Prepublication of the book “The New Package Travel Directive” published by ESHTE and INATEL – J. Melgosa Arcos (Salamanca)

Tourist protection against insolvency-Professor Javier Melgosa Arcos | University of Salamanca

The Directive provides in Chapter V, the forecasts for the “effectiveness and scope of insolvency protection” (Article 17), on the one hand, and the “mutual recognition of insolvency protection and administrative cooperation” (art. 18) on the other. That is, on the one hand, sets more specific criteria on the scope of protection and, on the other, tries to facilitate cross-border transactions.

With the aim of protection from insolvency to be effective, it should cover the foreseeable amounts of payments affected by the organiser’s insolvency and, where applicable, the foreseeable cost for repatriations. This means that the protection should be sufficient to cover all foreseeable payments made by or on behalf of travellers in respect of packages in peak season, taking into account the period between receiving such payments and the completion of the trip or holiday, as well as, where applicable, the foreseeable cost for repatriations. Whereas the necessary cover may be calculated on the basis of the most recent business data, for instance the turnover achieved in the last business year, organisers should be obliged to adapt the insolvency protection in the event of increased risks, including a significant increase in the sale of packages. However, 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.

An organiser’s insolvency protection shall benefit travellers regardless of their place of residence, the place of departure or where the package is sold and being irrespective of the Member State where the entity in charge of the insolvency protection is located.

In line with Directive 2006/123/EC, it is appropriate to lay down rules so as to prevent insolvency protection obligations from acting as an obstacle to the free movement of services and the freedom of establishment. Therefore, Member States should be obliged to recognise insolvency protection under the law of the Member State of establishment. In order to facilitate the administrative cooperation and supervision of organisers and, where applicable, retailers which are operating in different Member States with regard to insolvency protection, Member States should be obliged to designate central contact points (Recital 42 of the Directive).

To ensure mutual recognition of insolvency protection Member States shall designate central contact points to facilitate the administrative cooperation and supervision of organisers operating in different Member States. They shall notify the contact details of those contact points to all other Member States and the Commission.

The central contact points shall make available to each other all necessary information on their national insolvency protection requirements and the identity of the entity or entities in charge of the insolvency protection for specific organisers established in their territory. Those contact points shall grant each other access to any available inventory listing organisers, which are in compliance with their insolvency protection obligations. Any such inventory shall be publicly accessible, including online.