Latest developments in EU legislation and the Hungarian implementation process

1. Latest developments in EU legislation and the Hungarian implementation process 20th IFTTA Congress China 11-15 September, 2008 Dr Gyenizse Dorottya Hungary Ministry of Local Government Tourism Department

2. Topics • Review of the Package Travel Directive (90/314/EC) • The implementation of 2006/123/EC Directive on services in the internal market • Overview of the Hungarian legislation and national implementation process

3. Legal framework of the European Union – general overview • Primary legislation: Treaties (Treaty establishing the European Community, Treaty of the European Union, Accessing Treaties, Treaty of Amsterdam, Treaty of Nice, Treaty of Lisbon etc.) • International agreements: international agreements with third countries or international organisations, agreements and conventions between the Member States • Secondary legislation: totality of the legislative instruments adopted by the European institutions pursuant to the provisions of the treaties. Secondary legislation comprises the binding legal instruments (regulations, directives and decisions) and non-binding instruments (resolutions, opinions) provided for in the EC Treaty, together with a whole series of other instruments such as the institutions’ internal regulations and Community action programmes. • European Court of Justice - case-law

4. Review of the Package Travel Directive • Revision has begun in 2006 with Commission Questionnaire • 2007 July: The Commission presented Working Document on the Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours – see Portugal Conference papers • 2007 December: The Commission presented Working Document on the summary of the responses - the Commission has prepared this summary on the basis of the contributions to the Working document that was published on the SANCO DG web page in July 2007.

5. Review of the Package Travel Directive • Almost all the Member States and all consumer stakeholders call for a clarification regarding the scope of the Directive. Most of them, together with approximately half of the business stakeholders, think that the Directive should cover packages, which are put together at the demand of the consumer (dynamic packaging). • The majority of stakeholders, in particular businesses, call for a clarification of the responsibility of the organiser and the retailer. • There are divergent views as to whether consumers' right to moral damages should be clarified or elaborated on by the Directive. Businesses are against such a clarification. Member States are divided over the issue, the majority of which indicating that a right to moral damages already exists in their own national legislation.

6. Review of the Package Travel Directive • Consumer stakeholders suggest a number of key information obligations the organiser should be required to provide in the brochure. All of them stress that all information, including prices, must be given in writing or some other form and not only on the web. Many consumers do not have access to the internet and it is a matter of principle that the consumer should be informed rather than having to seek out the information himself. Conversely, business stakeholders explain that the provision on information in brochures is out of date. It is not possible to keep prices up to date as it is stated in the Directive. With few exceptions, all Member States endorse the solution whereby consumers must have access to updated prices in other ways than merely by a reference in the brochure to a website.

7. Review of the Package Travel Directive • If the organiser is constrained to significantly alter any of the essential terms, such as the price, the consumer may withdraw from the contract and be compensated. If the organiser cancels the package the consumer may be compensated except when the cancellation is justified by an insufficient number of participants. A majority of both Member States and consumer stakeholders ask for a clarification of "essential terms", although some believe it would be difficult to draw up any exhaustive list of terms. Both Member States and consumer stakeholders are divided over whether consumers should have the right to compensation in the case of cancellation when there is an insufficient number of participants. The idea of a generalised method of calculation of compensation meets no support, neither among business stakeholders nor Member States. They claim the need for a case by case approach.

8. Review of the Package Travel Directive • The organiser/retailer is obliged to provide sufficient evidence of security for the refund of money paid and the repatriation of the consumer in the event of insolvency. The idea of a common EU security system meets no support among most stakeholders. Even if a small number of them find this an interesting possibility, such a system is considered to be too difficult to introduce in practice. A majority of the Member States addressing the issue show interest for an increased cooperation notably to exchange best practices. Both Member State and business stakeholder responses raise the need to clarify how to handle cross-border cases where an organiser sells packages in another Member State.

9. 2006/123/EC Directive on services in the internal market Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market is in force since 27th December 2006 after 3 years preparatory process. Implementation period: till 31th December, 2009. The Directive falls under the framework of the 'Lisbon Strategy' and proposes four main objectives for creating an internal services market: • to ease freedom of establishment for providers and the freedom of provision of services in the EU; • to strengthen rights of recipients of services as users of the latter; • to promote the quality of services; • to establish effective administrative cooperation among the Member States.

10. 2006/123/EC Directive on services in the internal market Scope The services covered by the Directive: business services such as management consultancy, certification and testing; facilities management, including office maintenance; advertising; recruitment services; the services of commercial agents, legal or fiscal advice; real estate services such as estate agencies; construction, including the services of architects; distributive trades; the organisation of trade fairs; car rental; and travel agencies. Consumer services are also covered, such as those in the field of tourism, including tour guides; leisure services, sports centres and amusement park.

11. 2006/123/EC Directive on services in the internal market • The following services are excluded eg.: non-economic services of general interest, financial services (including those such as banking, credit, insurance and re-insurance), electronic communications services with respect to matters covered by other Directives; transport services, including port services; services of temporary work agencies; healthcare services; audiovisual services; gambling. • The Directive requires the Member States to examine and, if need be, simplify the procedures and formalities applicable to accessing a service activity and to exercise them. • In particular, the Directive includes: • putting in place points of single contact at which a provider may complete all the necessary formalities to fulfil various duties and the obligation to make this possible on-line.

12. 2006/123/EC Directive on services in the internal market • To ease freedom of establishment the Directive: • includes the obligation to evaluate the compatibility of the authorisation schemes in light of the principles of non-discrimination and proportionality and to maintain certain principles regarding the conditions and procedures of authorisation applicable to service activities; • repeals certain legal requirements that remain in the legislation of some Member States and that are no longer justifiable, such as requirements on nationality; • contains the obligation to evaluate the compatibility of a certain number of other legal requirements in light of the principles of non-discrimination and proportionality.

13. 2006/123/EC Directive on services in the internal market • To improve the free provision of services, the Directive stipulates that the Member States must guarantee freedom of access to the service activity and the freedom to exercise such activity throughout their territory. The Member State to which the service provider moves to become established may only enforce its own requirements as much as these are non-discriminatory, proportional and justified for reasons of public order, public safety, public health or environmental protection. • The Directive aims to: • strengthen the quality of services by encouraging, for example, voluntary certification of activities or drawing up quality charters and encourage European codes of conduct to be drawn up, in particular by professional bodies or associations.

14. 2006/123/EC Directive on services in the internal market • Establishing effective administrative cooperation among the Member States • In order to facilitate the establishment and free movement of services throughout the European Union, the Directive: • lays down a legal obligation requiring the Member States to cooperate with the relevant authorities of other Member States in order to ensure efficient control of service activities in the Union while avoiding a multiplication of monitoring. • constitutes the basis for developing an electronic system for the exchange of information between Member States, which is vital for establishing effective administrative cooperation between them.

15. 2006/123/EC Directive on services in the internal market Main important provisions Definitions - „Service" means any self-employed economic activity, normally provided for remuneration - "Member State of establishment" means the Member State in whose territory the provider of the service concerned is established - "Member State where the service is provided" means the Member State where the service is supplied by a provider established in another Member State Member States shall ensure that it is possible for providers to complete the following procedures and formalities through points of single contact: (a) all procedures and formalities needed for access to his service activities, in particular, all declarations, notifications or applications necessary for authorisation from the competent authorities, including applications for inclusion in a register, a roll or a database, or for registration with a professional body or association; (b) any applications for authorisation needed to exercise his service activities.

16. 2006/123/EC Directive on services in the internal market I. Freedom of establishment for providers Member States shall not make access to a service activity or the exercise thereof subject to an authorisation scheme unless the following conditions are satisfied: (a) the authorisation scheme does not discriminate against the provider in question; (b) the need for an authorisation scheme is justified by an overriding reason relating to the public interest; (c) the objective pursued cannot be attained by means of a less restrictive measure, in particular because aformerinspection would take place too late to be genuinely effective. II. Free movement of services Member States shall respect the right of providers to provide services in a Member State other than that in which they are established. The Member State in which the service is provided shall ensure free access to and free exercise of a service activity within its territory.

17. 2006/123/EC Directive on services in the internal market II. Free movement of services Member States shall not make access to or exercise of a service activity in their territory subject to compliance with any requirements which do not respect the following principles: (a) non-discrimination: the requirement may be neither directly nor indirectly discriminatory with regard to nationality or, in the case of legal persons, with regard to the Member State in which they are established; (b) necessity: the requirement must be justified for reasons of public policy, public security, public health or the protection of the environment; (c) proportionality: the requirement must be suitable for attaining the objective pursued, and must not go beyond what is necessary to attain that objective.

18. 2006/123/EC Directive on services in the internal market • Problems of the national implementation regarding tourism services • Difficult regulation, general provisions, problems with interpretation • Free movement of services: cross-border providers – problems with Member States’ different professional requirements and systems (eg. requirements for travel agencies, inspection of existing different financial guarantee systems) • Register for established providers: Member States must prove the necessity and reasons (eg. in Hungary maintaining travel companies’ register) • Altering register systems and procedures • Altering administrative procedures, attitudes • Implementation problems in practice throughout 27 Member States’ administrative systems and authorities

19. Hungarian legislation overview – implementation process • Tourism Act: Government presented to the Parliament in May, 2008 – 3 years negotiation on the draft Act after adopting the National Tourism Strategy General legal framework on tourism, definition, organizational structure, tasks, financial system, general rights and obligation of tourists and stakeholders etc. • Government Decree on Travel Organization and Agency Activities (213/1996.) Definitions, main purposes of the activities, technical and personal requirements of the activity, registration procedure, administrative requirements, financial security (bank guarantee, insurance, deposit), inspections, sanctions (cancellation from the register, fine) Revision: till 30th June 2009 to implement Service Directive Modification: competences of authority, maintain registration for travel companies in case of establishment, simplification of procedures, electronic administration

20. Hungarian legislation overview – implementation process • Government Decree on Travel Contracts and Travel Agency Contracts (214/1996.) Revision of the Decree: 2005/29/EC Directive concerning unfair business-to-consumer commercial practices in the internal market ; more adequate implementation of the Package Travel Directive; Working Group of revision;still problems at EU level! New elements, modification • Obligatory contains of the travel contract and brochure • Price elements, fuel costs incorporated • Traveller’s withdrawal (before 35-45 days, maximum compensation amount is 10% of the price) • Clarification liability of tour operator and travel agency (strict liability for tour operator) • Limit liability for non or improper performance (determining in the price) • Not force meajure: concerning travel advisories – „not offered country”

21. Hungarian legislation overview – implementation process • Minister Decree on tour guides (41/1995.) - Implementation of 2005/36/EC Directive on the recognition of professional qualifications - List of historical monuments (European Commission’s opinion) - Recognition of other EU Member States’ professional qualification in case of cross-border services • Minister Decree on the classification of commercial and private accommodation and the qualification of rural tourism accommodation (45/1998.) • Government Decree on utilization of private accommodations (110/1997.) • Government Decree on rural tourism activities (136/2007.) • Act on commercial activities (164/2005.) • Minister Decree on equestrian activity (proposal)

22. Thank you for your kind attention!Dr Dorottya GyenizseMinistry of Local GovernmentTourism DepartmentHungaryTel: + 36 1 225 6581E-mail: gyenizse.dorottya@meh.hu