Package Travel Contracts (Package Tours)
1. Substance, purpose and terminology
The German Civil Code (Bürgerliches Gesetzbuch (BGB)) regulates contracts for package tours (‘package travel contracts’) in §§ 651a ff. This solely concerns the legal relationship between the tour operator and the client. Unlike an individual travel contract, the operator bundles various services into a package (in advance) and offers this to the client at a standard price. §§ 651a ff BGB apply mutatis mutandis to the simple rental of a holiday home and the chartering of a yacht from a tour operator (charter party). In the case of a package tour, the client’s only contractual relationship is with the latter. The operator will maintain relations distinct from this relationship with various service providers (such as hauliers and hotels). In economic terms, package tourism has in the past been a growth sector. Companies within the internal market have in the meantime achieved a considerable level of concentration. The leading names are primarily domiciled in the United Kingdom and Germany. Nevertheless, price-driven competition remains intense. Moreover, the latest communication tools have given rise to new distribution channels, notably web-based (sales (forms of distribution)). ‘Virtual’ travel agencies, for example, now allow clients to piece together their own product electronically (dynamic packaging). Apart from the legal questions which have arisen, one consequence of this is competition between tour operators who sell their products by catalogue through stationary travel agencies and providers or tour agents who work through the internet. In the 1970s, legislation to govern package tours developed more or less synchronously in many Member States. The approximation of law pursued in past years at the Community level is partly designed to protect consumers (consumers and consumer protection law). It is also designed to stimulate their demand for (cross-border) tourism services. Moreover, harmonizing the rules enables operators to offer in some respects standardized products throughout the single market.
2. Trends in law
In March 1988, the Commission presented its first proposal for a package tour directive, based on ex-Art 100a TEC (now Art 114 TFEU/95 EC). Its aims were twofold: to serve the single market policy of free movement of services and to protect consumers (consumers and consumer protection law). In the wake of proposed changes by the Parliament, the European Commission submitted another proposal the following year that had been modified in favour of consumers. However, this enhanced standard of protection was later diluted in the Council of Ministers (Council and European Council), not least in refraining from making the operator liable regardless of wilful or negligent wrongdoing. Political agreement on a package tour directive was ultimately achieved on 13 June 1990. Before the harmonization instrument was adopted, Germany, France, Greece, Italy, Portugal and Spain had already enacted special regulations in this field. In Denmark, the United Kingdom and other countries, meanwhile, there were no specific provisions on package tours. In most cases, the directive was adopted in national laws via dedicated statutes, but in some instances it was incorporated into a national civil code or consumer protection code. In the Netherlands, for example, the rules were embodied in the Burgerlijk Wetboek (BW), whereas in Italy, they formed part of the Codice del consumo. The adoption of the directive in Germany, done within the Civil Code (Bürgerliches Gesetzbuch (BGB)), merely required a few additions and modifications to the existing §§ 651a ff BGB.
However, it did not result in homogenous law throughout the single market. One reason is that mistakes were made in the adaptation of the directive to the various legal systems of the Member States. Another is that this secondary instrument only provided for a minimum standard of protection: Art 8 of the directive allows every Member State, be it their legislative or judicial branches, to exceed this minimum. Most national parliaments took advantage of this option and were more stringent in their implementation. This relates in particular to additional requirements with regard to information (information obligations (consumer contracts)) and brochures as well as formal requirements. As a whole, the secondary law merely achieved an approximation of national rules on the basis of minimum harmonization, but without standardizing the legislation on package tours. This is strikingly demonstrated by the Consumer Law Compendium in its study on the comparative implementation of the directive in the Member States. Under Art 1, the directive covers all package tours sold or offered for sale in the European Community; the personal scope of the harmonization measure extends to all consumers in general, whether or not they are working in a ‘professional’ capacity. This is significant in the case, for example, of ‘incentive tours’ booked by employers as a reward or incentive for staff performance. The operator thereby enters into a contract with a party who is not acting as a consumer in the strict sense, but towards a private end. Because this secondary text thereby targets a broader group, it is different from other consumer protection directives (consumers and consumer protection law).
This notion of the consumer, as a pars pro toto, may explain why the harmonization directive has led to such a diversity of implementation models in different legal systems. In two-thirds of Member States, the terminology does not conform to that of the secondary instrument (while in Germany, for example, protection is accorded not to the ‘consumer’ but to the ‘traveller’, French law is directed at the ‘purchaser’, and Danish law at the ‘client’). There are further instances of divergences with regard to the counterparty. The Community instrument grants Member States leeway in deciding whether specific obligations should be imposed on the tour operator (‘organizer’) and/or agent (‘retailer’). Article 2(2) and (3) of the secondary legislation provides definitions for these two groups. Only a third of Member States’ implementing laws reflect this definition of the operator. German law is predicated, rather, on the (natural or legal) person who bears the organizational responsibility for contractually agreed services from the client’s perspective. Retailers, meanwhile, had no obligations imposed upon them by the implementation of the legislation in Germany, France, Finland, Luxembourg or Portugal. In Art 2(1), the directive defines a package tour as a prearranged combination of at least two of the following: transport, accommodation or other tourist services. The latter may not be ancillaries to the first two categories but must, rather, account for a significant proportion of the package. A further requirement is that the service, which must cover a period of more than 24 hours or include overnight accommodation, is sold or offered for sale at an inclusive price. The directive merely governs the relationship between the client and the operator/agent, with the emphasis on the liability of the latter two (Art 5) and on protecting the client from the operator’s insolvency risk (Art 7).
Moreover, particular importance is attached to duties of information, above all with regard to the configuration of brochures. Article 3(2)(g)2 of the directive provides that changes in details such as price must be ‘clearly communicated’ to the consumer before the contract is concluded, and the operator must ‘expressly’ state as much in the brochure. The German Ministry of Justice recently issued an ordinance on the basis of Art 238(1) of the Introductory Act to the Civil Code (EGBGB) concerning a modification to the Provision of Information Ordinance under the Civil Code (BGB-Info-VO). Henceforth, § 4(2) 2nd sentence of this ordinance grants tour operators the option of reserving a right to adjust prices on grounds that are not definitively listed. It seems doubtful that § 238(1) EGBGB would absorb that amendment. The provision authorizes changes that protect the consumer, while flexible catalogued prices would appear to have the contrary effect. It is equally doubtful whether the amendment complies with Article 3(2)(g)2 of the directive.
In past years, the European Court of Justice (ECJ) has repeatedly expressed views on the Package Travel Directive in procedures relating to references for a preliminary ruling. These concern the material scope of the harmonization measure (ECJ Case C-400/00 – Club-Tour, Viagens e Turismo  ECR I-4051; see the recent reference by the Austrian Supreme Court of Justice, OGH of 6 November 2008, 6Ob 102/08s), the scope of damages (ECJ Case C-168/00 – Leitner  ECR I-2631) and security against insolvency (ECJ Joined Cases C-178/94, C-179/94, C-188/94, C-189/94 and C-190/94 – Dillenkofer  ECR I-4845; Case C-140/97 – Rechberger  ECR I-3499).
3. International rules governing civil procedure and conflict of law
Package tours frequently take clients abroad. These cross-border constellations are particularly prone to raising questions about international jurisdiction and applicable law if the client has been dealing with an operator who is not domiciled in the same country. This aspect of international private law and procedure is not directly resolved by the Community legislature in the Package Travel Directive. International (and to some extent local) jurisdiction within the single market is founded first and foremost on the Brussels I Regulation (Reg 44/2001, see also the Agreement between the European Community and Denmark). With regard to contractual entitlements, apart from Art 2(1) and (5) no 5 Brussels I, the jurisdiction rules designed to protect consumers in Arts 15 and 16 are particularly relevant in this respect. In the case of package tours in the meaning of the directive, this protection takes effect in the circumstances described in Art 15(3) Brussels I as long as the client qualifies as a consumer according to the criteria in Art 15(1). In other words, the scope of this provision is not established where an employer books an incentive tour with an operator because, although the employer is granted protection under the directive, he is not a consumer under the terms of Art 15(1) Brussels I. Nor will the protective jurisdiction apply to simple holiday home rental by an operator. Although such legal transactions fall mutatis mutandis under § 651a ff BGB, they are not package tours in the meaning of the directive and Art 15(3) Brussels I. It is not entirely clear under what circumstances the operator is considered to be directing his activities, perhaps by means of a website, at the Member State where the consumer lives in the sense of Art 15(1)(c) Brussels I, or to what extent the conclusion of a contract can be attributed to this (see the recent above-mentioned OGH reference of 6 November 2008, 6Ob 102/08s). If the terms of Art 15 Brussels I do apply, the consumer can choose to bring proceedings against the operator, as set out in Art 16(1) Brussels I, at the court with international and local jurisdiction in the place where he resides. By the same token, under Art 16(2) Brussels I, proceedings may only be brought against the consumer in his or her Member State. The consumer may not be deprived in advance of this protective jurisdiction, eg in the form of a prorogation or derogation clause. This follows from Art 23(5) and 17(1) Brussels I.
As private international law (PIL) stands in Germany, the law applicable to package tour contracts is still determined by Arts 27 ff EGBGB, by virtue of which the Convention on the Law Applicable to Contractual Obligations (Rome Convention) was incorporated into the Introductory Act to the Civil Code. Fundamentally, package tour contracts are subject to a free choice of law by the parties, but this freedom is limited under certain conditions by a specific connecting factor for consumer contracts in the meaning of Art 29(1), (4)(2) EGBGB. The judge is obliged ex officio to undertake a concrete comparison between the foreign law contractually agreed and the relevant provisions in the consumer’s state of residence in order to establish which is more favourable. The law of the consumer’s residence, consequently, constitutes a minimum standard of protection. In the absence of a choice of law or if the choice proves ineffective, the law applicable to the package tour contract is primarily to be determined by virtue of objective connections on the basis of Art 29(2), (4)(2) EGBGB (otherwise Art 28 EGBGB takes over). The above comments on incentive tours and simple holiday home rentals apply accordingly. The practical relevance of Art 29 EGBGB is minor because its territorial and situational scope is confined to three sets of circumstances, which it then describes. Past loopholes in protection, especially in electronic commerce, have largely been resolved by Rome I Regulation (Reg 593/2008). This secondary instrument replaces the Rome Convention (except in Denmark) with effect from 17 December 2009, triggering the deletion of Arts 27 ff EGBGB (except for Art 29a). In the future, the law to be applied must above all be established with the aid of Art 6 Rome I, as long as the contract was concluded before the given deadline (a further limitation on choice then derives from the clause protecting the internal market in Art 3(4) Rome I).
Replacing the Rome Convention with a Community instrument means enhanced protection for consumers in conflict-of-law rules. Drawing on Art 15(1)(c) Brussels I, Art 6(1)(b), (4) Rome I also attaches decisive importance to whether a company has also directed its activities at the consumer’s country of residence. The above comments, therefore, apply accordingly. Moreover, in Art 6(4)(b) Rome I the Community legislature has clearly stated that the term ‘package tour’ must be determined in the light of the directive. Even if the package tour was booked in the consumer’s state of residence, but the operator then performs all the ‘services’ in a different country, Art 6(4)(a) Rome I does not apply (but see Dennis Solomon on the alternative relationship between the two elements constituting exceptions). In this sense, the question remains as to whether the applicability of Art 6(4)(b) Rome I, which is to be interpreted restrictively, is not in any case impaired by commercial activity being also directed at that country or by the provision of information to the consumer. Certainly, there is no discernible will on the part of the European legislature to depart from the former legal context provided by the Rome Convention by curtailing consumer protection.
4. Further harmonization projects
Since 1967, travel contracts have also been of interest to the International Institute for the Unification of Private Law (UNIDROIT). In 1968, a committee chaired by Otto Riese produced a draft for an International Convention on Travel Contracts (CCV) which was adopted on 23 April 1970. However, not many states have ratified this Convention, and Germany is among those that have not. The Package Travel Directive is one of the older secondary instruments in the field of consumer contract legislation, even if the harmonization measure does not, strictly speaking, rank among the classical consumer protection directives given its greater protective reach. Meanwhile, a broad overview reveals substantial terminological discrepancies between these various secondary texts. In view of this, the Commission has suggested submitting the acquis communautaire to review and possible approximation. This includes the Package Travel Directive. Like the Timeshare Directive (Dir 94/47, now amended by Dir 2008/122), it is to be complemented—as a vertical instrument for a specific type of contract—by a horizontal directive setting out general rules or addressing common issues. The Commission published a proposal for a consumer rights directive of this kind on 8 October 2008 (COM(2008) 614 final). Among the various approaches to revising the acquis communautaire indicated in the green paper on the review of the consumer acquis adopted on 8 February 2007, the Commission has thereby opted for a mixed approach. It is also pursuing a new strategy of full harmonization. This is already illustrated by the second-generation instrument for timeshare contracts (Dir 2008/ 122). If the Package Travel Directive also establishes maximum standards following its proposed amendment, this may oblige a few Member States to relinquish legislative or judicial reinforcements of protection. This could specifically also affect the particular application of § 651a ff BGB to holiday home rentals in Germany. In recasting the Package Travel Directive, it is to be hoped that Europe’s lawmakers will not only remove any terminological fuzziness, eg in relation to the ‘organizer’ and ‘consumer’ as contracting parties, and better reflect the case law from the European Court of Justice, such as the Club-Tour judgment; rather, they have a duty to close the loopholes in consumer protection and respond to real developments. First indications of the need for an update can be derived from the Commission’s report of 1999 (SEC (1999) 1800 final), eg with regard to tougher insolvency protection. The Commission also circulated a working paper dated 26 July 2007 posing crucial questions to interested parties and calling for dialogue. It subsequently received many views from practitioners and academics. The European Parliament has since published its 2008 study. So far, however, the Commission has not presented a proposal for a revised Package Travel Directive.
In the course of revision, the European legislature will doubtless have to consider how clients’ booking behaviour has changed and examine the conclusion of package holiday contracts by electronic means. The internet carves a route for consumers to seek tourism services beyond borders. It is worth asking whether and to what extent it is helpful to deny package tour clients the withdrawal and termination rights they would enjoy in the case of other distance-selling products and (financial) services. Furthermore, the new image of the active consumer is quite poignantly illustrated by dynamic packaging, with the aid of web-based platforms, where the division of roles between operator and mere agent tends to be blurred. In this respect, the authors of the directive will have the prerogative of assessment and will need to provide the Member States with distinguishing criteria for online bookings. The internet can also, as outlined above, lead to distortions of competition. The danger of an unlevel playing field looms in that classical tour operators have to fix their prices definitively in catalogues well before the season begins, whereas web-based providers neither incur the costs of printing nor are subject to similar restrictions when publishing prices on their sites. To ensure fair competition, the consolidated directive will need to clarify this issue. The final outline edition of the Draft Common Frame of Reference (DCFR) will not contain any new rules on travel law, but the updated Acquis Principles show that the Package Travel Directive could by all means prove exemplary: the forthcoming second volume of the Principles includes a few new specific provisions, essentially substance of the directive that had not already been included in the general contract law of the first volume. In this process, the requirements of the directive will, first, be adjusted to reflect the terminology in the Acquis Principles and, secondly, be substantively linked to the fundamental provisions in the latter.
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