-to-consumer contracts across the Community. Member States may not maintain or introduce, in their national law, provisions diverging from those laid down in this Directive, including more or less stringent provisions to ensure a different level of consumer protection.

Proposal for a new Directive on consumer rights Chapter II Consumer information The Package Travel Directive regulates in detail and comprehensively information of consumers before, at or after the conclusion of the contract. Therefore this Chapter will be not applicable for travel contract. Chapter III Distance and off-premises contracts (withdrawal right) A right of withdrawal is not appropriate for package travel contracts because: Difficult to be kept on hold or resold after withdrawal; Not easy to reconcile with suppliers conditions of contract; Impossible to manage last minute bookings; Could jeopardy the activity of mobile travel agents; Creates distortions of competition with transport services contract, to which no right of withdrawal applies. In the first version for distance contracts this Chapter was applicable for travel services as well, but after protestation of ECTAA and Member States this Chapter will be not applicable.

Proposal for a new Directive on consumer rights Chapter V Consumer rights concerning contract terms The Chapter will apply to contract terms drafted in advance by the trader or a third party, which the consumer agreed to without having the possibility of influencing their content, in particular where such contract terms are part of a pre- formulated standard contract (unfair terms). According to ECTAA opinion this Chapter also should not be applicable to package travel contracts because, due to the uncertainty concerning the content of the revised Package Travel Directive eg.: - inclusion of terms in package travel contracts requiring a minimum number of participants for the performance of the contract could be a problem. - organiser would have to grant a right of withdrawal when revising the price after the conclusion of the contract.

Package Directive… STILL NO DEVELOPMENT ON THE REVISION of the 90/314/ECC Package Directive… New information from the Commission: revision will continue only after the adoption of the new Directive on consumer rights (problem 2-3 years more???) Presidency of Spain, Belgium, Hungary political aim: force for revision, important issues eg. consumer interests, awareness consumers etc.

Hungarian implementation process 1. New Act on travel activities (tour operator and travel agency activity) – under negotiations Following the aims of Service Directive and new Hungarian Service Act Definitions, main purposes of the activities, technical and personal requirements of the activity, registration procedure, administrative requirements, financial security (bank guarantee, insurance, deposit), inspections, sanctions (cancellation from the register, fine) Screening results: - maintain pre-registration for travel companies in case of establishment - notification in case of cross-border services - competences of authority - simplification of procedures -electronic administration Big debate with stakeholders at the moment on the system of the financial guarantee (Government aim is to increase minimum sums after certain bankruptcies recently)

Hungarian implementation process Government Decree on Travel Contracts and Travel Agency Contracts (281/2008.) Latest revision of the Decree in 2008: 2005/29/EC Directive concerning unfair business-to-consumer commercial practices in the internal market ; more adequate implementation of the Package Travel Directive; Working Group of revision; still problems at EU level! Dynamic Packaging: as EU Commission has not made a final proposal for the revision of 90/314/EEC Directive yet, we did not amend the scope of the legal act, applying only to travel package definition (and one-element service) – due to competition issues Package definition is connected with financial security (activity rules)

Hungarian implementation process Serious problems since economic crisis: travel companies are also in a difficult situation, many of them are on the brink of insolvency. Travel agencies are not obliged to have financial guarantee, travel contract is concluded by the TOUR OPERATOR and the TRAVELLER, agency as intermediate – less responsability Problem: agencies do not want to make avaliable the price to the tour operatpr, concluding contract without pre-authorization of the tour operator etc…Traveller has a contract in hand and paid the money for the trip. Association of the Hungarian Travel Organizations: proposal for financial guarentee as 1st step for travel agencies as well.

Hungarian legislation overview 2. Tour guide services: new Minister Decree will be adopted Implementation of 2005/36/EC Directive on the recognition of professional qualifications (deadline 2008 September) List of historical monuments - European Commission Internal Market DGs opinion: on the basis of the professional qualifications directive 2005/36/EC, Member States will no longer be able to require additional qualifications from a tourist guide from another Member State (in case of temporary provision of services) and will thus no longer be able to require that he obtains a special licence/proves a special training, including for guides for specific monuments. The former ECJ case law was based on the former directive on recognition of professional qualifications (89/48) which has been repealed by the new directive 2005/36 which sets up a new regime for the cross border provision of services. On this basis, it seems no longer necessary to establish a list nor guidelines for any selection. Recognition of other EU Member States professional qualification in case of cross-border services – pre-notification once a year at the competent authority (problem: no information at EU level about national competent authorities)

Hungarian legislation overview 3. Accomodation services: new legal act adopted by the Government New license will be introduced: accomodation- licence for the establishments (different authorities are involved, but only one procedure to the client) Authorization is connected with the establishment not with the activity and the service provider New standardization proceeding: involving civil organizations – trade mark system owned by the Ministry, not obligatory

Conclusions – doubts… Serious changes at the travel market of the EU27 Distortion at the market because of the non-full harmonization and different implementation at national level legislation – examination of different systems (economic and legal decisions of the enterprises) Shifting business acvtivities to EU Members where less strict rules will be in force or non- registration??? In case of insolvency: EU citizenship vs. National citizenship – finally Member State must be involved transporting their citizens back to home (even tour operator was not registered there)

Thank you for your kind attention! Dr Dorottya Gyenizse Ministry of Local Government Tourism Department Hungary