Country AUSTRIA BULGARIA CZECH REPUBLIC CYPRUS

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1 7th Article of the Council Directive 90/314/EEC on package travel, package holidays and package tours declares that the organizer and/or retailer party to the contract shall provide sufficient evidence of security for the refund of money paid over and for the repatriation of the consumer in the event of insolvency. Country AUSTRIA BULGARIA CZECH REPUBLIC CYPRUS Are there any means (like insurance, travel fund which organizer and/or retailer could use in case of insolvency) in your country which could ensure that all obligations of organizer and/or retailer will be fulfilled? The rules on package travel are not only applicable for consumers but also for B2B (businessbusiness) cases. In general, the directive is implemented in the Austrian Consumer Protection Act. The rules on the protection of the travelers in case of an insolvency of the tour operator however are stipulated in a separate regulation called Reisegewerbe - und Reisebürosicherungs-Verordnung. In Austria a tour operator either has to have an insurance for the case of insolvency or a bank guarantee. Travelers have to be reimbursed if the service cannot be provided or if they had to pay twice (e.g. again to the hotel because the hotel didn t get the money from the tour operator). Furthermore, the trip/flight back home after consumers started the journey has to be assured. A tour operator is only allowed to demand a down-payment of max. 20%. Any further payment must not be made earlier than 2 weeks before departure and the traveler has to get the travel documents (ticket, voucher) in exchange with the further payment. If a consumer acts in contrary, payments above 20% are not protected against bankruptcy of the trader. The tour operator should provide the insurance to get registered and provide it each year to continue to be registered as a tour operator. The tour operator should provide insurance in case of insolvency as well. There is a mandatory insurance for all the tour operators. Insurance is required for the sale of single travel services as well as for travel packages subject to the Tourism and Travel Offices and Tourist guides Laws 41 (I) of 1995 to The Package Travel, Holidays and Tourist Guides Law of 1998, Law 51 (I) of 1998 provides: 16. (1) The other party to the contract shall at all times be able to provide sufficient evidence of security for the refund of money paid over and for the repatriation of the consumer in the event of bankruptcy or insolvency. [ ] 17.(1) The other party to the contract shall have, if he so chooses according to the provisions of section 16(2), insurance under one or more appropriate policies with an insurer authorized in respect of such business. Under this insurance policy the insurer agrees to indemnify consumers, who shall be insured persons under the policy, against the loss of money paid over by them under or in contemplation of contracts for packages in the event of the bankruptcy or insolvency of the other party to the contract. [ ] 18.(1) The other party to the contract shall ensure, if he so chooses, according to the provisions of section 16(2), that a bond is entered into by an authorized institution or insurance company functioning by virtue of the laws in force in the Republic of Cyprus for the time being. Under this bond the institution or the insurance company binds itself to pay to an approved body of which that other party is a member, a sum calculated in accordance with subsection (3) in the event of bankruptcy or insolvency of the other party to the contract.

2 FINLAND HUNGARY A very important task of the Finnish Consumer Agency is to maintain a register of package travel organizers in Finland and to gather securities from the organizers. The securities are usually in the form of a bank guarantee. Package travel is usually paid for in advance, and package travel operators may have considerable sums of money at their disposal from advance payments made by consumers. Package travel operators must therefore furnish the Consumer Agency with security in case of travel being interrupted or cancelled due to bankruptcy or other insolvency. The monitoring of package travel operators is based on an EC Directive and is the responsibility of the Finnish Consumer Agency in Finland (Travel Agency Decree 366/1995). The Consumer Agency maintains a register of package travel companies operating in Finland. Registration is mandatory. The register is public, and consumers can check that a company is registered before they purchase a trip. Prior to registration, a package travel operator must furnish security in case of bankruptcy to compensate for advance payments made by consumers return travel and lodging at the travel destination if the trip is interrupted. Securities are proportional to the company's obligations. If necessary, a company's expenses may be evened out using what is referred to as a periodic arrangement for security. The Consumer Agency may release a package travel operator from the security requirement if the travel is paid for afterwards. Travel agents are not covered by security, and so must tell the buyer of package travel who the responsible operator is. The relevant piece of legislation harmonizing the Directive is the Government Decree 213/1996 (XII.23.). The required sufficient evidence should be provided in the form of financial security, which may be: a) bank guarantee, b) insurance contract (concluded at least for one year), c) separated and blocked sum for intended use at credit institution (contract concluded at least for 18 months). The above forms of financial security can be applied separately or in a combined form. The quantity of the financial security is 12 % of the total planned revenue, but min. 5 million HUF (for tours starting from Hungary to a foreign destination). It can be higher (20% of the total planned revenue, but min. 20 million HUF) if charter flight is included or the responsibilities of the enterprise exceeds a certain rate. The enterprise shall verify the presence of the financial security every year until 31 October. The financial security shall cover all the costs, advance payments, fees listed in the legislation. If the actual revenue is 10 % higher than the one previously planned, the financial security shall be adjusted to the actual revenue. The financial security can be terminated 6 months after the stopping the activity at the earliest. The contract of the financial security shall contain the following condition: the credit institution or the insurance company will only make payments charged to the financial security if the enterprise presents the approval of the Hungarian Trading License Office. The contract shall also include provisions concerning the responsibilities of the insurance company or the credit institution if the enterprise does not ensure the return, the costs of existence or the reimbursement of the payments to the passengers. The Hungarian Trading License Office is the designated authority for the registration. All enterprises acting as tour organizers and retailers or shall be registered and approved by the Office. One of the conditions of issuing a license is that the Office shall approve the financial security of the enterprise. To use the financial security the written approval of the Office shall be presented. If the enterprise does not fulfill its obligations in relation to the return of passengers or the payments, the Office shall take the necessary arrangements together with the

3 insurance company or credit institution. The Office may withdraw the license of the enterprise (and cancel its registration) if - the license does not include a vital element any more, or - the enterprise breaches its obligation related to the financial security, or - does not take the necessary arrangements to return the passengers or reimburse the payments, or - is not able to prove that the enterprise is able to ensure the return of the passengers, - if liquidation proceedings are ordered against the enterprise, - if false information has been forwarded to the Office, - if the enterprise hinders authority inspections - if the enterprise applies for the cancellation. The Hungarian Trading License Office may pose fines if breach of the provisions of the Government Decree is present. The list of all newly registered and cancelled organizers and retailers are regularly published on the website of the ministry and in official journal. ITALY According to Article 50 of the recent Italian Tourism Code (Legislative Decree n. 79/2011): 1. The organizer and the intermediate must be covered by the liability insurance contract in favour of a tourist for civil damages under Articles 44, 45 and 47 (damage to the person, other damages, ruined holiday). [...] According to Article 51 of the mentioned Code : 1. Within the Presidency of the Council of Ministers - Department for the development and competitiveness' of tourism a national guarantee fund operates to allow, in case of insolvency or bankruptcy of the seller or the organizer, the reimbursement of money paid and the repatriation of the consumer in case of travel abroad, as well as 'to provide immediate financial availability' in case of forced return of tourists from non-eu countries during emergencies, whether or not due to the behaviour of the organizer. 2. The fund is financed by an annual amount equal to two per cent in the premium of the insurance policies required under Article 50, which is paid into the State budget to be reallocated by decree of the Minister of Economy and Finance, [...] 3. [...] 4. Claims for reimbursement to the fund are not subject to any limitation period, subject, however, to the prescription of the right to reimbursement. 5. The fund will be able to exercise the right of recourse against the defaulting party. 6. The mode management and operation of the fund are determined by decree of the President of the Council of Ministers or by a decree of the Minister, in consultation with the Minister of Economy and Finance and the Ministry of Economic Development. LATVIA Tourism Law of Latvia provides that it is mandatory for the tour operator who organizes package tourism services to have a security guarantee for the money deposited by consumers. The security guarantee of money deposited by the consumer shall be: 1) insurance or 2) a bank guarantee. The procedures for the deposit of the security guarantee of the money are determined by the Cabinet Regulation No It states that tourism operators shall ensure a sufficient guarantee in relation to the money deposited by a client in relation to repayment thereof and delivering of the client to the country where the journey began (if another country has not been indicated in the contract), if prior to the declaration of the insolvency proceedings the tourism operator cannot completely or partially fulfil contract obligations to the client or the fulfilment of the programme of services indicated in the contract is not possible due to the insolvency of the tourism operator.

4 The security guarantee for money deposited by a client shall be ensured for a period of time which is not less than a year, and it shall be sufficient to fulfil the requirements referred above point, but shall not be less than LVL LITHUANIA According to a Law on Tourism Article 8: 1. Tour organizers who offer to sell travel packages must have a valid insurance or a guarantee from a financial institution which in case of tour organizer s bankruptcy or insolvency must provide: 1) the return of a tourist back to the initial point of departure and the reimbursement of the money for services that were not provided if it occurs after a journey starts that a tour organizer cannot carry on the contract. 2) the reimbursement of the money a tourist paid if a travel has not started yet and it occurs before a travel starts that a travel organizer cannot start the contract. 2. Travel agencies and travel agents must have a valid insurance or a guarantee from a financial institution which in case of their insolvency or bankruptcy should ensure: 1) a return of a tourist back to the initial point of departure and the reimbursement of the money for services that were not provided if it occurs that tour organizer will not be able to fulfill its obligations under the contract because a travel agency or a travel agent did not pay all or part of the money for the package travel to the travel organizer. 2) the reimbursement of the money the tourist paid that is equal to the to the price of the services that were not provided if when the package travel starts it occurs that the travel organizer will not be able to conduct its obligations under a contract to a tourist because the travel agency or a travel agent did not pay for a package travel to a travel organizer. Tour organizers, travel agencies and travel agents acting in the Republic of Lithuania ensure the enforcement of their obligations by valid insurance or a guarantee from a financial institution. Tour organizers, travel agencies and travel agents must individually sign the insurance contract with insurance company or financial institution. LUXEMBOURG In Luxembourg, each organizer and/or retailer can individually choose a bank or an insurance company in order to ensure the security for the refund of money paid over and for the repatriation of the consumer in the event of insolvency. The consumer can request a certificate with this information to the organizer who has to provide all details. The name of the insurance or the bank is also usually mentioned into the terms and conditions of the travel agency. NETHERLANDS The text of the implementation of the Package travel directive is in the Dutch Civil Code. Article 512 states the following: 1. The tour operator takes the measures which are necessary to insure that, when it, due to financial incapacity, cannot (further) comply with its obligations towards the traveler, there is taken care of: either taking over of the tour operators obligations by another operator, either repayment of the travel sum or, if travel is already partly enjoyed, a proportional part from that. If the traveler has arrived already on the place of destination, as far as the travel agreement includes that transport, in any case there has to be taken care of for the return trip. 2. The tour operator makes in the first paragraph mentioned measures public by mentioning these in the commonly available prospectus or other publication, meant in Article 501, or on another understandable and accessible manner. Further a trader who offers package tours can comply to the obligations stated in the Dutch law by becoming a member of the Foundation Guarantee Fund Travel sums (In Dutch: Stichting Garantiefonds Reisgelden). The goal of the Foundation is doing benefits to or for consumers for on the Dutch market offered and concluded travel agreements, or agreements of transport with exception of air transport by a shipping ticket or agreements of stay, if these consumers suffer financial damage in cases that the tour operator concerned, travel agent, carrier or supplier of stay because of financial incapacity do not perform. In the Netherlands mostly all travel agencies/tour operators (95%) are members of the

5 NORWAY PORTUGAL SPAIN Foundation Guarantee Fund Travel Sums (hereafter: SGR). If the situation occurs that the consumer is already at his/her destination and he/she has to be repatriated, the SGR will take care of the repatriation and in principle the consumer doesn t have to pay for his/her return trip. The SGR tries to continue the trip as it is booked by the consumer. The consumer will than notice nothing from the intervention of the SGR. If the return journey will take place on another date or time than originally booked the consumer will be informed, with the help of the tourist guide at the spot. There is one exception to the cost free repatriation: when consumers only book a charter flight and they visit family and do not stay in a hotel or resort with the presence of a tourist guide it is often not possible for the SGR to contact the consumer. If this is the case, the consumer will come to the airport and hear about the bankruptcy and then the consumer will have to pay for his/her flight home and get the expenses refunded afterwards. The SGR tries to refund all claims within 3 weeks. In Norway there is an established travel-fund that is set up to insure the damages related to insolvency by the trader. The fund has its legal basis in the APR legislation in Norway. There is a legal means of ensuring that obligations of travel and tourism organizers and retailers will be fulfilled. This means is designated as Regulamento do Fundo de Garantia de Viagens e Turismo - Travel and Tourism Warranty Fund System. It is a Fund that has been created this year (2011) to avoid prejudice to consumers in case of insolvency of the organizer or the retailer. The registration and contribution to the Fund is mandatory to all organizers and retailers registered in Portugal. The warranty covers: package travel, package holidays, package tours and all other types of travel contracts including not organized services. The Fund is used in the situations of non-compliance of the contracts signed between the tourism traders (in which all organizers and retailers are included) and the consumers. The Fund is used after a decision of a) a Judicial Court; b) the Ombudsman; or c) an Arbitration Commission. It includes the refunding of the price that consumer paid to trader for the lost/nonconforming service. It also includes the reimbursement of the justified values that eventually the consumer paid in the case he/she had to contract other service because the lack/failure of the first one. For example: consumer had to stay in another hotel because of the trader infringement/insolvency. Legal framework regulating such cases are Decreto-Lei n.º 61/2011 and Portaria n.º 224/2011, the former creates the legal system of an instrument that can assure that consumers are reimbursed in case of insolvency of organizer or retailer. This diploma transposed the Bolkestein Directive (2006/123/CE). The latter specifies the characteristics of the creation and method of operating of the Fund system. In Spain the Article 163 Spanish Legislative Royal Decree 1/2007, approving the General Law for the Defense of Consumer and Users, states that operators have to make a bond in order to cover repayment of the price and repatriation of consumers in the event of the operator's insolvency. The Tourist Regional Authorities are the competent bodies for the constitution of the deposit that the operators have to make. Such duty is envisaged in Travel Agencies Legislation of the Autonomous Region.