Package Travel Directive 90/314 and its Implementation in Germany Prof. Dr. jur. Ernst Führich 22rn IFTTA Conference in Rome

Prof. Dr. Ernst Führich Hochschule KemptenFolie 2 PTD in Germany Some facts in tourism in Germany 2009  Value of tourism-production over 185 milliard €  UNWTO: Germans spent 88,2 milliard US-$ abraod  Holiday-trips: 75,5 mio  50 % package-tours organized by tour- operators

Prof. Dr. Ernst Führich Hochschule KemptenFolie 3 PTD in Germany Complaints: 2 % (TUI) to 5 % (Thomas Cook) Germany: Champion in litigation in travel cases

Prof. Dr. Ernst Führich Hochschule KemptenFolie 4 PTD in Germany I.Introduction: Objectives of the PTD II.Delay in Implementation in Germany III.Travel contract law until 1994 IV.Implementation: Art. 651a – 651m BGB and the Regulation on information duties of travel organisers (BGB-InfoV) V.Revision of the Directive and the minimum clause

Prof. Dr. Ernst Führich Hochschule KemptenFolie 5 PTD in Germany I.Introduction: 3 Objectives of the PTD Complete a common market in tourism service Consumer protection Minimum standard

Prof. Dr. Ernst Führich Hochschule KemptenFolie 6 PTD in Germany II.Delay in Implementation in Germany Implementation act comes into force on 1st November 1994 Dillenkofer case: Germany shall be liable to injured passengers on insolvency grounds through state liability in accordance with the principles of the Francovich ruling

Prof. Dr. Ernst Führich Hochschule KemptenFolie 7 PTD in Germany III. Travel contract law until 1994 Since 1979 there is a sub-chapter on package travel contracts in §§ 651a-k of the German Civil Code (BGB) Not same standard of consumer protection as the Directive German Supreme Court BGH rules 25 leading cases in travel law Minimum clause and benefit-of-the-doubt principle are the two main ideas of implementation in Germany The implementation was limited into German law, as far as present standards of the travel contract requirements not the Directive Directive was adopted in addition to the existing rules with 13 articles in §§ 651a – m BGB and a Regulation on Information Duties of Travel Organisers (BGB-InfoV)

Prof. Dr. Ernst Führich Hochschule KemptenFolie 8 PTD in Germany IV.Implementation: Art. 651a – 651m BGB and the Regulation on Information Duties of Travel Organisers (BGB-InfoV)

Prof. Dr. Ernst Führich Hochschule KemptenFolie 9 PTD in Germany IV Implementation 1. Scope a.Consumer Different definition of a ‘consumer’ in Directive 90/314 and other consumer protection directives. The Directive encompass legal persons as well as tradesmen concluding a contract for business purposes. The term ‘consumer’ is not used in Germany. § 651a s. 1 only mentions the ‘traveller’ as the person concluding a travel contract in his own name. ‘Traveller’ encompass legal persons as well as tradesmen concluding a contract for business purposes.

Prof. Dr. Ernst Führich Hochschule KemptenFolie 10 PTD in Germany IV Implementation b. Organiser  ‘Organiser’ in PTD is a person who, other than occasionally, organises packages and sells or offers them for sale, whether directly or through a retailer.  After the ruling of ECJ Club-Tour the term must be interpreted as to include holidays organised by travel agents at the request of the specifications of a consumer. The revision of the Directive has to clarify this!  §§ 651 a-m BGB has no definition of an organiser. It is commonly recognised, that any individual or legal person who is responsible for organising and offering a trip in his own name can be an organiser (BGH, – I ZR 171/97 Center Parcs).

Prof. Dr. Ernst Führich Hochschule KemptenFolie 11 PTD in Germany IV Implementation c. Package  According to Club Tour, the ‘pre-arranged’ package also includes combinations of tourist services put together when the contract is concluded between the travel agency and the consumer.  German legislation did not use a definition of “package”. But the form of words used in § 651 a (1) BGB (‘entirety of travel services’) means the combination of at least two services. Trips less than 24 hours are included.

Prof. Dr. Ernst Führich Hochschule KemptenFolie 12 PTD in Germany IV Implementation 2. Information Duties a.Implementation of the list  The German legislation has considered a detailed list of information as unsuitable for transposition in the legislative act BGB. So a list of information duties can be found in a government decree BGB- InfoV for tour organisers.  In §§ 4-11 BGB-InfoV you can find the list of information as laid down in the Directive.  The German law contains no additional information duties like other Member States.

Prof. Dr. Ernst Führich Hochschule KemptenFolie 13 PTD in Germany IV Implementation b. Passport and visa requirements  Directive stipulates, information on passport and visa requirements for nationals ‘of the Member State or States concerned’ must be made available.  This implies that travellers from all EU countries should be informed.  Germany has adopted regulations only applying to nationals of the country in which the trip is offered.  These regulation seem to me too narrow and infringe Community law.

Prof. Dr. Ernst Führich Hochschule KemptenFolie 14 PTD in Germany IV Implementation 3.Restriction on price revision  German legislation transposed the provisions of Art. 4 (4) almost literally.  I was strongly engaged in the years 2001/2002 in the judgements of the German supreme court of ( X ZR 242 and 253/01).  BGH ruled in the terms of contract is necessary a detailed calculation methods for the different variations mentioned in the Directive.  Remember: BGB says its an unfair contract term to encrease the price about goods/services for news circumstances in a limit of 4 month between contract and delivery!

Prof. Dr. Ernst Führich Hochschule KemptenFolie 15 PTD in Germany IV Implementation 4. Important Consumer Rights a. Cancellation by consumer  Directive does not provide for a general rule for cancellation of the booking by the consumer.  § 651i BGB allow the consumer to cancel the contract without any reason until the beginning of the travel.  The consumer is liable to compensate the organiser. In the terms of contract case law allows the organiser fix rules for the calculation of compensation up to 75% when there is a cancelation in the last week before travel (BGH).  In practice compensation went up to 90% of the price. However, cancelled trips are sold by agency as last-minute trips. We need fixed compensations reviewing the Directive.

Prof. Dr. Ernst Führich Hochschule KemptenFolie 16 PTD in Germany IV Implementation b.Cancellation in force majeure  § 651j BGB allows consumer and tour operator to cancel the booking if the travel is endangered by unforeseen force majeure (ash of vulcano!).  Consumer has not to pay the price if he cancels before travelling. During the trip he is partly freed to pay the price. Additional costs for the return flight have to be shared. Costs such as for accommodation have to be paid by the consumer.  After the the lock of the airspace many organisers cancelled the contract by force majeure. Without cancellation of the contract the organizer has to fulfill the contract.

Prof. Dr. Ernst Führich Hochschule KemptenFolie 17 PTD in Germany IV Implementation  The definition of force majeur is different across Member States and the Directive.  Force majeure is not defined within German legislation. Though it has been more closely defined in many rulings of German courts as an ‘external event that is not in any way connected to the company or the own risk of the consumer, and could not, even with due care and attention, have been avoided’ (BGH, – X ZR 17/01).  The definition of the Directive is wider, covering internal events rooted in the company’s business operations, such as staff strikes, where such an event was not foreseeable or its consequences could not have been avoided.  The definition adopted by German courts limits the opportunities for the trip organiser to cancel. German case law actually works in the consumer’s favour.

Prof. Dr. Ernst Führich Hochschule KemptenFolie 18 PTD in Germany IV Implementation c.Travel Defect and ‘Gewährleistung’  German law offers the traveller a wide range of remedies in §§ 651c – e BGB. Compared to the Directive, there is a higher standard of liability.  One special feature is termed a ‘travel defect’. As a consequence of this broad definition, liability and guarantees are extended.  The tour operator (not the retailer!) is liable for the trip’s success irrespective of who is at fault and essentially carries the risk. The traveller carries the risk of live or small defects.  Remedial action (§ 651c BGB), price reduction (§ 651d BGB) and cancellation on the grounds of an unsatisfactory trip (§ 651e BGB) do not require the organiser to be at fault.

Prof. Dr. Ernst Führich Hochschule KemptenFolie 19 PTD in Germany IV Implementation  If the fault is with the organiser, the traveller is entitled in § 651d BGB to a price reduction in line with the duration of the inconvenience. But the traveller has to inform the organiser or his tour guide about the defect.  If there is a fundamental breach of 30 to 50%, the consumer may also cancel the contract. The traveller must be returned free of charge to his departure using the same transport as stated in the contract. The organiser has to cover all costs and reimburse the fees minus the price of services already provided. If the traveller is not interest in the hotel because the defect is at the beginning of his travel - for example overbooking - the organiser has to pay back the whole price to the consumer.  Remember: These remedies do not depend on establishing the organiser’s fault. This is only a requirement when the consumer additionally seeks liability of damages, including recompensation for wasted holiday time (§ 651f BGB).

Prof. Dr. Ernst Führich Hochschule KemptenFolie 20 PTD in Germany IV Implementation 5.Liability of damage a.Liability of the organiser  Art. 5(1) of the Directive obliges to ensure that the organiser and/or the retailer is liable to the consumer for the proper performance of any obligations under the package travel contract. It is irrelevant whether the organiser, the retailer or others service suppliers fulfil the relevant obligations.  In contrast to the Directive, which uses the terms ‘non-performance’, ‘failure to perform’ and ‘improper performance’, German law prefers in § 651f BGB the more general term of ‘travel defect’.

Prof. Dr. Ernst Führich Hochschule KemptenFolie 21 PTD in Germany IV Implementation b. Negligence  § 651f BGB gives a compensation for damages und is broadly aligned with the Directive.  Instead of adopting the 3 exceptions according to Art. 5 (2) of the Directive, Germany preferred its general rules in §§ 276, 278 BGB. The organiser is not liable if he is able to prove that he acted neither intentionally nor negligently (‘culpa liability’).  Nevertheless the BGH ruled, additional the organiser has no liability in the exemptions of Art. 5 PTD ( fault of consumer or third party, force majeure).

Prof. Dr. Ernst Führich Hochschule KemptenFolie 22 PTD in Germany IV Implementation c. Limitation of damages  Under Art. 5(2) of the Directive, Member States may provide for limitations on the organiser’s and/or retailer’s liability in accordance with international conventions. Most member states have made use of this option.  In Germany liability is limited according to international conventions such as Montreal or the Athens Convention in § 651h (2) BGB.  In § 651h (1) BGB contractual limitations not higher than triple the size of the package price are possible except for personal injury.

Prof. Dr. Ernst Führich Hochschule KemptenFolie 23 PTD in Germany IV Implementation d.Loss of enjoyment  ECJ decided in Simone Leitner that Art. 5 is to be interpreted in principle as a consumers right to compensation for non- material damage.  Such compensation for non-material damage can arise from the loss of enjoyment the consumer has suffered as a result of improper performance of the travel contract.  German § 651 f (2) BGB allows since 1979 the traveller to be compensated for loss of enjoyment. It is necessary that the trip has been significantly disrupted. In our case law the travel defect per day must be over 50% under taking account all circumstances. So the traveller gets 100% of the price of day if the day is completely disrupted.  In view of the Leitner case, I argue in my papers that this additional pre-requisite of 50% may result an infringement of EU law. So some lower courts and I set the limit now to 30% travel defect per day.

Prof. Dr. Ernst Führich Hochschule KemptenFolie 24 PTD in Germany IV Implementation 6. Communication of shortcomings  Art. 5(4) says the consumer has to communicate any perceived failure in the performance of a contract to the organiser/supplier of the service at the earliest opportunity.  § 651d (2) BGB states that the organiser or his local representative have to be informed by the traveller without delay about any travel defects. There is no form in which such information should to be given.  § 651g (1) BGB even lays down a second obligation to communicate any shortcomings to the organiser within one month of the end of the trip.  This requirement may not be in line with EC law. Therefore the BGH alleviates this strict time limit easy in many judgements (BGH, – X ZR 163/02; – X ZR 28/03). For example, there is no limit if the organiser did not inform the traveller about the two deadlines in the terms of contract. So organiser has the evidence terms are handed out to the traveller!

Prof. Dr. Ernst Führich Hochschule KemptenFolie 25 PTD in Germany IV Implementation 7. Protection in Insolvency  Article 7 is not yet governing a security system for insolvencies.  So different security systems have developed in EC and do not promote the single market in tourism services.  § 651k BGB seems very complex. Protection can be given by insurance or bank. A guarantee certificate has to be provided before any payment. This can be requested by the consumer. According Dillenkofer, Konsumenteninformation, Ambry and Rechberger an unlimited security of consumers is necessary. Therefore the German annual limit of liability of insurers of 110 million Euro in § 651k (2) BGB is infringement of EC law.  Full protection of the consumer requires that the organiser ensures the organisation of the return journey in case of insolvency during the travel. In that respect Article 7 is not clear und the revision of the Directive has to clarify this!

Prof. Dr. Ernst Führich Hochschule KemptenFolie 26 PTD in Germany V.Revision of the Directive und minimum clause Most Member States made use of the minimum clause like Germany. The revision should not aim for full harmonisation. High protection standards should not be forced to decrease by implementation of a renewed consumer directive. In order to ensure that the Member States can not create barriers to trade, full harmonisation is only necessary in the most sensitive areas like formal information duties and contractual exclusion clauses.

Prof. Dr. Ernst Führich Hochschule KemptenFolie 27 PTD in Germany Thank you very much for your attention!