1. Insolvency protection: questions raised by the Member States
Workshop 3
25 October 2016
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2. Article 17 and Article 19(1) – meaning of "as a consequence of their insolvency"
In Article 17(2) and recitals 14 and 39 the words “in the event of” are used instead of “as a consequence of”. “In the event of” is also used in Article 7 of the Directive 90/314/EEC. In Case C-134/11 Blödl the CJEU decided that Article 7 also covers a situation where the insolvency is attributable to the organiser's fraudulent conduct). In Case C-140/97 the CJEU ruled that the Member State's liability for breach of Article 7 cannot be precluded by imprudent conduct on the part of the organiser. In such cases is the non-performance of the travel services a consequence of the organiser's insolvency and did the legislator intend to use the phrase “as a consequence” in Articles 17 and 19(1) to "overrule" this case law so that the protection does not cover fraudulent or imprudent conduct by the organiser?
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3. Article 13(1) and Article 17(1) – insolvency protection for retailer
1. If a Member State introduces/maintains liability for the performance of the package also for retailers in accordance with Article 13(1) 1st subparagraph, what does the phrase "the provisions of Chapter V, which are applicable to the organiser, shall apply mutatis mutandis to the retailer" imply?
Does it automatically mean that the retailer must take out insolvency protection? If so does this mean that both the retailer and the organiser must have insolvency protection for the same amount, even if the retailer forwards prepayments to the organiser?
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4. Article 13(1) and Article 17(1) – insolvency protection for retailer
2. If a Member State does not choose liability for retailers, what about insolvency protection for the retailer for the period before he forwards the payment to the organiser?
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5. Article 17 – insolvency protection where the contract has been terminated
Should insolvency protection cover contracts concluded that had been terminated (either by the customer or by the trader) before the trader’s insolvency occurred and where the traveller did not recover their refund before the insolvency occurred? Here, strictly speaking, the insolvency was not the reason for the non-performance of the package, but rather for the failure to refund the payments following termination of the contract.
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6. Article 17 – scope of insolvency protection
Is it correct that in the case of hotel accommodation plus excursion which does not represent a significant proportion of the combination, travellers will not be protected and have to rely on general insolvency proceedings regarding any refund claims?
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7. Article 17(1) + recital 40 – effectiveness of insolvency protection
Does a MS fulfil its obligations under Article 17(1) ("Member states shall ensure that organisers established in their territory provide security for the refund of all payments made by or on behalf of travellers …“) if:
it lays down acceptable options for providing security for refund and repatriation, but does not interfere with the choice of form and its execution other than checking whether traders are able to provide such refund
Or, alternatively, if:
it directly orders the use of specific combinations of options for such refund and at the same time also specifies and regulates the amount of fees in order to secure the refund for all payments made by consumers?
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8. Article 17(1) + recital 40 – effectiveness of insolvency protection
Would a state guarantee fund with state contributions and guarantees be incompatible with Article 17(1) or state aid rules?
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9. Article 17(1) + recital 40 – effectiveness of insolvency protection
Recital (40) of the Directive states that „effective insolvency protection should not have to take into account highly remote risks, for instance the simultaneous insolvency of several of the largest organisers, where to do so would disproportionately affect the cost of the protection, thus hampering its effectiveness. In such cases the guarantee for refunds may be limited“.
If a Member State gives traders the option to establish a private guarantee fund, is it correct that the fees for/ contributions to this fund do not need to take into account such remote risks?
Does such improbable scenario constitute an exception from the obligation to provide security for the refund all payments made by consumers?
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10. Article 19 (1) - extent of insolvency protection for linked travel arrangements
Is it correct that Article 19 covers only the insolvency of the traders facilitating linked travel arrangements and not, in addition, the insolvency of the other service providers? If also the insolvency of third parties had to be covered this would create excessive administrative burden and complexity, which should be avoided.
Example: a person buys transportation and a ticket to a concert as an LTA facilitated by the transport company. If the concert is cancelled due to the insolvency of the concert venue, is the transport company obliged to refund the money for the concert?
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11. Article 19 – insolvency protection for linked travel arrangements
Where a trader facilitating the purchase of an LTA becomes insolvent there is no evidence documenting the traveller's entitlement to insolvency protection (refund of the payments and possibly repatriation). Is it possible for MS to introduce the requirement that the facilitating entity concludes a contract with the traveller or the requirement for the facilitating entity to provide the traveller with a confirmation of the booking of the LTA so that the traveller can actually benefit from the protection?
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12. Article 17(1) and 19(1) – regarding third country traders
A website which is established in a country outside the EU sells a package or Linked Travel Arrangement which includes a flight and a hotel to a consumer in the EU. If the airline goes bankrupt who is responsible for the repatriation of the consumer? Do Article 17(1) 2nd subparagraph and Article 19(1) apply in such cases?
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13. Article 17(1) second subparagraph - insolvency obligation for traders established outside of the EU
It is not clear, how MS can enforce insolvency protection obligations in relation to online traders who are not established in a MS and how the insolvency protection system will look in these cases. Could Member States oblige the parent company to establish "a firm?
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14. Article 17(1) and 19(1) – information on envisaged rules
After the first workshop, which was held on 25 February 2016, MS sent to the Commission the existing provisions of their law regarding to insolvency. Would it be possible, after the workshop on 25 October 2016, for MS to send to the Commission the basic provisions on insolvency protection which they are planning to adopt, to their new national legislation, and then for the Commission to share this information with the rest of MS?
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15. Article 18 - contact points
Joint statement from Estonia, Latvia and Lithuania: suggestions regarding cooperation between contact points:
Establish a list of contact points that is updated and circulated among Member States.
Establish general procedures for communicating with other contact points (e.g. language, time-limits). For example, it should be agreed that in case of cross-border insolvency, information about the insolvency and instructions for the travellers should be sent to the authorities of the affected Member States.
Establish regular meetings of the contact points for information-sharing and joint action purposes.
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16. Thank you for your attention!