Revision of EU travel rules

By Alex Azabache on Unsplash

Last week, on November 29th, the European Commission announced the forthcoming (long-awaited) revision of EU travel rules (Improved rights and better information for travellers). This concerns a few legislative measures: 

1. Revision of Regulation 261/2004 on Passenger Rights through a newly proposed Regulation as regards enforcement of passenger rights in the Union

• new rules for passengers who booked flights via an intermediary
• an intermediary being defined as any ticket vendor, organiser or retailer other than a carrier
• new Article 8a adds a reimbursement right 
• passengers will need to be clearly informed by the intermediary and air carrier about the reimbursement process
• free of charge
• if reimbursement occurs through intermediaries: Air carriers shall reimburse intermediaries within 7 days, with intermediaries reimbursing passengers within further 7 days
• if passengers do not receive reimbursement within 14 days of choosing for this remedy, the air carrier contacts passengers to receive payment details and reimburses them within further 7 days
• new Article 14a adds rules on the transfer of passenger information, its safeguarding and when to delete it
• this will facilitate intermediaries sharing passenger information with air carriers, so that air carriers can be in contact with passengers about their flights
• strengthening enforcement mechanisms (similar mechanisms have been proposed to be added also to Regulation 1107/2006, Regulation 1177/2010, Regulation 181/2011, and Regulation 2021/782)
• new Article 15a requires air carriers to establish 'service quality standards' (Annex II contains a minimum list thereof) and implement 'a quality management system'
• new Article 16a specifies that the Commission will adopt a common form for reimbursement and compensation requests under Articles 7 and 8 Regulation 261/2004
• passengers will retain the right to submit their refund requests by other means
• passengers shall be free to provide information in any of the EU languages
• new Article 16b specifies that national enforcement bodies should adopt a risk-based approach to monitoring compliance with passenger rights
• this should allow detection and correction of 'recurrent non-compliance'
• new Article 16bb determines that carriers shall share information with national enforcement bodies within 1 month from the request (max 3 months in complex cases)
• new Article 16bc requires informing consumers about ADR

2. Revision of Regulation 1107/2006 on Rights of Disabled Persons and Persons with Reduced Mobility when Travelling by Air through a newly proposed Regulation as regards enforcement of passenger rights in the Union

• special right to assistance for persons with reduced mobility 
• including right for free of charge travel for a companion (if necessary to comply with safety procedures) - in Article 4(2)

3. New proposal for a Regulation on passenger rights in the context of multimodal journey

• multimodal journey is defined as a 'journey of a passenger between a point of departure and a final destination covering at least two transport services and at least two modes of transport' (Art 3(1))
• whilst the new provisions will apply to various types of multimodal journeys (single contract, combined contract, separate tickets) the unifying link between them (and limitation to scope) is that all transport contracts need to be offered by a carrier or intermediary
• whether payment takes place together for all services or separate is irrelevant though
• still, this means that the Regulation will not apply when it is the traveller who seeks out various connection between travel modes on their own
• Art. 4 - establishes the right to non-discriminatory contract conditions and tariffs
• discrimination is not allowed on the basis of passenger's nationality or the place of establishment of the carrier or intermediary
• Art. 5 - better information for passengers combining different travel modes (air, rail, road) in one trip
• e.g. on minimum connecting times between different transport modes, time schedules and conditions for the fastest trip, highlighting the lowest fares, disruptions and delays, complaint procedures
• intermediary transfers passenger data to all carriers involved to facilitate direct communication between them
• caveat: SMEs are exempted from having to provide real-time information
• right to assistance in case of missed connections
• Art. 7 - right to reimbursement and re-routing
• re-routing with the same (or another commissioned) carrier should not bring with it additional costs to passengers
• reasonable efforts should be made to ensure short delays in total travel time and to avoid additional connections
• reimbursement should be paid within 14 days (and may include vouchers, provided passengers agree to this)
• Art. 8 - reimbursement through intermediaries
• provided carriers agree, travellers could request reimbursement from intermediaries
• carriers then reimburse intermediaries within 7 days, and intermediaries have further 7 days to reimburse passengers
• if passengers do not receive reimbursement within 14 days of choosing for this remedy, the carrier contacts passengers to receive payment details and reimburses them within 14 days
• Art. 9 - right to assistance
• free of charge
• means and refreshments - reasonable to waiting time
• accommodation (and transport to it) - up to 3 nights
• Art. 10 - liability for combined multimodal tickets (with a single point of payment for all services) in case of missed connections
• carrier/intermediary liable to reimburse total amount paid for combined multimodal ticket + compensation (75% of the total ticket price) 
• unless clear information that the combined multimodal ticket consists of separate transport contracts
• Art. 11 - common form for reimbursement and compensation requests
• Chapter IV - contains rights for passengers with reduced mobility
• Chapter V - contains provisions on assuring quality of services
• Chapter VI - information and enforcement provisions

3. Revision of Package Travel Directive (2015/2302)

• Package organisers granted a right to a refund from service providers in case of cancellation or non-provision of a service within 7 days (Art. 22)
• to facilitate reimbursement of travellers within 14 days
• Downpayments for packages limited (new Article 5a)
• to max 25% of the package price, unless higher downpayment is justified by package organisers having to pay upfront for service provision
• total payment should not be requested until 28 days before the start of the package
• this is to protect consumers against risk of bankruptcy of organisers
• Revised Art. 12 clarifies termination rights in case of extraordinary circumstances (such as Covid-19)
• e.g. the need to consider official warnings against travel, but also serious restrictions that would have applied to travellers' travel at destination or upon return from travel at home country - when looking for justified termination
• New Art. 12a clarified vouchers policies 
• travellers transparently informed on the right to insist on a refund and voucher characteristics (validity period)
• voucher's amount should at least equal the amount of the refund right
• vouchers shall be valid min 12 months from the day travellers' accept them (with an option to extend by 12 months - once)
• refunded automatically (within 14 days) if not used before the end of the validity period
• vouchers shall be transferable to another traveller without any additional cost
• vouchers and refund rights covered by insolvency protection

Additional proposals have been adopted that aim to facilitate better provision of information to travellers on available travel modes, incl. combining different types of travel (revision of Delegated Regulation 2017/1926 on the provision of EU-wide multimodial travel information services). This new service intends to provide real-time information and updates, also on delays and cancellations, as well as specific information, e.g. on possibilities of taking bikes on a train (see more here).

Right of withdrawal, leisure activities and intermediaries - CJEU in Eventim (C-96/21)

Earlier this year in C-96/21 CTS Eventim the CJEU delivered another interesting judgment on the interpretation of Directive 2011/83/EU on Consumer Rights (CRD). As with most cases on CRD, this case tackles the matter of the right of withdrawal by providing an interpretation of Article 16(l) that exempts  'services related to leisure activities if the contract provides for a specific date or period of performance' from the right of withdrawal. 

Facts

The consumer ordered tickets through an online booking platform operated by CTS Eventim, an intermediary selling concert tickets organized by third parties. The concert that was due to take place in Germany was cancelled because of German administrative restrictions amid the COVID-19 pandemic, with a possibility to be held at a later date. In accordance with German legislation, CTS Eventim, acting on behalf of the concert organizer, sent the consumer a voucher in the value of the ticket price. The consumer however asked CTS Eventim for reimbursement of the ticket price and costs incurred and thus, according to the referring court, implicitly asked to withdraw from the contract.

Question

The question referred to the CJEU was: Would a situation where the trader (an intermediary acting in its name and on behalf of the organizer of the leisure activity) does not directly provide the consumer with a service related to leisure activity but sells the consumer a right of access to such service fall under the exception of Article 16(l)?

Ruling

The CJEU noted that the contract for the transfer of a right falls within the concept of a ‘service contract’ under Article 2(6) CRD, and insofar as Article 16(l) covers all services provided in the leisure sector, due to the word ‘related’, the provision is not limited solely to services directly relating to the pursuit of leisure activity (para 38). The transfer of a right of access to a leisure activity constitutes, in itself, a service related to a leisure activity (para 39). In this regard, it is irrelevant that a service is provided by the intermediary and not by the organizer of a leisure activity itself (para 43). 

However, CJEU looked at the objective of Article 16(l), and referring to Recital 49 noted that the objective is to protect traders against the risk associated with the setting aside of some capacity which, if a right of withdrawal were exercised, the trader may find difficult to fill, inter alia, in the case of cultural or sporting events (para 44); and referred to its previous case-law where it was established that the aim of Article 16(l) is to protect the interest of the providers of certain services against disproportionately suffering from consequences of the right of withdrawal (para. 45). The CJEU concluded that as long as the risk falls on the organizer of the activity, the transfer of a right of access to that activity by an intermediary will constitute a service related to that activity. It is irrelevant whether, on the date on which the consumer invokes the right of withdrawal, it is possible for the trader to fill in the empty capacity, in particular by means of the resale of the ticket. ‘The application of Article 16(l) of Directive 2011/83 cannot depend on such an assessment of the circumstances of each case' (para 48).

The CJEU also considered the second part of the exemption and concluded that a contract for the transfer of a right of access to a leisure activity must be regarded as providing for a specific date or period of performance since that activity is scheduled to take place on a specific date or within a specific period (para 53).

The CJEU concluded that the exception from the right of withdrawal may be relied on against the consumer, if, first, the termination of the obligation to perform that contract vis-à-vis the consumer by means of withdrawal would place the risk linked to the setting aside of the capacity thus released on the organizer of the activity concerned and, second, the leisure activity to which that right gives access is scheduled to take place on a specific date or within a specific period.

Further thoughts

This case provides an important interpretation of the CRD in distance contracts concluded via intermediaries, given that the CRD is silent on regulating contracts concluded via intermediaries.

The CJEU provides a good explanation of the rationale for the exception. It is expected of traders, not of intermediaries, to fill in capacities that are created by the right of withdrawal, e.g. resell the ticket that is for a specific date to avoid loss. 

The CJEU also provides substantiated reasoning why the exception should apply in the same way when contracts are concluded directly with service providers and indirectly, with intermediaries. The rule does not change whether or not the ticket is sold by an intermediary or the direct service provider, as long as the risk is born by the direct service provider, in this case, the organiser of the concert. 

However, the present case does not give full guidance on how Article 16(l) CRD should apply in other, similar settings. The present case defines intermediaries as those acting in their own name but on behalf of their principal. Given the emphasis of the risk being on the organiser of the event, the same solution would probably apply with intermediaries acting in the name and on behalf of their principal. However, the situation is less clear when the risk is not on the direct service provider, the organiser of the event, but on the online seller who sells tickets via its website. This would occur in a situation when the tickets are bought for resell. Although in this case online sellers would probably not be classified as intermediaries in law, from a consumer's point of view, there may be confusion and the two kinds of sellers might be considered to both be intermediaries. For instance, consumers would consider Skyscanner an intermediary whereas it is a travel agent. We could argue that the regime should again be the same because the rationale for the exemption seems to be the inability of traders to fill in the capacities that are created by the right of withdrawal. For example, just like organisers, intermediaries might struggle to resell tickets for a particular date and as a result, suffer loss. Overall though, this interpretation cannot easily be deducted from the reasoning in the present case.

Since this case and the earlier Tiketa C-536/20 case, the case law seems to move in a direction of considering including intermediaries within the scope of CRD; in the next case on this topic, the CJEU should take the opportunity to express views on the classification of various (intermediary) sellers and the legal regime(s) applicable to them.

Fascinating judgment of CJEU in Tiketa (C-536/20): Intermediaries share responsibility under CRD, Transparency: Cinderella before the ball

The CJEU issued another judgment today in the Tiketa case (C-536/20), which interpreted provisions of the Consumer Rights Directive, focusing on information obligations and the principle of transparency in a pre-pandemic scenario of consumers making expenses to attend events, which they have not been informed had been cancelled. 

A Lithuanian consumer in this case purchased online a ticket to an event from a ticket distributor - Tiketa. Information on the website and on the ticked delivered upon purchase to the consumer let him know that the event organiser was 'Baltic Music', their contact information and that they bear full responsibility for the event. Terms and conditions on the ticket mentioned also that if the event was cancelled, event organiser would be responsible in full for the ticket price. The entitlement to a refund of the ticket price was not contested here, but rather whether consumer could claim further damages and if yes, from whom - event organiser and/or ticket distributor? After all, the consumer made expenses to travel to the event site to only days later receive information about the event's cancellation. 

Traders and persons acting on their behalf

The first question inquired about the application of the notion of a 'trader' from Article 2(2) CRD. Could this notion apply to two subjects in one case scenario: to a trader and a person acting on their behalf, and could it then mean that they both could be held liable by consumers for breach of their obligations? This is a very relevant question in the era of digitalisation, whether we consider digital influencers or online platforms as potentially acting on behalf of traders whose products they promote.

Lithuanian case drew attention to the difference between language versions of the CRD, which could result in intermediaries being considered 'traders' only in some Member States (e.g. France), as others (e.g. Lithuania) recognised a person acting on behalf of a trader as a 'trader' only if they were acting for purposes relating to their own trader, business, craft or profession. Unsurprisingly, the CJEU, following purposive construction rules - supports a broad interpretation of the notion of a 'trader', encompassing also intermediaries (paras 31-32).

More importantly, the CJEU considers that both a trader and an intermediary could be held jointly responsible for the performance of information obligations under the CRD towards consumers, even if they both facilitate provision of the same service. The Court highlights the purpose of CRD as ensuring that consumers are being informed by traders, broadly defined in Article 2(2), rather than by their contractual counterparties. Hence, if a consumer does not receive mandatory information, the intermediary cannot escape liability for breach of CRD provisions by clearly indicating their intermediary position in the transaction (contrarily, to intermediaries liability for non-conformity, pursuant to Wathelet case) (paras 33-34) (see our case note here).

Comment

What does this judgment mean in practice for the online environment is the key question here? A lot of online webshops - distributing products of other traders - could likely be seen as acting on their behalf, and thus would now have either additional due diligence duties, i.e. checking what information these traders share with consumers, or will need to start providing mandatory information themselves. 

What about online platforms and digital influencers? If they were seen as acting on behalf of traders, as well, this information duty would include them, too.

Mandatory information in standard T&Cs

The answer to the second question was long awaited by the academic community: Could online traders provide mandatory information to consumers only by including it in their standard terms and conditions and asking consumers to tick a box that they have accepted these? Was that transparent provision of mandatory information?

Disappointingly, the CJEU does not condemn this standard online market practice. The CJEU focuses its reasoning on the fact that the CRD does not prescribe a method for communication of pre-contractual information to consumers in Article 6(1) or Article 8. The Court distinguishes this situation from a clearly prescribed method for communicating information after the contract was concluded - on a durable medium (para 46).

Comment

What is a missed opportunity by the Court in this case is the elaboration on the principle of transparency and its role in assessing the adequacy and effectiveness of the form in which information is given to consumers. The CJEU does not even mention transparency: whether information provided in standard terms and conditions could be perceived as provided not in a 'clear and comprehensible manner' due to it being less visible or less accessible to consumers? It seems that the answer provided on this point hinged on a technicality, rather than examine broader principles of consumer protection and its aims. Transparency remains a Cinderella before the ball, waiting for her godmother to dust her off.