Traveller Vulnerability in the Context of Travel and Tourism Contracts PDF

The book highlights the link between consumers and travellers, identifying the meaning of vulnerability in Brazil and the EU. It also covers different types of contracts for tourism and travel services, including online booking processes. Only after 2015, as a result of the directive on package travel and linked travel arrangements, did the EU begin viewing travellers as consumers in the sense of Union Consumer Law; conversely, in Brazil, the traveller has no legal status whatsoever and is considered solely a consumer. As the traveller is implicitly a consumer he/she is subject to vulnerability. However, the definition of vulnerability differs considerably between Brazil and the EU: while in Brazil it is a principle stemming from the Consumer Defence Code, covering all consumers, in the EU vulnerability is not an established principle. In the EU, although the average consumer is assumed to be reasonably well informed, observant and circumspect, they are also recognised as the weaker party in the contract. That recognition does not fit with the notion of "confident consumer". Vulnerable consumers in the EU are those whose individual characteristics, such as their age, physical or mental infirmity, or credulity, make them particularly susceptible to unfair commercial practices. Conversely, in Brazil these consumers are seen as being hyper-vulnerable, rather than solely vulnerable. In this context, travellers are in a weaker position than regular consumers buying goods or services, because they are outside of their domicile or jurisdiction for a brief or extended period of time. This book examines two types of traveller vulnerability that make travellers, particularly international ones, a special type of consumers: 1. External and 2. Legal (jurisdiction). Travellers’ vulnerability mainly stems from consumers travelling to different markets and different cultures. As such, they are subject to different laws that require special global attention. While both the EU and Brazilian system have their respective advantages and disadvantages, the goal of both must be to further increase protection for travellers, including business travellers. In consumer societies, the traveller is indeed a consumer by logical causation and hence a “special consumer”.

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Maria Goretti Sanches Lima

Traveller Vulnerability in the Context of Travel and Tourism Contracts A Comparison of Brazilian and EU Law

Traveller Vulnerability in the Context of Travel and Tourism Contracts

Maria Goretti Sanches Lima

Traveller Vulnerability in the Context of Travel and Tourism Contracts A Comparison of Brazilian and EU Law

Maria Goretti Sanches Lima IFTTA International/worldwide Sao Paulo, Brazil

ISBN 978-3-319-98375-2 ISBN 978-3-319-98376-9 https://doi.org/10.1007/978-3-319-98376-9

(eBook)

Library of Congress Control Number: 2018952464 © Springer Nature Switzerland AG 2018 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, speciﬁcally the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microﬁlms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a speciﬁc statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional afﬁliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

For Noé A paragon of rationality

Foreword

A comparative legal analysis between Brazil and the European Union must build bridges. Whilst a European jurist ﬁrstly thinks with the keywords ‘travel’ and ‘right’ regarding vacation packages and the recently reformed Package Travel Directive of 25 November 2015, in Brazil and in the rest of Latin America and in North America1 vacation packages do not play a signiﬁcant role. Instead, other types of contracts are more prominent in contractual relationship with carriers and hoteliers. Even the liability of the travel agency has a different meaning when a tour operator is in the background. The contracts concluded with the service providers often have a cross-border component—unlike the contract of ‘package tour’, which is concluded with the tour operator based in the same country. In the EU, if the person books a trip to a country where the arrangements were not satisﬁed, the applicability of foreign law will protect its citizens because of international process of private law (Brussels IA Regulation, Rome I Regulation). The process is fast, in the countries where the legal procedures apply. In other words, the structure of travel law is completely different. In order to ﬁnd similarities and differences through a comparison, a challenging effort has to be made. Even consumer law has no comparable structure. Nevertheless, both legal systems recognise the existence of strong signs of jurisdictional ﬁeld with that name. For Europeans, it is understood that a consumer must be a natural person, who enters into a transaction for a private purpose. In Brazil, it is different, mainly as it includes the understanding of legal person, who acquires goods and services for purposes other than for resale. For that, we would use the economic term ‘end consumer’. Of course, the protection of consumers must be bounded by other criterion—the vulnerable consumer, a new discovery in the European consumer law that has been known in Brazil for a long time. By discussing consumer

1

Cf. Stenzel (2008). vii

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Foreword

protection issues, the work is interesting; it touches fundamental issues on the protection of the weaker contracting party. The actual problems, which require legal solutions, are similar because even Brazilians travel. Travelling is no longer a luxury product accessed by a few people. Brazil has a relatively large middle class, which is often not quite perceived from a European perspective because of the extreme differences between the rich and the poor. Considering the huge legal differences, the comparative approach is a signiﬁcant challenge, which is further enhanced by the fact that the author could not write the thesis in her native language. She deﬁnes ‘Europe’ as the European Union. Therefore, it not addresses the rights of Member States or EU law as an example of transposition or implementation of the legal requirements of European Union law. It seems that the European Union appears more consistent from the outside rather than inside. The work is divided into three main parts, preceded by a detailed introduction. The two main parts consist in a country report on Brazil and the European Union. The third and ﬁnal part is the ‘Analysis’ and ‘Conclusion’. (. . .) In both analysed legal systems, the work goes beyond the comparison of travel regulations. The author aims to identify general principles on consumer protection and compare them. On that, she succeeded in an outstanding degree. Travel law serves rather to illustrate how these principles materially affect a certain jurisdictional ﬁeld. Here, the notion of consumer plays a fundamental role. It is clear that in the analysed jurisdictional system, not only the consumer concept is different, but even the concept of protection differs. In Brazil, the vulnerability of the consumer is more prominent than in the EU, where the concept of conﬁdent consumer is dominant in both courts and legislation. However, the recent discussions in the European Union related to vulnerable consumer show that the ‘conﬁdent consumer’ no longer represents an advanced concept. The author insists with good reasons on the concept of protection that is found on her domestic legal system. The author observes the notion of consumer, according to an ongoing discussion, at a high level of analysis and knows how to contribute to that debate. The discussion from the Brazilian perspective would enlarge and extend the horizons of the European reader, not only from a transatlantic horizon but also because it provides arguments for an intra-European debate on the notion of consumer (consumer rights directive), particularly questions on keywords such as ‘from consumer to user’ or ‘vulnerable consumer’. Nonetheless, it has to be noted that the author should not have restricted the research concerning EU law to several documents from the European institutions. The development of the notion of consumer in the EU law is accompanied by a lively debate, particularly in the English literature. However, it is remarkable that the results are correct. The documents offered a support to deepen the contribution of the author’s arguments, which highlights the work’s autonomy.

Foreword

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Overall, the work is an extraordinary achievement on a high level, which contains not only a comparative law perspective but also signiﬁcant new ideas to the debate of consumer rights. That is to say, it is a debate that ‘travel law’ plays a particular and signiﬁcant role in. The further debate on ‘vulnerable consumer’ should not miss this work.2 Emeritus Prof. of Private Law and European Law at the University of Rostock Rostock, Germany

Klaus Tonner

Reference Stenzel U (2008) Comparison of American and European travel law. Verlag Dr. Kovac, Rostock

2 The text was originally written in German. English version authorised. The English version is an edited extract from the original text. It provides a partial account of the full text.

Preface

Undertaking the task to write this book was a huge and overambitious pretension. Not only by reason of language barrier but also because there are transnational legal questions such as: how to compare two different cultures and legal systems and how to identify the universal principles on the ‘travel and tourism’ ﬁeld? Would be vulnerability a universal principle feasible to apply worldwide in ‘travel and tourism’ issues? The case herein is somehow peculiar because of the distinguished legal structure of the European Union related to the Brazilian legal structure, this is to say, Brazil with exclusive territorial sovereignty3 on one side and on the other side the EU, which respects national sovereignty and territorial integrity of the Member States but at the same time has its own legal system and sovereignty as well. Actually, the ﬁrst manuscript had included chapters attempting to demonstrate both legal systems, including the types of instruments.4 However, to put straightforward focus on the title, the conclusion was to cut it off. By the time the work started, EU law did not recognise traveller with ‘legal status’. With the new Travel Package Directive and Linked Travel Arrangements, the traveller did acquire ‘legal status’ after November 2015. Nevertheless, the work did not lose power as it took into account the proposal of the Package Travel Directive, and later the book was updated to reﬂect the topics of the current Directive on Package Travel and Linked Travel Arrangements. Fundamentally, the terms consumer, traveller and tourist are subjected to several discussions concerning individuals’ rights. The ‘legal status’ is one important aspect of ‘travel and tourism’. The debate on the ﬁeld of law is even bigger. ‘Travel and tourism’ is a portion of consumer law. There are those, however, who think different—that ‘travel and tourism’ has an independent structure. Others stress the intertwined aspect between consumer law and ‘travel and tourism’.

3 4

The country has 26 federal states and one Federal District—Brasilia. For example: EU: Directives, Regulations and so on—Brazil: Legal Statutes, Decrees and so on. xi

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Preface

Thus, beyond the discussion on ‘legal status’ and the ‘ﬁeld of law’, there is the phenomenon of vulnerability. Two categories of vulnerability emerge from the literature, namely, vulnerability that relates to personal characteristics of the consumer and a broader notion that takes into account the transactional situations in which consumers ﬁnd themselves.5 The work enters in such analysis, and the ﬁndings are incredibly interesting. It points out the differences between the EU and Brazil regarding vulnerability that affects the concepts of ‘conﬁdent consumer’ and ‘weaker party to the contract’. Because of vulnerability, it is unavoidable to recognize that the traveller needs protection. The work emphasises that if the consumer is always in a weaker bargaining position than the supplier, there is more reason to pay attention to the traveller, who usually is out of his domicile and jurisdiction. The traveller, mainly the international one, faces cross-border barriers such as different language, cultural differences and foreign currency. So often, he or she is victim of xenophobia, racism or any other bias. The most experienced traveller always faces several difﬁculties abroad. The traveller is a vulnerable person, which usually is under vulnerable situations. Actually, the traveller struggles to ﬁt into the visited country to acquire goods and services, barely knowing the rules of interaction. Travellers behave in the visited country as they behave back home. It is not easy to recognise the cultural schemes and scripts as rules of interaction. This is one spectrum of vulnerability. Another point related to vulnerability is the difﬁculty faced by the traveller to pursue an action against a supplier located abroad (as far as the EU is concerned, it is located in a non-member State) in case of non- or improper performance of the contract. In a modern high-technology society, the traveller has the convenience to contact directly the hotel, the car rental, the restaurant, the travel agency established in another country, concluding the contract through electronic means. There is no party autonomy as the contract is offered in terms of a ‘take it or leave it’ basis. If things go wrong, usually the traveller can ﬁle a claim. Nevertheless, the question is how to enforce a foreign judgment? Cross-border traveller relationship is not compatible with the framework of national consumer protection. Because of the need to protect the consumer who travels, UNWTO (United Nations World Tourism Organization) and HCCH (Hague Conference on Private International Law) have captured the core of the problem initiating an exhaustive work toward an international agreement regarding protection. On behalf of IFTTA (International Forum of Travel and Tourism Advocates), John Downes and I have attended the UNWTO’s Working Group providing contributions from IFTTA’s members to the draft convention. This book has a topic regarding international law in Chap. 4. There were some years in Germany and some years in Brazil. Meanwhile, annual conferences and workshops by IFTTA took place around the world. IFTTA’s

See: European Commission, ‘Consumer vulnerability across key markets in the European Union’ (January 2016) available online at: http://ec.europa.eu/consumers/consumer_evidence/market_stud ies/docs/vulnerable_consumers_exec_sum_27_01_2016_en.pdf. 5

Preface

xiii

conferences provided the opportunity to observe the environment of ‘travel and tourism’ internationally, as well as to get in touch with colleagues in many levels of interaction from different cultures.6 Hope that this investigative legal work can be useful as a contribution to the ﬁeld of ‘travel and tourism’ that is constantly developing. Sao Paulo, Brazil

Maria Goretti Sanches Lima

Reference Kolani D (2016) Discoursing the legal aspects of travel and tourism – IFTTA. In: Marques CL, Wei D (eds) The future of international protection of consumers. UFRGS, Porto Alegre, p 104

6

See the article written by the President Emeritus and co-founder of IFTTA, Dov Kolani in Marques, C. L. & Wei, D. (2016). The Future of International Protection of Consumers. Porto Alegre, UFRGS, p. 104.

Contents

1

Introduction: Is the Traveller a Consumer? . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1 8

2

Brazil Consumer and Tourism Laws . . . . . . . . . . . . . . . . . . . . . . . . 2.1 Consumer Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.1 Consumer Law Evolution . . . . . . . . . . . . . . . . . . . . . . . . 2.1.2 Consumer Law as a Field of Law . . . . . . . . . . . . . . . . . . 2.1.3 Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1.4 Traveller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 The Role of the Travel and Tourism Sector . . . . . . . . . . . . . . . . 2.3 Tourism Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.1 The Tourism National Statute . . . . . . . . . . . . . . . . . . . . . 2.3.2 Decree 7.381/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Travel and Tourism Contracts and Other Service Contracts . . . . . 2.4.1 Contract of Carriage of Passenger . . . . . . . . . . . . . . . . . . 2.4.2 Contract of Car Rental . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.3 Contract of Accommodation . . . . . . . . . . . . . . . . . . . . . . 2.4.4 Timeshare Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.5 Contract of Tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.6 Contract of Adhesion . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5.1 Enforcement of Foreign Judgments . . . . . . . . . . . . . . . . . 2.5.2 The Small Claims Courts in Airports . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . .

9 9 9 12 22 36 39 46 48 52 54 58 61 61 65 69 74 76 79 80 81

3

Europe Consumer and Travel Laws . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Consumer Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.1 Consumer Law Evolution . . . . . . . . . . . . . . . . . . . . . . . . 3.1.2 Consumer Law as a Field of Law . . . . . . . . . . . . . . . . . . 3.1.3 Consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.4 Traveller and Business Traveller . . . . . . . . . . . . . . . . . . .

. . . . . .

85 85 85 89 90 99 xv

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Contents

3.2 3.3

The Role of the Travel and Tourism Sector . . . . . . . . . . . . . . . . Travel Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.1 Further Developments . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.2 The Package Travel and Linked Travel Arrangements Directive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Service Contracts and Ancillary Contracts. Single Service and Combined Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.1 Contract of Carriage of Passenger . . . . . . . . . . . . . . . . . . 3.4.2 Contract of Car Rental . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.3 Contract of Accommodation . . . . . . . . . . . . . . . . . . . . . . 3.4.4 Timeshare Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.5 Travel Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.6 Standard Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5.1 Enforcement of Foreign Judgments . . . . . . . . . . . . . . . . . 3.5.2 The Small Claims Procedure . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

5

. 103 . 104 . 108 . 109 . . . . . . . . . . .

112 114 127 127 130 136 139 141 142 144 146

Analysis: Consumer, Traveller and Vulnerability . . . . . . . . . . . . . . . 4.1 Balance Between Businesses’ Interests and Travellers’ Interests . . . 4.2 Consumer and Traveller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Vulnerability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1 External Vulnerability . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.2 Legal Vulnerability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Travel and Tourism Contracts and Other Service Contracts . . . . . . 4.4.1 Combined Service Contracts and Single Service Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.2 Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.3 Right of Withdrawal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.4 Contract of Adhesion or Standard Contract . . . . . . . . . . . . 4.4.5 Carriage of Passenger by Air: Delay, Cancellation and Denied Boarding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.6 Carriage of Passenger by Air: Baggage Destruction, Loss, Damage or Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 International Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5.1 Tourist or Visitor, Traveller and Consumer . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

149 149 151 155 158 171 173 175 177 181 182 184 189 190 192 195

Conclusion: Travellers’ Protection . . . . . . . . . . . . . . . . . . . . . . . . . . 199 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205

Annexes: Brazilian Statutes and Flowcharts of EU Package Travel Directive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Brazilian Consumer Defence Code (Part) . . . . . . . . . . . . . . . . . . . . . . . Brazilian Tourism National Statute (Part) . . . . . . . . . . . . . . . . . . . . . . . Flowcharts: Directive 2015/2302/EU . . . . . . . . . . . . . . . . . . . . . . . . . . Table A1: Neither Package nor Linked Travel Arrangement . . . . . . . . . .

207 207 219 224 226

Acronyms, Abbreviations and Notes7

ABNT ANAC ANTT B2B B2C BGB BRICS C2C CA CADE CC CCV CDC CESL CGM CJEU CNAE CONMETRO CPC CPC CPF CGC CRD DN

7

Brazilian National Standards Organization Brazilian National Civil Aviation Authority Brazilian National Rail and Road Authority Business-to-business contracts Business-to-consumer contracts German Civil Code (Bürgerliches Gesetzbuch) Brazil, Russia, India, China and South Africa Consumer-to-consumer contracts Code of Aeronautics (Brazil) Administrative Council for Economic Defense Civil Code (Brazil) International Convention on Travel Contracts Consumer Defence Code (Brazil) Common European Sales Law Consumer-generated media Court of Justice of the European Union National Classiﬁcation of Economic Activities (Brazil) National Council of Metrology, Standardization and Industrial Quality (Brazil) Code of Civil Procedure (Brazil) Consumer Protection Cooperation Regulation (EU) Registration of individual in the Tax Department (Brazil) Registration of companies in the Tax Department (Brazil) Consumer Rights Directive Deliberação Normativa (Brazil—administrative rule)

The acronyms are disclosed in the original language. xvii

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Acronyms, Abbreviations and Notes

ECJ

European Court of Justice (ECJ may also refer to Court of Justice of the European Union, although in English, it is still most common referring to the court as the European Court of Justice (ECJ). The Treaty of Lisbon (2007/09) changed the ECJ’s ofﬁcial name from the ‘Court of Justice of the European Communities’ to the ‘Court of Justice’, which is known as Court of Justice of the European Union (CJEU).) Brazilian Tourism Institute (public agency tied with the Ministry of Tourism) European Union The accumulated legislation, legal acts and court decisions, which constitute the body of European Union law Foreign direct investment General Agreement on Trade in Services Gross domestic product Hague Conference on Private International Law Brazilian Institute of Geography and Statistics International Congress and Convention Association International Comparison Program (World Bank) International Monetary Fund International Maritime Organization International Standard Industrial Classiﬁcation Introduction Law to the Civil Code Linked online booking process Linked travel arrangements Member State (EU) National Enforcement Body (EU) National Democratic Party of Germany Non-EU Member State country Purchasing power currency Purchasing power parities Purchasing power standard Person with reduced mobility Public administrative agency (It inspects and monitors the market activities in Brazil, imposing penalties and or restrictions to irregular business. So far, there are 838 administrative agencies placed on 27 geographical units.) Package Travel Directive Die Republikaner (Germany) National account system Special Drawing Right (International Monetary Fund) Small and medium-sized enterprise Consumer Protection National System Supreme Federal Court of Justice

EMBRATUR EU EU acquis FDI GATS GDP HCCH IBGE ICCA ICP IMF IMO ISIC LICC LOBP LTA MS NEB NPD Non-EU MS PPC PPP PPS PRM PROCON

PTD REP SCN SDR SMEs SNDC STF

Acronyms, Abbreviations and Notes

STJ TEU TFEU TJRS TJSP TRF UGC UNWTO WTO

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Superior Court of Justice Treaty on European Union Treaty on the Functioning of the European Union Rio Grande do Sul Court of Appeal Sao Paulo Court of Appeal Federal Regional Court User-generated content United Nations World Tourism Organization World Trade Organization

Notes on Linguistic • The word supplier is used in a broad sense, meaning retailer, trader, organiser, seller, offeror, provider, enterprise, business, company or tourist service provider; each of them is synonymously used to denote supplier. When required, the context stresses the distinction accordingly. • The wording ‘product or service’ (produto ou serviço), which better ﬁts into Brazilian Portuguese, was translated to ‘goods or services’, which better ﬁts into English. Therefore, Article 3 § 1 of the CDC may also be translated as follows: Products are any goods, portable or not, material or immaterial. • The laws protecting consumers are known worldwide as Consumer Protection Code or Consumer Code. In Brazil, the terminology that suits the statute of consumer protection is the Consumer Defence Code (Código de Defesa do Consumidor), Act 8.078/90. This latter terminology provides a better comprehension of the Brazilian mens legis. • Tourist Services Provider is the terminology that better complies with the provisions of the Brazilian tourism statute rather than Tourism Services Provider. • The expressions ‘goods and services’ and ‘goods or services’ must be understood in the context in which they were expressed. • The titles of Brazilian statutes and decrees were translated into English. The Brazilian references and court cases remain in Brazilian Portuguese.

Chapter 1

Introduction: Is the Traveller a Consumer?

Which role does the consumer play when travelling? Is the traveller a consumer that consumes goods and services as a regular consumer, or does he/she consume speciﬁc goods and services under speciﬁc conditions that demand speciﬁc attention? In the latter case, describing the differences between consumer and traveller that affect the consumption of goods and services demanding accurate legislation is one issue of this book. Another issue is the uniqueness of the travel and tourism phenomenon and what differs travel/tourism contracts from other service contracts concerning Brazilian and European laws. Is the travel and tourism ﬁeld a clear ﬁeld of law? Over the last decades, travelling, for business, private or ofﬁcial purposes, has been the focus of particular attention from authorities of several countries. If the consumer, in general, is always in a weaker bargaining position than the supplier, then there is more reason to pay attention to the traveller, who usually is out of his/her domicile and jurisdiction when he/she is consuming goods or services. The traveller, especially the international one, faces cross-border barriers such as different language, cultural differences and foreign currency. So often, he/she is also victim of xenophobia, racism or any other bias. The most experienced traveller has always several difﬁculties abroad. It means that in such conditions, the traveller is a vulnerable person. Insofar as the vulnerability of the consumer comes from the uneven relationship between two parties,1 it seems far more reasonable and consistent with principles of law to extend such understanding of vulnerability to the traveller in a more speciﬁc legal framework. Classic writer Mark Twain believed in something fragile about the traveller, who he named as an ‘innocent abroad’. One might say that what before was innocent may be better described nowadays as vulnerable.

1 This is because the consumer is not in a position of equal bargaining power mainly because of difﬁculties in obtaining accurate information.

© Springer Nature Switzerland AG 2018 M. G. Sanches Lima, Traveller Vulnerability in the Context of Travel and Tourism Contracts, https://doi.org/10.1007/978-3-319-98376-9_1

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Introduction: Is the Traveller a Consumer?

With the growth of the travel and tourism industry, more people travel in their own country or from their own country to another country with different purposes. A wide range of travel services and facilities has been developed in a number of areas of trade, including the supply of transport, accommodation, food and insurance travel facilities. Therefore, at each border, the traveller is still inadvertently subjected to a change of the applicable liability rules. Thus, it is equally obvious, although more difﬁcult to demonstrate legally, that the traveller is a ‘special consumer’. Europe, for instance, endeavours to establish a coherent legal framework regarding ‘consumer protection’. The Consumer Rights Directive (CRD) enacted in 2011 set forth that the harmonisation of certain aspects of consumer distance and off-premises contracts is necessary for the promotion of a real consumer internal market striking the right balance between a high level of consumer protection and the competitiveness of enterprises.2 Article 25 of the CRD contains a conﬂict-of-law provision aiming to protect the consumer against opt-out clauses with regard to third countries.3 Until recently, the traveller was not explicitly mentioned in the EU directives or other EU legislation, and no speciﬁc and exclusive travellers’ rules pertaining to traveller protection existed. The former Directive 90/314/EEC on package travel did not provide a deﬁnition for traveller at all. With a view to an overarching EU travel law, there are studies commissioned by the EU that have advised to protect at least the person who travels. The former Package Travel Directive 90/314/EEC deﬁned the consumer as being the one who concluded the contract and not necessarily the one who travels.4 On 25 November 2015, the European Parliament and the Council of the European Union launched the Directive on package travel and linked travel arrangements, amending Regulation (EC) 2006/2004, Directive 2011/83/EU, and repealing Council Directive 90/314/EEC. It brings the EU package travel rules into the digital age and stresses that the majority of travellers buying packages or linked travel arrangements are consumers within the meaning of Union consumer law. At the same time, it is not always easy to distinguish between consumers and representatives of small business or professionals who book trips related to their business or profession through the same booking channels as consumers. Such travellers often require a similar level of protection.5 One striking aspect of the EU legislation is the need to reach cohesion within the 28 countries. Because of differences of national laws, suppliers and consumers are often uncertain about their rights in cross-border situations. One of their main concerns is what remedies they have when a product (or service) sold and purchased from another Member State is not in conformity with the contract. Many consumers are therefore discouraged to purchase outside their domestic market.6

2

Directive 2011/83/EU, (4). Reich et al. (2014), p. 310. 4 IP/A/IMCO/ST/2011-17, 2012, p. 23. 5 Directive 2015/2302/EU, (7). 6 COM (2011) 635, pp. 3–4. Note: See comments on chapter II. Europe (5). 3

1 Introduction: Is the Traveller a Consumer?

3

Therefore, the EU has sought to develop the mechanisms of cohesion to rely largely on a change, from the minimum standard principle to the full harmonisation principle. So far, directives providing a minimum standard that do not prevent the Member States from having more favourable rules have shown to be unsatisfactory, leading the EU to legislative changes on the basis of a full harmonisation principle.7 In Brazil, the Consumer Defence Code,8 which is the main legislation concerning ‘consumer protection’, stresses the word ‘consumer’ in wide deﬁnition by three articles.9 Therein, the consumer deﬁnition is not limited solely to an individual perspective but also implies the business traveller, the tourist traveller and a group of travellers. This legislation does not make a distinction between the consumer of goods and services and the user of goods and services,10 including also the professional or legal entity11 that usually consumes. However, the traveller is not explicitly described as a consumer, and there is no special statute on package travel. The Tourism National Statute—Act 11.771/08, which is the cornerstone of the travel and tourism sector—regulates the relationship between the government and the suppliers rather than private contractual relationship between the consumer (traveller) and the supplier of goods or services. Although the consumer in a literal sense buys goods or services, for the purposes of consumer law, the term ‘consumer’ in Europe has a narrower meaning, which is based on the capacity in which the consumer and the supplier of goods or services have acted.12 The consumer means any natural person who, in contracts covered by the Consumer Rights Directive, is acting for purposes that are outside his trade, business, craft or profession.13 On the contrary, the term consumer in Brazil has a broader meaning based on the grounds of the consumer relationship. It has three distinctions: (1) a natural person or legal entity that purchases or uses goods or services as a ﬁnal addressee, including a collective of individuals, Directive 2008/122/EC Recital (3): “. . .rights deriving from timeshare contracts should be fully harmonised.”; Directive 2011/83/EU, Art 4: “Level of harmonisation, Member States shall not maintain or introduce, in their national law, provisions diverging from those laid down in this Directive, including more or less stringent provisions to ensure a different level of consumer protection, unless otherwise provided for in this Directive.” Also the amended proposal for the new PTD will enlighten the need of harmonization Directive 2015/2302/EU, 2013/0246 (COD) Recital (5): “In accordance with Article 26 (2) of the Treaty, the internal market is to comprise an area without internal frontiers in which the free movement of goods and services and the freedom of establishment are ensured. The harmonisation of the rights and obligations arising from package contracts and linked travel arrangements is necessary for the creation of a real consumer internal market in that area, striking the right balance between a high level of consumer protection and the competitiveness of businesses.” 8 Act 8.078, 1990. 9 Idem, Art 2, 17, and 29. 10 Benjamin et al. (2010), p. 83. 11 Act 8.078, 1990, Art 2: “A consumer is any natural person or legal entity who purchases or uses goods or services as a ﬁnal addressee.” 12 Oughton and Lowry (2000), p. 1. 13 Directive 2011/83/EU, Art 2 (1). 7

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Introduction: Is the Traveller a Consumer?

(2) all victims of accidents (bystander) and (3) persons incidentally exposed to commercial practices.14 On the other hand, as further explained, neither traveller nor ‘consumer traveller’ has a particular deﬁnition prescribed by law. The traveller, in a literal sense, is ‘a person who is travelling or who often travels’ or ‘a person who does not live in one place but travels around, especially as part of a group’.15 Thus, for the purpose of a pragmatic observation, simply in this context, any person who travels obviously buys goods or services. Hence, in a broad sense, the person who travels consumes. Although it might appear as a superﬁcial observation, the liaison between ‘consumer’ and ‘traveller’ shows the existence of reasonable grounds demanding an accurate legal approach and that consumer and traveller are as individuals exercising their personal freedom as a fundamental right.16 Nevertheless, the traveller is prompted into a more fragile condition than the regular consumer when buying goods and services because he/she is out of his domicile or jurisdiction, usually for a medium or short period of time. Whilst ‘consumer’, by deﬁnition, includes us all and any action or proposals in the interest of consumers are in the interest of us all,17 the traveller, on the other hand, is reduced to a speciﬁc economic group in the economy, affecting and being affected by almost every economic decision. Like the consumer, the traveller usually is not organised to claim his rights and very often not heard by the authorities. Broadly speaking, it is possible to say that all travellers are consumers but not all consumers are travellers. In strict sense, there are those travelling in extreme vulnerability such as “asylum seeker” the refugees. They are travellers too, but hardly in the concept of consumption. They have a reason for travelling, but not a reason for consumption. With the increasing number of activity in the travel and tourism industry, the term traveller in the Brazilian legislation is still doubtful from a legal perspective. So far, in Brazil, there is strong legislation dealing with consumer’s rights, but there is not a piece of legislation dealing particularly with the traveller’s right. Conversely, since November 2015 through the Directive on package travel and linked travel arrangements, the traveller has achieved a legal status in the EU. In this context, one might think that there is a problem here. It is the debate about what is a consumer. This debate has not reached a conclusion over the years.

14

Act 8.078, 1990, Art 2, 17, 29. Oxford (2005). 16 Note: Europe—In 2009, the Treaty on European Union and the Treaty on the Functioning of the European Union resulted from the amendments introduced by the Treaty of Lisbon, which was signed on December 13, 2007 in Lisbon and which entered into force on December 1st, 2009 it embraces the term “Freedom to travel” under Chapter 2: Polices on Border Checks, Asylum and Immigration, Article 77 (2) (c). In Brazil—This fundamental right is implicit in the Federal Constitution under the following wording: “Art 5, item XV—it is free in time of peace the movement (of persons) within the national territory, and any person may, under the terms of the law, enter it, remain therein or leave it with her/his assets”. 17 Kennedy (1962). 15

1 Introduction: Is the Traveller a Consumer?

5

Inasmuch as being a citizen is one of the bases to provide an individual with certain rights (e.g., citizen rights), the subsequent question has arisen about the passenger, traveller, business traveller, user and, of course, consumer because they no longer remained only an individual person, in terms of a natural person under the law, but they are persons created by law. In addition to the consumer traveller, there are also consumer groups that are more likely to experience detriment than others. It is unlikely that everyone who falls into one of these categories faces the same level of risk. They are the children, the elderly and the disabled who also travel. Then how should vulnerability be understood, and how has been it conceptualised by the legal systems addressed to the traveller? Whilst the approaches of consumer vulnerability are different in Brazil and the EU, certain features of this circumstance are remarkably consistent. One hallmark of such features is that they reveal the dependencies between legal spheres that often are studied and discussed in isolation from one another. Contract law, for example, is largely consumer law. Hence, consumer law also affects the harmonisation of contract law. It makes visible the linkages between parties in a contract (B2C), and the component of vulnerability may be accounted for a qualitative consumer relationship in contractual terms, where one party is weaker than the other and thus in need of protection. This may inﬂuence the law applicable to contractual obligations in the relation between two parties, which may differ depending on the person’s rights. Based on the principle of equality, the weaker party shall be protected by rules more favourable to his/her interest than the general rules provide for. ‘Equality’ or ‘equal’ signiﬁes correspondence between a group of different persons with the same qualities in at least one respect but not all respects. ‘Equally’ signiﬁes a qualitative relationship. It is a ﬁction of law for establishing the criterion of proper rules. That is why consumers are protected by law from unequal bargaining power because often there is a lack of meaningful choice as in the case of a form contract heavily weighted in favour of one party in terms of a ‘take it or leave it’18 basis. For instance, if a contract contains unfair standard contract terms (EU terminology) or abusive clauses (Brazilian terminology) inserted by suppliers creating an imbalance to the detriment of the consumer, the consumer is not bound by them, although the contract itself usually remains valid. Where there is doubt about the meaning of a term (or clause), the interpretation most favourable to the consumer shall prevail under both laws: the EU19 and Brazil.20

18

The expression is primarily found into Courts decisions from U.S.A. such as: Carlson v General Motors Corp. 883 F 2d 287 (4th Cir. 1989), Campbell Soup v Wentz, 172 F2d 80 (3rd Cir. 1948). 19 Directive 93/13/EEC, Recital: “Whereas contracts should be drafted in plain, intelligible language, the consumer should actually be given an opportunity to examine all the terms and, if in doubt, the interpretation most favourable to the consumer should prevail”, and Art 5: “In the case of contracts where all or certain terms offered to the consumer are in writing, these terms must always be drafted in plain, intelligible language. Where there is doubt about the meaning of a term, the interpretation most favourable to the consumer shall prevail.” 20 Act 8.078, 1990, Art 47: “Contract clauses will be interpreted in such a way as it is most favourable to the consumer.”

6

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Introduction: Is the Traveller a Consumer?

It might be feasible that in this respect, the EESC (European Economic and Social Committee) is opposed to any steps, such as the optional system, which would allow for a review of the existing protection to safeguard consumers, who are the weaker parties to the contract and who do not always have the means for seeking help.21 In Brazil, the consumer relationship focuses on the vulnerable party.22 The vulnerability is the core principle of the National Policy of Consumers Relations prescribed in Article 4 (I) of the Consumer Defence Code, and usually no discussion takes place in the ﬁeld to assert the concept of vulnerability. All consumers are vulnerable, mainly because they are not in a position to have equal bargaining power because of difﬁculties in obtaining accurate information from the supplier/retailer. The same holds true for hypervulnerable persons,23 but it is also not quite the same framework as regular consumers because the hypervulnerable persons have special protection by special laws and a distinct approach taken by the courts. When they are acting as a consumer, not only do the CDC apply but also their particular law, such as the statute of disabled person. On the other hand, in the EU, although recognising that the consumer is the weaker party to the contract,24 the consumer is considered an average consumer who is reasonably well informed and reasonably observant and circumspect.25 The vulnerable consumers are those whose characteristics make them particularly vulnerable to unfair commercial practices, such as age, physical or mental inﬁrmity or credulity. These characteristics make these consumers particularly susceptible to a commercial practice or to the underlying product and economic behaviour. In the EU, only such consumers are likely to be distorted by the practice in a way that the trader can reasonably foresee.26 Consumer vulnerability is one of the key challenges to be tackled in the near future.27 Protection of vulnerable consumers has been the subject of reports by the European Parliament28 and consumer organisations.29 It seems that the EU has chosen a different approach than before, looking more at the reaction of the average consumer, which so far has been perceived as active and rational. Contrary to this view, there are ﬁndings that challenge the notion of the ‘average consumer’ and raise questions about what can reasonably be expected of the average consumer and what makes the consumer especially vulnerable.30

21

INT/608-CESE 802/2012-2011/0340 (COD), 3.13. STJ REsp 476.428/SC, j.2005. 23 Elderly, children, disabled, etc. 24 Regulation (EC) 44, 2001, Recital (13): “In relation to insurance, consumer contracts and employment, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules provide for.” 25 Directive 2005/29/EC, Recital (18), Unfair business-to-consumer commercial practices. 26 Idem, Recital (19). 27 TNS Opinion & Social, Special Eurobarometer n 342 (2011). 28 Resolution 2011/2272 (INI), P7_TA(2012)0209. 29 ANEC-CHILD-2011-G-111/ANEC-DFA-2011-G-071 (2011). 30 Minor (2012). 22

1 Introduction: Is the Traveller a Consumer?

7

‘Vulnerable consumer’ is a well-known expression, but there is no commonly accepted or widely agreed legal deﬁnition for it by reason of the heterogeneity of this group.31 Therefore, the EU Consumer Programme covering the period 2014–2020 has addressed in the Regulation on consumer programme issues linked to vulnerable consumers.32 In other words, whilst in Brazil every consumer is conceived vulnerable per principle (Article 4 (I) CDC) and hypervulnerable persons are special groups of consumers embedded by special laws,33 in the EU the term vulnerability, inter alia, stems from Directive 2005/29 on Unfair Commercial Practices. Vulnerable persons in the EU are those individuals or groups of consumers who are vulnerable because of their mental or physical inﬁrmity, age or credulity, rather than all consumers. This leads, inter alia, to questions whether a public policy is needed to deal with the negative externalities created by the current consumer environment that places the consumer in a vulnerable situation. Consequently, questions that are more practical may arise. For instance, if the supplier is located outside of the home country of the consumer having provided to the consumer transport, accommodation and other tourist services in the way of package travel, that is to say, a complete travel package, who is liable for non/or improper performance of the contract? It is difﬁcult for the consumer to pursue an action against a supplier in case of non/or improper performance of the travel contract. The supplier may be the tour operator, who offered and sold the tour, or the travel agent, who advised and recommended the tour to the traveller and booked the trip on his/her behalf. If the tour operators and travel agents are located in the traveller’s country of residence, they are subject to the same jurisdiction, and usually the consumer may sue them in the home country and ﬁle a claim under his or her national law. Consequently, it is vital in contract terms to clearly determine the contractual parties. On the other hand, if they are located in another country, international jurisdiction may be the issue in determining the court. It may be possible for a consumer who travels to have more than one country of habitual residence. However, this situation indicates that there are more than one set of laws, and each of them is performed in a speciﬁc country of habitual residence. Can the traveller be able to choose which state’s law apply? Moreover, there are cross-border procedures for small amounts of money. These are discouraged for a consumer who seeks a solution to the travel damage. This is because under national ordinary or simpliﬁed procedures, the costs of litigation are disproportionate to the value of the claim, and/or the judicial procedures are too lengthy. Based on this situation, the EU introduced an alternative procedure concerning claims, which do not exceed €2000,34 and Brazil relies on small-claims courts as an

31

Opinion ECCG (2013). Regulation (EU) 254, 2014. 33 Elderly, children, disabled, etc. 34 Regulation (EC) 861, 2007. This Regulation is under revision to increase the threshold up to EUR 10,000, COM (2013) 794 ﬁnal. 32

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Introduction: Is the Traveller a Consumer?

alternative to solve claims with reduced complexity if the amount does not exceed 40 times the minimum wage,35 calculated at around €12,266 in January 2015. Further issues, such as delay and cancellation, lost/damage or stolen luggage, misinformation, overbooking and timesharing are problems faced by travellers with regard to breach of contract. Hereby not only norms on private contractual law were analysed but also those on administrative law enforceable as a whole affecting the consumer market. The aim of this work, after describing consumer law evolution, the travel and tourism sector, and the travel and tourism contracts in Brazil and in Europe, is to analyse the feasibility of placing the traveller as a consumer in a strict sense because of the ‘speciﬁc vulnerability’ of the traveller at the time he/she is travelling. The answer will be positive.

References ANEC-CHILD-2011-G-111/ANEC-DFA-2011-G-071 (2011) How to protect vulnerable consumers? Benjamin AH, Marques CL, Bessa LR (2010) Manual de Direito do Consumidor, 3rd edn. Rev.dos Tribunais, São Paulo INT/608-CESE 802/2012-2011/0340 (COD). Proposal for a regulation of the European Parliament and of the council on a Consumer Programme 2014-2020 Kennedy JF (1962, March 15) Special message to the congress on protecting the consumer interest. Retrieved August 20, 2012, from The American Presidency Project: http://www.presidency. ucsb.edu/ws/?pid¼9108 Minor J (2012) Consumer protection in the EU: searching for the real consumer. Eur Bus Organ Law Rev 13(02):163–168 Opinion ECCG (2013) On consumers and vulnerability. European Consumer Consultative Group Oughton D, Lowry J (2000) Textbook on consumer law, 2nd edn. Blackstone Press Limited, London Oxford (2005) Advanced learner’s dictionary of current english, 7th edn. Oxford University Press, Oxford Reich N, Micklitz HW, Rott P, Tonner K (2014) European consumer law. Intersentia, Cambridge STJ REsp 476.428/SC. (j.2005). Agipliquigas S/A v Gracher Hotéis e Turismo Ltda. rel. Nancy Andrighi TNS Opinion & Social, Special Eurobarometer n 342 (2011) Consumer empowerment. Brussels

35

Note: According to the Sao Paulo State Act 15.624/14 the minimum wage is R$920,00.

Chapter 2

Brazil Consumer and Tourism Laws

2.1

Consumer Law

Consumer law in Brazil employs a clear layout of principles.1 The principle of vulnerability, which underlies Article 4 (I) of the Consumer Defence Code as further explained, is the cornerstone of consumer law. If the courts have not considered the principle of vulnerability on consumer matters, the rights of individuals in many important aspects would have been lost. The development of consumer law in Brazil has not yet come to an end as the Senate works on pending bills to amend and continuously improve the Consumer Defence Code.2 Going one step back, to understand the legal culture of consumer law in Brazil, and why the principle of vulnerability as a presumption is applicable to everyone who consumes, except legal entities that shall prove the vulnerability, it is desirable to start with the evolution of the ﬁeld.

2.1.1

Consumer Law Evolution

The Federal Constitution was the epicentre for a quiet revolution in the ﬁeld of consumer law. In 1934, the Constitution3 introduced the so-called protection of the popular economy into the Brazilian legal system. That was a similar Consumer 1 The main principles: (1) the vulnerability of the consumer, (2) the transparency of the consumer relationship (duty of information), and (3) the balance and harmonisation of interests on the grounds of good faith. 2 For instance, Bill n 186/2018 amends the CDC to assign the consumer’s right for booking in advance and for free ﬂight’s seats operated into Brazilian territory. Bill n 68/2013 amends the CDC to assign the nature of an extrajudicial power to the agreement settled before consumer protection agencies. 3 CF, 1988, Arts 115 to 117.

© Springer Nature Switzerland AG 2018 M. G. Sanches Lima, Traveller Vulnerability in the Context of Travel and Tourism Contracts, https://doi.org/10.1007/978-3-319-98376-9_2

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Protection law setting out competition law on a relatively primitive basis. The protection of the popular economy had different consequences if compared with what Brazil currently has now on consumer protection and competition laws.4 At that time, competition law was not yet formally articulated, but the country enacted many rules. Examples include the following provisions on crimes against popular economy,5 prevention concerning the abuse of the economic power,6 citizen’s rights to ﬁle a claim through collective redress on particular matters,7 collective redress related to damages from misuse of the environment and other subjects, including consumer matters.8 Before 1988, Brazilian law did not take a consistent approach to consumer law. The subject took place in the national system only after the Federal Constitution of 1988. Thereby, it established that the state should provide, as set forth by law, the defence of consumers. The Constitution tackled the consumer point twice, in Article 5 (XXXII) as a fundamental right and in Article 170 (V) as a principle of ﬁnancial and economic order. Two years later, the Parliament enacted the Consumer Defence Code (CDC), through Act 8.078/90, which entered into force in March 1991. The Code adopted a legal model based on the intervention of the state in a wide variety of situations concerning consumer protection. The Supreme Federal Court of Justice has stated that the main focus of the CDC is not to regulate a particular ﬁeld of law but rather to protect a category of persons, even if such persons are indirectly also protected by other special laws.9 In 1997, the Consumer Protection National System10 linked the PROCONs,11 public prosecutors, public defenders and consumer associations. They have developed work in an articulated and integrated form jointly with the National Consumer Department.12 The PROCONs are public administrative agencies established in states and municipalities with the function of protecting consumers. They are empowered under the jurisdiction of each state to perform the services established by the CDC. The services developed by PROCONs are carried out locally in each Brazilian

4

Pinheiro and Saddi (2006), p. 398. Act 9.840, 1946. 6 Act 4.137, 1962. 7 Act 4.717, 1965, named ‘ação popular’ (Statute of collective redress). 8 Act 7.347, 1985, named ‘ação civil pública’ (Statute of collective civil redress). 9 STF REsp 351.750-3/RJ, j.2009, vote of Min. Cezar Peluso. 10 According to Decree 2.181/97, the acronym of the Consumer Protection National System is SNDC (Sistema Nacional de Defesa do Consumidor). 11 PROCON is a Public Agency of Protection and Defence of Consumers (Fundação de Proteção e Defesa do Consumidor). 12 The National Consumer Department: it is known in Brazilian Portuguese as Secretaria Nacional do Consumidor (SENACON). 5

2.1 Consumer Law

11

Federal Unit, which so far congregates 838 administrative agencies placed on 27 Federal Units, which comprise 26 states and one Federal District: Brasilia.13 The PROCONs have a signiﬁcant role. They ensure an appropriate level of consumer protection, inspecting and monitoring the market activities, imposing penalties and/or restrictions to irregular businesses. This is the case, for example, of the tour operator that complained in the court against PROCON about the application of a penalty in the amount of R$190,648.89.14 The business announced in a newspaper a misleading advertisement of a package travel. The total amount of the price payable by instalments was different from the payment in cash. No clariﬁcation was made about the difference on the price. In addition, the offer was published in foreign currency, which the consumer cannot immediately understand. Therefore, the advertisement was misleading under consumer legislation.15 A claim brought by the consumer against a supplier before PROCON provokes the opening of an administrative procedure. If the supplier defends itself before PROCON, the agency, under speciﬁc circumstances, can decrease the administrative punishment. In addition, PROCONs also maintain a database where they must record substantiated claims.16 Based on administrative information collected, they publish the results of claims through a list. From that list, it is possible to identify suppliers that do not respect consumer’s rights. Thus, the consumer can either: (1) bring a claim to PROCON (there will be an administrative claim) or (2) ﬁle a claim in court (there will be a legal case). The administrative claim does not exclude the legal case. The consumer can rely cumulatively on both procedures. As long as consumer protection and unfair competition are somehow intertwined, Brazil also seeks to protect business competition in equal and fair terms. That means the direct protection of the competition will indirectly reach the consumers’ interests. Unfair competition might confuse the consumer as to the source of goods or services through misleading advertising, combined prices between companies or any anticompetitive conduct developed by business companies. Thus, since 1990, there have been antitrust law rules17 regulating accurately anti-competitive conduct of business companies. Even so, only in November 2011 did the Parliament enact Act 12.529. It reinforced the rules on competition law and compiled several provisions to prevent offences against the economic order.

13 See Procons’ list at: http://www.portaldoconsumidor.gov.br/procon.asp?acao¼buscar website visited on 15.06.2017. 14 Amount converted into euro: €63,549.63 in August 2014. 15 TJSP Ap.0009326-39.2011.8.26.0053/SP, j.2013. 16 Act 8.078, 1990, Art 44. 17 Act 8.137, 1990, on crimes against the tax system, economic and consumer relationships, and other matters; also Act 8.884, 1994 on prevention and repression of offenses against the economy among other matters.

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Although the protection of competition (antitrust law) and the protection of consumers (consumer law) have common characteristics, they operate in different ways. Whilst consumer law provisions protect consumers, competition law provisions protect suppliers (particularly SMEs). On contractual matters, the protection is related to B2C and B2B contracts being the latter under commercial law and competition law rather than consumer law. Beyond these developments in the legal system, it is noteworthy that consumer law entered into the programmes of law schools.18 It was enlarged by the approval of the Federal Constitution of 1988 but as an optional alternative to traditional lectures.19 Later, consumer law had gradually attracted a growing interest, being currently part of most of the programmes of law schools in view of its characteristic of a new law.

2.1.2

Consumer Law as a Field of Law

Although consumer law is intertwined with competition law, its core elements are outside of the sphere of competition or commercial law. Consumer law has autonomy over civil law. The ones who have formed this opinion state that consumer law is an independent ﬁeld of law. As the law is a mixture of public and private, it is called mixed law, and the main focus is the collective aspects of the rights.20 In the beginning, not everyone agreed that consumer law is a separate ﬁeld of law, especially if the ﬁeld is intertwined with public and private law, meaning a fragmentation trend in the general contractual (civil/private) law. Consumer law extracted a number of legal acts from commercial law. Therefore, the problems inherent in the law applicable emerged. For example, under commercial law, if a company enters in a bankruptcy process, the administrator of the legal process of bankruptcy may decide to fulﬁl the offer or not. However, under the CDC, the consumer is entitled to enforce an offer that was accepted in advance.21 Hence, unlike factual impossibility to fulﬁl the commitment announced, the administrator must accept the consumer order to perform the contract.22 Although it reinforces in theory the supremacy of the consumer system over commercial law, in practical terms it may be difﬁcult to foresee. One of the main points about consumer law is that a given subject of law is recognised as a ﬁeld of law if singular principles and norms are to be found particularly related to that ﬁeld. Those principles and norms contribute to identifying

18

Alves (2010), p. 338. Portaria 1.886, Ministry of Sport and Education, 1994, Art 6, (II), sole paragraph. 20 Nunes and Serrano (2005), pp. 148–149. 21 Act 8.078, 1990, Art 35. 22 Rocha (2010), pp. 90, 92. 19

2.1 Consumer Law

13

the ﬁeld and differentiating it from other ﬁelds of law.23 Under consumer law, there are three main principles: (1) the vulnerability of the consumer, (2) the transparency of the consumer relationship (duty of information) and (3) the balance and harmonisation of interests on the grounds of good faith. Prior to the CDC or the renewed Civil Code (2002), good faith was noted as a principle rather than a rule of law. After the CDC and the Civil Code, good faith became enforceable as a rule. For instance, Article 51 (IV) of the CDC states that any obligation taken as unfair or abusive or that may place the consumer in an excessively disadvantageous situation or be incompatible with the principles of good faith and equity is considered ‘Abusive Clause’. In fact, where one can be involved in terms of consumer relationship, there would be no doubt that the protection treatment is available under the consumer law system. The system contains speciﬁc principles, which should serve as a template for drafting the rules. In this context, the leading principle of such system is the principle of vulnerability, which implies the principle of equality. That is to say, in general terms, relief is available if the weaker party is unable or is for some other reason in need of special protection on account of an imbalanced relationship. To Brazilian Law unequal treatment means that the parties have to be treated in proportion to their inequalities. This is a ﬁction of law to eliminate inequality and promote equality in order to ensure that justice is done. The contract clauses have to be interpreted in a way that is most favourable to the consumer.24 For example, if the consumer travels regularly to other cities on behalf of his/her business, the insurer cannot argue that regular traveling increased the risk of a breach of contract. The TJSP decided that according to the CDC, if the contract is a ‘contract of adhesion’, the interpretation ought to be most favourable to the consumer.25 Concerning international law or international treaties, the question arises on the validity of such treaties. How does international private law work in the Brazilian law system? On consumer relationship, any treaty can apply only in a subsidiary function when necessary and appropriated, alongside the provisions of the CDC. Article 7 of the Consumer Defence Code sets forth as follows: Art 7. The rights set forth in this Code do not exclude any other rights that may come as a result of international treaties or conventions ratiﬁed by Brazil, of internal legislation, regulations set forth by administrative authorities under appropriate jurisdiction, as well as any other rights that stem from the general principles of Law, analogy, custom and equity.

Then a comparison between the national laws and the Montreal Convention may appear different when examined by the courts insofar as any compensation differs

23

Bandeira de Melo (2003), p. 45. Act 8.078, 1990, Art 47. 25 TJSP Ap.992.05.032177-2/Campinas, j.2010. 24

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signiﬁcantly from each other. Whilst the provisions of the Montreal Convention26 set a maximum limit of compensation calculated by applying the special drawing rights (SDR), as deﬁned by the International Monetary Fund, the Brazilian Code of Aeronautics establishes ‘Limits of liability’ calculated in public bonds, the so-called ‘OTN’.27 In contrast, the Consumer Defence Code and the Civil Code do not impose any limitations at all, allowing judges to decide on the amount requested by parties, as compensation, without restrictions. As a result, air carriers prefer the application of the Montreal Convention, which governs contract for international carriage by air,28 and the Brazilian Code of Aeronautics, which applies to contract performed for domestic carriage by air. Contrary, passengers usually claim for the application of the Consumer Defence Code because it provides many ways to facilitate consumers’ defence and ensures appropriate protection of their rights before the courts.29 In a particular set of circumstances where international treaties or special or sectoral laws would be used, whether there are disproportionality between the statutes, relative fault, personal injury or imbalance between parties boosting the vulnerability or the disadvantaged condition of the consumer, the Consumer Defence Code has emerged with a considerable force. Its inﬂuence extends far beyond merely bestowing the hierarchy of sources of law on a preordained list of statutes and a preordained legal system of law. As said, if the clauses of the contract have to be interpreted in the way more favourable to the consumer,30 the courts will consider the different types of rights granted by different laws considering the existence of international treaties. In the case of international air carrier liability, the Superior Court of Justice (STJ) has not hesitated to use the treaty, but simultaneously with the Consumer Defence Code, for full compensation of immaterial damage.31 According to the Supreme Court of Justice, the focus of the CDC is not to regulate a particular ﬁeld of law but rather to protect a category of person, even if other sectoral law also protects such a person.32 Nevertheless, consumer law is a ﬁeld of law in Brazil. The STF stated that the protection of the consumer is a reality in most law systems of civilised countries. It is not difﬁcult to realise the new dimension for this legal phenomenon nearly unknown up to the last century. The man of the twentieth century is living under the new 26

Convention for the Uniﬁcation of Certain Rules for International Carriage by Air—Montreal, 28 May 1999, Art 23. 27 Act 7.565, 1986, Art 257, 260, 262, 269. 28 Example: The various kinds of air contracts or contract clauses have tended to feature quite strongly that ‘(..) the Convention governs and in most cases limits the liability of carriers for death or personal injury and in respect of loss of or damage to baggage. See notices headed Advice to International Passengers on Liability and Notice of Baggage Liability Limitations.’ 29 Sanches Lima (2012), p. 3. 30 Act 8.078, 1990, Art 47. 31 Benjamin et al. (2010), p. 119. 32 STF REsp 351.750-3/RJ, j.2009.

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15

model of association: a mass consumption society characterised by an increasing number of goods and services, by credit and marketing domination, as well as by the difﬁculty of access to justice. These aspects determine and shape consumer law as an independent ﬁeld of law.33 Therefore, nowadays, law experts, Brazilian courts and law faculties have recognised consumer law as an independent ﬁeld of law comprehensively, where the principle of vulnerability has become one of the central template for explaining contemporary consumer law and policy.

2.1.2.1

The Consumer Defence Code

The CDC is a statute that comprises most of the features of the traditional earlier laws, such as civil, administrative, criminal, commercial and procedural laws. The Code regulates the whole matters concerning consumption of goods and services. The legal nature of the Code was set up with a view on a microsystem of law. The intention of the CDC sometimes entails the ﬁlling in of gaps with appropriate tools. For instance, a legal provision dealing with fault liability (guilt) through a special statute could not be applied in view of the fact that the CDC carries the main principle of no-fault strict liability (tort law). The provisions of the CDC are targeted at ‘public interest’, which is best for the society as a whole. The judge is entitled to scrutinise any question related to consumer relationship by himself without parties’ request. On consumer cases the ‘principle of disposition’ or private disposition, which determines the rights of the parties at the time they entered into a contract do not apply. Because of the ‘public interest’ involved in consumer cases, the public prosecutor has a typical function of defending groups of consumers in any collective redress.34 As it happens, speciﬁc sectoral legislation (e.g., insurance, transportation, banks, food and beverage) ought to be created, developed or revised in line with the CDC. It would not be acceptable for the transportation sector to become embedded in legislation where provisions would be applicable in cases of accidents or defect of services exclusively grounded on fault liability (guilt). Such provisions would be created against the principle of no-fault strict liability carved by Article 6 (VI) of the CDC. Authors35 say that in case of conﬂict between the CDC and the sectoral legislation, the CDC must prevail. The actual doctrine36 leads to a substantial harmonised interpretation of the law than with the formal concept of conﬂict, which distinguishes which one of the laws will be applicable. Prior to the Consumer Defence Code, civil law and commercial law addressed private relationships separately. Whilst civil law is the law where private individuals

33

STF ADIN 2.591-1/DF (2006), p. 156. Act 8.078, 1990, Art 81, Sole paragraph (III), Art 82 (I), 92. 35 Nery and Nery (2006), p. 181. 36 Benjamin et al. (2010), pp. 108–109. 34

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have rights and duties, commercial law is the law dealing with the sale and distribution of goods, negotiable instruments and ﬁnancing of credit transactions on the security of the goods sold. Some private relationships that before were addressed under civil or commercial law were brought under the protection of consumer law. The criterion to determine whether consumer law should apply to a conﬂict between parties is the ‘consumer relationship’. Any relationship in which one person or legal entity behaves like a consumer, purchasing or using goods or services as a ﬁnal addressee, is a consumer relationship. Hence, the Consumer Defence Code applies always. The Civil Code, the Commercial Code or even international treaties may apply to the relationship only in a subsidiary function, if appropriated and needed.37 Thus, the core of the Brazilian consumer law focuses ﬁrst on the relationship established between the supplier and the consumer rather than exclusively on the consumer as a natural person. The consumer is usually an individual or a legal entity (if vulnerable). In addition, bystanders and victims of accidents are also considered consumers. Thus, the CDC does not cover all kinds of trade and contractual relationships but, again, covers only those set up as a consumer relationship (B2C) related to private consumption. More signiﬁcant is the presumption that a natural person must always be a consumer when the other party is a supplier. For a legal entity, there is another criterion—vulnerability must be proven.38 That is to say, to obtain the CDC’s protection, the natural person does not need to prove vulnerability because it is presumed. On the contrary, the vulnerability of the legal entity must be proved. If so, the legal entity can invoke the CDC too. The Consumer Defence Code is a microsystem rather than a particular statute listing rights and duties of the consumer and supplier. The basic idea was exactly to intertwine different sources of law in order to reach more protection for the consumer. The sources are: (1) civil law (offer, advertising, contracts, commercial practices, liability and deﬁnitions, all in Articles 1 to 54 of the CDC), (2) administrative law (about the Consumer Protection National System, the PROCONS, ﬁnes and penalties, all in Articles 55 to 60 and 105 to 107 of the CDC), (3) criminal law (prevention of disorder or crimes for the protection of consumption creating special penalties, all in Articles 57 to 80), (4) procedural law (about inversion of the burden of proof, special jurisdiction for consumers, collective redress and individual lawsuit, all in Articles 81 to 104), (5) the ﬁnal provisions, all in Articles 109 to 119 of the CDC.39 The Code was an achievement in many different ways for the Brazilian society. Authors emphasise that the CDC has general provisions and principles rather than laws regulating consumption relationship in a speciﬁc sector (e.g., health aid, air

37

Idem, p. 113. Idem, p. 85. 39 Idem, p. 48. 38

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17

carrier). Hence, consumer law is not a fold of the ﬁeld of public law or private law. It has speciﬁc parameters and guiding principles. 40 The CDC seeks to deﬁne not the contract of consumption or the act of consumption but rather the consumer relationship. This term is broader than contracts or act of consumption. According to the CDC, the elements of the consumer relationship are as follows: (a) the legal persons (supplier and consumer), (b) the objects (goods and services), the scope (the consumer acquires goods or uses services as a ﬁnal addressee).41 The Code accepts all kinds of contracts to validate the consumer relationship, such as verbal contract, written contract, contract concluded by mail, contract of adhesion and the like. The CDC also covers relationships that are not accurately considered a contract, for example, the use of public services such as electricity, water and so on.42 Beyond the CDC’s rules, there are decrees.43 These were introduced on a piecemeal basis into the system regulating the provisions of the Code and dealing with particular problems. The most recent decree was enacted in 2013. It sets forth the signiﬁcant provision that every website used to offer or conclude a consumer contract shall disclose in a prominent way the following information: (1) the business name and the number of the registration with the Tax Department (CPF or CGC); (2) the physical and electronic address, as well as other contact information; (3) the characteristics of the goods or services, including the risks that they might present to the consumers’ health and safety; (4) any additional cost such as insurance or delivery; (5) the conditions of the offer, such as the means of payment, availability, form and deadline to conclude the service or delivery of the goods; (6) the offer’s restrictions.44 In addition, businesses that sell through the Internet shall conﬁrm immediately that they received the acceptance of the offer by the consumer. In a row, the business shall send the contract to the consumer in a way that allows him/her to keep or reproduce it promptly after the conclusion of the contract. Moreover, the business shall use safety and efﬁcient features to facilitate the payment.45 If the business that sells through the Internet does not fulﬁl the legal requirements, PROCON must impose a penalty of up to R$6.2 million46 or, as required by the CDC, suspend the website’s activity through an administrative procedure.47

40

Nunes and Serrano (2005), p. 8. Nery Jr., Nelson apud De Lucca (2008), pp. 105–106. 42 Nery and Nery (2006), p. 214. 43 Decree 2.181, 1997 on National Consumer System—SNDC, and Decree 7.962, 2013 on electronic commerce. 44 Decree 7.962, 2013, Art 2 (I) to (VI). 45 Idem, Art 4 (I) to (VII). 46 This is around €1.8 million in 2015. 47 Act 8.078, 1990, Art 57 Sole paragraph. 41

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As said, PROCONs are public administrative agencies. The services are carried out locally in each Brazilian Federal Unit. Each PROCON is entitled to open administrative ﬁles leading an administrative procedure or bring a judicial collective redress to the court. Therefore, PROCONs are jointly entitled, with other public entities, to defend the consumer in court through judicial collective redress.48

2.1.2.1.1

Exclusion of Liability

Regarding liability, Brazilian law allows three exclusions: (1) by fault of the victim, (2) by fault of a third party and (3) by extraordinary circumstances (force majeure). Thus, if the damage occurred because of the consumer’s active or passive behaviour, it is considered fault of the victim. Therefore, the burden of proof lies with the supplier, who ought to assert the exclusion of liability. The CDC adopted the system of no-fault strict liability (tort), that is, the liability is not absolute. According to the CDC, the manufacturer, producer, builder or importer will not be liable if it proves the following: (1) it did not put goods in the market; (2) even though the goods have been put in the market, the defect does not exist; and (3) there is an exclusive fault of the consumer, or the fault is attributable to a third party.49 These are exclusions of liability.

2.1.2.1.2

The Supplier

The supplier is a legal person (individual or entity) strictly liable for the quality of the goods and services supplied. The CDC broadly deﬁnes the concept of supplier as follows: Art 3. The supplier is every individual or legal entity, of public or private nature, domestic or foreign as well as any other person involved in the activities of production, assembly, creation, construction, transformation, importing, exporting, distribution or commercialization of goods or services.

The concept is wide enough to allow the Consumer Code to cover a greater number of relationships between the supplier and the consumer. The CDC adopted a criterion addressed to activities typically performed by professionals, like commercialisation, production, importing and exporting. The activities must indicate a customariness of the tasks, such as transformation and distribution of products. The CDC excludes contracts concluded between two consumers (C2C). Those contracts are therefore within the scope of the Civil Code.50

48

Idem, Art 82 (III). Act 8.078, 1990, Art 12 § 3 (I) (II) (III). 50 Benjamin et al. (2010), pp. 99–100. 49

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The Consumer Defence Code also applies to ﬁnancial institutions,51 the Union, states and municipalities (and their public companies) as they are all suppliers when providing services such as electricity, water or any other service. Although the concept of supplier covers a great number of activities, it does not differentiate a supplier from a seller or a retailer. A distinction would have an inﬂuence precisely on contracts of tourism that combine a chain of providers. This is because the travel agent is either a seller or a retailer of package travel, but the hotel and the carriage companies are suppliers of travel and tourism services included in the package travel. Even so, outside of the Consumer Code, there is the Tourism Statute. It envisages a narrow need to shape a concept in regard to suppliers of travel and tourism services. Article 21 carved the expression ‘tourist services providers’, pointing out six categories of providers: (1) tourist accommodation, (2) tourism agencies, (3) tourist carriers, (4) organisers of events, (5) theme parks and (6) tourist camps. Therefore, the notion of supplier carved by the statute is still far from clarifying the different roles of the players in travel services. It replaced the term supplier to ‘tourist services providers’ as a whole, without deﬁning it accordingly. Moreover, according to the Tourism Statute, an agency of tourism is a legal person that either intermediates services between suppliers and consumers or provides those services directly to the consumer.52 The agency is liable for providing every service acquired by the consumer through intermediation or suggestion. Taking into account that the relation between the agency and the consumer is a consumer relationship, the liability of the supplier on account of failure of any service is a matter of strict liability under Articles 12 and 14 of the CDC.53 Under the CDC, liability is not divided, and everyone in the chain is accountable as supplier because they are jointly liable.54 The different roles of suppliers in travel and tourism services are not relevant in view of the principle of solidarity. As the liability is not absolute, the supplier can exclude liability after proving one or more grounds for exclusions of liability.55 Thus, if the damage occurred because of the consumer’s active or passive behaviour, it is considered fault of the victim, but the burden of proof will remain with the supplier.

2.1.2.1.3

Goods and Services

Along with the concepts of consumer and supplier, there are other key concepts in the CDC on which the consumer relationship is based, as for instance the concepts of goods and services:

51

STJ Súmula 297 (2004). Act 11.771, 2008, Art 27. 53 TJSP Ap.9055447-05.2009.8.26.0000/SP, j.2012. 54 Act 8.078, 1990, Art 7, Sole paragraph. 55 Act 8.078, 1990, Art 12 § 3 (I) (II) (III). 52

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2 Brazil Consumer and Tourism Laws Article 3 (. . .) § 1. Goods are any good, portable or not, material or immaterial. § 2. Service is any activity available in the consumer market, for which there is ﬁnancial compensation, including those derived from bank activities, with ﬁnancial, credit, or insurance nature, except those resulting from labour relations.

Whereas the travel and tourism sector is based on services, the focus in the following will be on ‘services’ rather than ‘goods’. The ‘service provider’ will charge a price for the service. Although the law uses the term ‘ﬁnancial compensation’, it actually indicates that there is a price, whereas without it there is no reason to provide the service. In this context, one issue arises from the misleading idea of free-of-charge services, such as parking the car at the hotel’s parking place or permission granted to the passenger to carry extra luggage free of charge. Actually, the purpose of the supplier’s message is to serve as an advertisement for the sale of the service because in such an extension, the free charge is certainly included in the full price of the service offered by the supplier. Furthermore, whilst compensation56 is the only element that characterises the service, gratuitousness has become a topic of great discussion because of the growing commercial practice of sending free samples, free travel miles or awards on purchases of package travel. Article 39 of the CDC, which governs abusive practices, subjects such a commercial practice to its coverage. Courts have decided on pro-consumer in cases where the supplier attached another good or service free of charge for a given period. Usually, the supplier withdraws from the bank account of the consumer, between 3 and 6 months, after the regular payment occurs. This is the case of life insurance offered as an award in view of the purchase of other insurance, as for example travel insurance, house insurance and business insurance.57 Actually, there is more experimenting going on in commercial practices at present than never. The use of credit card in purchasing a travel ticket is one example whereby travel insurance offered by a third party was tied to it. The courts have fully imposed liability on any supplier in the chain of suppliers when breach of contract occurs.58 Sometimes the commercial practices go beyond a mere business model. It is a fact that some suppliers have insisted on discriminating consumers. If the consumer is prompt to pay for the good or service, the supplier cannot refuse a sale. The supplier cannot prefer one consumer to the other. To eliminate the negative discrimination, the CDC considers it an abusive practice to avoid selling goods or services directly to one that is willing to acquire it and can afford to pay for it. The only exception refers to cases of intermediation

56

Idem, Art 3 Para 2. TJSP Ap.282.996-4/7-00/SP, j.2009. 58 TJSP Ap.0226796-31.2006.8.26.0100/SP, j.2012. 57

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regulated by special laws.59 Nevertheless, this is not as simple as it may appear. Sometimes the practice of refusing to sell a good or service to a consumer means that the stock is ﬁnished or there is lack of capacity to perform the service. The supplier might be able to protect itself by informing consumers in advance of the quantity of goods available in stock or the limited availability of the services offered. Particularly noteworthy is Article 39 (II) of the CDC. It sets forth as abusive practice cases where there is quantity of stock available and the supplier refuses to accept consumers’ request. This is the case where a consumer purchased goods with a check without sufﬁcient funds and then wants to buy again at the same shop and pay by check. The supplier refuses to sell to the consumer by reason of the previous bad experience, it is to say, the supplier infers that the payment would be through a rubber check . Another example is a taxi driver who avoids providing service to a consumer in view of the short distance of the track requested.60 Although these examples are feasible to happen, it seems difﬁcult to ﬁnd an immediate solution in a stand-alone basis. Unfortunately, the mere fact that there is a ‘violation of rights’ such as abusive practice does not mean that it is economically feasible to prove the damage before the court. Moreover, in regard to goods and services, there are discussions related to ‘tying sale’ and ‘combined sale’ in a legal/commercial context because both serve different purposes, one to tie in and the other to arrange. That is to say, ‘tying sale’ is one in which the consumer is forced to purchase product A on the condition that some other product B be purchased with product A. The effect of ‘tying sale’ may be to substantially lessen competition or to create monopoly. It is usually known as an unfair method of competition.61 On the other hand, ‘combined sale’ is a prearranged combination of different components (goods or services) that cannot be separated without losing the good’s or service’s natural essence. The key aspect is essentiality inasmuch as components combined are lawful if the services or accessories are technically indispensable for the functioning of the main good or service.62 In Brazil, the so-called ‘combined sale’ or ‘combined offering’ is not forbidden, but its deviation,63 the ‘tying sale’, is. In this regard, the interpretation of Article 39 (I) of the Consumer Defence Code must always be in favour of the consumer inasmuch as the supplier is free to sell goods or services where the components were deﬁned in advance, but the consumer should always have the option to acquire separate components. For instance, the travel agent, who sells or offers a package travel put together by the organiser, including health insurance, is liable for the non-fulﬁlment or improper fulﬁlment by the insurance company. The courts have decided that if it is the popularly known ‘tying sale’, where the consumer has no discretion to decide the 59

Act 8.078, 1990, Art 39, IX. Benjamin et al. (2010), p. 256. 61 Act 12.529, 2011, Art 36 § (3) item I, d) XVIII. 62 Gloria (2003), p. 145. 63 Marques (2011), p. 841. 60

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terms of the contract, the travel agent, the tour operator and/or any provider in the chain will be liable. It meets the ‘principle of solidarity’ under the Consumer Defence Code.64

2.1.3

Consumer

Neither traveller nor consumer traveller has a particular deﬁnition prescribed by law. The law deﬁnes ‘consumer’, and the deﬁnition is fragmented, covering not only natural person, the individual as a physical person, but also legal entity that behaves as a ﬁnal purchaser or addressee.65 In addition, the concept of consumer is not only limited to contractual obligations, but victims of accidents in any event connected to the consumer relationship are also counted as consumers. Furthermore, those subjected to unlawful acts in pre-contractual duties such as misleading advertising and unfair commercial practices, whether or not the victim is a purchaser or a ﬁnal addressee, are consumers.66 The provisions of the CDC are a milestone in the deﬁnition of consumer: Article 2. A consumer is any natural person or legal entity who purchases or uses goods or services as a ﬁnal addressee. Sole Paragraph: The concept and status of consumers is extended to a collective of individuals, even if they are indeterminate, who have participated in any consumer relationship. Article 17. For the purposes of this section, all victims of the event have the same rights as consumers. (The section refers to Liability as to the Fact of the Product and Service) Article 29 - Any person exposed to what is described in this chapter and the next will be considered equal to consumers. (Chapter V refers to Commercial Practices and Chapter VI refers to Contract Protection).

The concept of consumer in the CDC67 focuses particularly on the activity exercised by a person in a consumer relationship rather than on the personal characteristics of a natural person. The wording of these provisions stresses that is equal to consumer: the natural person or legal entity as a ﬁnal addressee,68 who may have participated in any consumer relationship,69; all victims of the event70 the so-called bystander, and any person exposed to commercial practices prescribed in the CDC71

64

STJ REsp 1.102.849/RS, j.2009. Act 8.078, 1990, Art 2. 66 Idem, Arts 17 and 29. 67 Act 8.078, 1990, Arts 2, 17, 29. 68 Idem, Art 2. 69 Idem, Art 2, Sole paragraph. 70 Idem, Art 17. 71 Idem, Art 29. 65

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There is, however, as further discussed,72 a different interpretation concerning legal entity as a consumer. In a wide sense, the CDC presumes the vulnerability of a natural person, whilst the legal entity must prove its vulnerability to the court. The defence of consumers is a constitutional principle in the sense of fundamental right of the individual. The Constitution promoted the defence of the consumer,73 and therefore the CDC created new rights. The CDC has affected the way judges conceive consumer contract. The Code integrates the liability for sale of goods or services when the consumer is involved, whether there is a contractual relationship or non-contractual relationship.74 The rules underlie the national legal system as a whole. An example of non-contractual relationship: according to the STJ in view of an accident that occurred in 1996 at a Shopping Centre in the city of Osasco, all victims of the event were counted as consumers. It was possible to identify that the causes of the accident were failures in the services of the building, defects of the goods used in the construction and negligent management, everyone in the building in that moment, with or without a contract, was a consumer. Therefore, according to the principle of solidarity, which protects all victims of the event, every supplier was liable under the protective scheme of the CDC.75 The Sao Paulo state’s court granted compensation for personal injury and material and immaterial damages, under the protection of the CDC, to a woman who after parking her car in the parking garage of a shopping centre dropped down into an obstacle burdened with various items. Because of the accident, she had a surgery in her arm. The company argued that it was an accident, which did not involve a consumer relationship. However, the Sao Paulo Court of Appeal (TJSP) deemed that the accident was caused by the company’s negligence. The parking area was not well signalled. Thus, the CDC, which is more favourable to her, ought to be applied.76 The key aspect of the deﬁnition of consumer is relational. In order to be a consumer in a contractual relationship, the other party to the contract must be a supplier, and therefore the connection of a consumer relationship between the consumer and the supplier is formed (B2C). The Consumer Defence Code considers everyone a consumer, even the user. Such a wide concept allows for businesses, legal entities and professionals purchasing goods or services under special circumstances to be consumers.77 Therefore, any natural person or legal entity that purchases goods or services for its own need is an end consumer (consumidor ﬁnal), the so-called ﬁnal addressee.

72

See Sect. 2.1.3.1. CF, 1988, Art 5 (XXXII): The State will promote by law, the defence of the consumer. 74 Act 8.078, 1990, Art 17, 29. 75 STJ REsp 279.273/SP, j.2003. 76 TJSP Ap.990.10.136973-7/SP, j.2010. 77 Benjamin et al. (2010), pp. 79, 83. 73

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However, the legal entity needs to prove its vulnerability against the supplier, whilst the natural person not.78 Likewise, the Supreme Federal Court (STF) stated that the concept of consumer has an economic meaning, for instance, taking into account the person, who in the market of consumption acquires goods or services as ﬁnal addressee, assuming that s/he behaves like that in the fulﬁlment of his own need and not for the development of another business activity.79

This signiﬁcant judgment concluded in 2006 clearly endorsed that consumer relationships with a ﬁnancial nature shall also be covered by the CDC. In respect of consumer relationship’s classiﬁcation, there are three distinctions:80 (1) the main consumer relationship (based on the scope of consumption, the own need); (2) the secondary consumer relationship formed through accident81 in view of the defect or failure of a good or service affecting others around, for example the bystander, employees, employers and pedestrians, and causing physical hurt and discomfort to them; (3) the incidental relationship formed because of persons who may be incidentally exposed to commercial practices,82 as for instance advertising and promotional materials at the time they are in a shopping centre/department store as potential consumers being targeted by the supplier. In this latter situation, the person is equal to a consumer and therefore deﬁned as an incidental consumer. In this way, the concept of consumer is fragmented. It takes into account the contractual relationship between the parties (consumer and supplier) or their present situation (by accident or incident), rather than their personal characteristics.

2.1.3.1

Consumer Vulnerability

Of particular relevance in respect of consumer is the principle of vulnerability found on Article 4 (I) of the Consumer Defence Code. The provision of vulnerability is signiﬁcantly broader. The notion of vulnerable consumer stems from the Code based on the principle of vulnerability in abstract: Art 4: The objective of the National Policy for Consumer relationships is to assist consumers in their needs for protection, imposing respect for the consumer's dignity, health, and safety, protecting their interests and ensuring transparency and harmony in consumer relationships, based on the following principles: (text added by Act 9008 of March 21st, 1995) I - recognition of consumer vulnerability in the consumer market; II - government action in order to effectively protects the consumer; (. . .).

78

See further Sect. 2.1.3.1. STF ADIN 2.591-1/DF (2006). 80 Marques (2011), pp. 109, 394, 395. 81 Act 8.078, 1990, Art 17. 82 Idem, Arts 29, and 2 Sole paragraph. 79

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Vulnerability is multiform. It is an indeﬁnite and vague concept, a weakness that can stem from a range of situations and circumstances, without an accurate deﬁnition but with several practical effects. Under Brazilian law, consumer vulnerability has it grounds in an absolute legal presumption (not relative).83 It is a state of powerlessness. It arises from imbalanced interactions in the market. Although vulnerability is difﬁcult to deﬁne as a single concept, Brazilian consumer law and court rulings are ﬂexible enough to consider the notion of vulnerability in applying most rules. The notion of vulnerability is tied with the notion of weaker party or unequal relationship (on account of certain conditions and circumstances) or is also due to a dominant position that may be identiﬁed in the other party of the contractual relationship.84 The principle of vulnerability set forth by the CDC does not expressly mention the notion of vulnerable consumer at all; rather, the Code mentions ‘consumer vulnerability’. The Superior Court of Justice usually emphasises the notion of consumer vulnerability that is being developed by authors. Consumer vulnerability is classiﬁed into the following: technical vulnerability (the lack of knowledge in regard to the goods or services in the consumer relationship), legal vulnerability (the lack of legal knowledge), factual vulnerability (circumstances in which there is a lack on the economic, physical or even psychological capacity of the consumer) and, more recently included, informational vulnerability (the lack or insufﬁcient information regarding the goods or services that may inﬂuence in the consumer choice processes).85 As it happens, it is feasible to identify the notion of vulnerability a priori, in abstracto, or, to the contrary, to identify and locate it a posteriori, in concreto, where the latter depends on how the situation of vulnerability might be shown. The Brazilian legislator has opted for a presumption of consumer vulnerability in a way that every consumer is conceived typically vulnerable because he/she in principle does not have private autonomy in the consumer relationship. The consumer is exposed to several types of commercial practices.86 Whilst there is a presumption of legal vulnerability addressed to natural persons (because of lack of legal, accountancy or economic knowledge), the same does not hold true for individual professionals or legal entities, which have the minimum legal, accountancy and economic knowledge to exercise economic activity or at least have lawyers and experts to obtain advice from before compromising themselves in the market.87 Thus, the principle of vulnerability when addressed to professionals or legal entities is not a presumption equally assumed by the courts in the same way that it is for the consumer as a natural person. On the contrary, although a professional or legal entity may also be a consumer, as set forth by Article 2 of the CDC, the

83

Marques (2011), p. 304. Marques and Miragem (2012), p. 162. 85 STJ REsp 1.195.642/RJ, j.2012, (4). 86 Marques and Miragem (2012), p. 162. 87 Idem, pp. 155, 156. 84

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discussion on whether to apply the CDC is not entirely smooth, whereas the legal entity must prove the vulnerability to be under the protection of the CDC.88 Of particular relevance in commercial practices is the duty of information, which in a consumer relationship is extremely important. If there is a lack or defect of information, it is translated as a minus, as vulnerability, insofar as the duty to provide accurate information belongs to the other party (the supplier). The lack of information is the major factor of imbalance in a consumer relationship, in which the suppliers are the experts, the ones with the information. Therefore, taking into account the vulnerability stemming from the lack of information as a presumption, it turns out that the supplier shall compensate this social risk (lack of information) providing full information according to the mandatory provisions of consumer law.89 Besides, the Superior Court of Justice has emphasised that there are new forms of vulnerability suitable to attract the CDC to the contractual relationship. For instance, in a business relationship, beyond the hypothesis of vulnerability already known through the doctrine and court decisions, the weaker position of one party90 to conditions imposed by the other party,91 considering the aspects of the legal case, may characterise vulnerability. The party will be vulnerable when acquiring goods or services other than of the expertise area of the business. This situation enables the court to assess the possibility of applying the CDC in regard to a legal entity that is placed in the position of a consumer.92 Thus, the Superior Court of Justice (STJ) stated: (. . .) there is an evolution in regard to understanding the contractual relationship between a legal entity and a supplier whether in some cases, the legal entity who purchased goods or services may also be taken as a consumer in the event that the company reveals any vulnerability related to the supplier. (. . .) the vulnerability is the core principle of the National Policy of Consumer relationships prescribed in Art 4 of the CDC, and therefore the judgement is in line with the Consumer Law.93

The proof of the legal entity’s vulnerability is not always prima facie. This is because companies mix goods or services between the activities of the expertise area with activities of their own need of private consumption. Most cases are about small businesses with limited capacity to store energy and are dependent on public services such as electricity, water or gas. The Superior Court of Justice has considered legal 88

TJSP Ap.0451170-97.2010.8.26.0000/SP, j.2012, see vote divergent p. 2. The decision cited Marques, Claudia Lima: ‘There are cases in which small companies use goods or services in the production line. Hence, they are not used or at least mixed with service area, but not in the expertise area of the company. If the vulnerability is proofed it is feasible to conclude for the ﬁnal destination of the product or service acquired, and the CDC will apply.’ 89 Marques and Miragem (2012), p. 159. 90 The intermediary, representative or distributor. 91 The manufacturer or the service provider. 92 STJ REsp 1.195.642/RJ, j.2012, (5). 93 STJ REsp 1.195.642/RJ, j.2012.

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27

entities as consumers if they prove vulnerability. In this situation, they may be a consumer according to Article 29 of the CDC, as for example a hotel that purchases gas.94 This turns out to be milestones in B2B and B2C contracts, which have provisions, respectively, under the Civil Code and the Consumer Defence Code. Whilst the Civil Code regulates contracts performed by business to business (B2B)95 or by consumer to consumer (C2C), the Consumer Defence Code regulates contracts performed only by business to consumer (B2C). That is to say, if goods or services acquired by the legal entity do not belong to the expertise area of the company because they are used for their own need as a ﬁnal addressee (even if the purposes are mixed), the company can be considered a consumer.96 In other words, there is a presumption that a natural person must always be a consumer and therefore vulnerable when the other party is a supplier. But on the contrary, there is no presumption of vulnerability in the case of legal entities. The legal entity must prove its vulnerability to be beneﬁtted by consumer law.97 Recently, a decision of the TJSP deemed that a legal entity had to receive back the price paid for air tickets since the tickets were not used. The air company changed the tickets to an MCO (miscellaneous charges order) but avoided paying the money back. Though the air company won the case at ﬁrst instance arguing to apply the Brazilian Code of Aeronautics,98 which prescribes a deadline of 3 years to use air tickets, the Court of Appeal reversed the judgment based on the vulnerability of the legal entity in the face of the air company. The court ruled that the tickets acquired by a legal entity were addressed to individuals, the entity’s employees. In addition, the Consumer Defence Code should have been applied and not the Brazilian Code of Aeronautics. Therefore, consumer law ought to be applied when the court identiﬁes the vulnerability of the legal entity, which acquired the ticket.99 Whilst vulnerability is permanent or a long-term state, it can also be a momentary state in the case of an individual or group of individuals. Vulnerability is based on the continued weakness of the means the consumer achieves his or her rights or otherwise enjoys equal opportunities. Hence, vulnerability unbalances the consumer relationship. It is also separately or simultaneously a circumstance, a characteristic or a temporary state of the weaker party. The consumer-driven approach to vulnerability might arise from several factors on how to make the consumer vulnerable. An indicative and non-exhaustive list of 94

Benjamin et al. (2010), p. 87. B2B Contracts are also covered by the Commercial Code. 96 STJ REsp 1.195.642/RJ, j.2012: This case is an example that involved a dealership car which claimed compensation for damage caused by defects in their phone lines. Because of the vast amount of investments in advertising, those investments became worthless given the inability to answer calls from potential customers. The use of the service of phone lines may be accounted as mixed with the main activity of selling cars to achieve the ﬁnal result of it. 97 Benjamin et al. (2010), p. 85. 98 Act 7.565, 1986, Art 228. 99 TJSP Ap.0022927-43.2006.8.26.0068/SP, j.2013, p. 5. 95

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these factors is as follows: (1) technicality of contracts, (2) complexity and extension of contracts, (3) generalities of contracts, (4) the size of the letters (typos) of the contract, (5) the exclusion terms of the offer, (6) the terms referring to documents that were not given to the supplier and (7) the use of indeﬁnite and vague terms and concepts.100 Another important point is that the Civil Code prescribes general principles of good faith addressed to the relationships between equal parties and/or equal professional experts. On the contrary, under the Consumer Defence Code, there is a presumption that the contractual relationship is always unequal, and therefore special protection is required to reach equality.

2.1.3.2

Vulnerable Person and Hypervulnerable Person

The notion of vulnerable consumer as a vulnerable person stems from the principle of vulnerability prescribed by the CDC. The law did not provide a regulatory framework for vulnerability based on a deﬁned legal concept, but recent court ﬁndings101 and authors102 use the term vulnerability in liaison with the notion of vulnerable consumer. This is because the sophistication of the concept of vulnerability goes beyond the essentials of the principle set forth by Article 4 (I) of the CDC, which according to the authors applies to everyone who consumes—the rich, poor, educated, non-educated, credulous or wise.103 Since there are consumers who are more vulnerable than others, Brazilian law, courts and authors do not ignore other varieties of vulnerabilities. Those have different wording, as for instance special104 or severe105 vulnerability or hypervulnerability,106 but the meaning applies to consumers who are more vulnerable than others. Nowadays, the Superior Court of Justice has adopted the term ‘hypervulnerability’, referring to those individuals or groups of individuals.107 The court indeed refers to those groups as a category of ‘consumer hypervulnerables’.108

100

Benjamin et al. (2010), pp. 87, 88. TJSP Ap.0451170-97.2010.8.26.0000/SP, j.2012, see divergent vote p. 2. 102 Marques (2011), pp. 17, 652. 103 Benjamin et al. (2010), p. 259. See comments on the previous title: 1.3.1. Consumer vulnerability: ‘the vulnerability is classiﬁed in technical, legal, factual and informational.’ 104 Marques (2011), p. 369. 105 Marques and Miragem (2012), pp. 11, 147, 187. 106 Benjamin et al. (2010), p. 93. 107 Marques and Miragem (2012), p. 187. 108 STJ REsp 586.316/MG, j.2007, pp. 1, 3, 13, 22, 23, 25. 101

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29

Whilst the Consumer Defence Code protects all consumers as a whole in view of their presumed vulnerability,109 sectoral laws deﬁne rights of persons with hypervulnerability, adding particular rights to those individuals and groups of persons. They are (1) the children and youth,110 disabled111 and elderly112 and (2) slightly larger groups such as persons with reduced mobility.113 In this context, it is feasible to assert that the term hypervulnerability, developed by courts, is now embedded in national statutes in alignment with the CDC. For instance, children are most vulnerable as they are often unlikely to understand the implications of the information about goods and services provided in the market. They are unaware of the dangers they face, as well as are more susceptible to the inﬂuence of new methods of marketing. The youth are more likely to believe marketing and advertising information without questioning it. Besides the speciﬁc statute dealing with children and youth, the signiﬁcant provision protecting children against misleading and abusive publicity is found in the CDC.114 Any publicity that takes advantage of the weaknesses of the children’s judgment and their behaviour is conceived as an abusive practice. The Code also has a non-exhaustive list of abusive practices (unfair practices),115 which is assessed by courts jointly with Act 8.884/94 on prevention and repression of offences against the economy. Thus, children are certainly hypervulnerables. To children, recognising vulnerability is easier (because of their nature of having cognitive limitation), but vulnerability related to disabled persons has different grounds. They are connected with the barriers they face and the particular disability they have. Besides the statute of disabled person and its regulation, Decree 5.296/04, Brazil meets the requirements of the Convention on the Rights of Persons with Disabilities,116 adopted by the Federal Constitution117 and recognised by courts with a constitutional and supra-legislative value.118 The law separates the disabilities into the following categories: (a) physical disability (full or partial), (b) hearing disability (bilateral loss, full or partial), (c) visual impairment, (d) mental retardation and (e) multiple disabilities (association 109

Note: The principle of vulnerability of the CDC is presumed to the consumer while a natural person, but has to be proved by legal entities if they pursue the protection of the CDC. 110 Act 8.069, 1990, Statute of children and teenager (Estatuto da Criança e do Adolescente). 111 Act 7.853, 1989, Statute of disabled person (Estatuto do Portador de Deﬁciência). Note: the statute is currently under revision by the parliament. 112 Act 10.741, 2003, Statute of elderly (Estatuto do Idoso). 113 Decree 5.296, 2004, Art 5 (II) § 2, persons over 60 years old, pregnant, lactating women, and persons with an infant in their arms. 114 Act 8.078, 1990, Art 37, § 2. 115 Idem, Art 39. 116 The Convention was adopted in 2006 and entered into force on May 3rd, of 2008. So far, 145 States parties have signed the treaty. Brazil signed it on 30/03/2007 and ratiﬁed the Convention and the Protocol on August 1st, of 2008. 117 Decree 6.949, 2009, Regulation of the Convention on the Rights of Persons with Disabilities. 118 TJSP Ap.0014757-59.2009.8.26.0268/SP, j.2014.

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of two or more disabilities).119 The disabled person has the same rights as all other citizens to freedom of choice and to non-discrimination in the consumer market. However, although there is a higher risk of consumer detriment affecting a person with disability, it does not mean that the risk actually has happened or will happen. Nevertheless, hypervulnerability is widely presumed in this group as a category of hypervulnerables.120 A typical case lacking the duty of care to passengers with disabilities involved an air carrier. A person who had disability requested for the reservation of an accessible seat at the time she bought the ticket. She received information that the seat should be requested during the check-in time. However, at check-in time, the air company informed her that other passengers already occupied all accessible seats. The passenger ﬁnally found a seat only because of another passenger’s charitable attitude. The judgment took into account that the company failed to prove that the service was not defective. It also failed to prove an exclusion of liability on account of fault attributable to the consumer or to a third party. As a result, the principle of vulnerability in the consumer relationship shall apply. In a row, the inversion of the burden of proof of Article 6 (VIII) CDC also applies in favour of the consumer that is the weaker party. Moreover, assistance and charity provided by other passengers should not exclude the liability of the company to provide assistance and accessible seats to passengers in need.121 Although this case refers to lack of proof, it draws the line of detriment suffered by a disabled person, whereas the wording ‘charity’ intensiﬁes the feeling that there is no right but a charitable view. It is unlikely that a regular consumer, whose vulnerability is more general by principle, would experience the same level of detriment. Because of the hypervulnerability, there is a grant of transportation free of charge for those poor who are disabled persons. The condition must be proved under local rules.122 The Court (TJSP) has reinforced the universal characteristic of disabled person, who must not be discriminated by the type of disability, meaning that not only a person with physical disability shall be contemplated by the right of free of charge in local transportation but also all categories of disability.123 The disabled person, like other citizens, has the same right to free movement, freedom of choice and non-discrimination.

Decree 5.296, 2004, Art 5 § 1, (I). STJ REsp 931.513/RS, j.2009, p. 4. 121 TJSP Ap.0035373-72.2012.8.26.0002/SP, j.2013, pp. 4, 6. 122 The municipality has the jurisdiction to legislate about free of charge transportation to disable persons. 123 TJSP Ap.0011086-52.2011.8.26.0302/SP, j.2014. Note: According to Art 5 § 1 of the Decree 5.296/2004 the disabled person is one who has the limitation or inability to perform an activity and therefore falls in the following categories: (a) physical disability (full or partially), (b) hearing disability (bilateral loss, full or partially), (c) visual impairment, (d) mental retardation and (e) multiple disabilities—association of two or more disabilities. 119 120

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Although the municipality has the jurisdiction to legislate on free-of-charge transportation for disabled persons, it does not mean that local rules always have friendly requirements. It is the case of a city located in Sao Paulo state, which imposed a list of conditions restricting the free-of-charge transportation granted to disabled persons. In this case, the court emphasised that the federal legislation124 that grants the priority of accessibility to everyone with economic disadvantage shall prevail.125 But the air transportation sector has a different approach. Air companies are not obliged to provide air service free of charge to disabled persons with economic disadvantage. The provisions of Act 8.899/94 detailing the free-of-charge transportation to disabled persons in collective interstate carriage (lei do passe livre) do not set forth such a situation for air transportation.126 Nevertheless, administrative rules obliging airlines to charge only 20% or less for the traveller’s companion’s ticket, if the traveller with disability requires an assistant exist. On the other hand, the disabled traveller, in respect of carriage of equipment or essential assistive stuff for his own need, receives a discount of 80% in case of overweight luggage.127 For the elderly, there is a tendency to assume that many of them who have high incomes are relatively unaffected by consumer detriment; on the contrary, the actual number of elderly persons who have low incomes, being a great proportion of the population, are truly vulnerable. Nevertheless, this is a simplistic view. The assumption of vulnerability is based not solely on personal incomes but also on the circumstances and situations that exploit the vulnerability and intimidate or constrain the elderly when such a situation of detriment occurs. The elderly suffers greater psychological detriment than other consumers do. Public agencies, public companies and ﬁnancial entities (banks) are obliged to provide priority services by means of individualised services that ensure differential treatment and immediate care to the elderly.128 Thus, a recent decision of the STJ determined that the bus must not require an extra identiﬁcation card (like a document with photo) to make sure that the elderly can use the transportation free of charge. Only one personal identiﬁcation card is enough. In addition, the companies ought to reserve 10% of the seats to the elderly.129 Any person over 65 years old is eligible to exercise the right of transportation on local or regional public transport free of charge if he or she shows any

124

Act 7.853, 1989 and its regulation the Decree 3.289/99, the Act 10.048, 2000 and Act 10.098, 2000 regulated by Decree 5.296/04. The Act 8.899, 1994 refers to gratuity in interstate public transportation system. 125 TJSP Ap.0029172-84.2009.8.26.0482/SP, j.2014. 126 STJ REsp 677.872/PR, j.2005. 127 ANAC Resolution 280, 2013. 128 Act 10.048, 2000. 129 STJ AgRg REsp 1.162.156/RJ, j.2013.

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personal identiﬁcation that proves his/her age.130 Local laws shall determine whether persons between the age of 60 and 65 may exercise the same rights as those of persons aged over 65.131 Elderly may spend more time at home that leads to potential role conﬂicts and psychological tension. It is necessary to alleviate such tension constituting a threat of depression and consequently translating into elderly detriment. Therefore, the law grants at least 50% discount on tickets of any artistic, cultural, sport and leisure events.132 The second category of hypervulnerability is signiﬁcantly greater. It includes larger groups with reduced mobility. The Regulation on Accessibility of Disabled Person and Persons with Reduced Mobility (PRM) sets forth that a person with reduced mobility is a person without physical disability but has difﬁculties to move, permanently or temporarily, because of reasons affecting his/her ﬂexibility, coordination and perception. They are persons over 60 years old, pregnant women, lactating women and persons with an infant in their arms.133 There is also a wider concept of PRM established by the Brazilian National Standards Organization,134 which produces technical infra-rules named ‘normalização’ to assist the executive power (the administration) ﬁlling the gaps in legislation. It prescribes that a person with reduced mobility is one who temporarily or permanently has a limited capacity to use and to interact with the environment. This category of persons is, inter alia, the disabled persons, the elderly, obese individuals and pregnant women.135 These are anyone who has particular difﬁculty when entering in a consumer relationship. The Tourism National Statute136 refers to groups of individuals such as children, the disabled and the elderly as special segments of the internal market. The Ministry of Tourism conducted a study on the proﬁle of tourists, targeting persons with disabilities and reduced mobility, to investigate their needs for the purpose of including them in further plans and public policies related to travel and tourism.137 Neither ‘vulnerable person’ nor ‘hypervulnerability’ has a clear single deﬁnition by law. In light of the doctrine and court ruling, the terms vulnerability and ‘hypervulnerability’ are approached, though with a wide notion. Whilst vulnerability is considered a universal aspect pertaining to all consumers, ‘hypervulnerability’ is a stable characteristic of a person or a group of persons but hardly ever applies to all consumers.

Act 10.741, 2003 Art 39 § 1 § 2. Idem, Art 39 § 3. 132 Idem, Art 23. 133 Decree 5.296, 2004, Art 5 § 1 (II) § 2. 134 Associação Brasileira de Normas Técnicas. 135 ABNT NBR 9050:2004. 136 Act 11.771, 2008, Art 6 (V). 137 MTUR-Ministerio do Turismo. Turismo acessivel (2013). 130 131

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Furthermore, closest to the concept of ‘hypervulnerability’ is the concept of hipossuﬁciencia, which basically discloses a disadvantage when a person is engaged in lawsuit. Besides vulnerability, hipossuﬁciencia involves the procedural rights of the party to simplify his/her defense through inversion of the burden of proof. But the party must show the disadvantage, and the judge must analyse the feasibility of providing legal beneﬁt.138 In this regard, the Consumer Defence Code sets forth: Art 6: The following are basic consumers’ rights:(. . .) VIII - the facilitation of consumer defence when there is litigation, including the inversion of burden of proof in favor of the consumer in a civil action when, by the discretion of the judge, to decide that the claim holds truth or when the consumer is “hipossuﬁciente” (disadvantaged) according to ordinary rules of experiences.

It is not that the term is not prescribed by law but that the term is not deﬁned accordingly. What are ‘ordinary rules of experiences’? The term is indeﬁnite. Although the doctrine and courts attempt to use some criteria to identify the term hipossuﬁciente as a characteristic of a person, the term varies in the range of content and in the extent to which it is applied. For example, whilst the Superior Court of Justice139 recognises hipossuﬁciencia as a procedural notion, which allows access to justice according to the statute that grants free legal aid to poor people,140 legal academics emphasise that the acknowledgement of hipossuﬁciencia depends on two aspects: (1) the judge’s discretion, which allows him to identify whether or not the consumer is able to sustain his or her arguments with reasonable proof, and (2) if the term is too vague and indeﬁnite that the meaning shall be built according to an objective criterion, without giving the judge the option of choosing the rules. The judge must analyse the facts, pondering on the circumstances of a particular case appropriately.141 According to the Federal Court, hipossuﬁciencia may result from either an economic or cultural source. Economic is veriﬁed on those with low incomes. They have difﬁculties in paying their bills and belong to the low level of the social staircase. The low level of income may result from the lack of the minimum conditions necessary to enable a person to exercise his/her rights appropriately. Cultural is connected with illiteracy. It is to say, if a person is iliterate with low level of education or no education at all and he/she is unable to understand and reﬂect upon the consumer relationship because of below-average capabilities. However, such a type of hipossuﬁciencia emerges when there is a lack of culture in such a high degree that the person is drastically diminished in the face of the supplier. Illiteracy in a way blocks the person’s understanding of his/her rights in the consumer relationship.142

138

Theodoro Junior (2011), p. 165. STJ REsp 200.390/SP, j.2000. 140 Act 1.060, 1950, Lei de Assistência Judiciária Gratuita (statute of free legal aid). 141 Marques and Miragem (2012), p. 161. 142 TRF 3a. Região Ac.200661260032855, j.2009. 139

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In fact, the principle of vulnerability is abstract. The vulnerability of the consumer is directly or indirectly related to the contract and the protection on the consumer takes into account the contract.143 The consumer relationship is not solely based on the natural person but also based on the vulnerable party, the individual as a physical person or a legal entity as parties to the contract.144

2.1.3.3

Consumer’s Rights, Traveller’s Rights

The Consumer Defence Code (CDC) embedded key consumer rights as provided in its Article 6 and Article 4. Everyone involved in a consumer relationship will have the same rights granted by the Code. These persons may be the traveller, the disabled person, the elderly and even those not speciﬁcally covered by a special or sectoral statute. The provisions have an indicative and non-exhaustive list of Brazilian consumer law principles, as for example the following: 1. life, health and safety: protection of consumer's life, health and safety against any risks arising from any practices on account of the supply of goods and services considered harmful or dangerous; 2. information and freedom of choice: education and information about the adequate level of consumption of goods and services, ensuring freedom of choice and parties equality in contractual procedure; 3. information: appropriate and clear information on different goods and services, with correct details in regard to quantity, characteristics, composition, quality, tax and price, as well as the risks involved; 4. transparency and good faith: protection against misleading and abusive publicity, unfair commercial methods that are coercive or unlawful, as well as practices and abusive clauses that are imposed as part of the supply of goods or services; 5. contractual protection: the modiﬁcation of contractual clauses that impose disproportionate instalments or its revision based on supervening facts that make the contractual clauses exceedingly expensive; 6. prevention and reparation of person injury: effective prevention and reparation of material and immaterial damages, whether the damage is individual, collective or diffused; 7. access to justice: access to justice and to administrative entities for the prevention and reparation of material and immaterial damages, whether the damage is

143 144

Marques (2011), p. 12. STJ REsp 476.428/SC, j.2005.

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individual, collective or diffused, as well as ensuring judicial, administrative and technical protection to those in need; 8. facilitation on litigation: facilitation of consumer defence when there is a litigation, including the inversion of the burden of proof in favour of the consumer in a civil action, when, upon the discretion of the judge, the claim holds true or when the consumer is hipossuﬁciente (disadvantaged) according to ordinary norms; 9. appropriated and effective public service: provide the consumer with appropriate and effective public services, in general. The rights herein mentioned are not limited to Articles 6 and 4 because Article 7 emphasises that the rights set forth in the CDC do not exclude any other rights that may be created as a result of international treaties or conventions ratiﬁed by Brazil. In addition, they not exclude rights established under internal regulations set forth by administrative authorities, or other rights that stem from the general principles of law, analogy, custom and equity. There are meaningful remedies found on provisions granted by the Consumer Defence Code under the consumer contractual protection scheme. The examples of remedies granted to consumers in general that also apply to travellers are as follow: a) Consumer’s right of withdrawal or cancellation: it is granted for a period of seven days from purchase, without any justiﬁcation, whenever the goods or services were acquired off premises, especially by phone or doorstep selling (Article 49); b) Consumer’s restitutionary right to recover the money: this refers to the money that was paid under the contract, which was cancelled within the withdrawal period (Article 49 sole paragraph); c) Consumer’s right of relief from excessive penalty: the clause set up in the contracts of credit or ﬁnancing related to no payment of the obligation and/or its instalments shall not go over 2% of the total amount of each instalment (Article 52 § 1). d) Consumer’s right to pay the obligation prior to the ﬁnal date agreed upon in the contract. The payment may be either total or partial. The interest rate and extra costs shall be proportionally reduced to the date of the payment (Article 52 § 2). e) Consumer’s right to be informed in advance about the contract’s content: the traveller has the right to be informed of the content of the contract in advance and in a plain and clear manner and in a language that he/she understands. The contract shall not lack understanding of its meaning and scope. (Article 46). f) Consumer’s right to ﬁle a claim in the court of his/her domicile (Article 101 (I) CDC combined with Article 94 of the CPC). The Code asserts that the clauses of the contract have to be interpreted in a way that is most favourable to the consumer (Article 47). This is because the consumer is a vulnerable party (the weaker party). This is a ﬁction of law to eliminate inequality and promote equality.

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In addition, documents, declarations, reports, pre-contractual information, receipts and any written documentation provided by the supplier to the consumer traveller can be used to enforce the duty of care. Therefore, the respective liability of the supplier applies (Article 48). That is to say, the supplier is liable under every document issued upon the performance of the contract.

2.1.4

Traveller

Quite apart from the fact that consumer protection has developed, there were surprisingly few provisions tackling the word ‘traveller’ and none speciﬁcally about ‘traveller’ or even ‘tourist’ protection in Brazil. Nevertheless, the focus here is the traveller. As already said, despite the increasing activity in the travel and tourism industry, the term traveller is still doubtful from a legal perspective. This is because like the term consumer, the term traveller is a centrepiece of an ongoing debate on the legal nature of such person. What is a consumer? What is a traveller? The complex relation between consumer and traveller has not been discussed satisfactorily. This debate has not reached a conclusion over the years inasmuch as being a citizen is one of the bases of providing an individual with certain rights (i.e., citizen rights). Thus, a subsequent question has arisen about the passenger, traveller, business traveller, user and of course consumer since they are no longer strictly considered individual persons, in terms of natural persons under the law, but they are in fact persons created by law. Although all travellers are consumers,145 not all consumers are travellers. There is not any possibility that a legal entity could be a traveller. However, under Brazilian law, a legal entity might be a consumer if vulnerable.146 In addition, there are business travellers taking trips on behalf of a legal entity. Yet, despite all these legal questions, there is the ‘conceptual key of movement’. One of the fundamental freedoms is the free movement of persons. The Brazilian Federal Constitution sets forth the free movement of persons. The traveller as a person moves through space beginning at his or her place of residence and ending at

145

Note: Although barely possible, it is difﬁcult to think that a traveller nowadays may travel by means of no-cost. It is possible to save money in some parts of the travel, such as having accommodation at the friend’s house, and hitchhike for one’s own carriage, which may providing free. However, in practical terms there will be always the need to buy a sandwich and/or hot coffee in the middle of the trip or to pay for a local bus ticket to complete the journey. In addition, in contrast to Brazil, in some European countries it is not possible to use public or private toilets without a small payment. 146 Act 8.078, 1990, Art 2: A consumer is any physical person or legal entity who acquires or uses goods or service as a ﬁnal addressee. About vulnerability of the legal entity, see Sect. 2.1.3.1.

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his/her place of destination. Even a business traveller, traveling from one destination to another, has a particular place of residence. Therefore, to determine the ‘traveller’ is to discern aspects of ‘movement’. There is no doubt that the traveller needs movement. ‘Travel and tourism’ is the manifestation of the freedom of movement where the traveller is the centrepiece. Actually, all things are in movement and nothing stays put.147 In this context, the concept of ‘movement’ is a fundamental right under the Brazilian Federal Constitution: Art 5, item XV – it is free in time of peace the movement (of persons) within the national territory, and any person may, under the terms of the law, enter it, remain therein or leave it with her/his assets.

Frequently, the ‘consumer traveller’ who moves within the national territory or abroad usually travels independently, that is, he or she arranges for his/her own ﬂight (bus or ferry), accommodation or car rental. But the traveller may also prefer to buy a prearranged travel package that includes a combination of travel services bundled in advance by a travel agent, which consists of at least two of the following services: (1) carriage of passengers, (2) accommodation and (3) other tourist services. There is not any particular law that expressly deﬁnes the term traveller. The traveller as a legal person demands more accurate legal framework in order to be distinguished from the regular consumer. Travellers travel all over the world. Hence, an accurate legal terminology concerning traveller and travel will have greater signiﬁcance. The movement of travellers, at the same time that it promotes economic growth, increases consumer problems. Consequently, the paradox effect of ‘travel and tourism’ has become the focus of contemporary controversy. In the context of the Brazilian legislation, the word ‘traveller’ does not play a role as a main legal terminology. See Table 2.1 below. Between 1912 and 2008, there were few provisions particularly tackling the word traveller. For example, in 1940, Federal Decree 2.440/40 required that suppliers and travel agencies should be licensed to set up a local company that offers paid assistance to travellers. The term traveller appeared again in 1986 in the Brazilian Code of Aeronautics, where there is a contract for domestic carriage by air. Nevertheless, the word ‘traveller’ was always out of the context of its legal deﬁnition. In 2002, the Brazilian Civil Code used the word traveller only in regard to contracts of service of handled luggage (Articles 649 and 650). Recently, the word traveller was included in the Federal Tourism Statute, enacted in 2011, in its Article 27 (VIII) and (IX). However, neither the regulation nor the Tourism Statute has developed a clear legal deﬁnition for traveller in terms of contract law. Therefore, the traveller is implicitly a regular consumer under Brazilian law.

147

Heraclitus. A Greek philosopher (c.535–475 b.c.e.).

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Table 2.1 Legislation Year 1912

Legal act Federal Decree 2.681

Reference Railroad’s liability

1940

Federal Decree 2.440

1958

Federal Decree 43.028

Activities of suppliers and travel agencies Customs clearance

1984

Federal Decree 89.292

Standard for boarding card

1986

Brazilian Code of Aeronautics Act 7.565

Carrier’s liability

2002

Civil Code Act 10.406

Contracts of service of handled luggage

Provision Art 17. The railroads are liable for disasters that succeed in their lines to travellers, resulting in death, wounding or bodily injury. Art 25. The railroads are also liable under the previous article, if the traveller proves that s/he could not make the trip by having the trafﬁc being suspended or stopped, or was not any train set up for the time purchased, or could not ﬁnd a place in the class for which s/he has purchased the ticket Art 1. The companies which offer paid assistance to travellers are distributed into three categories: (. . .) Art 1. Not dependent of license as well as proof of hedging: I—the luggage of travellers that does not comprise furniture and vehicles, but only clothes and personal accessories up to the amount of 100 (one hundred) thousand cruzeiros, calculated according to the ofﬁcial exchange rate Art 2. The boarding card, or input and output card, will be printed in two-ways interleaved with carbon paper, according to the speciﬁcations of the standard mentioned in the previous article, and should be completed by the traveller or the carrier and delivered to the Federal Police in two sheets Art 281. Every carrier is required to have insurance to grant any damages in further risks as follows: I—For damages arising under this Title, with the limits of liability set out therein (Articles 257, 260, 262, 269 and 277) or contracted (§ 1 of Art 257 and paragraph of Art 262); II—the crew and travellers travelling for free which under these effects, are equivalent to passengers (Art 256, § 2) Art 649. To the deposits referred to in the preceding article are equated to the baggage of travellers or guests in hostels where they are hosted. Sole paragraph. The hosts will respond as

Validity Not repealed

Not repealed Repealed by Decree of 5.09.91

Repealed by Decree 94.318/87

In force

In force

(continued)

2.2 The Role of the Travel and Tourism Sector

39

Table 2.1 (continued) Year

2008

Legal act

Tourism Statute Act 11.771

Reference

Tourism agency

Provision custodians, as well as for thefts and robberies carried out by persons on their behalf employed or admitted in their company. Art 650. Ceases, in the case of the preceding Article, the responsibility of the host, if they prove that the harmful facts suffered by travellers or guests could not have been avoided Art 27. Tourism agency is the legal person that develops the economic activity of intermediation between suppliers and consumers of tourist services or provides those services directly. (. . .) § 3. The intermediation activities conducted by tourism agencies comprise the offer, the booking and sale to consumers in one or more of the following tourist services provided by third parties: (. . .) VIII—sale or paid intermediation of insurance linked to trips, tours and excursions as well as cards of traveller’s assistance; IX—sale of books, magazines and other articles addressed to travellers, and (. . .)

Validity

In force

Source: Author’s compilation

2.2

The Role of the Travel and Tourism Sector

Brazil is the largest country in South America with 8,286,488 km2 in area, followed by Argentina with 2,780,400 km2. It occupies the ﬁfth place in world rankings behind Russia (17,098,242 km2), Canada (9,984,670 km2), China (9,706,961 km2) and the United States (9,629,091 km2). In 2018, with a population estimated at 209,002,368,148 Brazil is a mass market in the continent and continues to expand in view of its capacity to grasp business opportunities. Sao Paulo is the country’s largest state by population with 45,394,316 people living there; followed by Minas Gerais, 21,222,390; and Rio de Janeiro, with 16,790,875 inhabitants. According to IBGE, in 2017, only the city of Sao Paulo, located in the state of Sao Paulo, accounted for 12,106,920 inhabitants.149 The country is composed of 26 member states of the Federal Union, plus the capital of Brasilia. 148 149

https://www.ibge.gov.br/apps/populacao/projecao/index.html website visited on 14.05.2018. https://cidades.ibge.gov.br/brasil/sp/sao-paulo/panorama website visited on 14.05.2018.

40

2 Brazil Consumer and Tourism Laws

Its ultimate goal is to improve the standard of living and social well-being of its people through industrialisation. However, for the time being, the standard of living has risen for substantial segments of the population but not for all. Even so, over the last years, the country strove to ensure income distribution as broadly as possible through public policies, and most importantly, its economy achieved reasonable strength to allow it to compete on its own basis as an exporter of manufactured goods. However, economic forces from outside still affect the development of the internal economy. Outside forces may cause imbalances, which may be another kind of vulnerability. For such economic vulnerability, no deep examination will be made herein. The international transboundary movement in travel and tourism has also affected the country in several ways. This movement ensured, along with other countries, the need to implement some measures and regulatory reform. The combination of such measures included inﬂation under control, reduction in the interest rate and rebalancing the account of payments.150 Regarding criminality in the main capitals, data published by IBGE show a decrease of 19.8% in the rate of homicides between 1997 and 2007 related to the number of crimes per 100,000 inhabitants. The analysis of those statistics must have a word of caution as there are several factors that may affect the outcome depending upon the circumstances. Ofﬁcial statistics of crimes, for example, take into account a set of standard terms of validity and reliability provided by statutes.151 This means that depending on the context, whether the level of ofﬁcial statistics on crimes increases or not, it is not always a negative factor as it may reﬂect changes in police practices (more or less intense) or changes in legislative matters.152 The report issued in January 2009 by the International Monetary Fund (IMF) on the World Economic Outlook (WEO) stressed that the recovery of the global economy was occurring more rapidly than expected, however in an unequal way. It recommended that whilst the situation had not been stabilised, governments should keep using measures to stimulate the economy. At least in percentage terms, the economic growth observed in emerging countries and in those developing countries had increased in recent years rather than in advanced economies. Furthermore, the report recommended the need for countries to regulate strongly the banking system in order to prevent another ﬁnancial meltdown.153 Nevertheless, the World Economic Outlook (WEO) 2015 revealed a sensitive situation as the global growth remains moderate. In many emerging market and developing economies, macroeconomic policy space to support growth remains limited. In economies with oil subsidies, the lower prices may provide some ﬁscal space to strengthen ﬁscal positions. Growth in emerging market is expected to pick

150

MTUR (2011/2014), p. 14. In the State of Sao Paulo the Act 9.155/95 requires that the Department of Public Safety shall disclose crime rates. 152 Rodrigues dos Santos (2009), pp. 219–220. 153 MTUR (2011/2014), p. 12. 151

2.2 The Role of the Travel and Tourism Sector Region/Year World Advanced USA Euro zone Japan Emerging Brazil i Russia India China South Africa Latin America

41

2007

2008

2009

2010

2011

2012

2013 3.4 1.4 2.2 -0.5 1.6 5.0

2014 3.4 1.8 2.4 0.9 -0.1 4.6

2015 3.5 2.4 3.1 1.5 1.0 4.3

2016 3.2 1.7 1.5 1.8 0.9 4.4

1.8 3.0 2.2

-0.3 0.5 -1.0

-2.8 -4.5 -5.5

2.5 2.0 4.7

1.6 1.6 -0.5

2.3 -0.8 1.8

6.0 8.5 9.8 14.2

5.0 5.2 3.9 9.6

-0.2 -7.8 8.5 9.2

7.6 4.5 10.3 10.4

3.9 4.3 6.6 9.3

1.8 3.4 5.1 7.8

2.5 1.3 5.0 7.8

0.1 0.6 5.8 7.4

-1.0 -3.8 7.5 6.8

-3.5 -0.2 7.1 6.7

5.4

3.2

-1.5

3.0

3.2

2.2

2.2 2.9

1.4 1.3

2.0 0.9

0.3 -0.7

Fig. 2.1 World economic outlook, real GDP (%). Source: World Economic Outlook, April 2015–January 2018—IMF. Figures recompiled by the author

up in 2016, driving an increase in global growth to 3.8%, mostly reﬂecting some pressures on activity in countries and regions with weak growth in 2015, such as Russia, Brazil and the rest of Latin America.154 Following Fig. 2.1, Brazil’s economy was projected at 1.0 in 2015. Private sector sentiment has remained stubbornly weak, reﬂecting the risk of near-term electricity and water rationing, unaddressed competitiveness challenges and fall out from the Petrobras investigation. The Brazilian authorities’ renewed commitment is to rein the ﬁscal deﬁcit and reduce inﬂation. It will help restore conﬁdence in Brazil’s macroeconomic policy framework, but it will further curb near-term demand.155 Comparing the year 2007 and 2010, there has been an enhancement of the percentage of the gross domestic product in Brazil. The country had 6.0 in 2007, which improved to 7.6 in 2010. However, it has decreased noticeably in 2014, 2015 and 2016 (Figs. 2.2 and 2.3). Tourism is part of the real GDP path. The turnover for tourism has gotten strong attention from authorities over the years, and Brazilian ofﬁcial sources are now publishing data on the sector. In order to identify the activities related to tourism in the national account system (SCN), the country has updated the CNAE (National Classiﬁcation of Economic Activities) to reﬂect the current reality of the economic activity of tourism. The CNAE is a classiﬁcation used to standardise the identiﬁcation codes of the units of the country’s production. The ﬁles and records of the government are updated in

154 155

IMF, International Monetary Fund (April 2015), Executive Summary, p. xv. Idem, p. 57.

42

2 Brazil Consumer and Tourism Laws

Fig. 2.2 World economic outlook, real GDP (%). Source: World Economic Outlook, January 2018— IMF. Figures recompiled by the author

Fig. 2.3 Projection: World economic outlook, real GDP (%). Source: World Economic Outlook, January 2018—IMF. Figures recompiled by the author

Region World Advanced economies

2017 3.7 2.3

USA

2.3

Euro area

2.4

Japan

1.8

Emerging economies

4.7

Brazil

1.1

Russia

1.8

India

6.7

China

6.8

South Africa

0.9

Latin America

1.3

Region World Advanced economies

2018 3.9 2.3

USA

2.7

Euro area

2.2

Japan

1.2

Emerging economies

4.9

Brazil

1.9

Russia

1.7

India

7.4

China

6.6

South Africa

0.9

Latin America

2.6

light of the CNAE. Such a classiﬁcation is used by the government, particularly in the tax area. According to the ofﬁcial study of IBGE, the updating processes took into account the classiﬁcation of tourism recommended by the UNWTO to speciﬁc economic activities of the industry. The UNWTO developed the Uniform International Classiﬁcation of Tourist Activities comprising the list of tourism characteristic activities (tourism industries) and grouping by main categories according to ISIC (International Standard Industrial Classiﬁcation) created by the United Nations.156 Over the last years, the outcome of the international turnover for tourism pointed to the strengthening of the activity in the international market. According to the data from Central Bank, in 2009, Brazil recorded a foreign exchange turnover of US$ 5.30 billion. Although lower than the previous year (2008), the ﬁgure represents an

156

IBGE, Economia do Turismo (2012), p. 7.

2.2 The Role of the Travel and Tourism Sector Fig. 2.4 International arrival by air

43 2010 2011 2012

5.809.505 9,018,507 9,368,195 9,467,994

Source: MTur in http://www.dadosefatos.turismo.gov.br/dadosefatos/home.html Website visited on 30.08.2013 and 02.04.2015

2015 2016 2017

10.538.012 10.172.972 10.624.962 Source: MTur in http://www.dadosefatos.turismo.gov.br/dadosefatos/home.html Website visited on 1.03.2018

increase of 165%, compared to 2002 (US$ 2 billion). In the same period, the growth of world tourism turnover was 66%.157 The international turnover for tourism is directly related to inbound tourism in the country, as well as how long international tourists stay and the expenditures they made in the country. Whilst the inbound tourism increased 40% between 2003 and 2005, after that it has a tendency for stabilisation around ﬁve million. It is important to bear in mind the following points: the massive impact of the bankruptcy of a lead national airline that operated that time (Varig), the pandemic inﬂuenza A (H1N1) and the international ﬁnancial crisis. Though the Federal Government has adopted internal measures to mitigate such events, external markets that send tourists to Brazil were also affected by the ﬁnancial crisis. Taking into account 2002 as reference, there was an increase of 33.6% in 2008. In the same period, the growth of international tourism worldwide was around 31.0%.158 The country registered about 6.48 million passengers that landed from international ﬂights in 2009. These numbers have been stabilised since 2004. In the period from 2002 to 2009, the growth was 39.95%. In 2009, there was a slight decrease, less than 1%, compared with 2008. It is relevant to point out that amongst these arrivals, there are also Brazilians returning from abroad.159 Compared to 2010, in 2013 the international arrivals by air have grown. The numbers of arrivals incresed from 5,809,505 in 2010 to 9,467,994 in 2013, the growth represents 3,658,489 arrivals, which accounted for 37% in that period (Fig. 2.4). Regarding the most visited cities in Brazil by foreign tourists, Rio de Janeiro remains in 1st position, whilst São Paulo, the main gateway of the country, is in the fourth position. Foz do Iguaçu and Florianópolis occupy prominent positions in the ranking of leisure tourism destinations, respectively second and third. Those destinations are followed by Búzios, Camboriú, Bombinhas, Parati and Angra dos Reis. Salvador is the exception in this group.160 157

MTUR (2011/2014), p. 42. MTUR (2011/2014), p. 43. 159 MTUR (2011/2014), p. 44. 160 Idem, p. 246. 158

44

2 Brazil Consumer and Tourism Laws

Table 2.2 Travel and tourism agencies Unidades da Federação/ Federative Units Brasil/Brazil Rondônia Acre Amazonas Roraima Pará Amapá Tocantins Maranhão Piauí Ceará Rio Grande do Norte Paraíba Pernambuco

Agências/ Agencies 10,792 93 40 153 34 169 42 35 167 66 279 146 153 268

Unidades da Federação/ Federative Units Alagoas Sergipe Bahia Minas Gerais Espírito Santo Rio de Janeiro São Paulo Paraná Santa Catarina Rio Grande do Sul Mato Grosso do Sul Mato Grosso Goiás Distrito Federal/Federal District

Agências/ Agencies 103 85 515 1047 130 1522 2404 899 552 920 220 175 264 311

Source: IBGE—Brazil in ﬁgures v.20 2012, p. 256

Compared to 2009, in 2010 Foz do Iguaçu and Florianópolis received more foreign tourists than other destinations. In the Brazilian travel industry, there is a predominant focus on international outbound and domestic tourism. This explains its actual geographic distribution (Table 2.2): nearly 40% of travel agencies are located in the main consumer markets of the country: São Paulo (22.3%), Rio de Janeiro (14.1%) and Minas Gerais (9.7%).161 One factor that may positively inﬂuence the international market of tourism in Brazil is the international business/tourist events. Over the last years, compared with the largest recipients of business/tourist events in the world, the country has risen in the ranking of the International Congress and Convention Association (ICCA). Every year, cities are included in the ofﬁcial list of host cities so that the city host can provide a sustainable environment to the events, indicating a variety in the supply of qualiﬁed destinations for business/tourism events. Brazil held the 2014 World Cup and the 2016 Olympic Games, as well as other related events, wich placed the country in a prominent international view enhancing opportunities for tourism.162 Compared to 2012, in 2014 the country has slipped down from the 7th to the 10th position in the ranking of number of international events (Fig. 2.5).

161 162

Idem, pp. 246–247. MTUR (2011/2014), p. 46.

2.2 The Role of the Travel and Tourism Sector Ranking 1st 2nd

45

2010 U.S.A. Germany

Nº 623 542

3rd

Spain

4th

United Kingdom France

6th

Italy

7th

Japan

8th

China-P.R.

282

China-P.R.

302

Japan

341

China P.R.

332

9th

Brazil

275

Netherlands

291

Netherlands

315

Netherlands

307

10th

Switzerland

244

Austria

267

China-P.R.

311

Brazil

291

11th 12th

Australia Canada

239 229

Canada Switzerland

255 240

Austria Canada

278 273

Austria Canada

287 265

13th

Netherlands

219

Japan

233

Australia

253

Australia

260

14th

Austria

212

Portugal

228

Switzerland

241

Sweden

238

15th

Portugal

194

Sweden

233

Portugal

229

Sweden

192

Republic of K Australia

207

16th

204

229

Switzerland

226

17th

186

Sweden

195

213

172

Argentina

186

Argentina

202

Republic of Korea Argentina

222

18th

Republic of Korea Argentina

Republic of K Portugal

19th

Belgium

164

Belgium

179

Belgium

194

Turkey

190

20th

Turkey

160

Mexico

175

Denmark

185

Belgium

187

5

th

2011 U.S.A. Germany

Nº 759 577

2012 U.S.A. Germany

Nº 833 649

451

Spain

399 371

United Kingdom France

341

Italy

305

Brazil

2014 U.S.A. Germany

Nº 831 659

463

Spain

434 428

United Kingdom France

550

Spain

578

477

543

469

United Kingdom France

363

Italy

390

Italy

304

Brazil

452

360

Japan

337

533

191

Fig. 2.5 Ranking ICCA 2010–2014/Number of international events. Source: ICCA

The travel and tourism sector has been developed as a strategic sector, and the tourism industry is still growing. It is a sector that is developing attractive tourism destinations and service activities. The federal and local governments are taking the initiative to create appropriate incentives to develop this sector. The mechanisms veriﬁed into the Tourism Statute are called Resource Channeling Mechanisms in Tourism.163 It encourages suppliers to invest in tourism activities to become tourist service providers.164 Besides these developments in tourism policy, the diversity of landscape, the entertainment on cities and events attract not only Brazilians but also travellers from South America and overseas. Beyond the attractive tourism destinations, there are also speciﬁc events such as the yearly Carnival in Rio de Janeiro (February), Oktoberfest in the southeast of the country (October), Cristal Fashion Week in Curitiba (April and October), Sao Paulo Fashion Week (spring or fall) and the most recent Travelweek Sao Paulo.

Act 11.771, 2008, Arts 15 to 20. The wording of the provision can be rephrased to ‘the fomentation of the tourist activities’. 164 Idem, Art 21. 163

46

2 Brazil Consumer and Tourism Laws

Destinations are signiﬁcant too. The main destinations are the beaches of Angra dos Reis, Paraty, Florianópolis, Fernando de Noronha, Ilhabela, among others. Nature destinations are Amazonia (Amazon), Lençois Maranhenses, Foz do Iguaçu, Chapada Diamantina, Pantanal. Main city destinations are Sao Paulo, Rio de Janeiro, Salvador, Fortaleza and Curitiba.

2.3

Tourism Law

For the purpose of clarity, it is to be noted that under Brazilian law, the ﬁeld ‘travel and tourism’ is not clearly a traditional ﬁeld of law attached directly to a branch of law. As in many other sectoral ﬁelds, consumer law absorbs and intertwines with tourism issues. It does not exclude the Civil Code, international treaties or any other special rules that simultaneously affect a speciﬁc travel case. Firstly, there is not any speciﬁc statute dealing with travel and/or tourism matters in a single and exclusive private law framework or even in a mixed private and public law framework. Secondly, although the Tourism Statute governs the relationship between government and suppliers, it did not set up private contractual issues between the consumer (traveller) and the supplier/retailer or seller. The Consumer Defence Code comprehensively covers such a relationship but makes no mention of traveller or even tourism. As it happens, because of a lack of exclusive principles, ‘tourism law’ is considered a subset of consumer law rather than a separate ﬁeld of law. Certainly, the expression ‘Tourism Law’ (Direito do Turismo), as proposed in Brazil by a few authors, does not meet the current legal tradition as the term implies. The legal tradition is a set of deeply rooted, historically conditioned attitudes about the nature of law, private or public; about the role of law in society; about the organisation and operation of the legal system, the polity and principles adopted that provide a reliable ﬁeld of law. The legal tradition relates the legal system to culture, of which it is a partial expression, and puts the legal system into cultural perspective on the grounds of leading principles. The current legal system in Brazil is the civil law tradition, which is the oldest and the most widely distributed worldwide. It is today the dominant legal tradition in most of Western Europe, all of Central and South America and some parts of Asia and Africa. Nevertheless, in the past, there were restrictions to accept a separate ﬁeld of law with mixed public and private law rules, meaning a fragmentation trend in the general contractual law. Nowadays, there is no doubt that consumer law is a ﬁeld of law. The Consumer Defence Code is a microsystem rather than a particular statute listing principles or rights and duties of the consumer and supplier. The basic idea was exactly to intertwine different sources of law in order to afford more protection

2.3 Tourism Law

47

to the consumer.165 The Federal Constitution sets forth the defence of consumer twice, as a fundamental right (Article 5 (XXXII)) and as an economic activity (Article 170 (V)). On the other hand, there is not the same treatment for the traveller. The Constitution not provides rights to the traveller, tourist or visitor similar to that of the consumer. The Constitution refers to the protection of the tourist and landscape heritage in Article 24 (VII). It is grouped amongst those provisions on the concurrent jurisdiction of the Union, states and Federal District (Brasilia). Another important provision is Article 180, which sets forth that the Union, states, Federal District and municipalities shall promote and foster tourism as a social and economic factor of the country’s development. However, in a broad sense, there would be no tourism without the traveller. Whilst tourism is an economic activity tied with travel, on the other hand travel refers to the activity of travellers. This leads to the conclusion that the existence of the traveller is the intimate cause of travelling and therefore the recognition of tourism as an economic activity. A traveller is someone who moves between different geographic locations, for any purpose and any duration,166 attracting the interest of the travel industry. Studies have pointed three categories of travel: (1) leisure; (2) businesses, congresses and events; and (3) other purposes.167 There turns out to be two signiﬁcant aspects of tourism law: (1) the economic activity and (2) the person activity. These are the ﬁrst basis to develop an accurate legal theory towards justifying travel and tourism law as a ﬁeld of law. As said, further measures need to be adopted to tackle a ﬁeld of law more consistently. These have to be addressed by policy and leading principles providing a reliable understanding of the ﬁeld. For the time being, under Brazilian Law, the ﬁeld ‘tourism law’ is questionable and controversial. The focus of the travel and tourism industry is not solely on tourism within the scope of leisure. It also points to every activity taken by travellers. Therefore, whilst the term ‘travel law’ implies directly a person’s rights (right to travel or movement), the term ‘tourism law’ does not; rather, it implies an economic activity. This leads to the assumption that under the Brazilian legal framework, in a later stage, ‘travel and tourism law’ might be taken as a better option to achieving a subset of consumer law covering all travel situations. Even so, it is feasible consider travel and tourism rules as they are locating in the legislation. Likewise, to consider aspects of public and administrative law that apply to tourism. As said, the rules of tourism are not harmonised in a legal framework that targets a separate ﬁeld of law. The terms ‘travel’ and ‘tourism’ are usually taken synonymously either by the legislator or practitioners. The history of travel and tourism

165

Benjamin et al. (2010), p. 48. UNITED Nations, ST/ESA/STAT/SER.M/83/Rev.1; 2008, § 2.4. 167 MTUR, Brazilian Ministry of Tourism (2006–2012), p. 4. 166

48

2 Brazil Consumer and Tourism Laws

legislation is comparably short. In 1958, Decree 44.863 set up the ﬁrst Brazilian Commission on Tourism (COMBRATUR), which had a function to develop tourist planning. Later, in 1966, Decree 55, which also created the public company named EMBRATUR—‘The Brazilian Tourism Company’, transferred the functions of planning to a Tourism National Council (CNTUR). Later, Act 8.181/91 changed the name of EMBRATUR to ‘The Brazilian Tourism Institute’ and revoked Decree 55. Though tourism is only a recent phenomenon in Brazil, in 1971 the Federal Educational Counsel launched the ﬁrst curriculum to faculty of tourism oriented for professional training.168 In 2000, the Ministry of Education created a commission of experts in tourism. The commission was responsible for issuing licences to faculties interested in implementing courses of tourism and accommodation.169 It empowered faculties to create several courses, for bachelor or master on tourism preparing people to work in the sector. Prior to 2003, tourism issues were managed by the Ministry of Sport and Tourism, which had cumulative functions. Then in 2003, an exclusive Ministry of Tourism was created,170 separated from Sport. The new Ministry functions made easier to spread tourism in the country, with the assistance of EMBRATUR and CNTUR. Along with the Federal Constitution,171 legislative enactments and administrative rules in the tourism area have been started vigorously. These legislative enactments are primarily concerned with guiding, planning and licences related to public and administrative laws focusing on the relation between government and suppliers of tourist services. Examples are the certiﬁcation of tourist services,172 recognition of the profession of tourist guides173 and the creation of the Tourism National Statute,174 regulated by Decree 7.381/10.

2.3.1

The Tourism National Statute

The Tourism National Statute, Act 11.771/08 and Decree 7.381/10 are the recent pieces of legislation on tourism. Although the Decree regulates the Statute, the scope and extent of each legislation differ in substance.

168

Parecer 35/71 do CFE—Conselho Federal da Educação. Portaria 1518/2000 do Ministério da Educação. 170 Act 10.683, 2003, Statute of administrative organization of the Presidency and Ministry. In 2008, the Decree 6.705 recreated the CNTUR. 171 CF, 1988, Art 24 (VII) and Art 180 recognised the importance of the tourism. 172 Act 11.637, 2007. 173 Act 8.623, 1993. 174 Act 11.771, 2008. 169

2.3 Tourism Law

49

Whilst the Tourism Statute mainly tackles the relationship between the government and the suppliers, Decree 7.381/10 mixed the provisions and included few contractual law provisions between the consumer (traveller) and the supplier.175 However, a decree is an administrative rule unilaterally enacted by the President. The interpretation between the Tourism Statute and the Decree may ﬂuctuate both with the skill of the interpreter and the consistency of the judges. At the time the statute was enacted, few authorities and some law practitioners started to name it as ‘Tourism General Statute’ inducing the idea of principles and rules with the purpose to guide the tourism sector. However, a ‘general statute’ is a reference for other sectoral statutes. A ‘general statute’ is a reference in the legal system. Obviously, the content of the Tourism Statute is far from a comprehensive reference for the sector. The CDC, for instance, is a general statute. It regulates consumer relationship in sectors such as health aid, domestic and international carriage, tourism and others. If there is contradiction between the CDC and a sectoral law, the CDC applies.176 However, whilst general laws are considered ruling laws, that is, they set forth principles and rules in a particular sector, special laws/statute are limited to a part of a sector (ius singulare). Thus, in case of conﬂict, the special law/statute will prevail.177 In this regard, the Tourism National Statute is neither a general law/statute nor a special statute since it did not carve general principles or rules for the tourism sector as a whole, nor did it regulate part of the tourism sector in private law matters concerning consumers. The Tourism Statute replaced the former Act 6.505/77, which is an administrative statute that focuses on the relationship between the government and tourist service providers, the suppliers. Even so, the Act set up key deﬁnitions that are useful to courts and law practitioners in drawing a picture on travel and tourism matters.

2.3.1.1

Legal Deﬁnitions

The Tourism National Statute deﬁnes ‘tourism’ as follows: Art 2: the activities undertaken by a natural person while traveling and staying in places other than their usual environment for a period less than 1 (one) year for leisure, business or other purposes.

The sole paragraph of the article emphasises that the travelling and the staying ought to generate economic returns, income and public revenues.178 The Tourism Statute sets forth ﬁve criteria for ‘tourism’:

175

Decree 7.381, 2010, is the regulation of the Tourism National statute. Marques, Claudia Lima quoted by Nunes and Serrano (2005), p. 8. 177 Machado (2004), p. 94. 178 Act 11.771, 2008, Art 2, sole paragraph. 176

50

1. 2. 3. 4. 5.

2 Brazil Consumer and Tourism Laws

an economic activity while traveling and staying in places other than their usual environment for a period less than 1 (one) year for leisure, business or other purposes.

The main point of this deﬁnition is that it excludes trips taken for free, for example a hitchhiker travels to a friend’s house for the purpose of visiting a friend for a short period of time and stays overnight without any cost. According to the interpretation of the Tourism Statute, if the trip does not generate any cost, it is not considered as a tourism activity. It is also relevant to note that the main focus of the provision is on the natural person whilst traveling, which excludes legal entities. Moreover, the purpose of the travel is not limited to leisure but also comprises business and other purposes. Within the Tourism Statute, the precise term travel (viagem) is barely used. The deﬁnition appears to have been missed or omitted in essence by the statute, whereas the provisions indicating such a term do not provide a travel legal framework. Yet in the sphere of deﬁnitions, the Statute and the Decree strived to identify two main elements: ‘tourist services’ and ‘tourist services providers.’ The term ‘travel services’ is not under the law. Article 21 draws the term tourist services as services offered by ‘tourist service providers’. With the exception of a narrow deﬁnition in Article 27 § 3 relating exclusively to tourism agencies, there is not an accurate and comprehensive deﬁnition of ‘tourist services’.179 The deﬁnition laid down by Article 27 § 3 sets forth that tourist agent’s activities comprise offering, booking and selling. The statute calls these activities ‘tourist services’, which include ticket booking, tourist accommodation and other services, as well as educational programmes and professional improvement.180 The term also refers to complementary activities of the tourist agent (Article 27 § 4), for example obtaining passports, tourist transport, clearance of baggage during travel and excursions, vehicle rental, obtaining visas or any other documents needed for travel accomplishment and so on.181 The deﬁnition of ‘tourist services providers’ is found in Article 21, which named businesses, companies, single societies, individual entrepreneurs and social services as such. These entities perform a tourist economic activity if they fall into one of the following categories: (1) tourist accommodation provider, (2) tourism agencies, (3) tourist carriers, (4) events organisers, (5) theme parks and (6) tourist camps. The list is enlarged by the sole paragraph that reserves an option for those businesses interested in joining the economic activity, as for example: restaurants, cafes, bars, thematic aquatic parks and enterprises equipped with entertainment and leisure devices, and so on.

179

Idem, Art 21. Idem, Art 27 § 3. 181 Idem, Art 27 § 4. 180

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The main question is how the legislation differentiates tourist services providers from other services providers. At one level, even posing the question seems rather obvious, but in short, Article 22 summed it all up by providing authoritative criteria for the identiﬁcation of a tourist services provider. It states that solely those recorded in the Ministry of Tourism’s database shall be considered to provide ‘tourist services’. The period to be part of the database takes 2 years. The database is mandatory for any business’s branches; nevertheless, air transport services are excluded (§ 1, § 5). It is noteworthy that the provision sets forth an obligation rather than an option to those offering ‘tourist services’.182 Taking into account the six categories mentioned above, Article 23 sets forth the legal deﬁnition for tourist accommodation. The service is the target of the deﬁnition, independently of the formal manner in which the legal entity is created. The business has to provide temporary ‘tourist accommodation services’ offered in individual units for the exclusive use of guests. In addition, other services like hosting services are ‘tourist accommodation services’ upon a written contract or not, expressed or implied, and agreed based on a daily price.183 Regarding timesharing, it is understood as a ‘tourist accommodation service’ handled and controlled by an interchangeable management. It comprises the organisation and transfer of periods of use of the property between assignees of different tourist accommodations.184 The division of the business into units of hotel does not deprive the ‘tourist accommodation service’ whereas that the ownership of the units belongs to several persons altogether. In this case, the sole requirement is that the unit has to be determined exclusively to accommodation.185 In this regard, tourism agencies,186 tourist carriers,187 organisers of events188 and theme parks189 are considered legal entities. However, the law did not identify what type of person tourist camps are. The provision is only limited to the deﬁnition of tourist camps: areas set up and arranged to receive tents, car trailers or similar equipment, which have the necessary facilities, features and particular services to make lodgers’ outdoor stay easier and convenient.190

182

Idem, Art 22. Idem, Art 23. 184 Idem, Art 23 § 2. 185 Idem, Art 23 § 3. 186 Idem, Art 27. 187 Idem, Art 28. 188 Idem, Art 30. 189 Idem, Art 31. 190 Idem, Art 32. 183

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2.3.2

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Decree 7.381/10

The President enacts decrees. In order to be valid, it requires a statutory basis the same way as other administrative rules enacted by the Ministry of Tourism or its agency, EMBRATUR. If the content of a decree is irreconcilable with a statute, then it shall be declared void by the courts. What’s peculiar about these rules is that they are targeting to detail the statute rather than to create rights and duties between parties. Precisely, whilst a statute details the provisions of the Constitution, a decree reﬁnes the statute’s provisions and eventually adds variables to an existing provision, but it cannot create rights and duties. In this regard, Decree 7.381/10 surprisingly mixed public and private law provisions. There are provisions tackling contracts between the ‘tourist services providers’ (suppliers) and the consumer. The Tourism Statute did not originally contemplate those provisions. The problem arises in the legislative technique of the Brazilian legal system caused by improper sectoral pressures, which may be void for uncertainty. The legal system has also created remedies as counterbalances to restrain the impact of unwelcome legislative techniques, but only in limited circumstances. The Article 7 of the CDC prescribes a remedy, which does not exclude regulations set forth by administrative authorities if they are taken for the beneﬁt of the consumer, as further discussed.191 Thus, Article 27 of the Decree bounds tourist accommodation providers to include price information in advertising. The price has to be printed or by any means has to be easily accessible to the consumer. Further, § 2 states that tourist accommodation providers ought to include in the advertising any agreement made between parties. That is to say, all services included in the daily price, any eventual fees chargeable for services, the means by which the price list referred to, and any other services offered, whether printable or not, ought to be included in the advertising. Thus, between the provisions of the CDC and the Decree, the court will take into account those most favourable to the consumer in view of Article 7 of the CDC.192 As regards timesharing, Article 29 sets forth that a tourist accommodation provider may use units of a hotel that belong to a third party, listed in Article

191

Act 8.078, 1990, Art 7: The rights set forth in this Code do not exclude any other rights that may come as a result of international treaties or conventions ratiﬁed by Brazil. In addition, they do not exclude the internal legislation on regulations set forth by administrative authorities with jurisdiction, as well as any other rights that stem from the general principles of Law, analogy, custom and equity. 192 STJ REsp 489.895/SP, j.2010: ‘According to Art 7 of the CDC, whether any statute grants rights to the consumer, this statute can join the consumer microsystem, including itself in the special protection of the consumer system (..) Thus, the deadline of Art 27 of the CDC does not apply to the ﬁle. It shall apply the deadline of Art 177 of the CC/16, because it is most favourable to the consumer.’

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24 (II) of the Tourism Statute,193 to offer agreements in a timesharing framework. Contracts of interchange services are different from timesharing contracts (Article 31). Contracts of interchange services ought to contain clauses determining the exchange services of the period of occupation, which are under administration of the hotel. The sole paragraph of Article 31 left to the Ministry of Tourism the burden to set up requirements and minimum standards for interchange services. The Article 32 of the Decree sets forth the following duties for tourism agencies: The contract of services offered by tourism agencies shall provide: I - the conditions of alteration, cancellation and refund of payment for services; II – the name of the companies and ventures included in the package travel; III – whether there is any restriction to conclude the contract; and IV – all other information needed in regard to the service.

The Article 33 speciﬁes that the agreement for the ‘tourist package’ offered by tourism agencies shall include the name, address and tax number of the suppliers. The sole paragraph adds that tourism agencies shall provide sufﬁcient data to identify and ﬁnd tourist service providers located in foreign countries. Such a rule, enforces the supplier’s liability since the tourism agency is obliged to give the data of each supplier involved in the chain of suppliers. According to the Consumer Defence Code, all suppliers are solidarily liable194 to pay compensation in case of damages related to service defect under the principle of solidarity. The tour operator or any other supplier such as the hotel, the restaurant and the air company are liable even without fault. For example, if the hotel does not comply with the booking previously arranged for the package travel, the liability rests on the tourism agency, as well as on the hotel.195 The consumer shall sign three documents.196 The ﬁrst one is the termo de conhecimento (awareness form). It sets forth that tourism agencies offering adventure tourist services shall provide additional information in writing on (1) whether the equipment is safe (2) the necessary measures to be taken in regard to safety and environmental protection (3) the legal consequences in case of disagreement. The second one is the termo de responsabilidade (responsibility form). It shall specify the risks involved in the travel and the necessary measures to be observed to

193

Act 11.771, 2008, Art 24, II: the enterprises or legal entities known as condominium hotelier, ﬂat, ﬂat-hotel, hotel-residence, loft, apart-hotel, apart-service condominium, condo hotel and the like, that own a license to construct or certiﬁcate of construction concluded, issued by the competent authority, accompanied by the following documents: (..). 194 Act 8.078, 1990, Art 7, Sole paragraph: lf the offense was carried out by more than one author, everyone will be jointly liable for the compensation of damages according to the norms of consumption. Art 34: The supplier of product or service is jointly liable for the actions taken by their representatives. 195 TJSP Ap.0006109-36.2011.8.26.0037/SP, j.2014. 196 Decree 7.381, 2010, Art 34 § 2 item IV, V.

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avoid such risks. In addition, it must inform the consumer how to use equipment and tools for ﬁrst aid. The third and last document is the termo de ciência (second awareness form), which must explain the ofﬁcial rules and necessary arrangements concerning both the travel and the tour provided by the agency. There are discussions regarding provisions set up by a decree instead of a statute. However, the legal technique of preferring a decree to design private law provisions to a statute should not diminish the value of the beneﬁts granted to travellers. That is to say, the interpreter must look to Article 7 of the CDC, which does not exclude any other rights resulting from the combination of laws, particularly internal legislation and regulations, set forth by administrative authorities. In this context, the Decree considers consumer interest in terms of enforcing a strong presumption in favour of the vulnerable party. The validity of the Decree is in line with the Consumer Defence Code.

2.4

Travel and Tourism Contracts and Other Service Contracts

The ﬁeld of law called travel law (or tourism law or even both travel and tourism law) is not found or clearly recognised as a separate classical ﬁeld of law with autonomy over civil law. As it happens, there is the question of how to recognise travel and tourism contracts within the Brazilian legal framework and separate them from other service contracts. Contract law in Brazil is primarily civil law, embodied in the Civil Code. Some rules laid down by the Code are mandatory (compulsory) and cannot be avoided by the parties, whilst others are suppletory (interpretative) and can be altered by agreement. The Code contains important provisions on the formation of contracts for the sale of goods and services and regulates particular type of contracts such as consignment assignment (Articles 534 to 537), commission (Articles 693 to 709), agency and distribution (Articles 710 to 721), brokerage (Articles 722 to 729), carriage (Articles 730 to 756). These contracts are called typical contracts or nominate contracts.197 Along with the Civil Code, sectoral legislation also applies, for instance air carriage (the Brazilian Code of Aeronautics198 and international treaties such as the Montreal Convention), health insurance, energy, communication and so on. Of fundamental relevance are contracts that are not speciﬁcally regulated199 and not speciﬁcally nominated by the Civil Code or special laws. However, they are

In Brazilian Portuguese it is named: ‘Contratos típicos’ or ‘Contratos nominados’. Act 7.565, 1986. 199 In Brazilian Portuguese it is named: ‘Contratos atípicos’. 197 198

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allowed to be made according to Article 425 of the Civil Code.200 They are the innominate contracts, also known as atypical contracts. Although innominate contracts are non-regulated contracts, they have a set of standardised clauses that shall be considered general clauses, for example (a) a clause declaring null and void payment in foreign currency201 (except if allowed by law), (b) a prohibition on penalty clauses to go beyond a reasonable amount,202 (c) good faith provision,203 (d) time limit of 5 years to ﬁle a claim in consumer relationship204 and many other clauses. Any contractual clauses agreed between parties tending to relieve the parties from general clauses shall be null and void. The nullity of any clause shall not include the nullity of the whole contract. However, if a clause has not been integrated into the contract despite efforts by the parties and the absence of such a clause is excessively costly for any of the parties involved, the whole contract is null.205 It is not sufﬁcient that the law discloses the name of the contract in view of the fact that there are contracts named by law that did not receive appropriate regulation. To ensure the effectiveness of the nominate contract, an entire contractual law regulation through an appropriate statute is required.206 Beyond the importance of the ‘theory of general contracts’, which explains a variety of classiﬁcation, types and nature of contracts, the main focus here lies in travel and tourism contracts. In this regard, it seems that another big topic has emerged from the debate: what is the best way to name a travel and tourism contract? What is the best term? Would it be travel contract? Would it be contract of tourism? Would it be simply travel and tourism contract? The authors take different views on which terminology to take into account to create a classiﬁcation for travel and tourism contracts. It is difﬁcult to establish an appropriate word for a contract for ‘tourism’. It is still not clear how to classify the contract in view of both the complex legal nature of travel and tourism and the lack in legislation. Some authors have attempted to introduce a distinction between a contract of tourism and a contract of travel, arguing that the latter includes services that are not related to leisure, as for instance, a business travel. Although this distinction might seem reasonable, there are those who defend the theory that in contracts of travel, there is not a consumer relationship. This is because the purchaser might not be the ﬁnal addressee but a legal entity.

200

Act 10.406, 2002, Art 425: The parties are allowed to set up innominate contracts, but general clauses shall be accounted. 201 Decree 857, 1969, and Act 8.078, 1990, Art 53 § 3. 202 Act 8.078, 1990, Art 52 § 1. 203 Act 10.406, 2002, Art 422, and Act 8.078, 1990, Art 4, III. 204 Act 8.078, 1990, Art 27. 205 Idem, Art 51 § 2. 206 Azevedo (2009), p. 132.

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On the other side, such a view has been criticised by recent commentators as they have pointed out that in contracts of tourism and in contracts of travel, there is an obligation of result rather than of conduct or behaviour. That means the traveller uses many services as a ﬁnal addressee that the purpose of the travel is irrelevant. That is to say, whether the travel is aimed at leisure, business, education, health treatment and so on, there will be always a contract of consumption.207 The discussion begins whether to use the term travel or the term tourism to classify the service as an economic activity. The service is the object of the contract. There are four lines of reasoning: First,208 the classiﬁcation that take into account the concept of travel. The ones in favour of this reasoning stresses that ‘travel’ is better because the terminology is broader in scope than the term ‘tourism’. The term tourism in regard to travel tends to be understood restrictively for leisure. Travel involves a group of activities, developed and offered to consumers, which move to different places distinct from their permanent residence. Moreover, the core of the concept is the activity rather the nature of the services offered. It means that services are both availed by ‘consumer residents’ and ‘consumer travellers’. Although both of them are main consumers of local services such as food, entertainment, car rental, clothing and so on, there seems to be no doubt that some services are designed speciﬁcally for travellers like air carriage and other services provided by travel agencies. To this reasoning,209 tourist contracts—as it is called (not tourism contracts)— may be divided into two categories: (1) production and (2) distribution. Whilst production comprises three sub-categories, namely (1.1) carriage, (1.2) accommodation and (1.3) entertainment, distribution is divided into (2.1) promotion and (2.2) sales. Service of carriage may be classiﬁed into the following types: air transport, road transport, rail transport, maritime transport and inland waterways. Accommodation services include hotel, food and beverages, and leisure facilities. Entertainment services include all equipment, structure and features used by the traveller such as convention centres, fairs, exhibitions, museums, theatres, cinemas and the like. On the other side, promotion and sales may be done directly by the supplier or through a third party like franchisers, representatives and travel agents. Promotion includes sales promotion, marketing, advertising, brochures and the like. Sales are done by means of regular and good commercial practices. The second reasoning210 also takes into account the term ‘travel’ to separate travel contracts from contracts of tourism. It asserts that a travel contract is broader than a contract of tourism, which encompasses any type of contract, such as contract of tourism, contract of carriage (air, road, rail and maritime), accommodation contract, business travel contract and others. Whilst the travel contract carries duties that are not always related to leisure, the contract of tourism is always attached to

207

Feuz (2003), pp. 62, 63. Ferraz (2005), p. 127. 209 Idem, pp. 127, 128. 210 Feuz (2003), pp. 61–71. 208

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leisure. In addition, the expectations of the parties at the time they enter into their contractual obligations are different. Thus, a ‘business travel contractual relationship’ is different from a ‘tourism contractual relationship’. As a result, in a ‘business travel contractual relationship’, the expectation of the party is to use the contract in a way to reach a purpose (carriage, accommodation); in contrast, in a ‘tourism contractual relationship’, the party’s expectation is to use the contract as a purpose (leisure). The third reasoning211 tackles the concept of tourism rather than the concept of travel, stressing that in a broad term, tourism is a phenomenon that includes travel and temporary stay, for any reason, covering all activities that are available to support the travel and the temporary stay of people. This reasoning stresses that tourism is not limited to travel, this being only one facet of tourism. Further, tourism is not attached to a consumer relationship in view of the fact that someone may travel to a friends’ house as a hitchhiker for free for the purpose of visiting a friend for a short period of time and staying overnight. That is tourism but not a consumer relationship. Both accommodation in a friend’s house and the hitchhike provided for free shape relations under the coverage of the Civil Code rather than the Consumer Defence Code. In addition, in line with this reasoning, tourism is not limited to leisure only. There are leisure tourism, business tourism, health tourism, religious tourism, educational tourism and sportive tourism. It is not limited to accommodation because residents might also use tourist services offered by a hotel even if they are not tourists. Moreover, neither means of movement nor geographical position is a limitation for the concept of tourism. There is tourism by air, road, rail, maritime and inland waterways. Although this reasoning provided a glimpse of the distinction between travel and tourism, it did not technically distinguish contracts itself, except that it referred to tourism contracts as a whole, integrated with the concept of contract of adhesion. The analysis did not go further, and no deep examination about contracts was done. Those outside the ﬁeld of legal sciences, belonging to the ﬁeld of applied economics, are close to this line of reasoning. They state a deﬁnition for tourist based on UNWTO’s classiﬁcation, saying that the purpose of a tourist’s travel may be classiﬁed into (1) leisure (recreation, holiday, health, study, religion and sport) and (2) business, family, missions and conferences.212 Finally, the fourth reasoning213 stresses that a contract of tourism shall be set up by a travel and tourism agency. The contract has to encompass a range of services in which the agency determines the arrangements and combination of the travel services provided to the traveller. The single components purchased by the traveller through the travel and tourism agency, such as air, rail and road tickets; hotel booking; ticket to tourist destinations; assistance to obtain visa or any other

211

Mamede (2004), p. 136. Beni (2001), p. 35. 213 Scartezzini Guimarães (2010), p. 231. 212

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documents, are not included in the concept of contract of tourism. In this case, the contract can be a carriage contract, an accommodation contract or any other service contract rather than a contract of tourism. This is to say, the contract of tourism must combine services whlist other contracts must not (single components). The role of the travel and tourism agency is in fact either an intermediary or a supplier of services. As described, it is possible to conclude that travel and tourism under the Brazilian legal system has neither a precise classiﬁcation nor a particular statute setting forth contractual law provisions between suppliers and travellers. The legislation is broad, covering all types of consumers. Although the legislation does not help for a better classiﬁcation, the authors advocate for a comprehensive legal scheme. Therefore, the different approaches reveal the need for a further accurate legal framework.

2.4.1

Contract of Carriage of Passenger

The contract of carriage is a formal legal arrangement between the passenger and the carrier for the service of carriage of passengers and their luggage. It is a nominate contract214 with legal grounds found in Articles 730 to 756 of the Civil Code. The service of carriage is classiﬁed by the doctrine according to each type, for instance air, road, rail, maritime and inland waterways. Sectoral laws shall also apply such as Act 7.565/86 (Code of Aeronautics), the Montreal Convention, Act 11.975/09 on road carriage and administrative rules from administrative authorities such as ANAC and ANTT. The contract is typically a contract of consumption. It is a contract of result rather than of means. This is to say, the service provider must ensure that the passengers will arrive at their destination accordingly. There is no unanimity amongst authors on the classiﬁcation of this type of contract. Whilst some authors separate contract of carriage from contract of service, there are those who deﬁne the contract of carriage as a subset of contract of service.215 Party autonomy for contracts of carriage is also subjected to limitations. For instance, according to Article 739, it is forbidden for the carrier to refuse the carriage of any passenger without valid reasons. These reasons can be justiﬁed by safety, health and hygiene or by any other exception created by law. In addition, the carrier cannot avoid paying any type of compensation to the passenger even if the contract prescribes an exemption clause in this regard. If the contract of carriage contains such a clause in it, that clause is null and void.216

The so-called in Brazilian Portuguese: ‘Contratos típicos’. Scartezzini Guimarães (2010), p. 91. 216 Act 10.406, 2002, Art 734. See also STF Sumula 161. 214 215

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Although the contract of carriage is expressly regulated by the Civil Code, authors217 have argued on which law to apply in case of conﬂict. Contracts of carriage should be governed by general law and further special laws,218 and there is lack of clarity on which one must prevail. For instance, taking into account the contract of air carriage, whether there is conﬂict of laws, judges are bound to conceive, interpret and apply the law according to the subject analysed. Such conﬂict is not only between general law and special law but also between national and international laws. The core of the issue is related to the compensation in cases of damages relating to pain and suffering219 and material damages. Whilst material damages are regulated by both national laws and the Montreal Convention, there are deep discussions concerning damages relating to pain and suffering, the so-called moral damages, better known in English as immaterial damage. The latter has a narrow and limited application under the Montreal Convention. The ﬁrst distinction between national laws and the Montreal Convention is in respect of the type of air carriage, whether the passenger is involved in domestic or international air carriage. Whilst the Brazilian Code of Aeronautics applies only to domestic carriage,220 the Montreal Convention, on the other hand, applies to international carriage.221 Moreover, the Consumer Defence Code and the Civil Code apply to both national and international carriage in terms of determining the liability of the air carrier. On the one hand, air carriers prefer the application of the Montreal Convention, where the contract is for international carriage by air,222 and the Brazilian Code of Aeronautics, where the contract is performed for domestic carriage by air on account

217

Ferraz (2005), p. 170. Such as: the Montreal Convention, and the Code of Aeronautics—Act 7.565/86. 219 The psychological consequences of personal injuries, in terms of pain, shock, consciousness that one’s life expectancy has been shortened, embarrassment caused by disﬁgurement, etc. Damages are assessed on the extent to which the claimant actually experiences these feelings. Oxford, A Dictionary of Law, 6th ed., New York, 2006. 220 Act 7.565, 1986, Art 215: ‘It is considered domestic and governed by this code any carriage in which the starting points, intermediate and destination points, are located in national territory.’ 221 Montreal Convention, O.J. L194, 18.07.2001 Art 1, § 2: ‘For the purposes of this Convention, the expression “international carriage” means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two States Parties, or within the territory of a single State Party if there is an agreed stopping place within the territory of another State, even if that State is not a State Party. Carriage between two points within the territory of a single State Party without an agreed stopping place within the territory of another State is not international carriage for the purposes of this Convention.’ 222 Example: The various kinds of air contracts or contract clauses have tended to feature quite strongly that ‘(..) the Convention governs and in most cases limit the liability of carriers for death or personal injury and in respect of loss of or damage to baggage. See notices headed Advice to International Passengers on Liability and Notice of Baggage Liability Limitations.’ In Brazil the Convention was ratiﬁed by the Decree 5.910/06 that entered into force on 27th Sep., 2006. 218

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of their limitation on liability. On the other hand, passengers usually claim for the application of the Consumer Defence Code because it provides many ways to facilitate consumers’ defence, and it ensures that their rights are observed in the courts. Under Article 6, item VIII, and Article 38 of the Consumer Defence Code, the inversion of the burden of proof in favour of a disadvantaged person is made possible. Besides the Civil Code, the Consumer Defence Code has several provisions in regard to reparation of damages. If the relationship between two parties is a consumer relationship, the courts will mainly apply the Consumer Defence Code and, only in a subsidiary function when necessary, the Civil Code.223 The Superior Court of Justice, in 1992 by virtue of ‘Sumula’ 37, recognised that immaterial and material damages are not strictly linked. The court concluded that ‘(. . .) there is cumulative compensation of damages for material and immaterial damage from the same fact’.224 Thus, according to another decision, if the fact has been proved, there is no need to provide any other proof of immaterial damage.225 In practical terms, in case of liability on personal injury by pecuniary (material) damage in international air carriage, the Superior Court of Justice (STJ) has not hesitated to use the treaty and simultaneously the Consumer Defence Code for a full compensation of immaterial damages.226 Nevertheless, some authors argue that there is coherence rather than contradiction when applying simultaneously an international treaty, the Consumer Defence Code, the Civil Code or any other special rules to a speciﬁc case. Hence, the actual doctrine leads to a substantial harmonised interpretation of the law rather than to a formal concept of conﬂict that disputes which one or the other of laws will be applicable.227 In other words, the Superior Court of Justice (STJ) has recognised that the contract of air carriage shall be understood as a contract of consumer relationship. In this case, the CDC does not exclude the Code of Aeronautics or the Montreal Convention.228 However, the correlation between the request and cause of action described in the petition may take great importance by choosing either the treaty or the national law. If the plaintiff ﬁled a claim based on an international treaty that covers only material damages setting a maximum limit for compensation and later he or she ﬁgures out that the CDC will provide better protection, the basis of the claim cannot be changed during the proceedings. That is to say, if both parties claim under the rules of the treaty, the court will be unable to apply the CDC. Even recognising that the CDC

223

Benjamin et al. (2010), p. 113. DJ 17/03/1992, p. 3172. REPDJ 19/03/1992, p. 3201. RSTJ vol. 33, p. 513. RT vol. 677, p. 203. 225 STJ AgIn 250.722/SP, j.1999, DJ 07/02/2000, p. 163. 226 Benjamin et al. (2010), p. 119. 227 Jayme (1995), pp. 259 apud Benjamin et al. (2010), pp. 108/109. 228 Nery and Nery (2006), p. 196. 224

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grants full compensation for material and immaterial damages, the court will take into account the law upon which the claim was based to decide the dispute.229

2.4.2

Contract of Car Rental

The purpose of the contract of car rental is to allow the use of a car to the consumer for a speciﬁc date or period of time. It is a formal legal arrangement between the consumer and the supplier where the consumer is the car driver. There is no speciﬁc sectoral or special legislation designed for this type of contract. The supplier (locadora de veículos) of the service is a ‘tourist service provider’, which has the possibility to register within the Ministry of Tourism.230 In this case, the registration in a public database of the Ministry of Tourism is not mandatory for the supplier of car rental on the grounds as it is biding for other suppliers.231 Although the Tourism Statute sets forth deﬁnitions for the car rental sector, it has no binding effect on the contract concluded between the consumer and the supplier. In this regard, the contract of car rental is a sub-category within the overall body of contract of consumption, meaning that the CDC is the main legislation applied to the contract. Therefore, the consumer is entitled to withdraw from the contract of car rental in view of the rights granted to all consumers as a whole.232

2.4.3

Contract of Accommodation

The contract of accommodation is a sub-category within the overall body of contract of consumption. Whilst the general contractual consumer law imposes a duty to exercise due care, the Tourism National Statute did not tackle duties on contractual law but only tackled the deﬁnition of means of accommodation (Meios de Hospedagem).233 In addition, the statute did not deﬁne contract of accommodation. As already said, the provisions of the Tourism Statute are set up to regulate the relationship between the government and the tourist service provider (supplier) rather than to regulate matters between the supplier and the consumer (traveller). The statute has no binding effect regarding contractual law provisions on the contract concluded between B2C. In practical terms, the statute particularly raised

229

STJ REsp 240.078/SP, j.2001. Act 11.771, 2008, Art 21 Sole Paragraph (VII). 231 Idem, Art 21 (I) to (VI). 232 See Sect. 2.1.3.3. 233 Act 11.771, 2008, Art 23. 230

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a legal deﬁnition to assist the interpretation of the concept of tourist accommodation, alongside the other deﬁnitions. In the private law, contract of accommodation234 is an innominate contract,235 not particularly regulated by the Civil Code, and as already said, with the exception of general clauses, the statute does not require any formal legal arrangement for it to be performed by the parties. Outside the area of general contract law, the Tourism National Statute did not set up contractual provisions in this regard, except Decree 7.381/10, which expressly set up narrow provisions for the contract of accommodation. However, its enforcement ought to be combined with Article 7 of the CDC, which applies only if it is of beneﬁt to the consumer traveller. The scope of the contract of accommodation is the service to provide overnight accommodation, including a clean bed every night, clean towels and sheets, ensuring the room is in a condition suitable to the consumer (traveller). According to the doctrine, it is only possible to talk about contract of accommodation when other types of services are offered or linked with accommodation such as food, conference room, wellness centre and the like.236 If a person enters a hotel to use the restaurant or the wellness centre solely in a single way, he or she is entering into a contract of service rather than a contract of accommodation. Usually, in most situations, the contract of service is performed with a third party unconnected with the accommodation service provided by the main supplier with which the third party had a prior agreement, sharing part of the operation of the business. There are different types of tourist accommodation such as hotels, residential hotels, camping and other similar residential tourist accommodation. According to the Tourism Statute, the focus is not on the deﬁnition of the type of accommodation but on the deﬁnition of the service provided as a ‘tourist accommodation service’. In this regard, there are discussions about the service provided by a particular type of accommodation, the so-called aparthotel or better known in English as condo hotels (fractional). The aparthotel comprises a building with several single units (ﬂats), supplied with furniture and hotel services. It is legally a condominium but is operated as a hotel, offering short-term rentals. Whilst the ownership is divided into fractions amongst several owners, the business management service is usually run by one hotel company. In addition, according to Article 23 § 1 of the Tourism Statute, it shall be submitted to registration at the Ministry of Tourism. Actually, this form of ownership blurs the line between what is described as paid accommodation and what is described as ownership of real estate or vacation homes. Given the nature and complexity of these arrangements, it becomes difﬁcult to identify and inform precisely about the type of accommodation or real estate service used there. As a result, the doctrine is divided. There are two situations to be found: (1) the owner of the unit may rent it to a third party, directly or through a real estate

It is known by the doctrine as ‘Contrato de hospedagem’ (Contract of hospitality). The so-called: ‘Contratos atípicos’ Act 10.406, 2002, Art 425. 236 Scartezzini Guimarães (2010), p. 5. 234 235

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company, or (2) the owner may transfer the property to the trustee group (an associate pool), which reallocates the apartment, together with other apartments, to be rented for a short period of time. The trustee is usually a hotel company. Therefore, in the ﬁrst situation, there will be a contract of rent between the owner and the tenant subjected to the tenancy statute, whilst in the second situation there is a contract of accommodation because the service provided is all-inclusive.237 Nevertheless, regarding the two situations mentioned above, a brief discussion of the issue will round out the discussion on the kind of contract. That is to say, if the agreement does not include services, the court has understood that the tenancy statute shall apply.238 The scope of the tenancy statute is the regulation of habitual residence, which does not cover aparthotels, which were set up to target short-term rentals.239 More recently, the State Court of Sao Paulo ruled that the tenancy statute shall not apply to a contract of accommodation, which is extended to a ﬂat or aparthotel. Thus, the law applicable is the Civil Code rather than the tenancy statute.240 It turns out that nearly all contracts of accommodation are classiﬁed as contracts of consumption. An example of accommodation that is outside of this classiﬁcation is overnight travel, which is characterised as unpaid accommodation (e.g., stays with friends and relatives, trips to owner-occupied vacation homes). These are excluded from the coverage of contracts of consumption. If one person receives another person (a guest) in his or her own domicile and have the guest pay the costs incurred by the owner, there will be a contract of accommodation but not a contract of consumption. This is because the owner does not exercise economic activity as a supplier, and therefore the Consumer Defence Code is not applied, only the Civil Code.241 There is also a case when a natural person (physical person) from time to time rents to guests, for a short period of time, his/her house located at the beach, in combination with other services such as cleaning and providing breakfast. The activity is an economic activity performed by the owner of the house, who is not a professional but only does the activity occasionally. Therefore, there will be a contract of accommodation,242 which would also be classiﬁed as a contract of consumption in view of the economic activity exercised by the owner of the house. As a result, the professional status of the supplier is not an essential element of a contract of accommodation. It is not mandatory that the supplier will always be a

237

Idem, p. 6. TJSP AI 0056571-40.2013.8.26.0000/SP, j.2013. 239 Scartezzini Guimarães (2010), p. 7. 240 TJSP Ap.0102607-13.2008.8.26.0002/SP, j.2012. Moreover, aparthotel is excluded expressly from the tenancy statute: Act 8.245/91, Art 1, sole paragraph. The following are regulated by the Civil Code and special laws: (..) item IV: apart-hotels, hotels - residence or equivalent, considered as those that provide regular service to its users and as such are allowed to operate. 241 Scartezzini Guimarães (2010), p. 10. 242 Idem, p. 12. 238

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hotel company. But if there is a professional person exercising the activity, then there will be always a contract of accommodation243 with consumption characteristics. Although the contract includes in the provision of services the duty of care of the luggage or a parking space in a parking garage, it does not matter whether or not the contract expressly states the inclusion of such services in view of the fact that the no-fault strict liability is granted in favour of the consumer (traveller). The consumer has the rights granted by the Consumer Defence Code.244 The supplier is liable even if there is no fault. Further, any supplier/retailer/seller (provider) in the chain will be liable, according to the principle of solidarity under the Consumer Defence Code.245 The hotel cannot avoid liability for stolen luggage left in the hotel by including a no-liability clause into the contract. In fact, the hotel has the duty to receive the consumer’s (traveller) luggage.246 The deposit of the things (luggage) brought into the hotel by the consumer (traveller) is not free of charge, but rather it is included in the price of the accommodation.247 Moreover, the duty of care relates to the obligation to ensure the safety and security of consumers (travellers) whilst temporarily availing of the accommodation provided by the supplier. As it happens, another question may arise in regard to the type of contract, inasmuch as the contract is evidently a contract of accommodation, not a contract of deposit. The hotelier is liable to the consumer (traveller) since the hotelier is a depositary. The relationship between the hotelier (supplier) and the consumer (traveller) is considered a ‘deposit by necessity’.248 It turns out that deposit is another kind of contract, particularly nominated by the Civil Code. However, as the deposit is linked with the contract of accommodation and its price is included in the price of the accommodation,249 how can one distinguish between one and the other contract? Or is it one contract, and there is no distinction? When the question is framed in this way, the answer appears inescapable but no less peculiar. The contract of deposit is performed at the time the things (luggage) belonging to the depositor (traveller) are transferred to the depositary (hotel) under its duty of care for safe custody. Even if the belongings are not transferred to a hotel through the simple act of entering into the room at his disposal carrying his luggage, there is a contract of deposit.250

243

Idem, p. 12. Act 8.078, 1990, Art 12, 14. 245 STJ REsp 1.102.849/RS, j.2009. 246 Act 10.406, 2002, Art 649, sole paragraph: The hoteliers are liable as depositors. They are also liable for theft and robbery committed by his employees in their business premises. 247 Idem, Art 651: The deposit is necessary and shall not be free of charge. In case of the Art 649 the payment for the deposit must be included in the price of the accommodation. 248 Idem, Art 649. 249 Idem, Art 651. 250 Scartezzini Guimarães (2010), p. 39. 244

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The contract of deposit is an auxiliary contract. Also noteworthy is the strong provision set forth by Article 652 of the Civil Code. It concerns the civil imprisonment of the depositary (supplier) if he does not restitute the deposit (luggage) when requested by the consumer (traveller). The sanction applied shall be up to one year imprisonment and compensation of damages. In regard to the exclusion of liability the Article 650 of the Civil Code states that the hotelier’s liability ceases if it proves that the circumstances causing harm to the travellers or guests could not have been avoided and damages were caused by the consumer traveller’s fault. The doctrine of ‘exclusion of liability’ is reinforced by the CDC.251 Thus, service providers are able to protect themselves by giving notice of the possible consequences or risks of failure and that consumers would be responsible for the damages incurred through their own fault. This is the case where the consumer traveller misuses hotel equipment after having been aware of all the information on the equipment’s operability. An example is when the customer jumps dangerously into the swimming pool or endangers himself/herself by jumping acrobatically from the window. These would be where exclusion of the hotel’s liability applies. However, courts have recognised concurrent liability (dividing the fault between the hotelier and the consumer) in speciﬁc cases. For example, if the consumer provoked the dangerous situation, such as jumping dangerously into the swimming pool, and on the other hand the hotel did not provide enough information concerning the depth of the water and the use of the swimming pool, the liability will be divided between the supplier (hotel) and the consumer.252 The hotelier, must exercise the duty of care, meaning whether under normal and reasonable foreseeable conditions, the hotelier has ensured the safety of the consumer at all time, which is reasonably expected. Obviously, if the hotelier’s liability is based on no-fault strict liability, the hotelier cannot exclude the fault of one of his employees or subcontractors.

2.4.4

Timeshare Contract

The contract of time-sharing, time-share or timesharing is best recognised in the Brazilian legal framework as an innominate contract. It does not mean that the contract has no name but rather that there is not an apprehensible and exclusive regulation for it. Article 31 of Decree 7.381/10 names it contrato de cessão por tempo compartilhado. In Brazilian Portuguese, timesharing is also known as ‘multipropriedade’, meaning ownership is divided into fractions amongst several owners. This contract is not particularly regulated by the Civil Code, and therefore, as already said, with the exception of general clauses, there is no formal legal

251 252

Act 8.078, 1990, Art 12 § 3. STJ REsp 287.849/SP, j.2001.

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arrangement required by law in order for it to be performed by the parties. It is currently treated by the doctrine as an innominate contract. The law applicable is the general consumer and contractual law. Outside the area of general contractual law, the ﬁrst fractional rules on timesharing were enacted in 1997 by both the Ministry of Industry and Commerce and EMBRATUR through administrative provisions.253 Furthermore, the Tourism National Statute did not set up contractual provisions in this regard, except Decree 7.381/10, which expressly set up narrow rules on timeshare contract in Articles 28 to 31. However, the enforcement of the Decree shall be combined with Article 7 of the CDC, which does not exclude regulations set forth by administrative authorities if it is to the beneﬁt of the consumer. The main characteristic of the contract is that it is tied not to a speciﬁc apartment or house but rather to the right to use and occupy any apartment or house belonging to the supplier (which may be a hotel company) for a certain period of time. The consumer traveller is entitled to occupy exclusively an immovable property assumed through the contract. The contract ought to include a term for a period of time of the year. Although the Decree refers to a certain period of time agreed upon in the contract by the parties, in substance it did not deﬁne a ﬁxed period of time. Neither the period of time nor the extent of the contract is determined by the Decree. According to this regulation, the period of time ﬁxed by an agreement ought to be characterised either by time or by points, being ﬁxed or ﬂoating in the contract.254 Although it might appear that the parties are free to choose the time more suitable for them, this is not the case. This is because from a supplier’s perspective,255 a timeshare contract can be a way for suppliers to encourage consumer travellers to travel in the low season. It could reduce the seasonal problems for the supplier regarding low booking rates. Therefore, the values of freedom of contract and private autonomy are diminished by excluding contracts individually negotiated. Yet it is a contractual relationship covered by the CDC, being a consumer relationship related to private consumption, where the contract is a contract of adhesion256 and the consumer traveller is particularly vulnerable. Consequently, it is reasonable to suppose that the time available (the right to use and occupancy) is always during the low season, in which consumers have no choice. Timesharing is used in the area of tourist accommodation to create rights in situations where tourist apartments or tourist houses belong to a hotel

253

Deliberação Normativa 378, 12.08.1997. Decree 7.381, 2010, Art 28 § 3, § 4. 255 According to Art 28 § 1 of the Decree 7.381 the supplier shall be a hotel service provider. 256 Contract of adhesion is a ‘standard term contract’ which is offered to the consumer without negotiation of its terms. Though European Law has not literally adopted such a term, it is widely used in Brazil, e.g. Art 54 of the CDC speciﬁes that: ‘A contract of adhesion is the one that the clauses have been approved by the competent authority or established unilaterally by the supplier of goods or services without the consumer having a chance to change its content substantially.’ 254

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company.257 The hotel company provides privileges for the afﬁliation of members to such service, which enables them to exchange or negotiate their right of use to the apartments (units) or houses with a third party. Note that the right refers to the use of immovable property rather than to ownership. There is not a property right but a right of use of the property for a speciﬁc period of time. For example, all owners of condominiums only have the right of use of the property and not ownership, and such right remains only up to the time ﬁxed in the contract. The timesharing is not limited only to a service and/or accommodation provided to the consumer traveller but also extends to an investment service. This leads to a legal discussion on whether it is solely a contract of service or a sub-category of the contract of accommodation, which by nature includes services.258 The main characteristics of this type of contract are requiring long-term delivery of services and requiring continuing services of various kinds such as parking space, restaurant, wellness centre. The services often are provided by a wide range of third parties, meaning other subcontracts are included within the main contract. Despite the growing activity on timesharing contracts in Brazil, there is a lack of certainty mainly because there is no speciﬁc statute about it. Therefore, the courts apply the general contractual law through the Consumer Defence Code. As mentioned, if appropriate and necessary, they also apply Decree 7.381/10 or any other norm, in combination with Article 7 of the CDC. Of great importance is how sellers have combined marketing and trade practices. It will determine the way in which courts can challenge the validity of a contract by means of their interpretation on what is a fair or an unfair commercial practice. This is because usually the consumer is invited to attend a business party, where he or she is offered alcoholic beverages, and the contract is signed in an environment where success in convincing the consumer is attainable and there are videos and games. According to the doctrine, it is an aggressive marketing practice that exaggerates the quality of goods or services in order to obtain from the consumer an unreﬂecting attitude or the mere wish to do as others do. As a result, the courts have applied Article 49 of the CDC, in which the consumer has the right of withdrawal in view of the fact that the contract was performed away from the business premises, the so-called off-premises contract.259 In this context, courts have recognised the abusive marketing practices used by the seller, which cause an imbalance in the relationship between the parties. The chosen method of selling is unfair where on the one hand the company highlights the great qualities of the business using experts and whilst in a favourable and seducing

Decree 7.381, 2010, Art 28 § 1: the supplier shall be a hotel service provider. Scartezzini Guimarães (2010), p. 79/84. This author emphasises that although the contract of time sharing is not included in the category of a contract of accommodation, in particular cases it may be similar to it. 259 Marcelino (2003), p. 748. 257 258

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environment; on the other side, the consumer, after long hours of watching appealing videos and listening to fancy explanations, had not have sufﬁcient time to reﬂect on the offer.260 That practice increases the vulnerability of the consumer, exploiting him/her in the situation. Another important provision applied to timeshare contracts is found in Article 53 of the CDC. It renders null and void those clauses that provide for the retention of the entire payment by the supplier if the consumer fails to pay one or more instalments. Because of the lack of clarity as to what is covered or should be covered by the entire payment, some suppliers include in the contract a clause permitting the retention of 90% of the entire consumer payment. They argue that the CDC under Article 53 only forbids retention of the entire payment, not part of it. As a result, the courts reacted by stating that Article 53 shall be interpreted in harmony with other rules, including those from the Civil Code261 limiting the amount of compensatory ﬁne.262 Concerning the compensatory ﬁne in case the consumer fails to pay an instalment, the most effective provision is found in Article 52 § 1, which limits the amount of compensatory ﬁne to a maximum of 2% of the amount of each instalment. Although the main content of Article 52 is addressed to credit and ﬁnancial services, authors say that the courts have enlarged the interpretation of such limit in order to cover all kinds of contracts of consumption. The limitation of 2% is valid not only for credit and ﬁnancial services but also for any kind of contract of consumption.263 Moreover, the consumer has the right to pay his or her duties in advance before the end of the contract. The payment may be entirely or partially settled. The payment shall include the proportional deduction of interest and other expenses.264 The similarity of the timeshare contract with other contracts of consumption is quite close if liability is referred to. This is because the contract involves a wide range of third parties, which are providers of services, meaning that all of them will be jointly liable for material or immaterial damages caused by their own conduct.265 Any other rule, such as Article 18 of DN 378/97, which sets forth subsidiary liability, has no effect at all.266

260

TJRS Ap.598021970/RS, j.1998. Act 10.406, 2002, Art 408 to 416. 262 STJ REsp 302.520/MG, j.2003. 263 Benjamin et al. (2010), p. 361. 264 Act 8.078, 1990, Art 52 § 2. 265 Idem, Art 7, sole paragraph, and Arts 18, 25 § 1. 266 Scartezzini Guimarães (2010), p. 84. 261

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Contract of Tourism

The doctrine asserts that a contract of tourism is for the sale of ‘tourist package’, and the obligation to produce a result is based on the contractual relationship. Liability lies with everyone in the chain, meaning that whether they are national or international suppliers, everyone will be jointly liable for the performance of the contract.267 The main characteristic of this contract is the chain of services, such as carriage of passenger, accommodation and eventually other services such as tours, exhibitions, sightseeing and the like, for an inclusive price. Herein, ‘tourist package’ and ‘travel package’ and ‘package travel’ are used synonymously. The most obvious point is that ‘tourist package’ is any prearranged combination of services put together by a supplier, tailored to a speciﬁc person or not, and offered for sale at one price. Authors draw attention to the divergences in opinion on the classiﬁcation of travel and tourism contracts, which have emerged because of the arrival of the travel and tourism sector. Amongst these, the theory between combined and single components has dominated among legal experts and practitioners in understanding the legal framework. Where the single components are purchased by the traveller, such as air, rail and road tickets; hotel booking; ticket to tourist destinations; assistance to obtain visa or any other documents through the travel and tourism agency or even from the supplier (the hotel or air company), the purchase is not included in the concept of contract of tourism. Differently, in the EU, the components of a contract, whether single or combined, are not crucial to determining the law applicable. Under Brazilian law, the contract may be a contract of carriage, a contract of accommodation or any other service contracts rather than a contract of tourism.268 Interestingly, a contract that involves maritime transport such as cruise might be classiﬁed under a contract of tourism. The supplier is committed to carrying the passenger according to a particular itinerary for some days, providing accommodation, meals and entertainment all-inclusive.269 It includes inland waterways because cruises may also offer packages that include crossing cities through rivers. As mentioned, under Brazilian civil law, there are innominate contracts not particularly regulated by the Civil Code.270 With the exception of general clauses, which ought to be followed as standardised clauses, there is no formal legal arrangement required by the Civil Code or a particular statute in order for these contracts to be performed by the parties. In this regard, the contract of tourism is an innominate contract not particularly regulated by law because it falls under the scope of general contractual law where the CDC applies.

267

Atheniense (2002), pp. 39–40. Scartezzini Guimarães (2010), p. 231. 269 Idem, p. 324. 270 The so-called in Brazilian Portuguese: ‘Contratos atípicos’ (CC Art 425). 268

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The Tourism National Statute is outside the area of general contractual law, meaning that the Statute did not set up contractual provisions in this regard, except as already pointed out by Decree 7.381/10, which regulates de Statute and expressly set forth in its Article 32 few provisions on the extent of the contract of services offered by tourism agencies. Consequently, the enforcement of the Decree aims particularly at protecting consumers. The Decree shall apply only if it is of beneﬁt to the consumer, in combination with Article 7 of the CDC. The Article 28 (I) of the Tourism Statute that refers to ‘package travel’ is inaccurate. It is not accurately preordained ‘package travel’ as a combination in a logical way, because it did not relate exclusively to its general meaning or legal concept. On the contrary, it attempts to underlie the classiﬁcation under the chapter ‘Tourist carriers’ by classifying four divisions that are (1) package travel (. . .). (2) local tour (. . .). (3) transfer (. . .) and (4) special (. . .).271 According to this provision, package travel is the itinerary conducted at the municipal level, intercity, interstate, or international, including in addition to transport, the accommodation and other tourist services such as visit to the tourist sites, food and so on. This deﬁnition insufﬁciently describes or stands for the ‘package travel’ as a combination or prearranged combination of tourist services as a coordinated choice. Rather, it is limited solely to the element ‘which include, in addition to transport’ that automatically excludes any combination of package such as accommodation or tours, which not include transport. Moreover, the term ‘package travel’ appears three times in the provisions of the Tourism Statute. Decree 7.381/10, on the other hand, lacks any discernible deﬁnition on this concept. The ﬁrst reference in the Tourism Statute, Article 32, sets forth that contracts relating to tourist services offered by a travel agency shall inform of (. . .) the companies and ventures included in the ‘package travel’. The second is found in Article 33, which speciﬁes that ‘package travel’ services offered by travel agencies shall include the name, address and tax number of the suppliers. Finally, Article 41 adds that cruise or river roadmaps, rail and road, as well as its variations made by sellers who sell ‘package travel’, must be presented to the Ministry of Tourism, taking into account the competencies of public agencies and other federal administration bodies. Thus, in matters relating to shaping a concept of ‘package travel’, neither the regulation nor the Tourism Statute has developed a clear legal deﬁnition for the term because they were designed mainly to regulate the economic activity of the supplier rather than to establish contract law provisions for the parties. However, even against this background, the courts have demonstrated an increasing willingness to protect the consumer from non-performance or improper performance of such a contract. Recent decisions of the Court of Appeal in Sao Paulo have conﬁrmed that according to the deﬁnition of ‘travel agency’ under Article 27 of the Tourism Statute, the liability of such a seller extends to any services purchased by a consumer, as well as services pointed by the travel agency to him or her. In matters

271

Act 11.771, 2008, Art 28.

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concerning consumer relationship, the supplier’s/retailer’s/seller’s liability for defective service is a no-fault strict liability (Articles 12 and 14 of the CDC).272 Therefore, because of a lack of precise legislation about the effects of the combination of services offered by the seller of a package travel, the assessment is mainly left to judges to decide on a case-by-case basis under the general legal framework of the CDC. As mentioned, according to the regulation, the contract offering services of ‘tourist package’ shall include sufﬁcient data to identify ‘tourist service providers’ in the country, as well as to identify and ﬁnd ‘tourist service providers’ located in foreign countries.273 This provision also meets the duty set forth by another provision that regulates the CDC. It concerns electronic commerce and requires that electronic sites used to offer or perform contracts of consumption shall disclose in a prominent way the following: (1) information on the name of the company (including the national number of the person whether physical or juristic); (2) physical (local) and electronic address; (3) essential characteristics of the goods or services, including eventual risks to the health and safety of consumers; (4) price discrimination on differentiation between any additional costs such as delivery and insurance; (5) sufﬁcient condition for the offer, including alternative ways of payment, availability of the stock in trade, time in which and mode by which the service will be executed or the product will be delivered; and (6) clear and prominent information on eventual restriction of the offer.274 It turns out that one of the signiﬁcant aspects of those contracts is the offer (oferta). The offer shall include the pre-contractual information duties. In particular, it is the information that a business ought to provide to the consumer before concluding the contract. The tourism agency must provide such information. But third parties, which are usually located in another state, city or even another country, will provide the tourist service. This means that other subcontracts are included within the main contract, and this peculiarity in addressing different suppliers is the key aspect of the contract of tourism.275 In Brazil, the pre-contractual information duties are obligations that fall within the scope of the Civil Code276 and the Consumer Defence Code.277 The remedy that meets the consumer traveller’s interest is found in the CDC, which carries a range of criminal responsibilities for the seller, which may arise from abusive practices in the contractual consumer relationship.

272

TJSP Ap.9055447-05.2009.8.26.0000/SP, j.2012. Decree 7.381, 2010, Art 33: The services of ‘tourist package’ offered by tourism agencies shall include the name, address and tax number of the suppliers. Sole paragraph: the tourism agency shall provide sufﬁcient data to identify and ﬁnd the tourist services providers located in foreign countries. 274 Decree 7.962, 2013, Art 2, I, II, III, IV, V, VI. 275 Decree 7.381, 2010, Art 33. 276 Act 10.406, 2002, Art 427 to 435. 277 Act 8.078, 1990, Art 20, 30 to 35. 273

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The question is how to adjust the legal limits of the information duty, whereas there is a difference between pre-contractual information duties that includes advertising and pre-contractual information duties that does not include advertising.278 Over the years, companies have worked hard to understand what determines consumers’ buying decisions. The purpose is to understand what induces people into buying more of companies’ products. Therefore, in a common sense, the major objective of advertising is not to convey information but to shape perceptions. Whilst the ﬁrst mode, information including advertising, advertises the good or service using marketing techniques to convince consumers of the qualities of the good or service, the second mode, information without advertising, discloses all the necessary terms and conditions of the offer that are essential to perform the contract. Article 35 of the CDC provides the remedy for these two different modes of advertising in a unitary approach. However, the provisions of the CDC on criminal offences have a separate approach for each of them. That is to say, Article 66 protects all consumers who received pre-contractual information without advertising, whilst Articles 67, 68 and 69 refer to misleading information in those that include advertising.279 Consequently, when advertising, if the information duty carries misleading and unfair advertising that encourages consumers by any reason, thus exploiting their vulnerability in the market, the seller may face criminal liability under Articles 67, 68 and 69 of the CDC. When the seller provides essential information280 without advertising, there is no problem. However, if the supplier does not comply with the essential information, he or she shall suffer the effect of civil liability under Article 35 and/or criminal liability under Article 66 of the CDC. With regard to criminal sanctions, there is no difference. Criminal sanctions do not differ signiﬁcantly. Information duties that include advertising (CDC Article 67) and those that do not include advertising (Article 66) receive the same sanction: 3 months to 1 year of imprisonment and a ﬁne. The highest sanction for non-compliance with the information duties is 6 months to 2 years of imprisonment and a ﬁne (Article 68). Another signiﬁcant point is found in Article 20 of the CDC concerning the offer and information duty. The article lists three remedies under the heading ‘Liability on Defect of Good or Service’. The supplier is liable for the difference between the service acquired by the consumer and the service advertised. In such a case, the consumer traveller may choose between (1) the re-execution of the service without additional costs, whenever suitable; (2) the restitution of money paid, updated on a

278

Rocha (2010), p. 83. Idem, p. 63. 280 Act 8.078, 1990, Art 31. Note: requires precise and comprehensive data on products and services’ characteristics such as: quality, quantity, composition, price, warranty, period of validity and place of origin, amongst other data, as well as the risks of failure to which the consumer’s health and safety are exposed to. 279

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daily basis, and compensation for personal injury; and (3) proportional price reduction. In this regard, the Court of Appeal of Sao Paulo held that the consumer who bought a package travel of a cruise to later ﬁgure out that the service provided did not meet the quality as described in the brochure and in the contract shall get a proportional price reduction. The court applied Article 14, which refers to insufﬁcient or inadequate information, and the remedy prescribed by Article 20 mentioned above.281 Thus, when there is an incompatibility between the content of the offer and the advertising of the service, the contractual clauses of the contract are voidable on account of the information defect. The remedies available to the consumer traveller are the same as for quality defect. That is to say, the remedy for service defects and quality defects are identical. From the perspective of the seller, there is a tying effect, meaning an offer that is precise ties the seller to its terms, which ought to be enforced against him/her. The seller is obliged to fulﬁl all the terms of his/her offer, which is a precondition for the contract.282 Therefore, in the so-called public offer, which involves an indeterminate class of people, if the seller intends to be obliged with regard to the limit of the number of products or the capacity of the services offered, the seller shall say expressly the quantity that he/she is able to provide through the offer. In this context, if a tourism agency offers to the public ‘tourist packages’ set up to travel to the Baltic Sea, the agency shall point out in the offer and advertising how many packages they are able to cover within the terms of the offer and/or the time limit for that. This is an important piece of information since the offer ties the seller to the terms of the contract. The discussion then focuses on the understanding of the phrase ‘in the limit of the units offered’ inasmuch as such phrase is broad rather than indicates a precise number of goods or services offered. Obviously, if the quantity is not accurately stated, the consumer may presume that the good or service is sufﬁciently available. As mentioned, the seller is tied to the offer, except in the case of force majeure and in credit agreements, where the seller cannot escape the terms offered by him/her.283 In addition, the supplier cannot refuse a consumer or prefer one consumer to another without good reason such as safety, health, hygiene or other exceptions created by law.284 The supplier/seller must not refuse a consumer’s request (if he/she disposes of stock in trade). If there is reasonable proof of the 281

TJSP Ap.1268802-0/1/SP, j.2009. Act 8.078, 1990, Art 30. 283 Rocha (2010), p. 83. According to the doctrine in credit agreements (such as loans) the economic capacity of the consumer and his moral standards are essential elements to conclude the contract. In fact, the conclusion of the contract does not depend exclusively of the supplier’s agreement, but also on a number of factors. 284 Act 8.078, 1990, Art 39 IX. Note: in contracts of carriage the Civil Code, Art 739 states that the carrier cannot refuse a passenger except in case required by law, or if the hygiene and health of the person justify it. 282

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refusal, the supplier shall face criminal liability. Act 8.137/90285 reinforces the CDC provisions setting forth the penalties of imprisonment and ﬁne upon those who misjudge and discriminate against a consumer. There are a range of legal cases about advertising where the failure to inform of the price or to inform incorrectly is considered by the court an omission by the supplier/seller. The supplier/seller is liable for violation of his or her pre-contractual information duties on the ground of defect of information, misleading advertising by omission or misleading by omission.286

2.4.6

Contract of Adhesion

A large part of contracts of consumption are designed under the contract model of contracts of adhesion. It means that in the travel and tourism sector, contracts of carriage of passenger, contracts of accommodation, a major part of timesharing contracts and a substantial part of contracts of tourism are in fact contracts of adhesion. As it happens, the Civil Code prescribes that if the contract of adhesion includes ambiguous or contradictory clauses, the interpretation most favourable to the adherent shall be adopted.287 The CDC reinforces such a provision, which provides larger protection as it states that contract clauses will be interpreted in such a way as is most favourable to the consumer.288 The deﬁnition of ‘contract of adhesion’ is found in the CDC: Art 54: A contract of adhesion is one where clauses have been approved by the competent authority or established unilaterally by the supplier of goods or services without the consumer having a chance to change its content substantially.

The main requirement of such a contract is the capacity of the contracting parties rather than the willingness to perform the contract. It is a standardised agreement, described as a contract, which terms are dictated by the predominant party in a contractual relationship. Actually, these kind of contacts spare parties the need to negotiate the contract terms individually. It is therefore, characterised by a lack of negotiation because the supplier/seller dictates the clauses of the contract. The supplier drafts the clauses one-sidedly, without the consumer agreeing to the clauses drawn up in advance. Hence, the consumer cannot inﬂuence the content of the

285

Act 8.137, 1990, Art 7: It is crime against consumer relationships; I- to favor or prefer, without reasonable reason a consumer or purchaser, except to the extent of the delivering systems to consumption by distributors or retailers. (..) Sanction applied is: two to ﬁve years of imprisonment, or payment of a ﬁne. 286 TJSP Ap.0026318-74.2011.8.26.0506/SP, j.2014. 287 Act 10.406, 2002, Art 423. 288 Act 8.078, 1990, Art 47.

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75

contract. Although the contract of adhesion is named a contract, it is in fact a method of contracting or a contracting model to improve the efﬁciency of a business. Party autonomy and freedom of contract are no longer the grounds for reaching harmony and balance in contractual relationships. In consumer societies, with distribution and production chains targeted towards a large group of people, contractual relationships are less personalised. They turn to contractual standard methods such as a contract of adhesion, where there is lack of pre-negotiation, absence of mutual agreement on the clauses of the contract and, therefore, unilateral option on the part of the consumer to take it or leave it, without having the capacity to modify it accordingly.289 There is no contract of adhesion when the traveller is not compelled to follow the terms of the contract. A critical point about this contract concerns how suppliers and sellers determine unilaterally the amount of penalty in case of breach of contract. The issue related to compensatory ﬁnes (penalty) is under discussion. The seller often sets up a compensation clause in case of loss or damage. The majority of the courts have asserted that there is no penalty at all if the seller had enough time to resell goods or services. The penalty is an exception and shall be accounted for in reasonable amount. In addition, the penalty is imposed only outside the scope of the right of withdrawal if either the seller or the consumer suffered loss. The supplier/seller often retains the whole amount paid in advance by the consumer. It is a recurrent practice considered as an abusive practice.290 Another point refers to the jurisdiction clause pre-agreed and included in a contract of adhesion. According to Article 112 of the CPC, the judge shall assess immediately the jurisdiction clause included in a contract of adhesion, repealing the clause if necessary and sending the ﬁles to the defendant’s domicile jurisdiction. In this case, the judge can act without the party’s request. The deadline to bring a ﬁle to the court is another signiﬁcant issue on contract law. The CDC set forth two provisions on deadline with signiﬁcant impact on consumer’s rights. Literally, the provision of Article 26 (I) (II) is in detriment of the consumer, whereas for the consumer bring a ﬁle to the court in case of failure to perform and improper performance of the contract it established the narrow deadline between 30 days (goods and services non-durable) and 90 days (goods and services durable). Article 27 sets forth 5 years (accidents of consumption),291 which starts to be counted since the damage and the author of the damage were identiﬁed. There is an important technical discussion on this subject amongst authors, which have opposite views. The main point regards Article 7 of the CDC, which does not expressly exclude any other rights that may arise from other pieces of legislation. Authors have emphasised that the courts are sensitive to the issue of a narrow deadline, which restricts the consumer’s rights, and applying a deadline that is

289

Marques (2011), pp. 40, 41, 77. TJSP Ap.01900000-41.2006.8.26.0100/SP, j.2011. 291 A defect in the good or service may cause an accident named ‘Accident of Consumption’. 290

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most favourable to the consumer ( favor debilis), based on Article 7 of the CDC. Therefore, the deadline for the loss of rights starts at the moment the defect is uncovered (Article 26, § 3)292 and not 30 or 90 days counted from the time the good is effectively delivered or the service is effectively performed. Thus, as already mentioned, Article 26 and Article 27 have different scope. Whilst Article 26 applies to damages resulting from failure to perform and improper performance of the contract (30 or 90 days), Article 27 applies to accidents of consumption (5 years). However, in interpreting such provisions, most of the time the courts are extending the deadline, applying Article 27. For example, it is possible to ﬁnd decisions involving contract of carriage of passenger and luggage that repeal the narrow deadline of Article 26 (I). Instead of 30 days, the court applied Article 27, setting forth the period of 5 years for ﬁling a claim against the air carrier that damaged the plaintiff’s luggage (a bicycle).293 Another decision on package travel concerning failure to perform and improper performance of the contract extended the deadline to 5 years.294 The STJ followed the same line of reasoning as applied in Article 27 (5 years) to a case of failure to perform the contract (the travel agent did not deliver tickets for the World Cup).295 The issue on the deadline has been criticised. Experts have said that that courts’ decisions imposing the longer deadline have gone a bit overboard. Courts applied the deadline under Article 27 (5 years) to cases of failure to perform and improper performance of the contract when it should be applied only to accidents of consumption.296 It is noteworthy that the deadline to ﬁle a claim set forth by Article 26 is too short (30 and 90 days). Therefore, there are arguments in favour of applying the Civil Code, which establishes a reasonable deadline of 3 years in its Article 206 § 3 (V).297 It seems more consumer-friendly.

2.5

Jurisdiction

The problem of ‘jurisdiction’ (competência) exposes the legal vulnerability of the consumer traveller to ascertain the court when entering into litigation, mainly if the other party is located in another country.

292

Marques (2011), p. 1246. TJSP Ap.0162599-96.2008.8.26.0100/SP, j.2013: ‘It is avoidable the deadline setting forth by Art 26 (I) of the CDC, applying to the case the deadline of Art 27 of the same code.’ 294 TJSP Ap.0040849-94.2006.8.26.0554/SP, j.2013. 295 STJ REsp 435.830/RJ, j.2003. 296 Scartezzini Guimarães (2010), p. 326. 297 Scartezzini Guimarães (2004), p. 404. 293

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77

In Brazil, the term jurisdiction is slightly divided into two technical meanings: (1) the authority that an ofﬁcial entity is empowered to take a decision on a claim (competência), and (2) an area (state or country) in which a particular system of laws has authority ( jurisdição). Whilst the ﬁrst is used when talking about a state or federal law (the law applicable to a particular case); the second is used to determine the competent court, whether special jurisdiction298 or common jurisdiction299 that will take place by the party to ﬁle a claim in the court. But very often the usage of the term within both Portuguese words is intertwined.300 Thus, to determine which court is competent to deal with a case, whether a court with special jurisdiction (e.g., labor court) or a court with common jurisdiction (e.g., state court), a party is required to analyse the matter involved in the case, as well as the limit of the amount in controversy. In the latter, there are also small claims courts, not only federal301 but also state302 courts, where depending on the amount in controversy,303 the small claims procedure will apply. It is a facultative procedure to the party. Taking into account that Brazil is comprised of 26 member states of the Federal Union, plus the capital of Brasilia,304 the jurisdiction ( jurisdição) of those claims assessed by federal courts is divided geographically into ﬁve different regions: north, northeast, southeast, south and west central. The state courts and the capital of Brasilia have their own geographic jurisdiction. Whilst federal courts are competent in managing cases where the federal government or its administrative agencies305 are involved as a party of the claim,306 the

298

Note: Special Jurisdiction is divided into; (1) Labour Courts, (2) Electoral Courts (3) Federal Military Criminal Courts. 299 Note: Common Jurisdiction is divided into: (1) State Courts and (2) Federal Courts. Whilst the Federal Courts are divided into ‘ordinary’ or ‘specialized’ claims the State Courts deal with claims that are not included in the Federal Courts’ jurisdiction, which basically are divided to be assessed by Criminal and Civil Courts. 300 STJ RO 2008/0003366-4/SP, j.2008, ‘The international competence (jurisdiction) of the Brazilian authority is not limited to the analysis of Arts 88 and 89 of CPC, which contains a non-exhaustive list.’ 301 Act 10.259, 2001, Small claim courts statute applicable to federal courts. 302 Act 9.099, 1995, Small claim courts statute applicable to state courts. 303 Act 9.099, 1995, Art 3: ‘The jurisdiction of small claim courts is applicable for conciliation and trial of civil suits of reduced complexity as it follows: I - in cases which value does not exceed forty times the minimum wage.’ 304 Acre (AC), Alagoas (AL), Amapá (AP), Amazonas (AM), Bahia (BA), Ceará (CE), Distrito Federal (DF), Espírito Santo (ES), Goiás (GO), Maranhão (MA), Mato Grosso (MT), Mato Grosso do Sul (MS), Minas Gerais (MG), Pará (PA), Paraíba (PB), Paraná (PR), Pernambuco (PE), Piauí (PI), Rio de Janeiro (RJ), Rio Grande do Norte (RN), Rio Grande do Sul (RS), Rondônia (RO), Roraima (RR), Santa Catarina (SC), São Paulo (SP), Sergipe (SE), Tocantins (TO). 305 Act 8.078, 1990, Art 93 (II). 306 Note: particular matters are also included in the jurisdiction of federal courts like: crimes committed on board of cruises and aircrafts, crimes committed abroad, and Indians’ rights.

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state courts manage issues listed in their particular statute. Nevertheless, the Federal Constitution sets forth the division of jurisdiction between federal and state.307 Therefore, the courts must take into account the rules of jurisdiction laid down by legislation, federal or state laws. But in the lead-up to the subject of contractual obligations, LICC/42 is the cornerstone of the matter. It prescribes in Article 12 that ‘the Brazilian authority is competent if the defendant is domiciled in Brazil or if the obligation shall be performed in Brazil’. In addition, Article 88 of the CPC sets forth: ‘It is competent of the Brazilian authority: I. the defendant, whatever his citizenship, is domiciled in Brazil, II. the obligation shall be performed in Brazil, and III. the action has its grounds on facts occurred or committed in Brazil’. However, if the consumer brings an action to court, these provisions will not take effect if the supplier is seated abroad. This is because on the international consumer contract, the consumer would have access to the court but would not have success to enforce the procedure or the result. That is vulnerability. Article 101 (I) of the CDC sets forth that in regard to supplier’s civil liability, the lawsuit shall be brought in the consumer’s domicile. This rule implicitly shows that the consumer is the only party interested in claiming an action on the supplier’s civil liability, and therefore the consumer’s domicile is strongly presumed. The experts308 and the courts309 recognise the presumption of the supremacy of the rule on consumer’s domicile. Matters relating to travel and tourism (B2C) embedded in a national consumer contract or an international consumer contract are within the common jurisdiction of state courts,310 where the supremacy of the consumer’s domicile is absolute and leads court judgments.311 In regard to national consumer contract, for example, if a package travel arranged by a travel agency established in Sao Paulo offering a combination of services such as transport, accommodation and tours in Bahia is purchased by a consumer domiciled in Rio de Janeiro, the question about jurisdiction may appear complex. Nevertheless, in case of breach of contract, the state court of Rio de Janeiro will be competent under Article 101 (I) of the CDC. This provision sets forth the plaintif’s domicile (consumer) to discuss the liability of the supplier. Article 94 of the Code of Civil Procedure sets forth the general rule of defendant’s domicile or habitual residence if the company ﬁles the claim against the consumer.

307

Federal Constitution, 1988. Federal Courts, Art 109, State Courts, Art 125. Benjamin et al. (2010), p. 60. 309 TJSP Ag. 7.109.165-1/Santos, j.2007. 310 Act 5.869, 1973, Art 94. The territorial jurisdiction. 311 STJ CC 128.079/MT, j.2013, TJSP Ag. 7.109.165-1/Santos, j.2007. 308

2.5 Jurisdiction

2.5.1

79

Enforcement of Foreign Judgments

Concerning international consumer contracts, the problem of jurisdiction reveals a double situation, which is more complex in terms of effectiveness. That is to say, if the supplier is abroad, his location is as an external element.312 An external element is an alien piece under the Brazilian law system. It will be the connection between one or more different legal systems313 that results in a concurrent jurisdiction (shared jurisdiction). Such a situation includes contracts perfected over the Internet, where individuals may order goods or services from sellers established in other countries. The Internet has fundamentally changed how consumers purchase and how businesses advertise and sell their goods and services online. In this context, for the purposes of clarity, it is important to say that concerning international consumer contracts, under Brazilian law, there is not a special statute on jurisdiction if an external element is located outside of the domestic legal system. Then questions may arise in the context of how to apply two or more related legal systems, such as: where to ﬁle a claim? Which law should apply? Will the ﬁnal decision be accepted and enforced in the foreign country? These are questions of vital concern in international private law. About e-commerce and consumer relationship, the majority of authors in Brazil advocate a narrow interpretation that should apply the law of the consumer’s domicile, and the claim shall be ﬁled in the same jurisdiction—in his/her domicile. However, the answer is not so simple. There is no legal certainty that a judgment in favor of a consumer domiciled in Brazil would be recognised by a foreign court. A Brazilian judgment authorising the enforcement of a consumer award is not automatically enforceable under a foreign jurisdiction. A legal decision under Brazilian jurisdiction is a mere recognition of a right (without enforcement). To obtain enforcement in another country, the prevailing party has to seek another procedure (letter rogatory) through the Superior Court of Justice.314 But it is mainly based on international and procedural cooperation between countries. Said procedure usually delays, implies costs and has become time-barred or has been disposed of by a party. The consumer domiciled in Brazil must hire a lawyer in another country so that he or she would be subjected to that country’s jurisdiction and ﬁle a claim against the supplier based on that country’s laws. Depending on the country, its legal framework and the peculiarities of the case, only material damages are allowed to be requested, not immaterial damages. This situation may lead to what could be another legal risk as the consumer is then to bear the costs and expenses to be incurred abroad for the legal case, implying different exchange rates, different legal procedures and so on. That is barely worthwhile because of the high cost of litigating abroad.

312

The regular contract of a consumer relationship shall contain the following elements: (1) the supplier, (2) the consumer, (3) the location of the parties, and (4) the product or service provided to the consumer. 313 Lima (2006), pp. 84 and 85. 314 CF, 1988, Art 105 (I) (i).

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Likewise, a consumer traveller domiciled in Europe or in any other non-EU member state country may also face difﬁculties in enforcing a court order from his/her country in Brazil. To enforce the judgment, the consumer traveller has to hire a lawyer in Brazil to execute the foreign judgment in the supplier’s domicile (jurisdiction). However, the judge will accept the case only if the party provides an ‘exequatur’. An ‘exequatur’ is a certiﬁcate order that accepts and recognises a foreign judgment. According to Article 105 (I), ‘i’, of the Federal Constitution, the Superior Court of Justice (STJ) is the only court that can issue such an order. The ‘exequatur’ is the result of the special procedure raised to the STJ, which is located in Brasilia (the capital). Therefore, a consumer traveller not domiciled in Brazil may well incur extra costs and delay in trying to enforce the foreign judgment. As a result, some judgments will remain unpaid because of difﬁculties to enforce a judgment abroad. Although there are legal tools to enforce foreign judgments, the procedural problem found by the consumer is the lack of enforceability.

2.5.2

The Small Claims Courts in Airports

In July 2010, considering the increasing difﬁculties faced by air travellers in the services provided by airlines, the ‘National Judiciary Council—CNJ’315 coordinated the establishment of small claims courts in the airports of Rio de Janeiro, Brasilia and Sao Paulo, followed subsequently by Mato Grosso and Minas Gerais.316 In adopting such procedure before the small claims courts, the traveller would not need the assistance of a lawyer if the amount sought does not exceed twenty times the minimum wage.317 If the parties reach an agreement via the small claims court procedure, the air passenger may obtain a court order, and the air carrier shall be obliged to pay the debt in accordance with that order. Cases are initially ﬁled with small claims courts situated in airports and subsequently sent to the Small Claims Court where the air passenger is domiciled.318 The entire procedure should follow the simple and informal criteria stated in the provisions of Act 9.099/95. However, the Act does not cover claims for material or immaterial damages. But if a traveller has chosen to ﬁle a claim with the Small Claims Court, he/she must have been aware that, as established by statute,319 the 315

Conselho Nacional de Justiça—CNJ (National Judiciary Council). The service was set up by ‘Provimento 11’ that it is a joint regulation from the National Judiciary Council—CNJ and the Department of Internal Affairs of the National Judiciary known in Portuguese as Corregedoria Nacional de Justiça. 317 Act 9.099, 1995, Art 9. 318 Provimento 11, of National Judiciary Council—CNJ (Conselho Nacional de Justiça), Art 3. 319 Act 9.099, 1995, Art 3: The jurisdiction of the Small Claim Court is applicable for conciliation and trial of civil suits of reduced complexity as it follows: I—in cases which value does not exceed forty times the minimum wage. 316

References

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amount of compensation claim must not exceed forty times of the minimum wage.320 In addition, as mentioned, the passenger will not need the assistance of a lawyer for compensation claims amounting to twenty times the minimum wage. But for claims exceeding this amount, it is mandatory to have the assistance of a lawyer.321 As a result, the maximum amount of compensation shall not exceed the threshold of forty times the minimum wage. Moreover, in the event that a traveller appeals from a judgment issued by a Small Claims Court, the same court will examine the appeal. But this time, parties would be assisted by a lawyer and the case would be heard by three judges rather than one.322 Based on the courts’ procedural structure described so far, the Small Claims Courts in airports are an option for the traveller who may prefer expediency and convenience of proceedings to regular court procedings. It is a legal facility, and some SCCs, such as one located in Brasilia, work 24 h. The idea of placing the small claims courts in main gateway airports seems eminently reasonable in itself. It aims to provide passengers easy access to justice. In practical terms, the main role of these courts is to receive the claim and send it to the small claims courts located at the jurisdiction of the consumer’s domicile, which shall be in the same state where the airport is situated. It excludes transit passengers (passengers on connecting ﬂights), as well as nationals and non-nationals residing abroad. The small claims courts were set up to resolve claims with reduced complexity. The liability is limited to the maximum amount of compensation already explained.

References ABNT NBR 9050:2004. Brazilian Organization for Standardization. Accessibility related to buildings, equipment and urban environment Alves MF (2010) In: Morato AC, Neri PD (eds) 20 anos do Código do Consumidor. Atlas, São Paulo Atheniense LR (2002) A Responsabilidade Jurídica das Agências de Viagem. Del Rey, Belo Horizonte Azevedo AV (2009) Teoria Geral do Contratos Típicos e Atípicos. Atlas, São Paulo Bandeira De Melo C (2003) Curso de Direito Administrativo. Malheiros, São Paulo Beni MC (2001) Análise estrutural do turismo. Senac, São Paulo Benjamin AH, Marques CL, Bessa LR (2010) Manual de Direito do Consumidor, 3rd edn. Rev.dos Tribunais, São Paulo

The minimum wage in Brazil is ﬁxed in Federal level and State level. Thus, only as reference, according to Act 12.255/10, Act 12.282/11 and Decree 8.166/2013 the amount established in 2015 at Federal level is R$788,00. The forty minimum wages mean R$31.520,00 that is around €9,270.58 euros in April 2015. 321 Idem, Art 9. 322 Idem, Art 41. 320

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De Lucca N (2008) Direito do Consumidor. Quartier Latin, São Paulo Ferraz JA (2005) Obrigações e Contratos em Viagens e Turismo. Minha Editora, São Paulo Feuz PS (2003) Direito do consumidor nos contratos de turismo. Edipro, São Paulo Gloria DF (2003) Venda casada de produtos e serviços no sistema ﬁnanceiro, vol 47. (R. d. Consumidor, Ed.) Brasilcon IBGE, Economia do Turismo (2012) Economia do Turismo. Uma perspectiva macroeconômica 2003–2009. Rio de Janeiro IMF, International Monetary Fund (April 2015) World Economic Outlook Jayme E (1995) Identité culturelle et integration: le droit international privé postmoderne. Recueil des Cours, vol 251. Académie de Droit International de la Haye, The Hague, II, p 259 Lima E (2006) Proteção do Consumidor Brasileiro no Comércio Eletrônico Internacional. Atlas, São Paulo Machado JB (2004) Introdução ao Direito e ao Discurso Legitimador. Almedina, Coimbra Mamede G (2004) Direito do Consumidor no Turismo. Atlas, São Paulo Marcelino AO (2003) Responsabilidade civil dos hoteis e do sistema de multipropriedade imobiliaria (Time-sharing). RT, São Paulo Marques CL (2011) Contratos no Código de Defesa do Consumidor. O novo regime das relações contratuais. RT, São Paulo Marques CL, Miragem B (2012) O novo direito privado e a proteção dos vulneráveis. RT, São Paulo Mtur B (2011/2014) Documento Referencial Turismo no Brasil 2011/2014. Ministério do Turismo, Brasilia MTUR, Brazilian Ministry of Tourism (2006–2012) Estudo da demanda turística internacional. Ministério do Turismo, Brasilia MTUR-Ministerio do Turismo. Turismo acessivel (2013) Estudo do perﬁl de turistas - Pessoas com deﬁciencia. Ministério do Turismo, Brasilia Nery N Jr, Nery RD (2006) Leis Civis Comentadas. RT, São Paulo Nunes V Jr, Serrano Y (2005) Código de Defesa do Consumidor Interpretado, 2nd edn. Saraiva, São Paulo Pinheiro AC, Saddi J (2006) Direito, Economia e Mercados. Elsevier, Rio de Janeiro Rocha SL (2010) A oferta no Código de Defesa do Consumidor. Editora Fórum, Belo Horizonte Rodrigues Dos Santos TC (2009) Current criminal law issues and Brazilian justice with regard to tourism. In: Sanches Lima MG, Rodrigues Dos Santos WR (eds) 21st IFTTA Annual Conference. Papers Collection. (Limited edition ed.). FTW Gráﬁca Digital Ltda, Sao Paulo Sanches Lima MG (2012) Air passengers’ rights in Brazil - Court law: overview of statutes, codes and treaties. IFTTA Law Rev, in RRa Reise Recht aktuell 2:2–4 Scartezzini Guimarães P (2004) Vícios do produto e do serviço por qualidade, quantidade e insegurança - cumprimento imperfeito do contrato. RT, São Paulo Scartezzini Guimarães P (2010) Dos contratos de hospedagem, de transporte de passageiros e de turismo. Saraiva, São Paulo STF ADIN 2.591-1/DF (2006) Confederação Nacional do Sistema Financeiro - CONSIF v Presidente da Republica e Congresso Nacional STF REsp 351.750-3/RJ. (j.2009). Varig S/A - Viação Aérea Rio Grandense v Ana Maria da Costa Jardim. rel. Min. Carlos Ayres Britto STJ AgIn 250.722/SP. (j.1999). Banco do Brasil S/A v Dental São Francisco Ltda - Micro Empresa e outros. rel. Min. Carlos Alberto Menezes Direito STJ AgRg REsp 1.162.156/RJ. (j.2013). Sindicato das Empresas de Onibus da Cidade do Rio de Janeiro e outros v Ministério Público da Cidade do Rio de Janeiro. rel. Min. Napoleão Nunes Maia Filho STJ CC 128.079/MT. (j.2013). Conﬂito de Competencia. 14a. Vara Civil de Cuiabá MT v Vara Distrital de Embu Guaçu - SP. Interessados: Cleonice Alves Beraldo e Taiamã Plaza Hotel Ltda. rel. Min. Raul Araujo

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STJ REsp 1.102.849/RS. (j.2009). Operadora e Agência de Viagens TUR Ltda. v Lair Antonio Ferst e Assist Card do Brasil S/A. rel. Min. Sidnei Beneti STJ REsp 1.195.642/RJ. (j.2012). Empresa Brasileira de Telecomunicações S/A - EMBRATEL v Juleca 2003 Veículos Ltda. rel. Min. Nancy Andrighi STJ REsp 200.390/SP. (j.2000). Edite Bernardo e outros v Municipio de São Paulo. rel. Min. Edson Vidigal STJ REsp 240.078/SP. (j.2001). José Andiara Trench da Silva e outros v American Airlines Incorporation. rel. Min. Waldemar Zveiter STJ REsp 279.273/SP. (j.2003). B Sete Participações S/A e outros v Ministério Público do Estado de São Paulo. rel. Min. Nancy Andrighi STJ REsp 287.849/SP. (j.2001). Agencia de Viagens CVC Tur Ltda. e outro v Renato Steves Versolatto. rel. Rui Rosado de Aguiar STJ REsp 302.520/MG. (j.2003). Guilherme João de Freitas v Construtora Artes e Ltda STJ REsp 435.830/RJ. (j.2003). Exceler Agência de Viagens e Turismo e Câmbio Ltda. v Jaime Loureiro Nobre Baptista Júnior e outros. rel. Min. Carlos Alberto Menezes Direito STJ REsp 476.428/SC. (j.2005). Agipliquigas S/A v Gracher Hotéis e Turismo Ltda. rel. Nancy Andrighi STJ REsp 489.895/SP. (j.2010). Souza Cruz S/A v Milton Taborda. rel. Min. Fernando Gonçalves STJ REsp 586.316/MG. (j.2007). Ministério Público do Estado de Minas Gerais v Associação Brasileira das Indústrias da Alimentação - ABIA. rel. Min.Herman Benjamin STJ REsp 677.872/PR. (j.2005). Viação Aérea São Paulo S/A VASP v Ministério Público Federal. rel. Min. Nancy Andrighi STJ REsp 931.513/RS. (j.2009). Estado do Rio Grande do Sul v Ministério Público do Estado do Rio Grande do Sul. rel. Min. Carlos Fernando Mathias STJ RO 2008/0003366-4/SP. (j.2008). Salomon Simon Frydman v República Federal da Alemanha. rel. Min. Nancy Andrighi STJ Súmula 297 (2004) “O Código de Defesa do Consumidor é aplicável às instituições ﬁnanceiras” Theodoro Junior H (2011) Direitos do Consumidor: a busca de um ponto de equilibrio entre as garantias do codigo de defesa do consumidor e os princípios gerais do direito civil e processual. Forense, Rio de Janeiro TJRS Ap.598021970/RS. (j.1998). Companhia Brasileira de Empreendimentos Turísticos SA v Lybino Hahn. rel. João Pedro Pires Freire TJSP Ag. 7.109.165-1/Santos. (j.2007). Varig SA - Viação Aérea Rio Grandense SA v Marcio Kauffmann Guimarães. rel. Ricardo Negrão TJSP AI 0056571-40.2013.8.26.0000/SP. (j.2013). Silvano Calazans de Campos Gaspar v Sadao Okuno. rel. Gomes Varjão TJSP Ap.0006109-36.2011.8.26.0037/SP. (j.2014). CVC Operadora e Agencia de Viagens S/A v Antonio Adriano Altieri e Viviane Queiroz. rel. Adilson de Araujo TJSP Ap.0009326-39.2011.8.26.0053/SP. (j.2013). Operadora e Agência de Viagens Tur Ltda. v Fundação de Proteção e Defesa do Consumidor de São Paulo - PROCON/SP. rel. Maria Laura Tavares TJSP Ap.0011086-52.2011.8.26.0302/SP. (j.2014). Iris Francisco Gales v Empresa Auto Ônibus Macacari Ltda. rel. Maria Olívia Alves TJSP Ap.0014757-59.2009.8.26.0268/SP. (j.2014). Prefeitura Municipal de Itapecerica da Serra v Cristiane Correa Yoshida TJSP Ap.0022927-43.2006.8.26.0068/SP. (j.2013). Flavio Cesar Maia Luz v Queensberry Agencia de Viagens e Turismo Ltda. rel. Soares Levada TJSP Ap.0026318-74.2011.8.26.0506/SP. (j.2014). CVC Brasil Operadora e Agência de Viagens S.A. e CVC Serviços Agência de Viagens Ltda. v Marcela Marques Ferreira. rel. Sá Duarte TJSP Ap.0029172-84.2009.8.26.0482/SP. (j.2014). Prefeitura Municipal de Presidente Prudente v Josefa Ferreira da Silva. rel.Venicio Salles

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TJSP Ap.0035373-72.2012.8.26.0002/SP. (j.2013). TAM - Linhas Aéreas S/A v Marley Maria Tusi Rodrigues. rel. Israel Góes dos Anjos TJSP Ap.0040849-94.2006.8.26.0554/SP. (j.2013). Clecio Campos da Silva v Operadora e Agencia de Viagens CVC Tur Ltda e outros. rel. Claudio Hamilton TJSP Ap.0102607-13.2008.8.26.0002/SP. (j.2012). Claudio Auricchio Turi v Amelia Ribeiro Galvão. rel. Cesar Lacerda TJSP Ap.0162599-96.2008.8.26.0100/SP. (j.2013). British Airways v Antonio Carlos Laxer. rel. Álvaro Torres Junior TJSP Ap.01900000-41.2006.8.26.0100/SP. (j.2011). Anadec - Associação Nacional de Defesa da Cidadania e do Consumidor v Luxtravel Turismo Ltda. rel. Castro Figliola TJSP Ap.0226796-31.2006.8.26.0100/SP. (j.2012). HSBC Bank Brasil S/A - Banco Múltiplo v Nagib Anderáos Neto e Marice Gattai Anderaos. rel. Rebello Pinho TJSP Ap.0451170-97.2010.8.26.0000/SP. (j.2012). Chubb do Brasil Cia. de Seguros S/A v Sergio Cesar Nunes de Souza ME. rel.Israel Góes dos Anjos TJSP Ap.1268802-0/1/SP. (j.2009). Operadora e Agencia de Viagens CVC Tur Ltda. v Luis Antonio Saccini e ots. rel. Artur Marques TJSP Ap.282.996-4/7-00/SP. (j.2009). Tirso de Freitas Castro v Itaú Seguros. rel. Ana de Lourdes Coutinho Silva TJSP Ap.9055447-05.2009.8.26.0000/SP. (j.2012). Henrique Palin Bortolan v Vermon Agência de Viagens e Turismo Ltda. ME. rel. Moura Ribeiro TJSP Ap.990.10.136973-7/SP. (j.2010). Tokio Marine Seguradora e outro v Ingeborg Lutjens. rel. James Siano TJSP Ap.992.05.032177-2/Campinas. (j.2010). Companhia de Seguros Gralha Azul v Oswaldo Chiarelli Dias. rel. Edgard Rosa TRF 3a. Região Ac.200661260032855. (j.2009). Simone de Andrade Rita v Caixa Economica Federal - CEF. rel. Alexandre Sormani UNITED Nations, ST/ESA/STAT/SER.M/83/Rev.1. (2008). International Recommendations for Tourism Statistics

Chapter 3

Europe Consumer and Travel Laws

3.1

Consumer Law

Consumer law in Europe employs the original concept of integration of the European Economic Community, and it is in line with the classical notion of free trade.1 Vulnerability, however, is not a principle. In the EU, the term vulnerability, inter alia, stems from Directive 2005/29 on Unfair Commercial Practices. Vulnerable persons in the EU are those individuals or groups of consumers who are vulnerable because of their mental or physical inﬁrmity, age or credulity. That is to say, the meaning relates to individual characteristics rather than being a ﬂuid notion.

3.1.1

Consumer Law Evolution

The focus of this chapter is European law, but references to Member States’ laws may count when appropriate to the context. Behind the constant evolution and change in the laws of the Member States, the institutions of the European Union have an important role to play—to lead EU law towards, inter alia, creating and enforcing consumer law. In the beginning, integration, as governed by the Treaty of Rome, was aimed at the achievement of a ‘common market’, to become later the ‘internal market’. To that extent, the institutions and legal structure were primarily concentrated on the producer of economic value (e.g., the supplier) and distribution.2 Yet, in 1957, the Treaty of Rome, which conferred rights on individuals and originally set up the European Economic Community (EEC) of Germany, France, Italy, Belgium, the Netherlands and Luxembourg, did not mention ‘consumer 1 2

Reich et al. (2014), p. 9. Reich et al. (2014), p. 8.

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protection’ speciﬁcally. However, the treaty allowed directives to approximate matters that directly affected the common market. In 1975, the ﬁrst Consumer Protection Programme3 from Europe had as its broad objectives the right to safety, the right to choose, the right to be heard and the right to be informed. It addressed issues such as consumer information, education, redress and representation, consumer health and safety, and the legal and economic interests of consumers. Of these issues, the health and safety of consumers was the subject of the greatest number of directives and regulations.4 In 1988, the European Commission recognised the importance of a consumer policy. In the report on progress towards the internal market, the EU Commission emphasised: ‘Consumer Protection provides an example of a policy area which will take on an enhanced importance in the completed internal market. Consumers will need to be reassured that their interests are properly represented, that considerations of physical and economic safety have been properly taken into account and that access to information and justice is assured.’5 In 1989, the EU created an independent Consumer Policy Service,6 which became DG XXIV, Directorates-General in 1995. DG no longer included numbers. Nowadays, it is only DG. The Service issued action plans each 3 years with the scope of reviewing and updating the framework needed to guarantee that the single market works for consumers. In 1992, Europe established the basis for a consumer policy through the Treaty of European Union (Maastricht Treaty). In 1997, the Treaty of Amsterdam took it further placing consumer policy in the shop window.7 After the Maastricht Treaty, the legislative activity has increased markedly. There were new directives on unfair terms in consumer contracts,8 unfair business-to-consumer commercial practices,9 consumer rights,10 timeshare,11 misleading and comparative advertising,12 package travel,13 general product safety,14 consumer sales and guarantees.15 The last three decades were a period of active law reform in Europe. The approach chosen by the Member States in the 1970s was welfare state oriented.

3

Annexed to Council Resolution of 14 April 1975; OJ 1975, C92/1. Oughton and Lowry (2000), p. 64. 5 COM (88) 650, pg. 2. 6 COM (90) 98. 7 Oughton and Lowry (2000), p. 54. 8 Directive 93/13/EEC. 9 Directive 2005/29/EC. 10 Directive 2011/83/EU. 11 Directive 2008/122/EC. 12 Directive 2006/114/EC repealed only Art 14 of Directive 2005/29/EC. 13 Directive 90/314/EEC, replaced by the current Directive 2015/2302/EU. 14 Directive 2001/95/EC. 15 Directive 99/44/EC. 4

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From the very beginning of European consumer (protection) policy, there was a tension between ‘consumer protection policy’ and ‘consumer policy’.16 Such a tension might be either a reﬂection in academic studies of the market power or the use of the terms ‘consumer protection policy’ and ‘consumer policy’ as synonyms. The difference between them is that consumer protection policy means that the Union has to ﬁnd measures to protect consumers against market abuses, whilst consumer policy deals with the conﬁdent consumer, who has conﬁdence in his or her legal security wherever he/she purchases within the European Union. The latter concept is based on the idea that consumers purchasing anywhere in the Union should expect goods and services to be of a quality and safety, which they are entitled to expect, and contract terms should not surprise them.17 Actually, according to the European Consumer Agenda,18 which stresses the consumer policy, there are wording references in building on strong EU consumer protection rules. The Consumer Rights Directive has substantially strengthened consumer rights harmonising a number of rules applicable to online contracts. The Directive enlightens the right balance between a high level of consumer protection and the competitiveness of enterprises.19 In addition, the EU acquis is based on the Functioning of the European Union (TFEU), which grants consumer protection by means of Article 114 (3). It would be surprising if any other policy adopted later would not consider the need to protect consumers. In this context, both policies are in essence targeting consumer protection. Such a target is also perceived through authoritative texts, as for instance: ‘The completion of the sectoral Legislation programme (. . .) will enable the Community to address consumers in the knowledge that their health and safety interests are adequately protected and that they can conﬁdently choose between a wide range of goods and services without undue risk.’20 Therefore, authors have pointed out that the consumer is the weaker party for structural reasons and needs protection by legal instruments.21 Interestingly, in the EU, the ‘conﬁdent consumer’ is the current term. Thus, a series of directives compounds consumer law.22 Even though the directives are often the primary ones, the existence of a European consumer law is

16

Tonner and Fangerow (2012), p. 69. Howells and Wilhelmsson (1997), p. 320. 18 COM (2012) 225. 19 Directive 2011/83/EU (4). 20 COM (1990) 98, 3 (iii). 21 Tonner and Fangerow (2012), p. 69. 22 To name the main ones: 2011/83/EU, the Consumer Rights Directive (that replaced the 85/577/ EEC, Doorstep Selling Directive and the 97/7/EC, the Distance Selling and off-premises contract Directive); 2005/29/EC, the Unfair Business-to-consumer commercial practices; 2008/122/EC the Timesharing Directive; 2008/48/EC, the Consumer Credit Directive (that replaced Directive 87/102/EEC); 2015/2302/EU on package travel and linked travel arrangement, which repealed the 90/314/EEC Directive; 93/13/EEC, the Unfair Terms Directive; and 1999/44/EC, the Consumer Sales. 17

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controversial because of its narrow relation with contractual law and therefore private (civil) law,23 where we think of private individuals having rights correlative to the obligations. In fact, consumer law contains both private and public law provisions. However, Europe started to deal with private law later than 1975, when the period of consumer protection already had initiated. The discussion of a European law of obligations entered into the political agenda in 2001. It started through the Communication of the Commission to the Council and the European Parliament on Contract Law,24 which, inter alia, included the establishment of a European Civil Code25 and the promotion of principles, such as ‘Principles of European Contract Law’.26 The latter was promoted by the Lando Commission and is known as ‘restatement’. On this point, with the choice between a code and a restatement, the discussion in question is how to enforce a code in common law legal systems. In 2004, the Commission announced further measures27 signalling an optional instrument and meaning, now, that consumer law will not compounded into a separate consumer code. In October 2011, the European Commission proposed an optional Common European Sales Law (CESL). It provides for a single uniform set of fully harmonised contract law rules, including consumer protection rules in the form of a Common European Sales Law, which is considered a second contract law regime within the national law of each Member State available in cross-border transactions upon a valid agreement taken by the parties.28 However, in December 2014, the EU Commission has included such a proposal on the list of withdrawal or modiﬁcations of pending proposals of Annex II of the Working Programme for 2015. The reason given is ‘Modiﬁed proposal in order to fully unleash the potential of e-commerce in the Digital Single Market’.29 In November 2011, the EU adopted the Consumer Rights Directive. It has been applied in all European Member States since June 2014.

23

Howells (2011), p. 173. Commission of the European Communities. Communication from the Commission to the European Parliament and the Council: On European Contract Law Brussels, 11 Jul 2001, COM (2001) 398. 25 COM (2001) 398, 1 (2). In 1989 and 1994 the European Parliament called for work to be started on the possibility of drawing up a common European Code of Private Law. 26 COM (2001) 398, 4.2 (55). These common principles or guidelines could however only be applied on a voluntary basis. If this were indeed done continuously by a sufﬁciently large number of legal practitioners as well as EC and national legislators, this would bring about greater convergence in the area of European contract law. 27 COM (2004) 651, (2.3) It was nevertheless considered appropriate to examine whether non-sector-speciﬁc-measures such as an optional instrument may be required to solve problems in the area of European contract law. 28 COM (2011a) 635, (3) The instrument chosen for this initiative is a Regulation on an optional Common European Sales Law. 29 COM (2014) 0910 ﬁnal. 24

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3.1.2

89

Consumer Law as a Field of Law

Consumer law has become the focus of attention of law experts and authorities in Europe. The term ‘consumer law’ has raised discussions over the years in regard to the existing traditional contractual (civil) law. The fact is that there is a slight distinction between general contractual (civil) law, which is based on party autonomy, and consumer law, which by nature is more protective. Nevertheless, the legitimacy of a separate and autonomous policy of consumer protection in the EU is based on the grounds of Articles 12 and 169 (currently Article 167) of the Treaty on the Functioning of the European Union (TFEU) and has been recognised as an autonomous ﬁeld of legislation and policy by each Member State. Thus, in many European countries, consumer law has been developed as an important ﬁeld of law through consumer codes, as in France with Code de la Consommation (1997), in Italy with Codice del consume (2005), in Spain with Consumer Code of Catalonia (2010) and Luxembourg with Code de la Consommation (2011). Whilst these countries have chosen to codify consumer law separately, other countries have chosen to transpose the directives concerning ‘consumers’ into the Civil Code.30 One of the strongest arguments to justify a separate codiﬁcation is that ‘consumer law’ is strictly intertwined with public and private law, meaning a fragmentation trend in the general contractual (civil) law. Actually, some civil law scholars would say that ‘consumer law’ is in essence private law.31 Indeed, there is a private law nature because it aims to protect the interests of the ‘weaker party’, the consumer, a person created by law in a consumer relationship. There is the need to separate consumer relationship from commercial relationship. On this topic, some important directives addressing the consumer’s interests have emerged in the EU. They established the ﬁrst steps to name ‘consumer law’ a ﬁeld of law.32 Nevertheless, when the issue is the source of EU ‘consumer law’ there is no convergence between authors. There are those who say that ‘consumer law’ is part of ‘private law’, with the capacity to inﬂuence general principles.33 On the other hand, there are others who argue that EU consumer law is part of the European economic law. According to the Advocate General, ‘it is true that there are signiﬁcant 30

Like in Germany, on German Civil Code (BGB). Schulze and Stuyck (2011), p. 26. ‘European Private Law affects and includes many sectors, one of which has developed before the others, namely consumer law. The acquis communautaire on the matter, which relied on wide literature and a huge number of cases emerged at national level and tackled with accurate scientiﬁc studies and research, strengthened itself by developing a body of rules and postulated the need to collect these rules in a systematic framework, a general Consumer Rights Directive.’ 32 Wilhelmsson, Is there a Consumer European Law? And there should be? Translated from Rome Conference 2000 by academics from University of Rio Grande do Sul. 2005, p. 187. 33 Idem, p. 186. 31

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differences between competition law and consumer law as regards their nature and scope. They also pursue different aims and, indeed, the European Union legislature has been careful to distinguish between the rules on competition applicable to undertakings set out in Articles 101 to 106 TFEU and those aimed at protecting consumers in Article 169 TFEU. None the less, both competition law and consumer law fall within the sphere of Economic Law.’34 However, it is logically impossible to give full effect to two matters that are irreconcilable with each other to the extent that the rules pursue different aims. The concept of ‘economic law’ in the form it is used today is relatively recent. Indeed, there is an inseparable linkage between ‘consumer law’ and ‘competition law’, but it means that whilst ‘economic law’ becomes the law of the ‘internal market’, which indirectly protects consumer interests,35 ‘consumer law’ directly protects consumer interests. The two spheres are always to some extent opposite with a limited convergence: to protect consumers directly and indirectly. Such a narrow convergence is not sufﬁcient to justify the approximation of the legal nature of ‘consumer law’ exclusively to ‘economic law’. The recent history of ‘economic law’ is another subject of study driving the attention of experts and authorities worldwide. In the subset of competition or commercial law it regards as agreements between ﬁrms, antitrust, restrictive practices, abuse of dominant positions, mergers, damages actions, cartels, state aid and so on. The main focus is maintaining market competition by regulating anticompetitive behaviour of companies rather than directly protecting consumers. The effect on the protection of consumer’s interests is an indirect consequence of the protection of competition. As a result, ‘consumer law’ does not fall within the sphere of ‘economic law’ because although they are intertwined, they in fact carry different provisions of laws. In terms of contracts, whilst ‘economic law’ pertains to B2B contracts, ‘consumer law’ relates to B2C contracts. The Consumer Rights Directive has substantially strengthened consumer rights in particular by harmonising a number of rules applicable to online contracts and giving light to the right balance between a high level of consumer protection and the competitiveness of enterprises.36

3.1.3

Consumer

The deﬁnition of ‘consumer’ stems from directives that aim to protect consumers’ interests. These directives concern ‘timeshare’, ‘unfair terms in consumer contracts’,

34

OPINION of Advocate General C-59/12 (2013), (32). Reich et al. (2014), p. 8. 36 Directive 2011/83/EU, (4). 35

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‘unfair business-to-consumer commercial practices’ and ‘consumer rights’,37 which altogether adopted the same deﬁnition: Consumer means any natural person who, in contracts covered by this Directive, is acting for purposes which are outside his trade, business, craft or profession;[. . .].

The Directive on consumer rights states clearly that its provisions do not apply to contracts that fall within the scope of the Package Travel Directive and Timeshare and Air Passengers Transport Services, in the latter with exception of Article 8 (2) and Articles 19 and 22. The current Directive on package travel and linked travel arrangements preferred to entitle the traveller, not the consumer, as the person protected by law. Nevertheless, it does not mean that the traveller is not a consumer. The Directive accurately explains that the majority of travellers buying packages or linked travel arrangements are consumers within the meaning of Union consumer law.38 The Directive includes business travellers as members of liberal professions or self-employed or other natural persons where they do not make travel arrangements on the basis of a general agreement. The Directive is clear, stating that in order to avoid confusion with the deﬁnition of the term ‘consumer’ used in other Union legislation, persons protected under this Directive should be referred to as ‘travellers’.39 In the former Package Travel Directive, the deﬁnition of ‘consumer’ was very different from other consumer protection directives as it implied the inclusion of other persons such as the ‘business travellers’. But this Directive did not clarify whether the business travellers could make travel arrangements individually or not. The current Directive made a step further. Notwithstanding that the consumer does not contract in a business capacity, the difﬁculty is in determining when he or she acts in a business capacity, whereas a company may purchase goods or services not for business purposes but for regular consumption. For example, a company may buy coffee for employees or a car for directors’ private use. On the scope of Consumer Rights Directive, Member States may decide to extend the application of the rules of the Directive to legal entities or to natural persons who are not consumers within the meaning of the Directive, such as non-governmental organisations, start-ups or small and medium-sized enterprises.40 On this point, Directive 2015/2302/EU stresses that ‘(. . .) it is not always easy to distinguish between consumers and representatives of small businesses or professionals who book trips related to their business or profession through the same booking channels as consumers. Such travellers often require a similar level of 37

Directive 2008/122/EC (timeshare); Directive 93/13/EEC (unfair terms in consumer contracts); Directive 2005/29/EC (unfair business-to-consumer commercial practices); Directive 2011/83/EU (consumer rights). 38 Directive 2015/2302/EU, Recital (7). 39 Directive 2015/2302/EU, Recital (7). 40 Directive 2011/83/EU, Recital (13).

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protection. In contrast, there are companies or organisations that make travel arrangements on the basis of a general agreement, often concluded for numerous travel arrangements for a speciﬁed period, for instance with a travel agency. The latter type of travel arrangements does not require the level of protection designed for consumers.’41 On this spot, the Directive does not apply to all business travellers but applies only to those that do not make travel arrangements based on a general agreement. Consumer behaviour is the basis for several consumer protection strategies and policies. In Europe, the law of each country is originally designed according to each geographical location, in the extent that the directives provide a minimum standard, which shall not prevent Member States from having rules that are more favourable to the consumer. Nevertheless, the EU has sought to develop the mechanism of cohesion, which changes reliance on the minimum standard principle to the full harmonisation principle, as further explained.

3.1.3.1

Consumer Traveller Vulnerability

For the purpose of clarity, it is important to say that under EU law, there is not a single deﬁnition of the concept ‘consumer traveller’. The term is never found in the EU legislation. The closest provision that links travellers and consumers together stems from the Directive on package and linked travel arrangements. On its Recital (7), the Directive sharply clariﬁed that ‘The majority of travellers buying packages or linked travel arrangements are consumers within the meaning of Union consumer law’. The Directive on consumer rights that leads the legal notion of consumer, explicitly excluded other legislation,42 such as the Directive on package travel and linked travel arrangements. Even excluding the package travel contracts and linked travel arrangements the remedies of the Directive on consumer rights are signiﬁcative concerning general consumer protection law. Taking into account that the EU law asserted its authority over the concept of traveller, an obvious question lands at the forefront: why was traveller included as an identiﬁable group of consumers? One of the reasonable answers is the linkage between the notions of consumer and vulnerability. If the consumer, in general, is always in a weaker bargaining position than the supplier, there is all the more reason to pay attention to the traveller, who usually is out of his or her domicile and jurisdiction when he/she is consuming goods and services. The EU rules aim to ensure that, as the most vulnerable party to the contract, especially when travelling, consumers enjoy a general set of rights that limit

41 42

Directive 2015/2302/EU, Recital (7). Directive 2011/83/EU, Art 3, 3 (g).

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problems and guarantee acceptable service throughout the EU. When buying package holidays, they beneﬁt from extra protection.43

3.1.3.2

The Average Consumer and Vulnerability

At ﬁrst sight, there seems to be nothing unreasonable about applying the notion of vulnerability to the traveller. Despite a modern approach on vulnerable consumer, vulnerability is not a widely understood concept outside the ﬁeld of behavioral sciences. ‘Vulnerability’ is difﬁcult to deﬁne as a single legal concept, and there are some criticisms concerning the appropriate deﬁnition that every study brings forth. In the EU, in addition to the Directive on Unfair Commercial Practices, which is the cornerstone of the issue, few Directives expressly tackle vulnerable consumers.44 The notion of vulnerability confronted with the concept of average consumer stems from the Directive on Unfair Commercial Practices,45 where such confrontation resulted in signiﬁcant misconception as further explained. Beside the concept of the average consumer, the Directive stresses three characteristics of identiﬁable groups of consumers particularly vulnerable in the market as follows: Recital (18): (. . .) this Directive take as a benchmark the average consumer, who is reasonable well informed and reasonable observant and circumspect, taking into account social, cultural and linguistic factors, as interpreted by the Court of Justice, but also contains provisions aimed at preventing the exploitation of consumers whose characteristics make them particularly vulnerable to unfair commercial practices. Art 5 (3): Commercial practices which are likely to materially distort the economic behavior only of a clearly identiﬁable group of consumers who are particularly vulnerable to the practice or the underlying product because of their mental or physical inﬁrmity, age or credulity in a way which the trader could reasonably be expected to foresee, shall be assessed from the perspective of the average member of that group.

Although the ‘average consumer’ is not deﬁned expressly in the Directive on Unfair Commercial Practices, the recital of the Directive refers to a deﬁnition, as interpreted by the European Court of Justice.46 Until now, European law and European policy are based on the concept of ‘average consumer’. According to the EU case law, in deciding whether a traders’ practice is misleading or not for a consumer, the judge has to apply an objective legal criterion, in the form of what is now known as the ‘average consumer standard’. 47 Thus, under the EU law, two signiﬁcant legal meanings emerged over the years: the average consumer and the vulnerable consumer. Whilst on one hand it might be 43

COM (2013c) 513, (2). Directive 2011/83/EU, Recital (34); Directive 2001/95/EC, Recital (8); Directive 2006/123/EC, Recital (41). 45 Directive 2005/29/EC. 46 ECJ 16.07.1998 C-210/96 and ECJ 16.09.1999, C-220/98. 47 Opinion ECCG (2013), p. 8. 44

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feasible to locate the concept of ‘average consumer’ amongst those who are conﬁdent and empowered by appropriate policy action,48 on the other hand the notion of ‘vulnerability’ shapes the notion of ‘vulnerable consumer’. It mainly means a group of consumers who are vulnerable because of their speciﬁc characteristics such as (mental or physical) inﬁrmity (children, youth or elderly), age or credulity (state of mind, cognitive, emotional). Notwithstanding such differences set forth by law, the concept of ‘average consumer’ does not ﬁt with the fundamental right of ‘consumer protection’,49 whereas by nature protection is needed if there is an unequal relationship between two parties—because the consumer does not have equal bargaining power mainly owing to difﬁculties in obtaining accurate information. It is hard to accept that someone who is well informed, observant, conﬁdent and empowered needs protection. Actually, the imbalance justiﬁes the intervention of the law in favour of the weaker party. The weaker and more dependent party needs to be protected against signiﬁcant contractual imbalances, whatever their legal or economic statuses are. Furthermore, as mentioned, a person who is observant, circumspect and conﬁdent does not ﬁt with the notion of the weaker party in a contractual relation. The Brussels I Regulation, for example, enacted before the Directive on Unfair Commercial Practices, implies that every consumer is weaker in consumer contracts.50 But matters of intervention aside, the notion of average consumer and the issue of vulnerability suddenly demanded more explanation. European consumer organisations have raised questions about the prevalent notion of the average consumer, claiming that as it is stands today, it puts too much responsibility on consumers’ shoulders. Moreover, recent surveys indicate that consumers are often less informed and assertive than policymakers assume and show that there are signiﬁcant national differences in consumer empowerment across the EU.51 As a result, a recent resolution from the European Parliament points out that ‘as the EU must focus on effectively protecting the rights of all consumers, the notion of an “average consumer” lacks the ﬂexibility needed to adapt to speciﬁc cases and sometimes does not correspond to real-life situations’.52 The EU Consumer Policy Strategy adopted by the European Commission for the years 2007–2013 sets as its main objectives the following: to empower the 493 million EU consumers, to enhance their welfare and to protect them effectively. The Strategy deﬁnes an empowered consumer as a consumer with ‘real choices,

COM (2012) 225 ﬁnal, (1). Oj 2010/C 83/391. Charter of Fundamental Rights of the European Union, Art 38. 50 Regulation (EC) 44, 2001, Recital (13): ‘In relation to insurance, consumer contracts and employment, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules provide for.’ 51 SEC 469 ﬁnal (2011). 52 Resolution 2011/2272 (INI), P7_TA(2012)0209, p. 4 (3). 48 49

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accurate information, market transparency, and the conﬁdence that comes from effective protection and solid rights’. Empowerment comes both from the capacity of consumers themselves and the strength of the infrastructural framework (regulations, public authorities, consumer organisations, etc.)53 However, even under the argument that the law provides empowerment, such argument mixes the understanding between the characteristic of the person (observant and circumspect) and an external factor (provided by law). It remains unclear whether the group of vulnerable consumers, who shall naturally be protected by their weaker consumer position, outside the scope of inﬁrmity, age or credulity will be protected in the case of commercial practices are assessed using the criterion of the ‘average consumer’, who is ‘reasonably well informed and reasonably observant and circumspect’.54 Although this sounds strange from the perspective of principles of consumer law, the notion of average consumer is facing tension in the EU. Whilst there are studies that investigate how informed and assertive consumers are in practice, and which socio-demographic characteristics may indicate more vulnerability than average,55 other studies appropriately excluded the concept of the average consumer from the tourism service.56 In this context, the transposition of the Directive on Unfair Commercial Practices by some Member States revealed that over the years, the issue has been in process. There are other characteristics and situations that should be added to the concept of vulnerability. Studies on the transposition of EU law57 have disclosed a broader comprehension of the term vulnerability than that predicted by EU law. For example, German law added two characteristics to those found in the Directive on Unfair Commercial Practices, like fear and under pressure (situations where consumers are in fear or under pressure).58 Moreover, consumer groups in special need of protection, such as fellow citizens who are linguistically or commercially inexperienced, in Germany are protected from the exploitation of their inexperience.59 The Spanish law, in addition to those characteristics found in the Directive, contains various regional statutes with similar characteristics of the vulnerable consumer, as for instance in Valencia (immigrants and persons who are temporarily displaced from their usual place of residence),60 in Aragon (adults, pregnant women,

TNS Opinion & Social, Special Eurobarometer n 342 (2011), p. 5. IP/A/IMCO/NT/2008-16 (2008), p. 30. 55 SEC 469 ﬁnal (2011), p. 10. 56 LONDON Economics (2009), p. 19. 57 IP/A/IMCO/NT/2011-20 (2012). 58 § 4 N 2 UWG (German Unfair Competition Act). Gesetz gegen den unlauteren Wettbewerb. 59 Bundestagsdrucksache, 15/1487, S. 17. 60 Act 1/2011, Art 6, Consumer Statute of Valencia, referred in IP/A/IMCO/NT/2011-20 (2012), p. 61. 53 54

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consumers socially or economically weak),61 in Asturias (adults, pregnant women, immigrants, and socially and economically weak),62 in Cantabria (adults, pregnant women, unemployed, immigrants and persons who are temporarily displaced from their usual place of residence),63 in Catalonia (any person in inferior situation or special weaknesses),64 in Castile-La Mancha (any person in inferior situation, subordination, weaknesses; pregnant women; unaccompanied women with family cares and low income; women affected by the process of marginalisation; immigrants; and socially and economically weak),65 in Navarre (any person in inferior situations, subordination, weaknesses; immigrants; and the like).66 As already noted, EU law primarily asserts the deﬁnition of ‘vulnerable’, which covers exclusively groups of persons with particular inﬁrmity, age or credulity, followed by the Directive on consumer rights67 and the Directive on general product safety,68 which are in line with the Directive on Unfair Commercial Practices. But the word ‘vulnerable’ is found also in a wide sense, such as in the Directive on services in the internal market, which emphasises ‘the protection of minors and vulnerable adults’.69 Overall, nowadays authors emphasise that it is fair to assume that the vulnerable consumer concept stands side by side with the informed consumer concept.70

61 Act 16/2006, Art 5, Consumer Statute of Aragon, referred in IP/A/IMCO/NT/2011-20 (2012), p. 61. 62 Act 11/2002, Art 5, Consumer Statute of Asturias, referred in IP/A/IMCO/NT/2011-20 (2012), p. 61. 63 Act 1/2006, Art 4, Consumer Statute of Cantabria, referred in IP/A/IMCO/NT/2011-20 (2012), p. 61. 64 Act 22/2010 Art 112-2c, Consumer Code of Catalonia, referred in IP/A/IMCO/NT/2011-20 (2012), p. 61. 65 Act 11/2005 Art 3, Consumer Statute of Castile-La Mancha, referred in IP/A/IMCO/NT/2011-20 (2012), p. 61. 66 Act 07/2006 Art 3, Consumer Statute of Navarre, referred in IP/A/IMCO/NT/2011-20 (2012), p. 61. 67 Directive 2011/83/EU, Recital (34): ‘In providing that information, the trader should take into account the speciﬁc needs of consumers who are particularly vulnerable because of their mental, physical or psychological inﬁrmity, age or credulity in a way which the trader could reasonably be expected to foresee.’ 68 Directive 2001/95/EC, Recital (8): ‘(. . .) in particular the categories of consumers which can be particularly vulnerable to the risks posed by the products under consideration, in particular children and the elderly’. 69 Directive 2006/123/EC, Recital (41): ‘(. . .) in particular, issues relating to human dignity, the protection of minors and vulnerable adults and animal welfare. Similarly, the concept of public security includes issues of public safety’. 70 Reich et al. (2014), p. 48.

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Vulnerability, Detriment and the Disadvantaged Consumer

Apart from the concept of average consumer, three notions have been particularly noteworthy in the European law and in the studies conducted by the EU: (a) vulnerability or the vulnerable consumer, (b) detriment, and (c) the disadvantaged consumer. Whilst both ‘vulnerability’ and ‘disadvantaged’ are used in different contexts, which sometimes indicate situations and sometimes assign personal characteristics,71 on the other hand the word ‘detriment‘ is used only to show a result of an act causing harm or damage72 to the person protected by law. For example, a contractual term not negotiated may cause a signiﬁcant imbalance in the parties’ rights, to the detriment of the consumer,73 or comparative advertising should include criteria of objective comparison of the features of goods and services to determine which practices relating to comparative advertising may distort competition and may be detrimental to competitors, having therefore an adverse effect on consumer choice.74 Consequently, the word ‘detriment’ has more practical consequences in terms of assertiveness in consumer law than ‘vulnerability’ and ‘disadvantaged’. But the assertiveness of the term ‘detriment’ shall not reduce the importance of the term ‘vulnerability’, which must be, and nowadays it is, intensively worked out. Though vulnerability is difﬁcult to deﬁne, it can arise from limitations in mental or physical capacity as much as from the ﬁnancial circumstances in which a consumer ﬁnds himself/herself. This suggests that it would be rather difﬁcult to come up with a common set of legal rules to tackle consumer vulnerability at the EU level. In particular, it would seem difﬁcult to design speciﬁc legal rules dealing with instances of vulnerability because of the ﬂuidity of the concept.75 Furthermore, in regard to the disadvantaged person, studies have emphasised that positioning consumers as disadvantaged simply because they belong to a socioeconomic group does not ﬁt with actual behavior, nor can it lead to adequate recommendations on consumer empowerment. Research should focus on the concept of vulnerable consumers rather than disadvantaged consumers.76

COM (2012) 225 ﬁnal, (3.2): ‘(. . .) The current context may also exacerbate the disadvantaged situation of vulnerable consumers’. 72 Oxford (2005). 73 Directive 93/13/EEC, Art 3 (1). 74 Directive 2006/114/EC, Recital (9). 75 IP/A/IMCO/NT/2011-20 (2012), p. 24. ‘Compilation of Brieﬁng Papers on Consumer Vulnerability.’ 76 TNS Opinion & Social, Special Eurobarometer n 342 (2011), p. 6. 71

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Vulnerability and the Vulnerable Consumer

Focusing on vulnerability and the vulnerable consumer, experts have pointed out that consumers in vulnerable positions are not vulnerable consumers, stressing that the issue goes deeper than conﬁdence, and society cannot be simply or easily divided into vulnerable groups and the rest, considering that people’s circumstances change and anybody can become vulnerable at any time, for example through job loss or bereavement. They suggest looking at how to remove organisational barriers and empower consumers in vulnerable positions.77 Over the years, there have been signiﬁcant changes in the comprehension of the concept of vulnerability in Europe that will have considerable impact on the law in the near future. As a result, a recent resolution on strengthening the rights of vulnerable consumers has suggested to the EU Commission that ‘the concept of vulnerable consumers should also include consumers in a situation of vulnerability, meaning consumers who are placed in a state of temporary powerlessness resulting from a gap between their individual state and characteristics on the one hand, and their external environment on the other hand, taking into account criteria such as education, social and ﬁnancial situation (for example over-indebtedness), access to the internet, and alike. All consumers at some point in their life can become vulnerable due to external factors, interactions with the market or because they have difﬁculties in accessing and comprehending relevant consumer information and therefore need special protection (. . .). The EU must focus on effectively protecting the rights of all consumers, the notion of an ‘average consumer’ lacks the ﬂexibility needed to adapt to speciﬁc cases and sometimes does not correspond to real-life situations.’78 What is more, the resolution suggests that the Commission should encourage Member States to maintain constant and close analysis of social and consumer behaviour and situations that may place certain groups or individuals in vulnerable situations, for instance by analysing consumer claims, and to put an end to vulnerability through speciﬁc measures, where appropriate, to provide protection for all consumers, regardless of ability and at whatever stage of life.79 Therefore, the issue regarding vulnerability to all consumers and consumers who are more vulnerable than others because they belong to speciﬁc groups is not addressed appropriately. Even few experts who disclosed the problem of the risk linked with the notion of vulnerability hardly approach a comparison between vulnerability in abstracto (applies to all consumers) and vulnerability in concreto (applies to a group of consumers who are particularly vulnerable). But the pathway to placing vulnerability with risk factors sounds appropriate as experts have pointed out that ‘Vulnerability should be identiﬁed through understanding risk factors,

77

Stearn (2012), pp. 4, 5. Resolution 2011/2272 (INI), P7_TA(2012)0209, p. 4 (D) and (3). 79 Idem, (5). 78

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awareness of behavioural triggers, and a recognition of the potential barriers caused by existing systems.’80 Thus, taking into account the ﬂuidity of vulnerability in view of the present risk of the situation where the consumer is involved, it is impossible to put an end to vulnerability through speciﬁc measures on individual state and characteristics, on the one hand, and external factors, on the other. However, it is possible to reduce the risk of the vulnerability through assertive public policy such as consumer protection and, why not, a further consumer traveller protection. In matters of vulnerability, the measures should focus on the contract, not on the individual himself/herself because it is impossible to measure vulnerability in all situations in which the individual will be involved. In other words, it is the same with the theory of risk,81 where people are constantly attempting to balance risk like a thermostat. The setting of the thermostat varies from one individual to another, from one group to another, from one culture to another. All individuals become accustomed to some acceptable level of risk, where in matter of travelling the travel anxiety is associated with the perception of safety and intentions to travel. There are numerous types of perceived risks associated with tourist destinations, air travel and decision-making processes of a destination choice that impact consumers’ vulnerability. The balance risk is noticed as simple common sense of safety mechanisms addressed by policy and regulation. Both are able to attenuate (not eliminate) the consumer’s vulnerability risk, for example, reduction of risk by means of appropriate information, right to have money back if something goes wrong, guarantee of compensation, appropriate consumer jurisdiction choice and so on. However, owing to some particular characteristics of some groups of consumers, who are by nature more vulnerable than others, the law should give special care in enhancing their rights concerning equality. There is a need to reduce the risk and uncertainty involved in purchasing goods and services when travelling. Such a need may be satisﬁed if a destination offers a high, reasonable or appropriate level of safety and quality concerning consumer protection. The result would reduce but not eliminate the risk of consumer vulnerability in a single market.

3.1.4

Traveller and Business Traveller

The traveller’s deﬁnition was set forth in Directive 2015/2302/EU, Article 3 (6): ‘traveller’ means any person who is seeking to conclude a contract, or is entitled to travel on the basis of a contract concluded, within the scope of this Directive; [. . .].

80 81

Stearn (2012), p. 11. Reisinger and Mavondo (2006).

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The scope of the Directive is found in Article 2 (1): This directive applies to packages offered for sale or sold by traders to travellers and to linked travel arrangements facilitated by traders for travellers.

This is the ﬁrst time that a deﬁnition of traveller has been made in the EU legislation. It leads to the conclusion that under EU law, travellers are only those who conclude contracts on package travel or linked travel arrangements. The level of the protection between packages and linked travel arrangements is another point82 as the person with a legal status to take those travel services is indeed the traveller. Regarding vulnerability, the current Directive has made no progress. It replicated the notion that vulnerable individuals are those whose characteristics make them particularly vulnerable such as age or physical inﬁrmity. It says that the trader should take into account the speciﬁc needs of travellers who are particularly vulnerable because of their age or physical inﬁrmity, which the trader could reasonably foresee.83 Curiously, the legal deﬁnition of traveller in the Directive does not contemplate the term ‘natural person’. It states ‘any person’ as traveller, which could bring some distortion. Nevertheless, it is a minor problem as Recital (7) sets forth: this Directive should apply to business travellers, including members of liberal professions, or self-employed or other natural persons, where they do not make travel arrangements on the basis of a general agreement. In order to avoid confusion with the deﬁnition of the term ‘consumer’ used in other Union legislation, persons protected under this Directive should be referred to as ‘travellers’.

Therefore, it is possible to imply by inference or association that the traveller in general is a natural person. The borderline between what is consumer and what is traveller is not always clear-cut. A series of debates over the years has led to the startling revelation that European law’s concept of consumer in the travel and tourism and related sectors has not always been as clear as expected. The adoption of the ﬁrst PTD—Package Travel Directive 90/314/EEC on package travel—in 1990 created important rights for Europeans purchasing holiday packages and even business travel packages, but the Directive neither provided a harmonised deﬁnition of consumer in line with other consumer protection directives nor acknowledged a deﬁnition for the traveller. The notion of traveller was introduced in international law by the Convention on Travel Contracts (CCV) of 1970. However, it was not incorporated by successive EU legislation.84 It read: Art 1 (7) ‘Traveller’ means any person who beneﬁts from an undertaking deﬁned in paragraph 2 or 3, whether the contract is concluded or the price paid by himself or by another person for him.

82

Directive 2015/2302/EU, Recital (9). See on this book 3.4.5. Travel Contract. Directive 2015/2302/EU, Recital (25). 84 CCV (1970). Note: In the EU only Italy still remains a signee of this convention. 83

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Although the deﬁnition of traveller did not exist at that time in European law, some Member States included the term traveller in their codes, such as Germany in the Bürgerliches Gesetzbuch (BGB), Netherlands in the Burgerlijk Wetboek (BW), at the time of implementing the PTD. The term traveller was adopted also by Austria, Estonia and Sweden. France, Luxembourg, and Slovakia preferred the term ‘purchaser’. Other countries such as Denmark, Czech Republic and Poland used ‘customer’, whilst Latvia and Portugal took ‘client’ and Lithuania, ‘tourist’. Only a few Member States used the term consumer, such as Ireland, Cyprus, Greece, Malta, Spain and the United Kingdom.85 The Directive on the common system of value added tax86 did not provide a deﬁnition for traveller, but it tackled the term traveller mainly in relation to exception from tax in many of its provisions. In addition, other documents, such as the resolution on the functioning and application of established rights of people travelling by air, emphasise that everything should run safely and smoothly for the air passenger and other travellers before, during and after the ﬂight.87 Likewise, law cases assessed by the ECJ have used passenger, consumer and traveller synonymously, whether in the description of the case or in the ﬁnal ruling.88 This may imply that the passenger is also a traveller, and thus the traveller needs special protection. In 1990, the structure of the travel market was simpler than it is nowadays and the Internet did not exist. The development of online sales and liberalisation in the airline sector have changed the way in which consumers organise their holidays, such consumers having led to different ways in which traders assist consumers in customising combinations of travel services, particularly online. There was ambiguity in many Member States as to whether such combinations fall under the scope of the former Directive and whether traders involved in putting together such combinations were liable for the performance of the relevant services, especially in the online environment, causing uncertainty for traders and consumers.89 Recently, the Court of Justice analysed the concepts of ‘traveller’ and ‘customer’ in relation to taxation and the special scheme for travel agents set forth by Directive 2006/112/EC. There were discrepancies between language versions, so that the coexistence of the traveller-based approach and the customer-based approach leads to double taxation and distortions of competition.90

85

Nölke-Schulte et al. (2008). Directive 2006/112/EC, Art 147 (1) (a), (2), Art 307, 308, 310, 374. 87 Resolution 2011/2150 (INI), P7_TA(2012)0099, (3). 88 ECJ 13.10.2011 C-83/10, (21): ‘Three passengers on the ﬂight in question were invited to take a ﬂight leaving the next day (. . .). Another traveller was offered a seat, the same day (. . .).’ ECJ 16.01.2014 C-430/13, (20): ‘(. . .) to pay compensation in respect of the costs of travellers’ repatriation and involuntary overnight stays (. . .)’ rules (1) ‘(. . .) where the detailed rules laid down therein do not achieve the result of ensuring that the consumer is provided with an effective guarantee of the refund of all money paid over and repatriation in the event of insolvency on the part of the travel organiser(. . .)’. 89 COM (2013c) 512, 1. Context of the proposal. 1.2.1. Development of Internet distribution and liberalisation in the airline sector. 90 ECJ 26.09.2013 C-189/11. 86

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Regarding ‘business traveller’, there is no particular deﬁnition in the current Directive on package travel and linked travel arrangements. But the Directive provides a way to infer the concept as it speciﬁes that it only applies to business travellers, including members of liberal professions, or the self-employed or other natural persons insofar as they do not make travel arrangements on the basis of a general agreement.91 Thus, the comparison between Recital (7) and Article 2 (2) (c) may possibly create a slight confusion for the interpreter. As to the ﬁrst, the Directive applies to ‘business traveller’, including members of liberal professions or self-employed or other natural persons. As to the second, the Directive does not apply to ‘business travel between a trader and another natural or legal person who is acting for purposes relating to his trade, business, craft or profession’. Article 2 (2) (c) added that it does not apply if the purchase falls into a ‘general agreement’. Recital (7) highlighted the term ‘general agreement’ as follows: (. . .) this directive should apply to business travellers, including members of liberal professions, or self-employed or other natural persons where they do not make travel arrangements on the basis of a general agreement.

Unfortunately, the Directive offers no particular deﬁnition of the term ‘general agreement’. It is worthy to note the difﬁculties faced by the legislator in ﬁnding a suitable solution and arriving at the term ‘general agreement’ as it was changed from the proposal of the Directive to the text approved. Whilst the proposal of the Directive stated ‘framework contract’,92 the current Directive set forth ‘general agreement’ at the end. The reason was left open. The term ‘general agreement’ is widely used in legal texts of the World Trade Organization (WTO). According to the WTO, most of the agreements are the result of the 1986–1994 Uruguay Round negotiations, signed at Marrakesh ministerial. There are about 60 agreements and decisions. Negotiations since then have produced additional legal texts. New negotiations were launched at the Doha Ministerial Conference in November 2001. Tourism service negotiations have been included since January 2000. The principles of trade in tourism services, as for all other services, are contained in the General Agreement on Trade in Services (GATS). Although it appears that the term ‘general agreement’ stems from GATS, the relationship between parties in the contract, regulated by the Directive, has a different scope. The directive indicates on Recital (7) that ‘there are companies or organisations that make travel arrangements on the basis of a general agreement, often concluded for numerous travel arrangements for a speciﬁed period, for instance with a travel agency’. The Directive emphasised that such a ‘type of travel arrangements does not require the level of protection designed for consumers’. Therefore, all business travellers are consumers, but not all consumers are business travellers.

91 92

Directive 2015/2302/EU, Recital (7). A7-0124/2014 (4.1) Recital (7) and COM (2013b) 512 Art 3 (6).

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103

Although the traveller has gained a legal status, it is true that not all travellers are under the protection of the current Directive. For example, those who take short-term trips less than 24 h that do not include accommodation, as well as packages or linked travel arrangements offered or facilitated occasionally and on a not-proﬁt basis and only to a limited group of travellers, are excluded from the scope of the Directive.93 Consequently, it seems that the criterion of assessment used to set up who is a traveller or who is a business traveller has to be stressed. That is to say, the identiﬁcation of the parties on the contract should accurately identify the person that may attract the person’s rights.

3.2

The Role of the Travel and Tourism Sector

Europe is one of the world’s seven continents.94 The geographical status, however, is different from the economic and political organisation. It geographically accounts for approximately 50 countries. The European Union is part of it, which comprises 28 Member States.95 On July 2013, Croatia was added to the European Union. The continent covers an area of 4,381,376 km2. In 2017, with a population estimated at 511.8 million,96 Europe is a mass market. Germany is the largest country in population, with 81.2 million people living there, followed by France, 66.42 million.97 A survey conducted by the European Commission (Eurostat Statistics in Focus 28/2012) shows that ﬁve of the European Union Member States are included in the world’s top 10 destinations for holidaymakers. These are Italy, Spain, France, Austria and Germany.98 In 2017, across the EU, the top four most popular destinations for non-residents were Spain, Italy, France and the United Kingdom, which together accounted for more than half (56.2%) of the total nights spent by non-residents in the EU-28.99 However, the statistical deﬁnition of ‘tourism’ is broader than its legal or common deﬁnition inasmuch as it encompasses not only private trips but also businesses trips. This is primarily because the tourism statistics see tourism from an economic perspective.

93

Directive 2015/2302/EU, Recital (19). Asia, Africa, North America, South America, Europe, Australia, and Antarctica. 95 Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, U.K., Croatia. 96 Eurostat, Key ﬁgures on Europe, 2017, Luxembourg. PDF /ISBN 978-92-79-72272-1, p. 15. 97 https://europa.eu/european-union/about-eu/ﬁgures/living_en#size_and_population website visited on 23.04.2018. 98 Eurostat, Statistics Explained Archive (May 2012), pp. 1106, 1144. 99 Eurostat, Key ﬁgures on Europe, 2017, Luxembourg. PDF /ISBN 978-92-79-72272-1, p. 119. 94

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The Europeans made ﬁve million more holiday trips in 2011 but spent less days at their destination. Curiously, the survey observed that over the past 4 years, the number of holiday trips made by residents has remained more or less stable at just over one billion. In 2011, there was even a slight rise of 0.5% compared with 2010.100 The set of data sources in the EU is the Eurostat statistics on international trade in services, which use methodological references from the International Monetary Fund (IMF) and the United Nations’ manual on statistics of international trade in services. The Eurostat includes three main sub-items: transport, travel and other services. Transport covers all transport services that are provided by residents of one economy for those of another and that involve the carriage of passengers, the movement of goods (freight), rentals (charters) of carriers with crew, and related supporting and auxiliary services. All modes of transport are considered, including sea, air, space, rail, road, inland waterway and pipelines, as are other supporting and auxiliary services (such as storage and warehousing).101 Travel covers primarily the goods and services acquired from an economy by travellers during visits of less than 1 year to that economy. The goods and services are purchased by, or on behalf of, the traveller or provided, without a quid pro quo (that is, they are provided as a gift), for the traveller to use or give away. The transportation of travellers within the economies that they are visiting, where such transportation is provided by carriers not resident in the particular economy being visited, as well as the international carriage of travellers, is excluded; both are covered in passenger services under transport. Also excluded are goods purchased by a traveller for resale in the traveller’s own economy or in any other economy. Travel is divided into two subcomponents: business travel and personal travel.102 Other services comprise external transactions not covered under transport or travel, speciﬁcally communication services; construction services; insurance services; ﬁnancial services; computer and information services; royalties and license fees; other business services; personal, cultural and recreational services; and government services.103

3.3

Travel Law

The European ‘travel and tourism law’ or even ‘travel law’ is not clearly recognised as a traditional ﬁeld of law. Travel rules have been achieved by a series of directives under the scope of consumer law. It is not a separate or self-contained ﬁeld of law. In

100

European Union, 2012. Manuscript completed on: 22.06.2012. Data extracted on 04.06.2012. Catalogue number: KS-SF-12-028-EN-N. ISSN 1977-0316. 101 Eurostat, Statistics Explained Archive (May 2012), p. 1173. 102 Idem, p. 1173. 103 Idem, p. 1173.

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some respect, it is the application of well-established rules, principles and processes of general ‘consumer law’ to the resolution of consumer and travel problems and disputes. Therefore, the subject cannot be understood without a good understanding of ‘consumer law’ as a whole. Many questions on ‘travel law’ can be answered through ‘consumer law’, but modern problems have also prompted the creation of a new law or the clariﬁcation, amendment or repeal of an existing law. For example, Directive on package travel and linked travel arrangements repealed Directive 90/314/EEC. It extended the protection for traditional travel packages combined by the supplier to include travel packages that are combined at the traveller’s request. In addition, the Directive introduced the concept of ‘linked travel arrangements’, which is not a package, as further examined. In the travel sector, the existence of different services integrated by different sectoral legislation automatically triggers basic assessments. Single services, for example, may be considered as accommodation; car rental; air,104 rail,105 bus/coaches106 and waterborne107 transportation; or other tourist services such as events/excursions. Whereas the transport sector is submitted to a number of regulations, other sectors such as accommodation, car rental and other services are not speciﬁcally regulated, except if part of the ‘package travel’ and covered by general EU laws such as Unfair business to consumer commercial practices and Unfair terms in consumer contracts, as well as the Consumer Rights Directive. The Consumer Rights Directive (CRD) excluded contracts that fall within the scope of the Package Travel Directive.108 Such exclusion does not mean that the provisions of the ‘Package Travel Directive and Linked Travel Arrangements’ do not tackle consumer protection; on the contrary, both the Directive on package travel and linked travel arrangements109 and the CRD110 imply ‘package travel’ as one of the targets of consumer protection legislation. Such an approach perceives that travel

104

Regulation (EC) 261, 2004. Regulation (EC) 1371, 2007. 106 Regulation (EU) 181, 2011. 107 Regulation (EU) 1177, 2010. 108 Directive 2011/83/EU, Art 3 (3) (g): ‘(3) This Directive shall not apply to contracts: (g) which fall within the scope of Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours.’ 109 Directive 2015/2302/EU, Recital (3): Article 169(1) and point (a) of Article 169(2) of the Treaty on the Functioning of the European Union (TFEU) provide that the Union is to contribute to the attainment of a high level of consumer protection through measures adopted pursuant to Article 114 TFEU. Recital (6) while ensuring a high level of consumer protection across the Union, it is necessary to further approximate the laws of the Member States relating to packages and linked travel arrangements. 110 Directive 2011/83/EU, Recital (32): ‘The existing Union legislation, inter alia, relating to consumer ﬁnancial services, package travel and timeshare contains numerous rules on consumer protection. For this reason, this Directive should not apply to contracts in those areas.’ 105

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law is closer to being a subdivision of consumer law rather than a separate traditional ﬁeld of law. In this context, a separate EU policy on travel law would envisage a separate legal standard exclusively for travel policy and legislation. However, this approach does not meet the current EU policy framework. At the moment, which kind of policy does EU stress: travel or tourism? In line with the consumer policy, the EU is signalling to strengthen tourism policy rather than travel policy, mainly because ‘tourism’, which was not contemplated by the former EC Treaty, appears prominent in EU Treaty, currently in the TFEU.111 Curiously, years ago, persistent authors had predicted the need for a European tourism policy, stating that transport policy, environmental protection policy, consumer policy, to name the most important ones, constitute single pieces that have to be connected with each other. Therefore, the difﬁcult aim of a European tourism policy must be to coordinate these other sectors of policy.112 Now the EU sources have stated that the Committee of the Regions ‘welcomes the Commission’s desire to deal with the tourism policy in a coordinated and integrated fashion, linking it to other policies such as transport, agriculture and environmental protection policies, information and communication technologies, social policy, culture, etc; (. . .) In this regard, the Commission’s approach of integrating tourism into the different European policies is to be welcomed’.113 In addition, pressures regarding climate change, which addresses the need for a green economy on the environment,114 are also pushing for new policies. For instance, ‘the transformation into an inclusive green economy requires the integration of environment issues into other policies, such as energy, transport, agriculture, ﬁsheries, trade, economy and industry, research and innovation, employment, development, foreign affairs, security, education and training, as well as social and tourism policy, so as to create a coherent, joined-up approach. Action within the Union should also be complemented by enhanced global action and cooperation with neighbouring countries to tackle common challenges.’115 Although the European Union has been able to lay the foundations for a European tourism policy, whilst taking account of the need for sustainable development,116 the EU tourism policy currently is limited only to funding the tourism sector for private and public purposes, including programmes and ﬁnancial support for tourism 111 TEU and TFEU (2010), TFEU Art 6: The Union shall have competence to carry out actions to support, coordinate or supplement the actions of the Member States. The areas of such action shall, at European level, be: (. . .) (d) tourism. Art 195: The Union shall complement the action of the Member States in the tourism sector, in particular by promoting the competitiveness of Union undertakings in that sector. (. . .) 112 Tonner (1998), p. 33. See also McDonald (2003). 113 OPINION CREU 2011/C 104/03 (2011). 114 UNITED Nations, A/CONF.216/L.1 (2012). 115 Decision 1386/2013/EU Action Programme to 2020, on a General Union Environment Action Programme to 2020 ‘Living well, within the limits of our planet’ (Text with EEA relevance), 2013. 116 COM (2010) 352 ﬁnal, p. 4.

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projects.117 ‘Tourism’ did not achieve a legal status within the EU acquis as ‘travel’ did, through the PTD. So far, ‘tourism’ is restricted to ‘EU tourism policy’. When the issue is to implement sectoral policies, the EU mentions ‘travel’ in less prominent role, e.g. ‘the need to factor consumer interests from the outset into the design and implementation of sectoral policies of key importance for consumers, in particular in the food chain, energy, travel and transport, sustainable products, digital and ﬁnancial services sectors’.118 Travel Policy takes place also concerning the condemnation of the sexual abuse of children in the EU119 or on Europol’s staff regulations.120 It is noteworthy that the Union shall develop a policy with a view to the conditions under which nationals of third countries shall have the freedom to travel within the Union for a short period. This, however, is in regard to policies on border checks, asylum and immigration rather than to travel policy as a whole.121 As a result, there is a fuzzy boundary between ‘tourism policy’ and ‘travel policy’ in the Union. For a long time, after the EU enacted the PTD in the 1990s and the growth in the travel industry increasing consumer demand for travel services, the lawmakers and authors have created a new legal approach to the sector; the ‘travel law’ approach.122 In terms of European law doctrine, there were also small variations in the subject, whether it is holiday law123 or solely tourism law124 or indeed travel law.125 Experts have pointed out that the laws protecting passengers and holidaymakers at EU level are fragmented and lacking in cohesion.126 Even so, ‘travel law’ is still strong in the EU legal cultural perspective because of the existence of the PTD named nowadays as package travel and linked travel arrangements. If a relevant statute exists, the references to it will serve as an introduction to encourage the existence of a ﬁeld or a sub-ﬁeld of law. A search for statutory authority is always necessary because it is no longer realistic to assume that there is no pertinent statute. Although the statutory law is an excellent place to begin the assumptions of validity of a ﬁeld of law, it is not substantial. To conﬁne the scope of

117

Directorate-General for Enterprise and Industry, 2014, downloadable on: http://ec.europa.eu/ enterprise/sectors/tourism/index.en.htm webpage visited on: 05.04.2015. 118 Resolution 2012/3190 (2012). 119 OPINION EESC 2009/C 317/07 (2009) (5) (5.2) EU institutions can lead the way by introducing their condemnation of the sexual abuse of children as part of their ethical travel policy and include this on all travel expense reimbursement forms. 120 Council Act 2004/C 114/02 OJ 30.4.2004 (1) It is desirable to amend the Staff Regulations applicable to Europol employees, as laid down in the Council Act of 3 December 1998 (5) (‘Staff Regulations’) in particular in order to improve the travel policy. 121 TEU and TFEU (2010), TFEU Art 77 (c). 122 Yaqub and Bedford (1997). 123 Oughton and Lowry (2000), p. 267. 124 Howells and Wilhelmsson (1997), Contents: Tourism. 125 Karsten (2010), pp. 201–215. 126 Tonner and Schuster (2005), p. 3.

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an autonomous meaning to a subject, turning it into an autonomous ﬁeld of law requires general principles underlying the legal system as a whole. This is true for consumer law127 but not for ‘travel law’. ‘Travel law’ has no relevance in the general principles underlined by the EU Treaty. Whilst the consumer has a prominent protection under the principles established by the treaty, travellers or tourists were not even mentioned. The treaty refers to ‘tourism’ in Article 6, where the Union shall have competence to carry out actions to support, coordinate or supplement, inter alia, ‘tourism’.128 In this context, there are two aspects that the EU system regulates: (1) consumer interests and (2) tourism as an economic activity.129 The ﬁrst means a legal person, the second an economic phenomenon. The EU is interested in protecting the interests of consumers (consumer protection)130 and in carrying out actions to support, coordinate or supplement the actions of the Member States, inter alia, related to the tourism sector.131 Although legal studies over the years have addressed ‘travel law’ based on the PTD, there is now an upward trend towards ‘tourism’. However, no exclusive piece of legislation on ‘tourism’ exists in the EU acquis, and ‘tourism policy’ is restricted to ﬁnancial and funding projects. Overall, nowadays ‘travel law’ is considered not a traditional autonomous ﬁeld of law but a subdivision of consumer law in view of the existence of PTD 90/314/EEC, which was replaced by Directive 2015/2302/EU. In fact, it is a sectorial legislation relying on the consumer law system. Therefore, the impact of consumer law on the sectorial ‘travel law’ or, better, ‘travel and tourism law’ legislation is unavoidable.

3.3.1

Further Developments

It is difﬁcult by nature to envisage travel law outside of the scope of consumer law. The current Directive on package travel and linked travel arrangements emphasises that the majority of travellers buying packages are consumers in the sense of Union

127 TEU and TFEU (2010), TFEU Art 4 (2), ‘Shared competence between the Union and the Member States applies in the following principal areas: (f) consumer protection’; Art 169, ‘In order to promote the interests of consumers and to ensure a high level of consumer protection, the Union shall contribute to protecting the health, safety and economic interests of consumers, as well as to promoting their right to information, education and to organise themselves in order to safeguard their interests’. 128 Idem, Art 6 (d). 129 McDonald (2003), p. 8: ‘The stress here is signiﬁcant. It is not tourism in itself, but tourism as part of the common market, as an economic activity, which forms the basis for signiﬁcant Community action impacting tourism.’ 130 TEU and TFEU (2010), TFEU Art 4 (2) (f), Art 12, Art 114, Art 169. 131 Idem TFEU Art 6.

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consumer law.132 But now, it will focus on the traveller and no longer on the consumer. Authors have argued that it might be advisable to consolidate the various different pieces of EU legislation into one legislative instrument, which could be called the ‘EU Travel Code’133 or ‘Consumer Travel Directive’.134 The latter is more realistic and more closely connected with the logic of the current EU legal scheme. Whilst there is a common sense acquainted with the logic of ‘the consumer’, the persons created by law, e.g. ‘passenger’ or ‘traveller’, pressure for a legal cohesion. Such a pressure can also arise if gaps in the law start to become a problem. The great number of exceptions inserted into the general rules may not prevent incoherencies in the system. It is not possible ab initio to foresee what combinations of circumstances will arise. Hence, it is impossible to consider before a particular case what sacriﬁce or compromise of interests or values the lawmaker will wish to do in order to reduce the risk of harm.135 When the law has a number of exceptions, it does so in the knowledge of a mechanism for obviating problems ﬂowing from national differences. However, it causes much uncertainty to individuals, which increases the level of consumer vulnerability, now not because of the market but because of the law. In addition, whilst the Consumer Rights Directive extended the period of withdrawal to 14 days, which is an achievement, it at the same time imposed many exceptions from the right of withdrawal136 that more generally decreased the level of consumer protection of some consumers. Thus, speciﬁc single services are not covered by the right of withdrawal, as for instance accommodation provided by hotels or holiday cottages or cultural or sporting events, as mentioned in Recital (49) of the CRD.

3.3.2

The Package Travel and Linked Travel Arrangements Directive

The current Directive 2015/2302/EU is the centrepiece of legislation in the travel and tourism sector. It mentions that traders should take into account the speciﬁc needs of travellers who are particularly vulnerable because of their age or physical inﬁrmity.137 In this way, Directive 2015/2302/EU reproduced the understanding of the Directive on unfair business to consumer commercial practices, in which

132

Directive 2015/2302/EU, Recital (7). IP/A/IMCO/ST/2011-17 (2012), p. 33. 134 Tonner and Schuster (2005), p. 3. 135 Hart (1961), p. 129. 136 Directive 2011/83/EU, Art 16 (l). 137 Directive 2015/2302/EU, Recital (25). 133

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vulnerability is laid down only on those individuals whose characteristics make them particularly vulnerable to unfair commercial practices.138 Signiﬁcantly, as herein said, the traveller achieved a legal status in the current Directive. Under the former Directive, the person targeted by the statute was the consumer rather than the traveller. Even so, the deﬁnition of consumer carried out by the former Directive was entirely different from other consumer protection directives. Over the past 24 years, because of signiﬁcant changes in the market, the level of protection of the former Directive was reduced considerably, mainly owing to the development on the Internet of the so-called dynamic packaging or dynamic bundling. That Directive belonged to the ﬁrst generation of consumer protection directives adopted between 1985 (Doorstep Selling Directive, 85/577/EC) and 1999 (Sales of Consumer Goods Directive, 1999/44/EC), following the minimum standard principle.139 In addition, the former PTD did not explicitly state whether the package arranged at the request of the consumer, a tailored package, would be under its protection. The Court of Justice of the European Union had clariﬁed the matter afﬁrmatively in favour of the consumer,140 being that the current Directive 2015/2302/EU included provisions in this regard. Although not clearly expressed by the former Directive, the business traveller as a purchaser of a package travel could possibly be included in the deﬁnition of consumer in view of the wide deﬁnition of consumer developed by that Directive. Since the beginning, authors have argued that ‘the scope of the Directive is broader than being a pure Consumer Protection measure’.141 Indeed, the original aim of enlarging the protection to cover business travellers has survived in the current Directive 2015/2302/EU. It states that it should apply to business travellers, including members of liberal professions, or self-employed or other natural persons, where they do not make travel arrangements on the basis of a general agreement.142 The Directive pointed to a legal approach strengthening speciﬁc traveller’s rights, permitting to say that the traveller is a special consumer under EU consumer acquis. It is no exaggeration to state that the traveller is a special consumer as Directive 2015/2302/EU sets forth: ‘The majority of travellers buying packages or linked travel arrangements are consumers within the meaning of Union consumer law.’143 Therefore, it will create the opportunity for a consumer relationship with a broader deﬁnition inasmuch as consumer protection embeds norms that are more

138

Directive 2005/29/EC, Recital (18). Tonner (2013), p. 126. 140 ECJ 30.04.2002 C-400/00, Club Tour. 141 Howells and Wilhelmsson (1997), p. 247. 142 Directive 2015/2302/EU, Recital (7). 143 Idem, Recital (7). 139

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general. These equally apply to travellers such as tourists and/or some particular business persons. By nature, it is unavoidable to consider the traveller as a consumer in a complex large consumption society. Even the travel industry employs the term traveller on a daily basis. In most of the cases, consumption is the intimate cause of travelling even when encapsulated in leisure. General EU consumer law covers travel and tourism services (such as accommodation and car rental), so consumers making travel arrangements are protected against unfair practices throughout the EU.144 The communication from the Commission to the EU Parliament emphasises that being the most vulnerable party to the contract, especially when travelling, consumers enjoy a general set of rights, which limit problems and guarantee acceptable service throughout the EU.145 One striking aspect to note here is that the contract is the exclusive source that informs about where the supplier is established. It means that if a European traveller enters into a contract with a supplier established in a non-Member State, he or she will be out of the scope of the Directive’s protection. It is noteworthy that the traveller should receive all necessary information before purchasing a package, whether it is sold through means of distance communication, over the counter or through other types of distribution. In providing this information, the trader should take into account the speciﬁc needs of travellers who are particularly vulnerable because of their age or physical inﬁrmity, which the trader could reasonably foresee. Nevertheless, Directive 2015/2302/EU did not clarify to what extent the information before purchasing a package should be transmitted to the traveller.146 As the approach of the EU to vulnerability remains on personal characteristics of the individual, would be expected detailed requirements about information on accessibility into the new Directive. Rather, it states that ‘the trader should take into account the speciﬁc needs of travellers who are particularly vulnerable’. It does not specify how this should be done, as for instance whether the information should include how many seats for disabled persons should be made available on the aircraft or if the hotel has lift accessible for wheelchair and so on. Finally, as already said, the Directive approaches the vulnerability embedded in speciﬁc scope regarding personal characteristics of the individual, rather than a principle covering all consumers. More details regarding the Directive are found on Sect. 3.4.5, ‘Travel Contract’.

144

COM (2013c) 513, p. 3. COM (2013c) 513, p. 2. 146 Directive 2015/2302/EU, Recital (25). 145

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Service Contracts and Ancillary Contracts. Single Service and Combined Services

According to the type of service, whether single or combined, contracts may include different terms and may be under general law (lex generalis) and/or special law (lex specialis). Whilst accommodation, car rental and other services such as events, tours, excursions and the like fall within the coverage of general law, transport, packages and linked travel arrangements are considered under special laws. The term ‘ancillary contract’ refers to a subordinate contract where the consumer acquires services related to a timeshare contract or a long-term holiday product contract and that is provided by the trader or a third party on the basis of an arrangement between that third party and the trader. In the wording of the Timeshare Directive, although ‘ancillary contract’ comprises more than one service, it is not a combination of services. The Directive does not use the term ‘combination’ at all. It is interesting that the directives, on ‘timeshare’ and ‘package travel and linked travel arrangements’, have approached more than one services/contracts in different manners and at different levels. That is to say, though by nature they refer to a combination of services targeted at one purpose, denoting a union of at least two services, the directives formulated the concept in different ways. Whilst Directive 2015/2302/EU employs the term ‘combined’ for such services/contracts, Directive 2008/122/EC on timeshare employs ‘ancillary contracts’. The reason may be technical—to avoid confusion with packages and LTA. However, legal persons are different. Timeshare is to consumer; package and LTA are to traveller. Contract law in Europe is a ﬁeld comprised of a number of rules. The EU uses directives to harmonise national provisions in different sectors to straighten the relationship between business and consumers. To name the important ones for travel and tourism law, there are directives on unfair terms in consumer contracts,147 on unfair business-to-consumer commercial practices,148 on consumer rights149 on services in the internal market150 on timeshare contracts151 and on package travel contracts and linked travel arrangements.152 Besides the directives, there are regulations, which are directly applicable in all Member States. The term ‘travel contract’ is found in the CCV with the following deﬁnition: ‘“Travel Contract” means either an organized travel contract or an intermediary travel contract’.153 Thus, the borderline between organised travel contract and intermediary travel contract is the point for determining the shape of travel and

147

Directive 93/13/EEC. Directive 2005/29/EC. 149 Directive 2011/83/EU. 150 Directive 2006/123/EC. 151 Directive 2008/122/EC. 152 Directive 2015/2302/EU. 153 CCV (1970), Art 1 (1).Note: In the EU only Italy still remains a signee of this convention. 148

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tourism services, whether combined or single. In EU consumer law, contracts are under rules of general law or special law. Whilst there are services under the scope of general law such as accommodation and car rental,154 other services are under the scope of special law such as transport155 and package travel and linked travel arrangements.156 However, although intermediary services are conceived as single services, not all single services are intermediary. It is the case, for example, where the consumer books hotel accommodation directly without any intermediary service provided by a travel agent. The importance of determining whether the service is combined or single is not in what they say about the particular task itself (e.g., hotel booking service) but in what they reveal about how to identify the law applicable to the contract, for it turns out that a hotel booking service included and sold together, at an inclusive price, with other services such as transportation and tour is not a single service anymore. If there are more than one services included in one contract or separate contracts combined, it turns into a combined services, which falls under the scope of special provisions of the Directive on package travel and linked travel arrangements. The point is to verify whether the contract is a ‘package’ or ‘linked travel arrangements’. They have different kinds of protection. See the chapter ‘Travel Contract’ in line with Flowcharts 1 and 2. The obvious dividing line in matters of contract is between the common sense of contract and the legal sense of it. The common sense considers a contract to be a formal written document, which is a misconception; on the other side, the legal sense considers a contract as any agreement that the law will enforce. Although this may appear as a superﬁcial observation, it sets clear the simplicity or complexity between different forms of contracts. Whilst some contracts might be as very simple as buying a ticket to the theatre or to the amusement park or buying snacks and coffee from a vending machine, other contracts may be as complex as the combination of services embedding different liability rules, like the package travel contracts and linked travel arrangements. Complex contracts may also easily hide unfair terms insofar as the supplier or seller may impose terms that the consumer had no real opportunity to read and understand before signing the contract.157 Over the years, there were barriers from divergent contract laws adopted by Member States, particularly because the directives mainly related to consumer rights and package travel were conceived to provide a minimum standard of legal protection. Such a standard did not prevent the Member States from having rules that were more favourable. For example, one of consumers’ main concern is what remedies

COM (2013c) 513, p. 3: ‘Travel and tourism services (such as accommodation and car rental) are covered by general EU consumer law.’ 155 Air- Regulation 261/2004, Rail—Regulation 1371/2007, Bus and coaches—Regulation 181/2011, Waterborne transport—Regulation 1177/2010. 156 Directive 2015/2302/EU. 157 COM (2013c) 513, p. 3. 154

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they have when a product purchased from another Member State is not in conformity with the contract. Many consumers are therefore discouraged from purchasing outside their domestic market.158 Recent ﬁndings have shown that one in three retailers with more than ten employees would be interested in making cross-border sales in the EU if the laws regulating transactions with consumers were the same across the EU. Likewise, the large majority of retailers that have made cross-border sales (70%) would be interested in making cross-border sales to more countries if the laws regulating consumer transactions were the same across the EU.159 As a result, the European Union is shifting from the principle of minimum standard to the principle of full harmonisation, which is now included in the Consumer Rights Directive (CRD)160 and the Package Travel and Linked Travel Arrangements Directive.161 It is a positive achievement, but the effects will take longer until the ﬁrst results start to be noted.

3.4.1

Contract of Carriage of Passenger

In essence, the contract of carriage of passengers includes a single service, but it does not mean that the service is not included in contracts compiled by combined services. When it happens, it is relevant in terms of contracts because the service combined with other services will be assessed under different rule(s) other than transport legislation only. That is to say, the type of contract also changes. If the service of carriage of passenger comes all together at once with other services rather than a service completely isolated, the contract of carriage of passenger will be somehow included in the main contract of the package travel contract or linked travel arrangements. Thus, depending on the service (whether single or combined), the contract is classiﬁed under different types of norms. The EU has a set of norms that standardised entitlements, such as Regulation 261/2004 on the protection of passengers against denied boarding, cancellation or

158

COM (2011a) 635, pp. 3–4. COM (2011c) 942, (46). 160 Directive 2011/83/EU Art 4: ‘Member States shall not maintain or introduce in their national law, provisions diverging from those laid down in this Directive, including more or less stringent provisions to ensure a different level of consumer protection, unless otherwise provided for in this Directive.’ 161 Directive 2015/2302/EU Recital (5) ‘the harmonisation of the rights and obligations arising from contracts relating to package travel and to linked travel arrangements is necessary for the creation of a real consumer internal market in that area, striking the right balance between a high level of consumer protection and the competitiveness of business’. 159

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long delay of ﬂights (air passenger’s rights). Luggage is under the Montreal Convention and Regulation 1008/2008. With the adoption of passenger rights for bus and coach transport in 2011, the EU now has a comprehensive and integrated set of basic passenger rights rules in all modes of transport: air, rail, waterborne and road. The EU legislator had two aims: ﬁrst, to introduce a common set of passenger rights, guaranteed by law, for the four transport modes and, second, to allow the necessary distinctions on account of the speciﬁc characteristics of each mode and their markets related to the industries and passengers to ensure proportionality.162 The legislation as a whole set rules for how companies should deal with delays, cancellations, lost or damaged luggage and online pricing, also stating what levels of service passengers should expect and giving them information about their rights in terms of refunds, alternative transport and ﬁnancial compensation.163 All these modes are means of transport, which have different requirements, discussed below. The contract of carriage of passenger by air is under Regulation 261/2004 on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of ﬂights; Regulation 2027/97 on air carrier liability in the event of accidents, as amended by Regulation 889/2002,164 which changed the title of Regulation 2027/97 to air carrier liability in respect of the carriage of passengers and their baggage by air, as well as by the Montreal Convention; and few other provisions extracted from legislation dealing with matters other than the formation of a contract, as for instance pre-contractual information duty found in Regulation 1008/2008 on common rules for the operation of air services in the Community.165 Whilst the Montreal Convention provides remedies assessed on a case-by-case basis depending on the individual damages suffered by the passenger, Regulation 261/2004 establishes standardized entitlements (regarding assistance and care) applicable to all passengers, regardless of their individual circumstances, in the event of denied boarding, cancellation or long delay of ﬂights. Regulation 889/02 (which amended Regulation 2027/97) entitles the passenger to be compensated in case of mishandled baggage up to €1200, except if the airline demonstrates the COM (2011b) 898 ﬁnal, p. 1 (I-Introduction), (II-Review of passenger rights legislation). Hunter (2014), p. 8. 164 Regulation (EC) 889, 2002 amending Council Regulation (EC) 2027/97 on air carrier liability in the event of accidents. 165 Regulation (EC) 1008, 2008, Art 23 sets forth that the air fares and air rates available to the general public shall include the applicable conditions when offered or published in any form, including on the internet, for air services from an airport located in the territory of a Member State to which the Treaty applies. The ﬁnal price to be paid shall at all times be indicated and shall include the applicable air fare or air rate as well as applicable taxes, and charges, surcharges and fees which are unavoidable and foreseeable at the time of publication. In addition to the indication of the ﬁnal price, at least the following shall be speciﬁed (a) air fare or air rate; (b) taxes; (c) airport charges; and (d) other charges, surcharges or fees, such as those related to security or fuel. (. . .) Optional price supplements shall be communicated in a clear, transparent, and ambiguous way at the start of any booking process and their acceptance by the customer shall be on ‘opt-in’ basis. 162 163

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adoption of reasonable measures to avoid the damages or the impossibility to implement such measures. On the other hand, Regulation 261/2004 requires air carriers to provide passengers with assistance, such as meals, refreshments, telephone calls and hotel accommodation; offer rerouting and refunds; pay ﬂat-rate compensation between €250 and €600 per passenger, depending on the ﬂight distance; and proactively inform passengers about their rights. Neither the Montreal Convention nor Regulation (EC) 2027/97 requires the establishment of enforcement bodies (NEBs) to ensure their correct application,166 but it is required by Regulation 261/2004, Article 16 (1). If the delay is longer than 5 h, under Regulation 261/2004, the passenger may claim for reimbursement of the full ticket price or the cost of the unused ticket segment or rerouting.167 The same right of reimbursement also applies to passengers whose ﬂights form part of a package, except for the right to reimbursement where such right arises from Directive 90/314/EEC,168 repelled by Directive 2015/2302/EU. Regulation 261/2004 shall not affect the rights of passengers granted by the Package Travel Directive.169 The ticket is the valid document giving the passenger entitlement to transport, or it could be something equivalent such as one in paperless form, including electronic form,170 proving the conclusion of the contract of air carriage. The contract is performed between the air carrier and a passenger directly or on behalf of another person, legal or natural, who has a contract with that passenger.171 Though it does not apply to passengers travelling free of charge or at a reduced fare, not available directly or indirectly to the public, it shall apply to passengers having tickets issued under a frequent ﬂyer programme or other commercial programmes by an air carrier or tour operator.172 Except where there are reasonable grounds to deny boarding to passengers, such as health, safety or security or inadequate travel documents, the air carrier cannot refuse to carry passengers on a ﬂight if they have presented themselves for boarding in time to conclude the checking process.173 If boarding is denied to passengers against their will, the operating air carrier shall immediately compensate them174 with (a) 250€ for ﬂights of 1500 km or less; (b) 400€ for intra-Community ﬂights of more than 1500 km and for all other ﬂights between 1500 and 3500 km; (c) 600€ for all ﬂights not falling under (a) or (b).175 However, as already said, if the passenger COM (2013a) 130 ﬁnal, p. 2. Regulation (EC) 261, 2004, Art 8 (1) (a) (b) (c). 168 Idem, Art 8 (2). 169 Idem, Art 3 (6). 170 Idem, Art 2 (f). 171 Idem, Art 2 (b). 172 Idem, Art 3 (3). 173 Idem, Arts 2 (j), 3 (2). 174 Regulation (EC) 261, 2004, Art 4 (3). 175 Idem, Art 7 (1). 166 167

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decides to continue the trip, the air carrier shall offer to him/her, meals and refreshments; hotel accommodation, if necessary; transport between the airport and the place of accommodation.176 The burden of proof concerning questions of whether and when the passenger has been informed of the cancellation of the ﬂight lies with the air carrier.177 The air carrier is liable for death and for any personal injury of passengers according to provisions set forth by Regulation 2027/97 as amended by Regulation 889/2002. It extended the Montreal Convention’s applicability to domestic ﬂights, whether the accident that caused the death or injury took place in the course of any of the operations of embarking or disembarking or on board the aircraft.178 The Montreal Convention and Regulation 2027/97 set a maximum limit of compensation calculated by applying the special drawing rights (SDR), as deﬁned by the International Monetary Fund.179 Taking up, inter alia, concerns of the notion of ‘extraordinary circumstances’, the European Court addressed the issue on Case-549/07 (Wallentim-Herman). Through this decision, the court clariﬁed when a technical problem in an aircraft should not be regarded as an ‘extraordinary circumstances’. Moreover, other cases assessed by the CJEU also impact on the interpretation of the current Regulation by the EU Commission. In the joined cases C-402/07 (Christopher Sturgeon and Others v Condor Flugdienst GmbH) and C-432/07 (Stefan Böck and Cornelia Lepuschitz v Air France SA), the court held that a long delay of at least 3 h at arrival is enough to entitle passengers to compensation. More recently, an interesting case180 challenged the CJEU in the interpretation of the notion of ‘extraordinary circumstances’ included in Regulation 261/2004 in relation to Articles 5 (1) (b) and 9. Whereas these articles provide the passenger the right to assistance and care in case of cancellation of the ﬂight, other provisions, such as Article 7, set forth that an air carrier shall not be obliged to pay compensation if it can prove that the cancellation is caused by extraordinary circumstances that could not have been avoided even if all reasonable measures had been taken. The request to the court happened because the air company refused to provide the passenger with the necessary care after the eruption of the Icelandic volcano Eyjafjallajökull, which more generally led to closure of part of the European airspace. The CJEU ruling must be interpreted to mean that circumstances such as the closure of part of European airspace as a result of the eruption of the volcano constitutes ‘extraordinary circumstances’ within the meaning of Regulation 261/2004, which does not release air carriers from their obligation to provide care laid down in Articles 5 (1) (b) and 9. In addition, an air passenger may only obtain the reimbursement of the amounts that proved necessary, appropriate and

176

Idem, Art 9 (a) (b) (c). Idem, Art 5 (4). 178 Regulation (EC) 2027, 1997, Art 1. 179 Montreal Convention, O.J. L194, 18.07.2001, Art 23 and Regulation (EC) 2027, 1997, Art 3 (2). 180 ECJ 31.01.2013 C-12/11, Denise McDonagh v Ryanair Ltd. 177

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reasonable, in the light of the speciﬁc circumstances of each case, to make up for the shortcomings of the air carrier. Actually, the background of the problem is not the compensation but rather how to oblige the airline to provide reasonable assistance to the passengers for at least one week. The Regulation is silent about the reasonable time. However, the CJEU’s interpretation tackled the duty of care, and therefore it is in favour of the consumer. In such a context but in a different approach, Directive 2015/2302/EU uses the term ‘unforeseen events’ and ‘extraordinary circumstances’, stressing two different scopes. Whilst in the ﬁrst the traveller should, under certain conditions, be entitled to transfer a package to another traveller and pay the expenses to the organiser,181 in the second the traveller has the right to terminate the contract without paying any termination fee where unavoidable and extraordinary circumstances will signiﬁcantly affect the performance of the package.182 The contract of carriage of passenger by rail is based on the provisions of the Berne Convention of 1961 on Carriage by Rail, now COTIF of 1980, as amended in 1999, which was integrated and replaced by the current Regulation (EC) 1371/2007 on rail passengers’ rights and obligations. Additionally, in regard to general jurisdiction, which accounts for the majority of contracts of carriage of passengers, Regulation 593/2008 on the law applicable to contractual obligations (Rome I), which integrated the 1980 Rome Convention, as well as Regulation 864/2007, related to non-contractual obligations (Rome II), also apply. A milestone for the contract of carriage of passenger in the rail mode is Regulation (EC) 1371/2007, which protects both kinds of passengers, international and domestic. It produces direct effect of applicability on Member States. The Regulation adopted part of the Convention Concerning International Carriage by Rail (COTIF) of 1980, within Annex I attached to it. The Railway undertakings may offer contract conditions more favourable for the passenger than the conditions laid down by the Regulation.183 The ticket is evidence of the conclusion and the contents of the contract of carriage of passenger by rail. In case of absence, irregularity, or loss of the ticket, this shall not affect the existence or validity of the contract, but the passenger who does not produce a valid ticket must pay a surcharge. If he or she refuses to pay the carriage charge or the surcharge upon demand, he/she may be required by the inspector to discontinue the journey. Likewise, if he/she presents a danger to safety in regard to the functioning of the operations or to other passengers or, furthermore, if he/she causes inconvenience to other passengers in an intolerable manner, he/she shall be excluded from the carriage or may be required to discontinue the journey. In this latter situation, the passenger shall not be entitled to a refund of any charge that he/she may have paid in advance.184

181

Directive 2015/2302/EU, Recital (30). Idem, Recital (31). 183 Regulation (EC) 1371, 2007, Art 6 (2). 184 Idem, Annex I, Appendix A, Art 9 (1) (a) (b) and Art (2) (a) (b). 182

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Under the general conditions of carriage, the passenger is allowed to take with him any item easily handled, as well as live animals and those which do not disturb or annoy other passengers; otherwise, they shall not be allowed. The responsibility for the animals within hand luggage is entirely on the passenger.185 By the contract of carriage, which is represented by the ticket, the carrier is liable to carry the passenger, his luggage and vehicles (such as bicycle, wheelchair and the like) to the place of destination and deliver the luggage and vehicles to that place. If the carriage of the bicycle does not affect the speciﬁc rail service, the transportation may be done through the rolling stock available in the train that permits the allocation of the bicycle on it.186 What is more, the Regulation sets forth that rail passengers in Europe have to be informed comprehensively and in the most appropriate format about ‘pre-journey’ and ‘during the journey’. All in all, this information to be provided by the carrier comprises as follows: (a) pre-journey, which includes general conditions applicable to the contract; time schedules; accessibility and facilities for disabled persons and persons with reduced mobility; accessibility and access conditions for bicycles; availability of seats in smoking and non-smoking; ﬁrst and second class, as well as couchettes and sleeping carriages; any activities likely to disrupt or delay services; availability of on-board services; procedures for reclaiming lost luggage; procedures for submission of complaints, and (b) during the journey, which covers on-board services, next station, delays, main connecting services, security and safety issues.187 In case of delay of more than 60 min, the railway shall provide two options to the passenger: (a) reimbursement of the full cost of the ticket for the part of the journey not made and for the part already made if the journey is no longer serving any purpose in relation to the passenger’s original travel plan; in this latter situation, the passenger is eligible for a return service to the ﬁrst point of departure at the earliest opportunity, and (b) continuation of the journey or rerouting under comparable conditions to the ﬁnal destination at the earliest opportunity or the ﬁnal destination at a later date at the passenger’s convenience. The payment of the reimbursement shall be as follows: for a delay of 60–119 min, 25% of the ticket price, and for a delay of 120 min or more, 50% of the ticket price.188 The compensation of the ticket price must be paid within 1 month after the submission of the request for compensation at the latest.189 Likewise, if the delay is more than 60 min, the carrier shall offer free of charge the following: (a) meals and refreshments in reasonable relation to the waiting time, if they are available on the train or in the station or can reasonably be supplied; (b) hotel or other accommodation and transport between the railway station and

185

Idem, Annex I, Appendix A, Art 12 (1) and Art 15. Idem, Annex I, Appendix A, Art 6 (1) (2) (3) combined with Art 6 of the Regulation. 187 Idem, Annex II: Minimum information to be provided by the railway undertakings and/or by ticket vendors. 188 Regulation (EC) 1371, 2007, Arts 16 (a) (b) (c), 17 (1) (a) (b). 189 Idem, Art 17 (2). 186

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the place of accommodation in cases where a stay of one or more nights becomes necessary or an additional stay becomes necessary, where and physically possible; (c) if the train is blocked on the track, transport from the train to the railway station, to the alternative departure point or to the ﬁnal destination of the service.190 In case of accidents arising out of the operation of the railway and happening whilst the passenger is in, entering or alighting from the railway vehicles, the carrier is liable for any loss or damage resulting from the death of, personal injuries to or any other physical or mental harm to a passenger caused by such an accident.191 The regulation predicts three situations of exclusion of such a liability: (1) if the accident has been caused by circumstances not connected with the operation of the railway and the carrier, in spite of having taken the necessary care, could not avoid the consequences of the accident; (2) if the accident was due to the passenger’s fault; (3) if the accident was due to the behavior of a third party.192 The regulation sets forth the upper limit per passenger at 175,000 SDR as a lump sum or as an annual annuity corresponding to that sum in case of death or personal injury, but national laws may increase this amount granted to the passenger.193 Moreover, in addition to the payment in case of death or personal injury, there is also a limit of damages in case of loss of, or damage to, articles carried by the passenger, up to a limit of 1400 SDR per passenger.194 The carrier’s liability varies up to the limits already mentioned, as established by the Regulation, depending on accidents or carriage of hand luggage and animals by other successive carriers. If successive carriers perform the carriage, governed by a single contract, in case of death of and personal injuries to passengers, the carrier contracted to provide the service in the course of which the accident happened is liable. When the carriage service has not been provided by the carrier but by a substitute carrier, the two carriers shall be jointly and severally liable.195 In case of registered luggage, where successive carriers perform the service of a single contract, each of the carriers shall become a party to the contract of carriage in respect of the forwarding of luggage or the carriage of vehicles. Therefore, they shall assume the obligations arising therefrom. In such a case, each of the carriers shall be responsible for the carriage over the entire route up to delivery.196

190

Idem, Art 18 (1) (2) (a) (b) (c). Idem, Annex I, Appendix A, Art 26 (1). 192 Idem, Annex I, Appendix A, Art 26 (2) (a) (b) (c). Note: Another undertaking using the same railway infrastructure shall not be considered as a third party. 193 Idem, Annex I, Appendix A, Art 30 (2). Note: According to IP/09/1871 the amount of 175,000 SDR is around €21,000 by December 2009. 194 Idem, Annex I, Appendix A, Art 34. Note: According to IP/09/1871 the amount of 1,400 SDR is around €1,285 by December 2009. 195 Idem, Annex I, Appendix A, Art 26 (5). 196 Idem, Annex I, Appendix A, Art 38. 191

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The contract of carriage of passenger by road is the ‘transport contract’. It means a contract of carriage between a carrier and a passenger for the provision of one or more regular or occasional services.197 It is mainly based on the following legislation: Regulation 181/2011 concerning the rights of passengers in bus and coach transport, Regulation 864/2007 related to non-contractual obligations (Rome II), Regulation 593/2008 on the law applicable to contractual obligations (Rome I), as well as few other provisions extracted from legislation dealing with matters other than transport services covering passenger transport, as for instance the provisions protecting consumers against excessive fees for the use of means of payment or against hidden costs. These provisions are provided by Directive 2011/83 on Consumer Rights.198 The cornerstone of the contract of carriage of passenger by road is Regulation 181/2011, in force since 1 March 2013, producing direct effect of applicability on Member States. Although it applies to single service of carriage of passengers, a particular combined service may also be covered if the service was cancelled for reasons of a regular service. However, the regulation shall not affect the rights of passengers under Directive 90/314/EEC, which was replaced by Directive 2015/2302/EU, where a package tour referred to in that Directive is cancelled for reasons other than cancellation of a regular service.199 The Regulation points out a distinction between long-distance (more than 250 km) and short-distance services, where there are general provisions applicable to all services, including those below 250 km, such as non-discrimination based on nationality, non-discriminatory treatment of disabled persons and PRM, information before and during the journey, complaint mechanism established by carriers and independent national bodies (NEBs), and provisions applicable to longdistance services, such as assistance (snacks, meals, accommodation); guarantee of reimbursement or rerouting; compensation; protection of passengers in case of death, injury, loss or damage caused by accidents; and speciﬁc assistance free of charge for disabled persons and PRM. By principle, the bus or coach passenger is the weaker party to the contract of carriage, meaning that all passengers should be granted a minimum level of protection.200 This implies that carriers may offer contract conditions that are more favourable for the passenger than the conditions laid down in the Regulation.201 The ticket is the valid document or evidence of the conclusion of the contract of carriage of passengers by road,202 and it may be issued by carriers in an electronic format, unless other documents give entitlement to transport.203 The contract

197

Regulation (EU) 181, 2011, Art 3 (c). Idem, Recital (27) and Art 3 (3) (k). 199 Regulation (EU) 181, 2011, Art 2 (8). 200 Idem, Recital (2). 201 Idem, Art 6 (2). 202 Idem, Art 3 (d). 203 Idem, Art 4 (1). 198

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conditions and tariffs applied by carriers shall be offered to the public without any direct or indirect discrimination based on the nationality of the passenger or the place of establishment of the carriers or vendors but without prejudice to any social tariffs.204 In the context of non-discrimination, carriers, travel agents and tour operators shall not refuse to accept reservation from a person on the ground of disability or of reduced mobility, to whom tickets shall be offered at no additional cost.205 If the carrier refuses to accept a reservation or provide a ticket on account of unsafe conditions, health problems, the design of the vehicle or the infrastructure requirements, they (carriers, travel agents and tour operators) shall inform the person concerned about any acceptable alternative services operated by the carrier.206 In case of cancellation or delay of more than 120 min or even in case of overbooking, the passenger shall immediately be offered the choice between (a) continuation or rerouting to the ﬁnal destination at no additional cost and under comparable conditions, as set out in the contract, and (b) reimbursement of the ticket price and, where relevant, a return service by bus or coach free of charge to the ﬁrst point of departure, as set out in the contract. The payment shall be made within 14 days after the offer has been made or request has been received.207 If the carrier fails to offer this choice to the passenger, the passenger shall have the right to receive the compensation amounting to 50% of the ticket price, in addition to the reimbursement of item (b) as mentioned above. The carrier shall pay the passenger within 1 month after the submission of the request for compensation.208 When the journey has a scheduled duration of more than 3 h, in case of cancellation or delay in departure from a terminal of more than 90 min, the carrier shall offer to the passenger free of charge the following: (a) snacks, meals or refreshments in reasonable relation to the waiting time or delay, available to the passenger on the bus or in the terminal or can reasonably be supplied, and (b) a hotel room or other accommodation, as well as assistance to arrange transport between the terminal and the place of accommodation in cases where a stay of one or more nights becomes necessary. The limit of the total cost of accommodation per passenger, not including transport to the hotel, is €80 per night for a maximum of two nights. Carriers shall pay particular attention to the needs of disabled persons, persons with reduced mobility and any accompanying persons.209 However, the carrier is released from the obligation to provide accommodation to the passenger if it is proved that the cancellation or delay was caused by severe weather conditions or major natural disasters endangering the safe operation of bus or coach services.210 Furthermore, passengers with open tickets, as long as the time

204

Idem, Art 4 (2). Idem, Art 9 (1) (2). 206 Idem, Art 10 (1) (2). 207 Idem, Art 19 (1) (a) (b) (5). 208 Idem, Art 19 (2). 209 Idem, Art 21 (a) (b). 210 Idem, Art 23 (2). 205

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of departure is not speciﬁed, are not beneﬁted by the continuation, rerouting and reimbursement rights, as well as the assistance in case of cancelled or delayed departures, except those passengers holding a travel pass or a season ticket.211 In the event of accidents that occurred in the use of the bus or coach, passengers shall receive compensation for death, including reasonable funeral expenses or personal injury, as well as for loss of, or damage to, luggage. The amount of compensation shall be in accordance with the applicable national law. Any maximum limit provided by national law to the compensation shall not be less than (a) €220,000 per passenger and (b) €1200 per item of luggage. In the event of damage to wheelchairs, other mobility equipment or assistive devices, the amount of compensation shall always be equal to the cost of replacement or repair of the equipment lost or damaged.212 In addition, in the event of accident, the carrier shall provide reasonable and proportionate assistance to the passengers to ensure they receive immediate needs following the accident. Such assistance shall include, where necessary, accommodation, food, clothes, transport and the facilitation of ﬁrst aid. Any assistance provided to the passenger shall not constitute recognition of the carrier’s liability. For each passenger, the carrier may limit the total cost of accommodation to €80 per night and for a maximum of two nights.213 The contract of carriage of passenger by sea is based on the Athens Convention on Carriage by Sea,214 integrated by Regulation 392/2009 on the liability of carriers of passengers by sea in the event of accidents through its Annex I. The subsequent norm is Regulation 1177/2010, which provides additional rights to passengers travelling by sea and inland waterway. It amended Regulation 2006/2004 on consumer protection cooperation. Additionally, provisions are found in Directive 2010/ 36/EU on safety rules and standards for passenger ships, which amended Directive 2009/45/EC (on safety rules and standards for passenger ships). About jurisdiction, two norms apply: Regulation 593/2008 on the law applicable to contractual obligations (Rome I) and Regulation 864/2007 related to non-contractual obligations (Rome II). A milestone for contracts of carriage of passenger by sea is Regulation 1177/ 2010, in force since 18 December 2012. It states that since the maritime and inland waterway passenger is the weaker party to the transport contract, all passengers should be granted a minimum level of protection. Nothing should prevent carriers from offering contract conditions more favourable for the passenger than the conditions laid down by the Regulation.215 The Regulation shall not affect the rights of

211

Idem, Art 23 (1). Idem, Art 7 (1) (2). 213 Idem, Art 8. 214 The Athens Convention relating to the Carriage of Passengers and their Luggage by Sea (PAL) was adopted on 13 December 1974. It entered into force on 28 April 1987. The Protocol of 2002 was adopted on 1 November 2002 entered into force on 23 April 2014. 215 Regulation (EU) 1177, 2010, Recital (2). 212

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passengers with combined service contract under Directive 90/314/EEC, which was replaced by Directive 2015/2302/EU, where a package tour referred to in that Directive is cancelled for reasons other than cancellation of the passenger service or the cruise.216 In this regard, a cruise ship contract performed between a supplier and a consumer for more than 24 h or that includes overnight accommodation is clearly a package travel. The ECJ has already held that for a service to qualify as a package, it is enough if it combines tourist services sold at an inclusive price, including two of the three services referred to in that provision, namely transport, accommodation and other tourist services not ancillary to transport or accommodation and accounting for a signiﬁcant proportion of the package.217 Regulation 1177/2010 sets forth that the ticket is the valid document or other evidence of the conclusion of the contract of carriage of passenger by sea, the transport contract,218 and may be issued by carriers in an electronic format unless, under national law, other documents give entitlement to transport.219 The contract conditions and tariffs applied by carriers shall be offered to the public without any direct or indirect discrimination based on the nationality of the passenger or the place of establishment of the carriers or vendors, but this is without prejudice to any social tariffs.220 In the context of non-discrimination, carriers, travel agents and tour operators shall not refuse to accept reservation from a person on the ground of disability or of reduced mobility, to whom shall be offered tickets at no additional cost under the same conditions that apply to all other passengers.221 If the carrier refuses to accept a reservation or provide a ticket on account of unsafe conditions, health, the design of the passenger ship or port infrastructure and equipment, including port terminals, that make it impossible to carry out the embarkation, disembarkation or carriage of the disabled person or PRM in a safe manner, they (carriers, travel agents and tour operators) shall inform the person concerned about an acceptable alternative transport on a passenger service or a cruise operated by the carrier.222 In case of cancellation or delayed departures of more than 90 min, the passenger shall immediately be offered the choice between (a) rerouting to the ﬁnal destination at no additional cost and under comparable conditions, as set out in the contract, and (b) reimbursement of the ticket price and, where relevant, a return service, free of 216

Idem, Recital (20). ECJ 07.12.2010 C-585/08 and C-144/09 (37) and rule (1): A contract concerning a voyage by freighter, such as that at issue in the main proceedings in Case C-585/08, is a contract of transport which, for an inclusive price, provides for a combination of travel and accommodation within the meaning of Article 15(3) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. 218 Regulation (EU) 1177, 2010, Art 3 (n). 219 Idem, Art 4 (1). 220 Idem, Art 4 (2). 221 Idem, Art 7 (1) (2). 222 Idem, Art 8 (1) (2). 217

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charge, to the ﬁrst point of departure, as set out in the contract, at the earliest opportunity. The payment of the reimbursement shall be made within 7 days, in cash, by electronic bank transfer, bank order or bank cheque, of the full cost of the ticket at the price at which it was purchased. If the passenger agrees, the full reimbursement may also be paid in the form of vouchers and/or other services in an amount equivalent to the price paid for the ticket, provided that the conditions are ﬂexible, particularly regarding the period of validity and the destination.223 On the other hand, in the event of delay in arrival, passengers may request compensation from the carrier at the ﬁnal destination. The transport contract shall set out this term. The minimum level of compensation shall be 25% of the ticket price for a delay detailed by the regulation between 1 and 6 h. If the delay exceeds double the time set out in the hours pointed, the compensation shall be 50% of the ticket price.224 Likewise, if the delay in departing is more than 90 min, the carrier shall offer free of charge snacks, meals or refreshments in reasonable relation to the waiting time, if they are available or can reasonably be supplied. Moreover, in the case of cancellation or delay of departure where a stay of one or more nights or additional to that intended by the passenger becomes necessary, where and when physically possible, the carrier shall offer passengers departing from port terminals, free of charge, appropriate accommodation on board, or ashore, and transport to and from the port terminal and other places of accommodation, as well as additional snacks, meals or refreshments, as provided before. For each passenger, the carrier may limit the total cost of accommodation ashore, not including transport, to €80 per night and for a maximum of three nights. Carriers shall pay particular attention to the needs of disabled persons, persons with reduced mobility and any accompanying persons.225 However, carriers may not provide payment of compensation for passengers if the cancellation or delay occurs due to weather conditions endangering the safe operation of the ship or due to extraordinary circumstances226 that could not have been avoided even if all reasonable measures had been taken.227 In case of accidents, the liability of the carrier is under Regulation 392/2009, jointly with the provisions of the Athens Convention set out in Annex I of the

223

Idem, Art 18 (1) (a) (b) (2) (3). Idem, Art 19 (1) (a) (b) (c) (d). 225 Idem, Art 17 (1) (2) (3). 226 Idem, Recital (19): The Court of Justice of the European Union has already ruled that problems leading to cancellations or delays can be covered by the concept of extraordinary circumstances only to the extent that they stem from events which are not inherent in the normal exercise of the activity of the carrier concerned and are beyond its actual control. It should be noted that weather conditions endangering the safe operation of the ship are indeed beyond the actual control of the carrier. Note: ECJ 31.01.2013 C-12/11, ruled that ‘extraordinary circumstances’ within the meaning of Regulation 261/2004 do not release air carriers from their obligation to provide care. See also particular comment in the heading: Contracts of carriage of passenger by air. 227 Idem, Recital (14) and Art 20 (3) (4). 224

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Regulation and its extension Protocol on behalf of the International Maritime Organization (IMO) Guidelines set out in Annex II. The liability of the carrier is limited to death and personal injury to persons and to loss of, or damage to, luggage and vehicles. Death or personal injury caused to a passenger by a shipping incident228 makes the carrier liable to a limit of 250,000 units of account (SDR). The carrier may declare it void, proving that the incident (a) resulted from an act of war, hostilities, civil war, insurrection or a natural phenomenon of an exceptional, inevitable and irresistible character or (b) was wholly caused by an act or omission done by a third party with the intent to cause the incident. If the loss exceeds the above limit, the carrier shall be further liable unless proved that the loss occurred without his fault or neglect.229 What is more, if death or personal injury is caused to a passenger not by a shipping incident but because of the carrier’s fault or neglect, the carrier is liable too. However, the burden of proving fault or neglect shall lie with the claimant.230 In addition, if the carrier proves that the death or personal injury to a passenger, or the loss or damage to his luggage, occurred due to passenger’s fault or neglect, the court shall seize the case and may exonerate the carrier wholly or partly from his liability.231 The liability of the carrier for the loss of or damage to luggage and vehicles is also limited. Annex I of the Regulation divides the liability into the following: (1) to cabin luggage, which shall in no case exceed 2250 SDR per passenger, per carriage; (2) to vehicles, including all luggage carried in or on the vehicle, which shall in no case exceed 12,700 SDR per vehicle, per carriage; (3) to luggage other than that mentioned above, which shall in no case exceed 3375 SDR per passenger, per carriage. There will be deductions in the case of loss or damage to other luggage.232 Any contractual provision purporting to relieve liability or to prescribe a lower limit of liability than that ﬁxed by Annex I (Convention) of Regulation 392/2009 shall be null and void, but the nullity of that provision shall not render void the contract of carriage, which shall remain valid.233

Regulation (EC) 392, 2009, Annex I, Art 3 (5) (a): ‘shipping incident’ means shipwreck, capsizing, collision or stranding of the ship, explosion or ﬁre in the ship, or defect in the ship. 229 Idem, Annex I, Art 3 (1) (a) (b). 230 Idem, Annex I, Art 3 (2). 231 Idem, Annex I, Art 6. 232 Idem, Annex I, Art 8 (1) (2) (3) (4). 233 Idem, Annex I, Art 18. 228

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3.4.2

127

Contract of Car Rental

Currently, there is no speciﬁc legislation in Europe that expressly targets the contract of car rental. Usually, only when included in a ‘package travel contract’ is car rental service considered a travel component (hotel, car rental and the like).234 Directive 2006/123/EC on services in the internal market covers also services concerning car rental under the general law concept.235 There are, however, few discussions on whether to classify ‘car rental’, in a strict sense, as a service or as a facility since the supplier offers only the car to be used as the object of the contract without additional services such as a driver. To analyse further, however, one should consider that the consumer traveller gets not solely a car but a car that is fuelled, reconditioned and cleaned prior to the service. Car rental agencies may offer sophisticated online services to the consumer traveller. Often, the company tracks the car to ensure the parties to the contract are protected against risks. All this suggests that the contract of car rental may not simply be a matter of facility, but more a matter of service. In essence, the contract of car rental is considered a single service, but it does not mean that the service is not included in contracts compiled by combined services such as the package travel contract or linked travel arrangements. The CRD stresses that car rental is a service, and therefore consumers should beneﬁt from the protection afforded by such a Directive, with the exception of the right of withdrawal.236 In this regard, the CRD sets forth in Article 16 (l) on ‘Exceptions from the right of withdrawal’ that if the contract provides for a speciﬁc date or period of performance, the car rental service is excluded. The explanation for the exclusion is found in the CRD, which states that the granting of a right of withdrawal to the consumer could also be inappropriate in the case of certain services where the conclusion of the contract implies the setting aside of capacity, which, if a right of withdrawal were exercised, the trader may ﬁnd difﬁcult to ﬁll.237 The next topic, ‘Contract of Accommodation’, examines the exclusion of the right of withdrawal related to the same framework as applied to the contract of car rental.

3.4.3

Contract of Accommodation

Unlike the Paris Convention of 1962 on the Liability of Hotel-Keepers, outside the area of unfair commercial practices, timeshare, package travel and linked travel 234

IP/A/IMCO/ST/2011-17 (2012), p. 22. Directive 2006/123/EC, Recital (33). 236 Directive 2011/83/EU, Recital (27). 237 Idem, Recital (49). 235

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arrangements, jurisdiction and general consumer and contractual law, currently there is no speciﬁc legislation in Europe that expressly targets accommodation. However, many rules of general contract and consumer law in fact are applicable to the contract of accommodation for non-residential purposes. Whereas the use of innovative types of vacation home ‘ownership’ under timeshare arrangements presents additional challenges in terms of their classiﬁcation,238 the legal assessment of this contract is usually addressed in a unique approach that places the timeshare contract outside of the scope of the contract of accommodation. Directive 2008/122/EC on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts prescribes the speciﬁcities of such a different mode of timeshare contract. As it happens, the main legislation amongst other particular provisions tackling contracts of accommodation is the Consumer Rights Directive (CRD), valid since 13 June 2014.239 It applies to any contract concluded between a trader and a consumer, including rental of accommodation for non-residential purposes.240 Additionally, in regard to general contractual obligations, which accounts for the majority of contracts in B2C mode, the following legislation may also apply: Regulation 593/2008 on the law applicable to contractual obligations (Rome I), which replaced the 1980 Rome Convention; Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, which repealed Brussels I Regulation (EC) 44/2001; Directive 2006/123/EC on services in the internal market; Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce; Directive 93/13/EC on unfair terms in consumer contracts; as well as Directive 2005/29/EC on unfair business to consumer (B2C) commercial practices. The contract of accommodation for non-residential purposes is obviously a ‘service contract’. The contract shall entitle the consumer to use an overnight accommodation, including a clean bed every night, clean towels and sheets in the condition that the room and the hotel structure must maintain in a clean manner at least concerning certain standards not harmful to health. It means that by nature, the contract of accommodation usually includes facilities in a ‘service contract’. In essence, the contract of accommodation comprises a contract of single service, but it does not mean that the service may not be included in contracts compiled by combined services such as those covered by the Directive on package travel and linked travel arrangements. However, the CRD excluded from its provisions contracts relating to package travel,241 as well as timeshare contracts.242

238

UNWTO, United Nations World Tourism Organization (2010), p. 13. Directive 2011/83/EU, Art 28: Member States shall adopt and publish, by 13 December 2013, the laws, regulations and administrative provisions necessary to comply with this Directive.(. . .) They shall apply those measures from 13 June 2014. 240 Idem, Recital (26). 241 Idem, Recital (32) and Art 3 (3) (g). 242 Idem, Recital (32) and Art 3 (3) (h). 239

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Although the CRD does not expressly deﬁne contract of accommodation, such a notion stems from variations amongst other concepts deﬁned in the Directive; for example ‘service contract’,243 ‘distance contract’244 and ‘off-premises contract’245 provide some basis for interpretations of the contract of accommodation. Thus, contract of accommodation is a ‘service contract’. There are different information duties as concerns ‘distance contract’ or ‘off-premises contract’. On those contracts, the simultaneous physical presence of the trader and the consumer is the core point. That is to say, whilst ‘distance contract’ is performed without the simultaneous physical presence of the trader and the consumer, i.e. by means of distance communication (usually the Internet or telephone), on the other hand ‘offpremises contract’ is concluded with the simultaneous physical presence of the trader and the consumer but can be done outside of the business premises of the trader. Even if the trader issues an offer outside the trader’s ofﬁce and the consumer accepted it and later the parties concluded the contract at the trader’s ofﬁce, it is still an ‘off-premises contract’. Therefore, ‘distance contract’ and ‘off-premises contract’ are variations of a ‘service contract’ rather than a contract itself. In this respect, the information requirements provided for in the CRD should suplement the information requirements of Directive 2006/123/EC on services in the internal market and Directive 2000/31/EC on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on Electronic Commerce).246 Consequently, accommodation service providers for non-residential purposes, such as hotels, motels, hostels, resorts or similar businesses, shall comply with the information requirements, in particular on pre-contractual information duties. That is to say, the information requirements found in CRD to service contracts,247 distance contracts and off-premises contracts248 apply to contracts of accommodation for non-residential purposes.

Idem, Art 2 (6): ‘“service contract” means any contract other than a sales contract under which the trader supplies or undertakes to supply a service to the consumer and the consumer pays or undertakes to pay the price thereof’. 244 Idem, Art 2 (7): ‘“distance contract” means any contract concluded between the trader and the consumer under an organised distance sales or service-provision scheme without the simultaneous physical presence of the trader and the consumer, with the exclusive use of one or more means of distance communication up to and including the time at which the contract is concluded’. 245 Idem, Art 2 (8): ‘“off-premises contract” means any contract between the trader and the consumer: (a) concluded in the simultaneous physical presence of the trader and the consumer, in a place which is not the business premises of the trader; (b) for which an offer was made by the consumer in the same circumstances as referred to in point (a); (c) concluded on the business premises of the trader or through any means of distance communication immediately after the consumer was personally and individually addressed in a place which is not the business premises of the trader in the simultaneous physical presence of the trader and the consumer; or (d) concluded during an excursion organised by the trader with the aim or effect of promoting and selling goods or services to the consumer’. 246 Idem, Recital (12). 247 Idem, Art 5 (1) (a) (b) (c) (d) (e) (f). 248 Idem, Art 6 (1) (a) (b) (c) (d) (e) (f) (g) (h) (k) (m) (n) (o) (p) (q) (t). 243

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If the contract is concluded in the place of business of the trader before the consumer is bound by the contract, or any corresponding offer, the trader shall provide the consumer with the pre-contractual information. These are the main characteristics of the service, the identity of the trader, the total price, the duration of the contract, the conditions of after-sales services and commercial guarantees, where applicable.249 These information are in line with the other requirements of the EU law.250 Particularly concerning digital services, the service provider shall make available to the recipient of the service (the consumer) appropriate, effective and accessible technical means, allowing him to identify and correct input errors prior to the placing of the order.251 Likewise, if the contract is concluded off-premises (for example, at a trade fair, where usually businesses—hotels, motels, resorts, and the like—show and sell their services), the trader must give the information on the paper to the consumer. A signiﬁcant exclusion in respect of distance and off-premises consumer contracts is the right of withdrawal. The CRD excluded contracts of accommodation from the provisions of Articles 9 to 15.252 The CRD clariﬁes that the granting of a right of withdrawal to the consumer could also be inappropriate in the case of certain services where the conclusion of the contract implies the setting aside of capacity, which, if a right of withdrawal were exercised, the trader may ﬁnd difﬁcult to ﬁll. This, for example, is the case where reservations are made at hotels or for holiday cottages or cultural or sporting events.253 Furthermore, the CRD excluded from its provisions, amongst others, package travel, timeshare and passenger transport services,254 driving the conclusion that regarding these matters, the right of withdrawal does not follow the general rule on consumers’ rights but shall be regulated by special legislation.

3.4.4

Timeshare Contract

Timeshare contracts are regulated not only by Directive 2008/122/EC on the protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts but also by other pieces of legislation such as Regulation (EEC, Euratom) 1182/71 determining the rules applicable to periods, dates and time limits; Regulation 593/2008 on the law applicable to contractual obligations (Rome I), which replaced the 1980 Rome Convention; Regulation

249

Idem, Art 5 (1) (a) (b) (c) (d) (e) (f). Directive 2006/123/EC, Art 22, (1) (b) (c) (d) (e) (f) (g) (h) (k). 251 Directive 2000/31/EC, Art 11 (2). 252 Idem, Art 16 (l). 253 Idem, Recital (49). 254 Idem, Art 3 (g) (h) (k). 250

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864/2007 related to non-contractual obligations (Rome II); Regulation (EU) 1215/ 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, which repealed Brussels I Regulation (EC) 44/2001; Regulation 2006/2004 on consumer protection cooperation; Directive 93/13/EC on unfair terms in consumer contracts; as well as Directive 2005/29/EC on unfair business to consumer commercial practices. The cornerstone of timeshare contract is Directive 2008/122/EC. It replaced Directive 94/47/EC mainly because the sale and resale of timeshares and longterm holiday products, as well as the exchange of rights deriving from timeshare contracts, were not covered by the former Directive. Additionally, some subjects covered by the ﬁrst Directive needed to be updated and clariﬁed.255 Although the tendency of the Directive was to harmonise certain aspects of the marketing, sale and resale of timeshares and long-term holiday products, as well as the exchange of rights deriving from timeshare contracts,256 it left to Member States one of the most signiﬁcant legal classiﬁcations regarding the nature of the timeshare rights.257 That is to say, the Member States may deﬁne whether the right referring to timeshare ownership is about a real property right (right in rem) or tenancy (personal right—right in personam). The Directive allows for covering of a wide range of timeshare variants taking into account the legal diversity of the Member States where timeshares are sometimes regarded as real property (e.g., Italy, Spain, Portugal) and sometimes as a right of tenancy (Greece).258 However, such legislative choice strayed signiﬁcantly from what is meant to be the legal framework for timeshare. In this case, the identiﬁcation of the law applicable will depend on the nature of the contract pertaining to private law. As mentioned, the Directive did not provide a legal orientation as to the grounds of the rights. For instance, if the nature of the right granted by the timeshare contract under national law is conceived as right in rem (property right), it turns out that the right is an erga omnes obligation and therefore enforceable not only upon contractual parties but also against any other third party. More precisely, any action based on a proprietary right has effect against the whole world and not only on a personal right, which only affects particular persons and involves a contractual obligation. In other words, whilst property right implies right in rem (mandatory rules) with different kinds of remedies (e.g., enforcing eviction from the property), right of tenancy implies contractual law rules (personal obligations) comprising other

255

Idem, Recital (1) (2) (3). Idem, Recital (3), ‘(. . .) should be fully harmonised. Member States should not be allowed to maintain or introduce in their national legislation provisions diverging from those laid down in this Directive.’ 257 Idem, Art 1, (2): ‘(. . .)This Directive is without prejudice to national legislation which: (d) relates to the determination of the legal nature of the rights which are the subject of the contracts covered by this Directive.’ 258 COM (2007) 303 ﬁnal, p. 10 (3.2) ‘The legal nature of timeshare.’ 256

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remedies such as enforcing payment for damages insofar as tenancy imposes a duty to repair the property. Moreover, timeshare contracts in an exchange system that may allow the consumer to exchange his or her rights on overnight accommodation and other services with other persons are controlled not by the consumer but in some cases by a third party different from the one who sold the timeshare rights to the consumer. Therefore, the consumer may not exercise the rights of the prior contract against a third person, but only the rights granted by the new contract of exchange. Consequently, it is extremely difﬁcult in a particular way that a consumer right (like the timeshare right) will cope with a right in rem, mainly because of this dependency of a third party. As a result, such different pictures of sources of law may create distortion when addressing timeshare contract through the framework of travel and tourism contracts, which are neither embedded with right in rem nor with tenancy obligation, but timeshare is under the classiﬁcation of consumer contracts259 with tourism aspect.260 In this context, though timeshare contract was expressly excluded from the Consumer Rights Directive (CRD),261 it is considered as a consumer contract, and provisions on consumer rights shall be taken into account. For example, consumer contracts are governed by Article 6 of Rome I Regulation on contractual obligations, which will apply in line with Article 22 of Brussels I Regulation on jurisdiction in determining the law applicable to the contract of timeshare. It turns out that, so far, the answer to the nature of timeshare rights depends on the legal culture of each Member State rather than an EU law, to which was left certain minimum requirements to be worked out by legislation. The Directive provides for the protection of consumers in respect of, amongst others, pre-contractual information, the language of the contract, the right to withdraw from the contract within a minimum period of 14 days and ban on advance payments during this period. There are two deﬁnitions in the Directive for the ﬁrst formation of timeshare contracts: ‘timeshare contract’262 and ‘long-term holiday product contract’.263 The difference between them seems to depend on some elusive mix of both forms of

Regulation (EC) 2006, 2004, Art 3 (a): “laws that protect consumers’ interests” means the Directives as transposed into the internal legal order of the Member States and the Regulations listed in the Annex; ANNEX Directives and Regulations covered by Art 3(a): (. . .) (7) Directive 94/47/EC of the European Parliament and of the Council of 26 October 1994 on the protection of purchasers in respect of certain aspects of contracts relating to the purchase of the right to use immovable properties on a timeshare basis (OJ L 280, 29.10.1994, p. 83), the latter was repealed by Directive 2008/122/EC. 260 Directive 2008/122/EC, Recital (2): ‘(. . .) Since tourism plays an increasingly important role in the economies of the Member States, greater growth and productivity in the timeshare and longterm holiday product industries should be encouraged by adopting certain common rules.’ 261 Directive 2011/83/EU, Art 3 (3) (h). 262 Idem, Art 2 (1) (a). 263 Idem, Art 2 (1) (b). 259

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contracts because both forms target in the ﬁrst instance an accommodation. In a practical way, these contracts might also be combined into one contract.264 The scope of the contract is to provide the consumer with rights to use immovable property or properties265—the timeshare usage rights—within the schemes of the ‘timeshare contract’ to obtain one or more overnight accommodation and/or the ‘long-term holiday product contract’ to obtain discounts or other beneﬁts. As already mentioned, the property is the target of the contract and might be addressed to one speciﬁc immovable property like a particular resort in the mountains or movable like a cruise ship.266 It might also be possible that the contract targets properties comprising a pool of accommodation,267 such as immovable (multi-resorts) or movable (cruise lines), where the consumer can then book accommodation on that pool according to availability. Whereas the contract is neither a single service nor a combined service solely, it presents additional challenges in terms of its classiﬁcation. That is to say, the Directive carved the term ‘ancillary contract’ rather than ‘combined services’. In essence, although ‘ancillary contract’ comprises more than one service, it is not a combination of services in the wording of the Directive. The Directive did not provide a reference indicating a combination of those services. It sets forth that ‘ancillary contract’ means a contract under which the consumer acquires services that are related to a timeshare contract or long-term holiday product contract and that are provided by the trader or a third party on the basis of an arrangement between that third party and the trader.268 Moreover, although the timeshare Directive did not exclude the PTD, its Recital (8) expressly sets forth that its provisions should not affect the provisions of the PTD, inferring that the two shall act separately from each other. In a strict sense, timeshare contract targets a holiday property269 to obtain one or more overnight accommodation for more than one period of occupation in a speciﬁed period of the year, and the duration of the contract is for one year or longer.270 OPINION ECJ C-73/04 (2005), III (9): ‘The contract, which was headed ‘request for and contract of membership’, also provided that the Kleins would become members of the Sun Beach Holiday Club. This was a necessary condition of the conclusion of the contract: it was not an option to conclude the contract without becoming a member of the club. Contracting parties also had the right to the standard services provided by the hotel itself to club members and to other guests, such as reception and bureau-de-change services.’ 265 Directive 2008/122/EC, Annex I, Part.3 (2): ‘Information on the properties’. 266 Idem, Art 1 (2) (b): ‘relates to the registration of immovable or movable property and conveyance of immovable property’. 267 Idem, Annex I, Part.3 (1): ‘Information about the rights acquired – (. . .) accommodation to be selected from a pool of accommodation (. . .).’ See also, OPINION ECJ C-270/09 (2010), I-13194 (2) (c): ‘the properties comprising the pool of accommodation may change between the time when Points Rights are acquired and the time when Points are redeemed for the right to occupy a property’. 268 Directive 2008/122/EC, Art 2 (1) (g). 269 COM (2007) 303 ﬁnal, p. 3 (1). 270 Directive 2008/122/EC, Art 2 (a). 264

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The contract is neither multiple reservations of accommodation, including hotel rooms, nor ordinary lease contracts, whereas multiple reservations do not imply rights and obligations beyond those arising from separate reservations, and on the other hand lease contracts refer to one single continuous period of occupation and not multiple periods like what occurs in timeshare contracts.271 Before the consumer is bound by any contract or offer accepted, the trader shall provide the consumer, in a clear and comprehensible manner, accurate and sufﬁcient information. This pre-contractual information includes standard information272 like information relating to the parties, the nature and content of the rights, price, costs, summary of the key services available and other general information. Member States shall ensure that the contract is in writing, on paper or any other durable medium and drawn up in the language or one of the languages of the Member State in which the consumer is resident or a national, at the choice of the consumer.273 Moreover, in the case of a timeshare contract concerning one speciﬁc immovable property located in a country other than the consumer’s residency, the trader shall additionally provide to the consumer a certiﬁed translation of the contract. The translation shall be done in the language or one of the languages of the Member State in which the property is situated. It shall be an ofﬁcial language of the Community.274 After signing the contract, the consumer shall be given a period of 14 calendar days to withdraw from the timeshare contract without giving any reason to the trader.275 During this period, it is forbidden to make any advance payment, provision of guarantees, reservation of money on accounts, explicit acknowledgement of debt or any other consideration to the trader or to any third party by the consumer.276 Where the consumer exercises the right of withdrawal, he or she shall neither bear any cost nor be liable for any value corresponding to the service concluded before withdrawal.277 Long-term holiday product contract targets holiday discount clubs where consumers pay, for instance, an entry fee to receive ‘attractive discounts’ on holiday accommodation. It may occur in isolation or together with travel or other services,278 such as ﬂights and rental cars, and only if speciﬁed in the contract, further additional payments, including any membership fee, is divided into yearly instalments according to the contractual schedule. If the payment is predicted in the contract

271

Idem, Recital (6). Idem, Annex I, Part.1, 2 and 3 (1-6). 273 Idem, Art 5 (1). 274 Idem, Art 5 (1) (b). 275 Idem, Art 6. 276 Idem, Art 9. 277 Idem, Art 8 (2). 278 Directive 2008/122/EC, Art 2 (1) (b). 272

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but is not part of the contractual schedule arranged in advance, it is forbidden.279 The duration of the contract is for 1 year or longer.280 This type of contract is not understood as covering ordinary loyalty schemes, which provide discounts on future stays in the hotels of a hotel chain. This is because the membership is not paid in advance for obtaining discounts or other beneﬁts in respect of accommodation.281 Such kind of membership means an alternative way for businesses to attract the loyalty of consumers. For long-term holiday products, such as holiday discount clubs, the entry fee may be lower than the price to be paid for timeshare, but the payments to be made for each of the actual stays may be higher than the annual management fee paid by timeshare owners.282 In this modality of contract, the payment shall be made exclusively according to a staggered payment schedule, not differently. The payments, including any membership fee, shall be divided into yearly instalments, each of which shall be of equal value. The trader shall send a written request for payment, on paper or on any other durable medium, at least 14 calendar days in advance of each due date. From the second instalment payment onwards, the consumer may terminate the contract without incurring any penalty by giving notice to the trader within 14 calendar days of receiving the request for payment of each instalment. This right shall not affect rights to terminate the contract under existing national legislation.283 The ‘resale contract’ and ‘exchange contract’: these are ‘modalities of contracts’ particularly noteworthy in the Directive. That is to say, they are subsequent changes to the ‘timeshare contract’ and ‘long-term holiday product contract’ and may not be formed without those previous agreements. Whilst resale is a contract under which a trader assists a consumer to sell or buy a timeshare or a long-term holiday product,284 the ‘exchange contract’ is a contract under which a consumer joins an exchange system that may allow him or her to exchange his/her rights on overnight accommodation and other services with other persons.285 Resale refers to contracts for mediation. It means that the consumer can sell the entire primary contract. For example; a consumer wishing to sell his/her timeshare contract enters into another contract, the resale contract, with a resale agent to sell the whole contract; on the other side, the exchange refers to the possibility of exchanging the rights in terms of time or location.286 Contracts for resale normally involve a one-off fee covering, for instance marketing costs and administrative costs for the resale, which the consumer must often pay upfront; on

279

Idem, Art 10 (1). Idem, Art 2 (b). 281 Idem, Recital (7). 282 COM (2007) 303 ﬁnal, p. 2 (2). 283 Idem, Art 10 (1) (2). 284 Idem, Art 2 (1) (c). 285 Idem, Art 2 (1) (d). 286 COM (2007) 303 ﬁnal, p. 7 (2.4). 280

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the contrary, if the consumer joins an exchange scheme, costs in the form of annual membership fees and/or a separate fee related to each exchange will apply.287 The contracts give rise to substantial ﬁnancial commitments for consumers, with a global initial payment followed by annual payments (the size of which depends on the type of accommodation offered, the season and modalities of the service) for the duration of the contract.288 The legislation covers a variety of rights allowing the rotating use of immovable and movable properties, including other services, but targeting the main service of accommodation.

3.4.5

Travel Contract

In the wording of Directive 2015/2302/EU on package travel and linked travel arrangements, travel contract mainly includes two forms: (1) combined travel services by packages, which is a combination of at least two different types of travel services purchased for the same trip or holiday,289 and (2) linked travel arrangements (LTA), which though corresponds to at least two different types of travel services purchased for the purpose of the same trip or holiday does not constitute a package, resulting in the conclusion of separate contracts with the individual travel service providers.290 The LTA applies when the traveller visits or contacts a point of sale and selects and pays for each service separately.291 Additionally, the contract is regulated according to provisions of any of the following sources of law: Regulation 864/2007 related to non-contractual obligations (Rome II); Regulation 593/2008 on the law applicable to contractual obligations (Rome I); Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, which repealed Brussels I Regulation (EC) 44/2001; Regulation 2006/2004 on consumer protection cooperation; as well as a few other provisions extracted from legislation like Directive 93/13/EC on unfair terms in consumer contracts, Directive 2005/29/EC on unfair business to consumer commercial practices and Directive 2006/123/EC on services in the internal market may also apply. Interestingly, the Consumer Rights Directive excluded contracts on package travel,292 but Directive 2015/2302/EU refers to the Consumer Rights Directive in cases of linked travel arrangements.293 Therefore, Directive 2011/83/EU on

287

Idem, p. 11 (3.3). Idem, p. 2 (2). 289 Directive 2015/2302/EU, Art 3 (2). 290 Idem, Art 3 (5). 291 Idem, Art 3 (5) (a). 292 Directive 2011/83/EU, Art 3 (g). 293 Directive 2015/2302/EU, Recital (48): ‘ (. . .)it is necessary to amend Directive 2011/83/EU to ensure that it continues to apply to individual travel services that form part of a linked travel 288

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consumer rights is one of the sources of law in relation to the travel contract on matters not covered by the Directive 2015/2302/EU. Though Directive 2015/2302/EU avoided using the term ‘combination’ or ‘combined’ to deﬁne LTA in Article 3 (5), it is obvious that the term combination is implicit in that deﬁnition. In this regard, Recital (17) highlights that ‘Only the combination of different types of travel services, such as accommodation, carriage of passengers by bus, rail, water or air, as well as rental of motor vehicles or certain motorcycles, should be considered for the purposes of identifying a package or a linked travel arrangement’. Beyond the term combination, which ceased to be an exclusive discrimen to deﬁne a ‘package’ and now identiﬁes linked travel arrangements, the Directive decided to split the package’s deﬁnition into a range of elements that in a broad sense overlap and interact with the deﬁnition of LTA. That is to say, to classify a travel contract, the Directive distinguishes between ‘package travel contract’ and ‘LTA’, where both includes separate contracts,294 individual travel services providers295 and a single point of sale.296 See Flowcharts 1 and 2. It turns out that whilst LTA includes only separate contracts,297 package, on the other hand, may include both single contract298 or separate contract.299 Noting that LTA is not a package but some sets of LTA’s elements are found in the concept of package, the main question is how to identify a real discrimen between them. In fact, while the Directive became more sophisticated, the deﬁnition of package became more complex and more difﬁcult to perceive. Thus, taking into account that both forms include separate contracts, what appears reasonable to determine is ‘payment’, which also discloses a discrímen. This is because whilst in ‘package’ the traveller may select the service(s) in a single point of sale before agreeing to pay300 at an inclusive or total price,301 in LTA it is different. In LTA, the traveller also selects travel services in a single visit or contact with a trader’s point of sale but will pay separately for each travel service,302 which is provided by another trader.303 Another discrimen concerns advertisement. If the travel services are advertised or sold under the term ‘package’304 or under a

arrangement, insofar as those individual services are not otherwise excluded from the scope of Directive 2011/83/EU, and that certain consumer rights laid down in that Directive also apply to packages’. 294 Idem, Art 3 (2) (b) for Package, and Art 3 (5) for LTA. 295 Idem, Art 3 (2) (b) for Package, and Art 3 (5) for LTA. 296 Idem, Art 3 (2) (b) for Package, and Art 3 (5) (a) for LTA. 297 Idem, Art 3 (5). 298 Idem, Art 3 (3). 299 Idem, Art 3 (2) (b). 300 Idem, Art 3 (2) (b) (i). 301 Idem, Art 3 (2) (b) (ii). 302 Idem, Art 3 (5) (a). 303 Idem, Art 3 (5) (b). 304 Idem, Art 3 (2) (b) (iii).

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similar term such as ‘combined deal’, ‘all-inclusive’ or ‘all-in arrangement’,305 it is a ‘package’ not an LTA. Moreover, whilst ‘linked travel arrangements – LTA’ is not a package,306 a ‘linked online booking process – LOBP’ can qualify as a package.307 To get a glimpse of what LOBP means, Recitals 9 and 13 of the Directive provide that the purpose of LOBP is to facilitate the procurement of at least one additional travel service from another trader within 24 h after the ﬁrst booking. Such facilitation is based on a commercial link amongst traders, whether through the number of clicks or turnover. What is the essence of LOBP? It is the way that businesses operationalise the purchasing. From the Directive stems two ways in which LOBP can happen: (1) as a subset of package (Article 3 (2) (v)), meaning a kind of ‘click-through booking’ based on a businesses’ partnership where traveller’s personal data are transferred between traders in order to conclude another contract, offered, sold or charged at an inclusive or total price within 24 h after the conﬁrmation of the ﬁrst travel service, and (2) as a subset of linked travel arrangement (Article 3 (5) (b)), meaning also a kind of ‘click-through booking’ based on a businesses’ partnership, but the personal data are not automatically transferred and the traveller pays each travel service separately. Through LTA, the trader facilitates in a targeted manner the procurement of at least one additional travel service from another trader where a contract with such other trader is concluded within 24 h after the conﬁrmation of the booking of the ﬁrst travel service.308 In both LOBP as a subset of package and LOBP as a subset of linked travel arrangements, business partners agree to cooperate on their mutual interests. It is different from those travel services booked independently by travellers through linked websites, which do not have the objective of concluding a contract with the traveller but only provide advertisement and information on travel services in a general way, such as a list of transport services. These are neither ‘package’ nor LTA.309 ‘Packages’ and ‘LTAs’ may have different implications. The traditional ‘package travel contract’ beneﬁts from full consumer protection, meaning that the organiser is responsible for the performance of all travel services included in the package. Consequently, the LOBP in the way of package provides the same full consumer protection as what the traditional package provides. Conversely, in LTA and its

305

Idem, Recital (10). Idem, Art 3 (5): ‘linked travel arrangements’ means at least two different types of travel services purchased for the purpose of the same trip or holiday, not constituting a package, resulting in the conclusion of separate payment of each travel service providers, if a trader facilitates. 307 Idem, Art 3 (2) (b) (v): purchased from separate traders through linked online booking processes where the traveller’s name, payment details and e-mail address are transmitted from the trader with whom the ﬁrst contract is concluded to another trader or traders and a contract with the latter trader or traders is concluded at the latest 24 h after the conﬁrmation of the booking of the ﬁrst travel service. 308 Idem, Recital (13). 309 Idem, Recital (12). 306

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LOBP subset, consumer protection is reduced, but the organiser needs to offer assistance in case of repatriation of travellers in the event of insolvency.310 The latter provides less consumer protection in comparison with the package itself or with the LOBP in the way of package. On the other hand, the purchase of a travel service on a stand-alone basis as a single travel service should constitute neither a package nor a linked travel arrangement,311 and the protection falls on other directives. See Table A1 in Annexes. In summary, though the current directive in terms of travel contract is an achievement bringing the consumer traveller to the new era of ‘e-consumer’, it seems difﬁcult to envisage that the traders will succeed to comply in a plain manner with its requirements, mainly in regard to LOBP in the form of package and/or in the form of LTA. From the traveller’s perspective, if the traders fail to inform clearly and prominently whether they are offering a package or a linked travel arrangement as requested by the directive,312 the payment at a total price (package) or a separate payment (LTA) is one way to identify the facilitation of the procurement of travel services.

3.4.6

Standard Contract

Standard contract is the EU terminology for the contract of adhesion (Brazilian terminology). It is also known as a pre-formulated standard contract or standard form contract. If the seller or supplier claims that a standard term has been individually negotiated, the burden of proof in this respect shall be incumbent on him.313 Directive 93/13/EEC on unfair terms in consumer contracts stipulates when a contract term shall be regarded as not individually negotiated (Article 3 (2)) and therefore submitted to control according to the Directive. Although it is a named contract, it is in fact a method of contracting or a contracting model for improving efﬁciency of the business. A large number of standard contracts are used in all Member States to facilitate economic transactions. These contracts spare parties the need to negotiate the contract terms individually for every single transaction and provide a degree of certainty to the parties. It supposed that the rights and obligations of the parties may be clearly identiﬁed. However, the standard contract, because of its one-sided characteristics, may easily exclude essential consumer rights or include unfair terms without the consumer’s consent. The contract is developed by one of the contracting parties where a single contracting party possesses sufﬁcient bargaining

310

Idem, Recital (14). Idem, Recital (15). 312 Idem, Recital (16). 313 Directive 93/13/EEC, Art 3 (2). 311

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power to impose its contract terms. Thus, if the consumer cannot inﬂuence the content of the terms, there is no party autonomy. But such a lack of negotiation may increase consumer vulnerability in view of to the fact that whilst the consumer believes that he or she is protected by a contract, he/she, in fact, may not be as the contract may have been drafted to exclude the consumer’s rights. Yet the standard contract becomes a source of the potential vulnerability of both parties. The complex, ambiguous or contradictory terms can amplify vulnerability. Thus, a contractual term that has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a signiﬁcant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer. A term shall always be regarded as not having been individually negotiated where it has been drafted in advance and the consumer has not been able to inﬂuence the substance of the term particularly in the context of a pre-formulated standard contract. Even if one speciﬁc term or certain aspect of it has been individually negotiated, the rest of the contract still remains within the scope of the Unfair Terms Directive.314 It is particularly noted that when contracts where all or certain terms offered to the consumer are in writing, these terms must always be drafted in plain and intelligible language. Where there is doubt about the meaning of a term, the interpretation most favourable to the consumer prevails.315 It is the principle of the most favourable interpretation of contractual provisions. These contracts usually especially limit the consumer’s rights through forum selection terms and choice of law terms. As it happens, there are restrictions on the choice of law for businesses-to-consumer transactions found in the Rome I Regulation, meaning that if the parties choose the law of another Member State rather than the consumer law of the consumer’s habitual residence, such a choice may, under the conditions of Article 6 (1) of the Rome I Regulation, not deprive the consumer of the protection of the mandatory provisions of the law of his habitual residence.316 The proposal for a Regulation on a Common European Sales Law intends to introduce by means of Article 2 (d) a legal concept for ‘standard contract terms’. The provision further sets forth: ‘It means contract terms which have been drafted in advance for several transactions involving different parties, and which have not been individually negotiated by the parties within the meaning of Article 7 of the Common European Sales Law.’317

314

Idem, Art 3 (1) (2). Idem, Art 5. 316 Regulation (EC) 593, 2008, Art 6 (2). 317 COM (2011a) 635. 315

3.5 Jurisdiction

3.5

141

Jurisdiction

In Europe, the problem of ‘jurisdiction’ does not differ much from what goes for the other legal systems in this respect. Jurisdiction relates to competence, which means identifying which court of justice is competent to hear and decide a case or make a certain order. It relates to the territorial limits of the court and the territorial scope of the legislative competence of Parliament.318 The question of which court has jurisdiction to decide a dispute arises where the disputants are located in two different countries or where the subject matter of the dispute is connected to several countries. The problem is often encountered in the interpretation and application of a statutory provision, as well as the enforcement of the judgment in another country. Rules on jurisdiction, especially those targeted to protect consumers, are now found in Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, which repealed Brussels I Regulation (EC) 44/2001.319 Brussels I Regulation was adopted on the basis of Articles 61 (c) and 67 (1) of the Treaty Establishing the European Community. After the entry into force of the Treaty of Lisbon, the Treaty basis for the adoption of legislative instruments aimed at ensuring the compatibility of the rules applicable in the Member States concerning jurisdiction are Article 67 (4) and 81 (2) (a), (c) and (e) of the TFEU.320 According to the new Regulation (EU) 1215/2012, the rules of jurisdiction must be highly predictable and founded on the principle that jurisdiction is generally based on the defendant’s domicile. Jurisdiction should always be available on this ground save in a few well-deﬁned situations in which the subject-matter of the dispute or the autonomy of the parties warrants a different connecting factor. The domicile of a legal person must be deﬁned autonomously so as to make the common rules more transparent and avoid conﬂicts of jurisdiction.321 It nearly repeated the provision previously set forth by Brussels I Regulation with minimum of changes.322 In relation to consumer contracts, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules.323 This leads to the following conclusion: if the plaintiff is the consumer and the defendant is the supplier, the consumer must be protected by rules of jurisdiction more favourable to his/her interests. Most of the time, in a large extension, the consumer’s domicile is preferred. That is to say, the consumer can ﬁle a claim or be sued in his/her domicile. However, as above mentioned, the law opens the possibility for the consumer to choose rules of jurisdiction more favourable to his/her interests. 318

Oxford (2006). Regulation (EU) 1215, 2012, Art 80. 320 SEC 1547 ﬁnal (2010), p. 42 (5). 321 Regulation (EU) 1215, 2012, Recital (15). 322 Regulation (EC) 44, 2001, Recital (11). 323 Regulation (EU) 1215, 2012, Recital (18). 319

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Thus, if the rules where the supplier is domiciled are more attractive to the interests of the consumer, he/she may ﬁle a claim there. Recently, the Court of Justice of the European Union on a contract of travel concluded between a consumer domiciled in one Member State and a travel agency established in another Member State granted the right of the consumer to bring an action against two undertakings, the travel agency and the supplier of services, before the court of the place of the consumer’s domicile.324 In addition, the court clariﬁed the point about the ‘weaker party to the contract’, stating that rules on special jurisdiction in Article 15 et seq. of Regulation 44/2001 in matters relating to consumer contracts are intended to protect the weaker party to the contract by granting him the possibility to choose the court and by limiting the possibility to conclude choice of jurisdiction clauses and that protection would be deprived of its effectiveness if it were not possible to rely on the rights that the consumer derives from a single booking transaction against the two contracting partners before the court with jurisdiction under Article 16(1) of Regulation 44/2001.325 So far, Regulation 44/2001, the so-called Brussels I Regulation, still applies in cases brought to the court up to 10 January 2015. The new Regulation 1215/2012 applies to disputes established after 10 January 2015.326 Therefore, it is too early to ﬁnd cases based on the new Regulation on jurisdiction. Comparing both regulations, it can be said that few changes have been implemented by the new Regulation. The content of Regulation 44/2001 was rearranged by the new one, which basically stresses safeguards against abolishing all intermediate measures (the exequatur) as the main focus of the new reform. Both stressed that ‘A judgment given in a Member State shall be recognized in the other Member State without any special procedure being required’.327 But the main difference is that the new Regulation introduced the term ‘exequatur’ in its Recital (2) and abolished the declaration of enforceability,328 whilst Brussels I did not. Those intermediate measures (exequatur) are connected with the recognition and enforcement of judgments.

3.5.1

Enforcement of Foreign Judgments

The ‘enforcement of foreign judgments’ is one of the most important issues in the sphere of jurisdiction. Europe has 28 countries with different legal cultures on rules

324

ECJ 14.11.2013 C-478/12. Idem, (20) (21) p. 5. 326 Regulation (EU) 1215, 2012, Art 81: ‘This Regulation shall enter into force on the twentieth day following that of its publication in the Ofﬁcial Journal of the European Union. It shall apply from 10 January 2015, with the exception of Articles 75 and 76, which shall apply from 10 January 2014.’ 327 Regulation (EU) 1215, 2012, Art 36 (1) former Regulation (EC) 44, 2001, Art 33 (1). 328 Regulation (EU) 1215, 2012, Art 39. 325

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of jurisdiction. One step is that the court accepts the competence to hear and decide a case. Another is to make a certain order and declare it enforceable. The recognition of enforcement of decisions in civil and commercial matters in all EU Member States is found on the principle of mutual recognition of judicial and extrajudicial decisions in civil matters.329 Traditionally, a judgment given in one Member State does not automatically take effect in another Member State. In order to be enforced in another country, the court in that country ﬁrst has to validate the decision and declare it enforceable. This is done in a special intermediate procedure, known as ‘exequatur’, which takes place after the judgment has been obtained.330 The intermediate exequatur procedure still makes cross-border litigation more cumbersome, time consuming and costly than national litigation. Parties have to bear court fees for processing the application. Often a lawyer is hired to prepare the documentation and handle the procedure abroad. Costs of translation and service of documents also add to the bill. The delay and costs involved in obtaining the recognition and enforcement of cross-border judgments discourage people from making full use of the possibilities offered to them in the internal market by doing business and shopping in other EU countries. The time for obtaining exequatur varies between the Member States. It can take from a couple of days up to several months, depending on the jurisdiction and the complexity of the case.331 Whilst Brussels I required the declaration of enforceability in accordance with the procedure laid down by the law of the Member State in which enforcement is sought, the new Regulation 1215/2012 abolished such a declaration and established the certiﬁcate set forth by its Article 53. Nowadays, a judgment issued in one Member State has to be enforceable in another Member State without the need for a declaration of enforceability; rather, it needs the certiﬁcate issued by the court of origin. In addition, the procedure for the enforcement of judgments given in another Member State shall be governed by the law of the Member State addressed.332 It seems that the problem of the exequatur has yet to be carried out by the EU law. Indeed, the certiﬁcate seems to be simpler than the declaration of enforceability as there is a pre-formulated standard model on Annex I of the new Regulation. However, it has not yet been taken as an automatic recognition and enforcement of the judgment in another MS. The new Regulation enables the court of origin to issue a European Enforcement Order in respect of a judgment with the result that the judgment will become enforceable in other Member State without the need to obtain an enforcement order there. The provision of the Regulation creates the impression of an automatic recognition for it says that a judgment given in a Member State shall be recognised in the

329

Idem, Recital (3). SEC 1547 ﬁnal (2010), pp. 11–12. 331 Idem, p. 12. 332 Regulation (EU) 1215, 2012, Art 41 (1). 330

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other Member State without any special procedure being required. Nevertheless, it seems less surprising that the recognition and enforcement of the judgment in another MS are still bureaucratic. This is because the court or authority may require the party to provide (a) a copy of the judgment that satisﬁes the conditions necessary to establish its authenticity and (b) the certiﬁcate issued by the original court (which substitutes the declaration of enforceability). In addition, the party must provide a translation or transliteration of the contents of the certiﬁcate. Moreover, the court may also require a translation of the judgment if needed.333 Furthermore, there is the risk to enter into another legal discussion, whereas the person against whom enforcement is sought can apply for refusal of the recognition or enforcement of a judgment if one of the grounds for refusal of recognition is presented. Basically, they are as follows: (1) if the recognition of the judgment is contrary to public policy in the MS addressed, (2) if the judgment was given in default of appearance, (3) if the judgment is irreconcilable with an earlier judgment given between the same parties in the MS addressed, another MS or a third state, (4) if the judgment conﬂicts with jurisdiction over consumer contract provisions set forth in Section 4 of the Regulation or with ‘exclusive jurisdiction’ set forth in Section 6.334 The legal discussion may go further if there is the need to clarify that the public policy referred to in Article 45 (1) (a) may not be applied to the rules relating to jurisdiction.335 As a result, the parties have to hire a lawyer to prepare the documentation and handle the procedure into the court of another MS. Finally, costs of translation and service of documents will be added to the bill. At the end, the enforcement of a judgment in another MS is still cumbersome.

3.5.2

The Small Claims Procedure

The European procedure for small claims was set up to simplify and speed up litigation concerning small claims in cross-border disputes. It is an alternative to the procedures existing under the laws of the Member States to reduce litigation costs. The procedure enables courts to process applications entirely by means of a written procedure, except in exceptional circumstances where a judgment cannot be given on the basis of written evidence.336 It is done through standard forms and free assistance for the parties in ﬁlling in the forms. Representation by a lawyer is not mandatory, and the use of electronic means of communication is encouraged. The

333

Idem, Art 37 (1) (a) (b), (2). Idem, Art 45 (1) (a) (b) (c) (d) (e) (i) (ii). 335 Idem, Art 45 (3). 336 Regulation (EC) 861, 2007, Art 5. 334

3.5 Jurisdiction

145

procedure is available for use by both consumers and businesses doing cross-border transactions in the EU. Actually, Regulation 861/2007 Establishing a European Small Claims Procedure sets forth a current threshold of € 2000 for cases on the basis of the simpliﬁed procedure for civil and commercial matters, whatever is the nature of the court or tribunal.337 As a number of Member States already increased the scope of their national simpliﬁed procedures by raising the threshold, the EU Commission launched a proposal to raise the current threshold up to € 10,000.338 There is no need for the consumer traveller to go to court. He or she can start the procedure by post or by any other means of communication, such as fax or e-mail, by ﬁlling out standard claim Form A, as Annex I of Regulation 861/2007, and lodging it with the court or tribunal that has jurisdiction.339 The defendant has 30 days to reply, and the court or tribunal shall give a judgment within 30 days of the defendant’s response.340 Overall, the small claims procedure works satisfactorily. However, the recognition and enforcement of the judgment in another EU MS still have barriers. That is to say, although a judgment given in a Member State in the European small claims procedure shall be recognised and enforced in another Member State without the need for a declaration of enforceability and without any possibility of opposing its recognition,341 it is still bureaucratic. This is because the party seeking enforcement shall produce (a) a copy of the judgment that satisﬁes the conditions necessary to establish its authenticity and (b) the certiﬁcate issued by the original court (which substitutes the declaration of enforceability). In addition, the party must provide a translation or transliteration of the contents of the certiﬁcate.342 Actually, reasonably, the person against whom enforcement is sought can apply for refusal of the recognition or enforcement of a judgment if it is irreconcilable with an earlier judgment given in any Member State or in a third country where the cause of action and the parties were the same. Under no circumstances may a judgment given in the European small claims procedure be reviewed in its substance in the Member State of enforcement.343

337

Idem, Art 2 (1). COM (2013) 794 ﬁnal (3) (3.1.1.). Note: it is not possible to predict when the new Regulation will come into force. It will raise the current threshold up to € 10,000. 339 Regulation (EC) 861, 2007, Art 4. 340 Idem, Art 5 (3) and Art 7 (1). 341 Idem, Art 20 (1). 342 Idem, Art 21 (2) (a) (b). 343 Idem, Art 22 (1) (a) (b) (c) (2). 338

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References344 A7-0124/2014. Legislative resolution on the Proposal for a Directive on package travel and assisted travel arrangements CCV (1970) International Convention on Travel Contracts. Brussels COM (2004) 651. European Contract Law and the revision of the acquis: the way forward COM (2007) 303 ﬁnal. Proposal for a Directive on the protection of consumers in respect of certain aspects of timeshare, long-term COM (2010) 352 ﬁnal. Europe, the world’s No 1 tourist destination – a new political framework for tourism in Europe COM (2011a) 635. Proposal for a Regulation on a Common European Sales Law COM (2011b) 898 ﬁnal. On passengers rights in all transport modes COM (2011c) 942. Commmission staff working document on bringing e-commerce beneﬁts to consumers COM (2012) 225 ﬁnal. On a Europen Consumer Agenda - boosting conﬁdence and growth COM (2013a) 130 ﬁnal. Common rules on compensation and assistance to passengers in the event of dening boarding and of cancellation or long delay of ﬂights COM (2013b) 512. On package travel and assisted travel arrangements, amending Regulation (EC) No 2006/2004, Directive 2011/83/EU and repealing Council Directive 90/314/EEC COM (2013c) 513. On bringing the EU package travel rules into the digital age ECJ 04.09.2014 C-452/13. Germanwings GmbH v Ronny Henning ECJ 07.12.2010 C-585/08 and C-144/09. Joined Cases: Pammer and Reederei Karl Schlüter GmbH v Co KG & Hotel Alpenhof GesmbH v Mr Heller ECJ 13.10.2011 C-83/10. Aurora Sousa Rodríguez and others v Air France SA ECJ 14.11.2013 C-478/12. Armin Maletic and Marianne Maletic v lastminute.com GmbH and TUI Österreich GmbH ECJ 15.06.1999 C-140/97. Walter Rechberger and others v Republik Österreich ECJ 16.01.2014 C-430/13. Ilona Baradics and Others v QBE Insurance (Europe) Ltd Magyarországi Fióktelepe, Magyar Állam ECJ 16.07.1998 C-210/96. Gut Springenheide GmbH and Rudolf Tusky v Oberkreisdirektor des Kreises Steinfurt ECJ 16.09.1999, C-220/98. Lifting ECJ 24.10.2013 C-277/12. Vitälijs Drozdovs v Baltikums AAS ECJ 26.09.2013 C-189/11. European Commission v Kingdom of Spain ECJ 30.04.2002 C-400/00. Club Tour ECJ 31.01.2013 C-12/11. Denise McDonagh v Ryanair Ltd Eurostat (May 2012) Statistics explained archive. Vol. 3 – Business and trade statistics Hart H (1961) The concept of law. Clarendon Press, Oxford Howells GG (2011) European contract law reform and European consumer law -two related but distinct regimes. Eur Rev Contract Law 7(2):173–194 Howells GG, Wilhelmsson T (1997) EC consumer law. Biddles Limited - Guildford and King’s Lynn, Great Britain Hunter J (2014) Report on European cross-border travel and tourism. Learning from consumer experiences and complaints. Commissioned by ANEC, The European Consumer Voice in Standardisation, Belgium IP/A/IMCO/NT/2008-16 (2008) Transposition and enforcement of the Directive on unfair commercial practices (2005/29/EC) and the Directive concerning misleading and comparative advertising (2006/114/EC) IP/A/IMCO/NT/2011-20 (2012) Compilationg of brieﬁng papers on consumer vulnerability. Brussels 344

EUR-Lex is the source for EU court cases, legislation and documents.

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IP/A/IMCO/ST/2011-17 (2012) Study on implementation of the Package Travel Directive. EU Karsten J (2010) In: Twigg-Flesner C (ed) Travel law. Cambridge University Press, Cambridge LONDON Economics (2009) Study on consumer detriment in the area of dynamic packages. Final report to the European Commission - health and consumers DG McDonald M (2003) European Community tourism law and policy. Blackhall Publishing Ltd., Dublin Montreal Convention. (O.J. L194, 18.07.2001). Convention for the uniﬁcation of certain rules for international carriage by air. EU Nölke-Schulte H, Flesner-Twigg C, Ebers M (2008) EC consumer law compendium. Sellier European Law Publisher, Munich OPINION CREU 2011/C 104/03 (2011) Of the Committee of the Regions on ‘Europe, the world’s No 1 tourist destination: a new political framework for tourism in Europe’ OPINION ECCG (2013) On consumers and vulnerability. European Consumer Consultative Group OPINION ECJ C-270/09 (2010) MacDonald Resorts Ltd v The commissioners for her majesty’s revenue & customs OPINION ECJ C-73/04 (2005) Brigitte and Marcus Klein v Rhodos Management Ltd OPINION EESC 2009/C 317/07 (2009) Opinion of the European Economic and Social Committee on ‘Protection of children at risk from travelling sex offenders’. OJ 23.12.2009 C317/43 OPINION of Advocate General C-59/12 (2013) BKK Mobil Oil Körperschaft des öffentlichen Rechts v Zentrale zur Bekämpfung unlauteren Wettbewerbs eV Oughton D, Lowry J (2000) Textbook on consumer law, 2nd edn. Blackstone Press Limited, London Oxford D (2006) Dictionary of law. Oxford University Press, New York Oxford (2005) Advanced learner’s dictionary of current English, 7th edn. Oxford University Press, Oxford Reich N, Micklitz HW, Rott P, Tonner K (2014) European consumer law. Intersentia, Cambridge Reisinger Y, Mavondo F (2006) Cultural differences in travel risk perception. J Travel Tour Mark 20(1):13–31 Resolution 2011/2150 (INI). (P7_TA(2012)0099). Resolution on the functioning and application of established rights of people travelling by air Resolution 2011/2272 (INI). (P7_TA(2012)0209). European Parliament resolution on a strategy for strengthening the rights of vulnerable consumers Resolution 2012/3190 (2012) Council resolution on “A European Consumer Agenda - Boosting conﬁdence and growth”. COMPETITIVENESS (Internal Market, Industry, Research and Space) Schulze R, Stuyck J (2011) Towards a European contract law. Sellier, Munich SEC 1547 ﬁnal (2010) Commission staff working paper impact assessment. Proposal for a regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters SEC 469 ﬁnal (2011) Commission staff working paper. Consumer empowerment in the EU Stearn J (2012) Tackling consumer vulnerability. Consumer Focus, London TEU and TFEU, 2. (2010). Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union TNS Opinion & Social, Special Eurobarometer n 342 (2011) Consumer empowerment. Brussels Tonner K (2013) Reviewing the protection of the tourist: passengers’ rights and package travel only or a tourist services directive? In: Eugène Buttigieg J (ed) Rights and remedies for consumer in the European Union. Gutenberg Press, Malta, p 137 Tonner K, Fangerow K (2012) Directive 2011/83/EU on consumer rights: a new approach to European consumer law? J Eur Consum Market Law 2:67–80 Tonner K, Shuster A (2005) Protecting the rights of passengers and holidaymakers. ECLG/039/05. European Consumer Law Group, Brussels Tonner K (1998) Consumer protection and the European Union’s tourism policy. Consum Law J 6:32–46

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UNITED Nations, A/CONF.216/L.1 (2012) Rioþ20 United Nations Conference on sustainable development. Rio de Janeiro UNWTO, United Nations World Tourism Organization (2010) International Recommendations for Tourism Statistics 2008. New York: Series M N 83/Rev.1 Wilhelmsson T (2005) Existiria um direito europeu do consumidor? E deveria existir? Translated from Rome Conference 2000 by academics from University of Rio Grande do Sul. Revista dos Tribunais 53:181–198 Yaqub Z, Bedford B (1997) European travel law. Wiley, West Sussex

Chapter 4

Analysis: Consumer, Traveller and Vulnerability

4.1

Balance Between Businesses’ Interests and Travellers’ Interests

There is a slight confusion regarding the term ‘protection’. The law ought to protect parties’ interests to guarantee balance in the market. However, the rules of protection regarding business or consumers/travellers are not intertwined. ‘Travel and tourism’ is mainly tied with consumer protection. That is to say, the principles of consumer law must be applied also for travel and tourism. Whilst businesses are under the protection of competition law, which regulates anticompetitive conduct by business companies, consumers are under the protection of consumer law, whose purpose is to rectify the inequality in bargaining power between the consumer and the supplier. Competition law and consumer law have different protection rules. To the consumer, the word ‘protection’ attracts ‘legal status’. It addresses the idea of vulnerability and therefore the need of protection in view of the unequal relationship between the parties. Although the protection of competitors (antitrust law) and the protection of consumers (consumer law) have common characteristics and are subjected to economic progress, they operate in different ways, which offer different functionality. Whilst competition law relates to agreements between ﬁrms, antitrust, restrictive practices, abuse of dominant positions, mergers, damage actions, cartels, state aid and so on, consumer law takes account of the protection of consumer’s economic and legal interests in view of the weaker position of the consumer in the contract concluded between the consumer and the supplier. In addition, consumer law covers legal redress and settlement of disputes, unfair commercial practices, quality of goods and services and so on. Therefore, their approach in the protection of the consumer is totally different.

© Springer Nature Switzerland AG 2018 M. G. Sanches Lima, Traveller Vulnerability in the Context of Travel and Tourism Contracts, https://doi.org/10.1007/978-3-319-98376-9_4

149

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4 Analysis: Consumer, Traveller and Vulnerability

In different countries, they take different forms. But basically it is possible to recognise in worldwide legislation a separate legal framework for both consumer policy and competition policy. The essence of the protection rules requires identifying the imbalance of the relationship in a contract. Hence, the bargaining power between consumer/traveller and the supplier/retailer is persistently unequal. Unequal bargaining power impacts on freedom of contract and changes the real traditional freedom, which is the core principle of private law. The inequality of bargaining power has long been recognised worldwide by several countries. The EU adopted consumer protection laws setting up forms of control and thereby balancing the relationship between the two parties, the consumer/traveller and the supplier/retailer, putting mandatory terms into contracts by law. The same occurs in Brazil and other countries in South America. Inequality results basically in one party having greater power than the other. In consumer law, the supplier is always in a better and more dominant position than the consumer. Conversely, tourism businesses are protected by competition law where one business holds a dominant position in a given market and is able to abuse that position (e.g., market sharing cartels). Actually, businesses must be protected against the same type of legal person (another business), whilst the consumer must be protected against another type of legal person (the supplier), where the commercial practice in a given market counts in determining whether it is a fair or an unfair practice. In summary, whilst businesses must be protected against each other because of illegal competitive practices in the market, consumers must be protected against suppliers/retailers (businesses) in view of their lack of meaningful choice in the terms of the contract, as in the case of a contract heavily weighted in favour of the supplier, such as those worded on a ‘take it or leave it’ basis (the well-known standard contract or contract of adhesion). Consumer protection is tied with the ‘overriding reasons relating to the public interest’. The Directive on Services sets forth that this concept has been developed by the ECJ and may continue to evolve.1 One of the possible explanations for this is that the balance between suppliers/businesses and consumers/travellers is only feasible through measures protecting consumers. The consumers ought to be protected because of the several risks they are exposed to in the actual market, mainly abroad. These risks imply the ﬂuidity of vulnerability.

1

Directive 2006/123/EC, Recital (40).

4.2 Consumer and Traveller

4.2

151

Consumer and Traveller

Although the framework of consumer law is similar in Brazil and in the EU, subtle differences in relation to their speciﬁcities exist. One of those differences is the concept of ‘consumer’ and the concept of ‘traveller’. The consumer is a person constructed by law. What could be more artiﬁcial than the concept of consumer or the concept of traveller? However, whilst the law already shaped the concept of consumer in both systems, the concept of traveller has bafﬂed many law practitioners. A natural person is equally natural in both systems. There is no doubt in providing natural persons with individual rights as a citizen or as a resident. That is a prerogative of nature. The differences vary in the construction of a person such as a consumer and now a traveller or even a business traveller. For example, in Brazil, a person considered a consumer, like a bystander, is not a consumer under EU law. The concept of consumer in Brazilian law is fragmented. It covers not only natural person, the individual as a physical person, but also legal entity that behaves as a ﬁnal purchaser or addressee if the entity is vulnerable. The concept is not only limited to contractual obligations but also covers victims of accidents, the so-called bystander. Likewise, it is extended to any events connected to the consumer relationship or to unlawful acts in pre-contractual duties such as misleading advertising and unfair commercial practices. However, a legal entity may in some situations be regarded as a consumer, if vulnerable, but it never will be regarded as a traveller owing to the obvious reason that although both are persons, a natural person travels but a company (entity) does not. Conversely, in European law, the concept of consumer is found in various directives, such as on ‘timeshare’, ‘unfair terms in consumer contracts’, ‘unfair business-to-consumer commercial practices’ and ‘consumer rights’. These have adopted the same approach, where the consumer means any natural person who in contracts covered by the respective Directive, is acting for purposes, which are outside his trade, business, craft or profession. The EU left Member States with the discretion to extend the application of the rules of the Directive on Consumer Rights to legal persons or to natural persons who are not consumers.2 This undermines the full harmonisation principle3 for the reason that differences in the deﬁnition of consumer may exist amongst Member States; Directive 2011/83/EU, Recital (13). ‘(..)Member States may therefore maintain or introduce national legislation corresponding to the provisions of this Directive, or certain of its provisions, in relation to contracts that fall outside the scope of this Directive. For instance, Member States may decide to extend the application of the rules of this Directive to legal persons or to natural persons who are not consumers within the meaning of this Directive, such as non-governmental organisations, start-ups or small and medium-sized enterprises.’ 3 Art 4: ‘Level of harmonisation, Member States shall not maintain or introduce, in their national law, provisions diverging from those laid down in this Directive, including more or less stringent provisions to ensure a different level of consumer protection, unless otherwise provided for in this Directive.’ 2

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4 Analysis: Consumer, Traveller and Vulnerability

where one Member State considers a legal entity or a bystander as a consumer, the other Member State does not. This weakens the equal applicability of the law. There is even a peculiarity in the provisions of Recital (13) and Article 4 of the Consumer Rights Directive concerning the full harmonisation principle, which indicate the relativity of the principle. That is to say, both allow exceptions with the use of terms such as ‘MS may decide’, ‘MS may also maintain or introduce national provisions’, ‘including more or less stringent provisions’, ‘unless otherwise provided for’. Curiously, Article 4 sets forth: Member States shall not maintain or introduce, in their national law, provisions diverging from those laid down in this Directive including more or less stringent provisions to ensure a different level of consumer protection (. . .)

Note that Article 4 used ‘shall not’ but at the same time made this relative by using the words ‘more or less’. Though ‘shall not’ is a stronger expression, both Recital (13) and Article 4 carry terms of relativity, indicating permissibility, possibility or probability. In line with the Directive on Consumer Rights, the majority of Member States adopted a similar notion of consumer (e.g., Germany, Austria). However, France inserted the deﬁnition of consumer into its French Consumer Code in a different way: ‘any individual who acts for purposes which do not enter in the scope of his/her commercial, industrial, artisanal or liberal activity.’ Such a technique left the courts to decide whether a person should be treated as a consumer or not. The concept of ‘travelling consumer’, introduced in the EU years ago,4 is no longer used. Although it focuses on the consumer who travels, the concept relates to the activity of the consumer (the adjective ‘travelling’) rather than to the traveller as a legal person. In this context, the legal person is solely the consumer, not the traveller. The current Directive 2015/2302/EU, however, introduced the concept of traveller with a legal status in the EU legislation. As a result, the EU carefully stresses that the majority of travellers buying packages or linked travel arrangements are consumers within the meaning of Union consumer law.5 It shows that the EU lawmaker is aware that in consumer societies, it is not feasible to exclude the traveller from the scope of the consumer law. This is to ensure that the traveller acquires substantive rights. However, a better solution would be to place the two terms—consumer and traveller—on equal footing, such as ‘consumer traveller’. This would avoid extensive studies and recurrent questions like ‘Is the traveller a consumer?’ In addition, the consumer and the traveller would share the focus of studies on an equal basis. Contrary to common perception, ‘consumer traveller’ is unavoidable in view of the continued impact of the travel and tourism industry in the consumer market and increased sophistication in the management and use of data, such as dynamic packaging. Moreover, travel (and tourism) is a dynamic economic activity, which

4 5

COM (1998) 563 ﬁnal and COM 1999/C 66/04. Directive 2015/2302/EU, Recital (7).

4.2 Consumer and Traveller

153

unfolds in an ever-changing environment. It is expected that the legal concepts would also follow the developments of the market. Whilst in Brazil the concept of the consumer is wider and not limited to contractual obligations, in Europe the concept of consumer found in a couple of directives is narrow and strictly limited to contractual obligations. Thus, although the current Directive 2015/2302/EU splits the well-known classiﬁcation between combined and single (or individual) travel services, the person entitled to the package travel contract is the traveller rather than solely the consumer. Yet the cornerstone of consumer law in Brazil is the type of the consumer relationship (such as purchase of goods or services, insurance, ﬁnance, transport, accommodation, timeshare and so on) and also the type of the consumer party involved in the contract, whether an individual, a legal entity, a bystander or a group of individuals. Likewise, in the EU, the cornerstone of consumer law is the legal relationship between the supplier and the consumer. But consumer law is divided into a range of directives, such as timeshare, package travel, services in the internal market and consumer rights directives, which must be transposed into the national law of the Member States or regulations such as those on transport, contractual obligations and jurisdiction, which are directly applicable in the Member States. A comparative overview of the provisions of the current law, mainly the CDC in Brazil and the EU directives, may prove relevant in the assessment of the deﬁnition of the consumer as follows (Tables 4.1 and 4.2). Until recently, EU directives or any other EU legislation did not explicitly mention the traveller in a strict sense, and no speciﬁc rules pertaining to consumer protection addressing only travellers have existed. Nevertheless, the current Directive on package travel and linked travel arrangements, which repealed Directive 90/314/EEC, introduced the concept of traveller in addition to the concept of Table 4.1 Brazil Act 8.078/90 CDC (Consumer Defence Code) ‘Article 2. A consumer is any natural person or legal entity who purchases or uses goods or services as a ﬁnal addressee Sole Paragraph: The concept and status of consumers is extended to a collective of individuals, even if they are indeterminate, who have participated in any consumer relationship.’ ‘Article 17. For the purposes of this section, all victims of the event have the same rights as consumers.’ (The section refers to liability as to the fact of the product and service.) ‘Article 29—Any person exposed to what is described in this chapter and the next will be considered equal to consumers.’ (Chapter V refers to commercial practices, and Chapter VI refers to contract protection.) Source: Author

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4 Analysis: Consumer, Traveller and Vulnerability

Table 4.2 Europe Directive 2011/83/EU (Consumer Rights) ‘Recital (13). Member States may decide to extend the application of the rules of this Directive to legal persons or to natural persons who are not consumers within the meaning of this Directive, such as non-governmental organisations, start-ups or small and medium-sized enterprises.’ ‘Article 2 (1). Consumer means any natural person who, in contracts covered by this Directive, is acting for purposes which are outside his trade, business, craft or profession;[. . .].’ Directive 2008/122/EC (timeshare) ‘Article 2 (1) (f) ‘consumer’ means a natural person who is acting for purposes which are outside that person’s trade, business, craft or profession;[. . .].’ Directive 2005/29/EC (unfair business-to-consumer commercial practices) ‘Article 2 (a) ‘consumer’ means any natural person who, in commercial practices covered by this Directive, is acting for purposes which are outside his trade, business, craft or profession;[. . .].’ Directive 93/13/EEC (unfair terms in consumer contracts) ‘Article 2 (b) consumer’ means any natural person who, in contracts covered by this Directive, is acting for purposes which are outside his trade, business or profession;[. . .].’ Source: Author

consumer. It modernised the existing rules, ensuring that the majority of travellers buying travel packages are consumers in the sense of Union consumer law.6 ‘traveller’ means any person who is seeking to conclude a contract, or is entitled to travel on the basis of a contract concluded, within the scope of this Directive. Directive 2015/2302/EU, Art 3 (6). This is a step forward ensuring that travellers have legal capacity. Nevertheless, as already mentioned, the literal wording ‘traveller’ solely misguides the nature of the consumption idea. The norm should have included some sort of reference to consumption. The non-reference creates a misleading impression of an independent ﬁeld of law, when, on the contrary, the necessity of consumption cannot be separated from the issues of travelling. Travel Law is part of Consumer Law as Consumer Law principles guide Travel Law. Therefore, ‘consumer traveller’ at ﬁrst glance would settle any misleading impression focusing on the legal person into both capacities: consumption and travelling. On the contrary, in Brazil, the legal concept of the traveller is still unknown. Without a precise legal deﬁnition, it is intertwined with the concept of consumer, which is wide enough to consider also legal entities (if vulnerable), bystanders and all persons exposed to commercial practices, covering the subjective rights of the

6

Directive 2015/2302/EU, Recital (7).

4.3 Vulnerability

155

legal holders as a whole. The courts have named hypervulnerables, other legal persons set up by special laws, as Elderly, Children and Disabled persons.

4.3

Vulnerability

Both Brazil and the EU have used the term vulnerability in different contexts. The term has different meaning in those legal systems, and explanations vary according to the approach in question. In Brazil, all consumers are vulnerable under the principle of vulnerability set forth by the CDC.7 Vulnerability is assessed in abstracto on all consumers or in concreto on a group of consumers who are particularly vulnerable, like those hypervulnerable persons,8 which have protection by special laws. Both consumers and hypervunerable consumers are not in a position to have equal bargaining power mainly on account of the difﬁculties in obtaining accurate information from the supplier/retailer, but hypervulnerables are more vulnerable than others. The sophistication of the concept of vulnerability goes beyond the essentials of the principle set forth by the CDC. According to authors, it applies to everyone who consumes: the rich, poor, educated, non-educated, credulous or wise.9 The Superior Court of Justice identiﬁes three types of consumer vulnerability as follows: technical vulnerability (the lack of knowledge concerning the goods or services in the consumer relationship), legal vulnerability (the lack of legal knowledge) and factual vulnerability (circumstances in which there is a lack of consumer economic capacity, such as physical or even psychological capacity of the consumer). More recently, the court has included informational vulnerability (the lack of information or insufﬁcient information concerning the good or service that may inﬂuence consumer choice processes).10 Conversely, in the EU, legislation takes as a benchmark the average consumer, who is reasonably well informed and reasonably observant and circumspect, taking into account social, cultural and linguistic factors.11 The concept of vulnerability in the EU touches only those characteristics that make a person particularly vulnerable to unfair commercial practices, such as age, physical or mental inﬁrmity, or credulity. These characteristics make those consumers particularly susceptible to a commercial practice or an underlying product and economic behaviour. In the EU, only such consumers are likely to be distorted by commercial practices in a way that the trader can reasonably foresee.12

7

Act 8.078, 1990, Art 4 (I). Elderly, children, disabled. The term hypervulnerable stems from the courts not from the law. 9 Benjamin et al. (2010), p. 259. 10 STJ REsp 1.195.642/RJ, j.2012, (4). 11 Directive 2005/29/EC, Recital (18). 12 Directive 2005/29/EC, (19), Unfair business-to-consumer commercial practices. 8

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4 Analysis: Consumer, Traveller and Vulnerability

Though different in emphasis, in essence these deﬁnitions rest on one of two main aspects of vulnerability: weaker bargaining power and difﬁculties in obtaining accurate information in the modern market. The relevance of determining the particular legal status of a party is due to the legal notion that a party is bound to perform his or her obligations. A party is bound by the reasonable impression that he/she creates. According to traditional principles of private law, a party who signs an instrument may not later complain about not reading or not understanding it. However, important risk factors of consumer vulnerability have emerged from the current socio-economic context as a result of market dispute and economic, social and technological developments, which create new sets of challenges. The risks are heightened by the fact that markets are becoming increasingly complex and sophisticated, leaving it difﬁcult for the consumer to assess them reasonably. Regarding the terms of the contract, the consumer is left without choice but to agree to the terms drawn up in advance by the seller or supplier without being able to inﬂuence the content of those terms. This is what is called unequal bargaining power. Whereas unequal bargaining power goes beyond the scope of the traditional freedom of contract, consumer protection laws interfere reasonably and necessarily with the freedoms of both parties. This is why the current EU policy is ﬁrmly grounded on the protection of individual rights,13 and the current Consumer Rights Directive stresses that consumers should enjoy a high common level of protection across the Union.14 By legal nature, any consumer policy or consumer protection or even consumer protection policy has its grounds on the unequal relationship between two parties. Such imbalance has basis on the principle of equality, meaning that no party has precedence over another. The law shall address natural differences only in accordance with the principle of equality. It is a legal ﬁction for establishing the criterion of proper rules. That is why consumers are protected by law from unequal bargaining power because often there is a lack of meaningful choice as in the case of a form contract heavily weighted in favour of one party in terms of a ‘take it or leave it’ basis. As herein mentioned, if a contract contains unfair standard contract terms (EU terminology) or abusive clauses (Brazilian terminology) inserted by suppliers into the text of the contract creating imbalances to the detriment of the consumer, the consumer is not bound by them. Although the contract itself usually remains valid, the abusive clauses are invalid. If there is doubt about the meaning of a term

13 INT/608-CESE 802/2012-2011/0340 (COD) Consumer agenda 2014–2020. The EESC—European Economic and Social Committee is opposed to any steps, such as the optional system, which would allow for review of the existing protection to safeguard consumers who are the weaker parties to the contract and who do not always have the means for seeking help. 14 Directive 2011/83/EU, Recital (7).

4.3 Vulnerability

157

(or clause), the interpretation most favourable to the consumer shall prevail both in Europe15 and in Brazil.16 The law does not prohibit standard term contract (EU terminology) or contract of adhesion (Brazilian terminology) but regulates such type of contract in view of the principle of equality. This leads to a more elementary or more natural conclusion that the existence of vulnerability in this context is intrinsically intertwined with the existence of an unequal relationship between two parties where the consumer, in general, is always in a weaker bargaining position than the supplier. It means that the weakness comes not from an individual or personal characteristic but from the ﬂuidity of vulnerability in view of the present risk of the situation where the consumer is involved. It is impossible to put an end to vulnerability through speciﬁc measures to address individual state and characteristics on the one hand and external factors on the other, but it is possible to reduce the risk of the vulnerability by creating an assertive public policy like consumer protection or a further consumer traveller protection. Thus, for instance, it is false to believe that a crash during a ﬂight is impossible. The crash event is possible but most unlikely to happen if the air company carries out the regular technical measures and sticks to maintenance schedules. A plane crash that attracts media coverage will temporarily alter peoples’ feelings about the safety of ﬂying. However, the risk is not really changed, the risk is always there. In this context, consumer vulnerability is always there in abstracto, in different levels. But as the airline’s commitment to safety is beyond of the consumer’s capacity to make certain the level of the risk, the law shall ensure that every air company in a given country and a given market is subject to the safety standards. In this regard and along with other rules, consumer law was introduced on a piecemeal basis to deal with the particular imbalance of the relation where the consumer is always vulnerable in view of, inter alia, the lack in private autonomy. Studies on vulnerability from different countries have demonstrated that the concept varies signiﬁcantly depending on the approach in question. For example, in the United Kingdom, it is consumers in vulnerable positions, not vulnerable consumers. We can’t simply or easily divide society into ‘vulnerable groups’ and ‘the rest’. People’s circumstances change and anybody can become vulnerable at any time for example through job loss or bereavement. The focus of action needs to go beyond individuals and individual solutions.17 In Australia, consumer vulnerability is often described in terms of consumer characteristics or demographics such as age, disability, gender, race/ethnicity, liter-

15 Directive 93/13/EEC: ‘Whereas contracts should be drafted in plain, intelligible language, the consumer should actually be given an opportunity to examine all the terms and, if in doubt, the interpretation most favourable to the consumer should prevail.’ 16 Act 8.078, 1990, Art 47: ‘Contract clauses will be interpreted in such a way as it is most favourable to the consumer.’ 17 Stearn (2012).

158

4 Analysis: Consumer, Traveller and Vulnerability

acy and level of education. In general, these measures are useful indicators of potential vulnerability, and most government departments, large institutions and commercial businesses use this to operationalise their vulnerability and disability programmes and policies. However, there is no empirical proof that biophysical characteristics of individuals should be the sole basis on which to deﬁne consumer vulnerability. An alternative approach might be to view vulnerability as a spectrum that is neither enduring nor binary. Any individual might experience vulnerability at a point in time.18 The EU also carried out a study in 2011 that pointed to a speciﬁc problem such as the disadvantaged consumer. More recently, a different approach emerged, arguing that considering consumers as disadvantaged persons simply because they belong to a socio-economic group does not ﬁt with actual behaviour, nor can it lead to adequate recommendations on consumer empowerment. According to this approach, research should focus on the concept of vulnerable consumers rather than disadvantaged consumers.19 To the traveller, there is a range of external situations that imply external vulnerability; some of these are different language, cultural differences and foreign currency. So often, the traveller is also a victim of xenophobia, racism or other biases. Even the most experienced traveller might always experience difﬁculties abroad. Moreover, international consumer contracts might embed the vulnerability of the traveller by legal vulnerability as further explained. In settling disputes that arise from contracts, concurrent jurisdiction of courts is also a matter of vulnerability between two legal systems of law. Therefore, it is also a lack of legal international harmonisation of laws. It means that in such conditions, the traveller, which in essence is a special consumer, is always in a vulnerable condition.

4.3.1

External Vulnerability

4.3.1.1

Language and Cultural Differences

Language, together with culture, is the main barrier for the consumer traveller. In an alien environment, the linguistic conventions of a society and the use of logic as a tool to understand natural languages can affect the reasoning of the consumer, which goes beyond language. The traveller faces difﬁculties in accessing information, ﬁnding appropriate goods and services or even understanding rules of the foreign city. These certainly give rise to problems of vulnerability. Two approaches of natural languages serve to illustrate this. The ﬁrst approach regards law, whilst the second concerns the meaning of the language and cultural

18 19

Harrison (2013). TNS Opinion & Social, Special Eurobarometer n 342 (2011).

4.3 Vulnerability

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incompatibility between logical patterns and the natural language. Both approaches are discussed below. Taking up, inter alia, concerns on language related to contracts, both systems, Brazil and the EU, require that the language of the contract be clear. In Brazil, the written form of the contract of adhesion shall be prepared using clear language and legible characters to ensure consumer comprehension.20 In addition, the offer of goods and services shall ascertain their characteristics, quality, quantity, composition, price, warranty, period of validity and place of origin, amongst other pieces of information. The information shall correctly, clearly, precisely and comprehensively be given in Brazilian Portuguese language. The offer shall also inform of the eventual risk that the good or service may pose to the health and safety of the consumer.21 In Europe, where all or certain terms offered to the consumer are included in the contracts, these terms must always be in plain, intelligible language.22 However, the issue of language in Europe is more sensitive because of cultural diversity. As it happens, the Directive on Consumer Rights sets forth that the Directive should not harmonise language requirements applicable to consumer contracts. Member States may maintain or introduce in their national law language requirements regarding contractual information and contractual terms.23 In the case of timeshare contracts, as to pre-contractual information and contract terms, consumers should have the right to choose the language that they are familiar with.24 In regard to small claims procedure, a party can refuse to accept a document because it is neither (a) in the ofﬁcial language of the MS nor (b) in a language that the addressee understands.25 It is a misleading commercial practice to provide after-sales service to consumers in a language that is not an ofﬁcial language of the Member State where the trader is located and then make such service available only in that other language without clearly disclosing this to the consumer before the consumer commits to the transaction.26 Recognising that language is a vulnerability for the consumer, the Brazilian state court located in Rio Grande do Sul cancelled a timeshare contract concluded in another language because the consumer traveller was not aware of clauses regarding the occupancy periods of the property. The court applied Article 49 of the CDC. It clariﬁed that the consumer had the right of withdrawal, and hence every amount paid

Act 8.078, 1990, Art 54, § 3. Idem, Art 31. 22 Directive 93/13/EEC, Art 5. 23 Directive 2011/83/EU, Recital (15), Art 6 (7). 24 Directive 2008/122/EC, Recital (10). 25 Regulation (EC) 861, 2007, Art 6 (3) (a) (b). 26 Directive 2005/29/EC, Annex I (8). 20 21

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4 Analysis: Consumer, Traveller and Vulnerability

during the period of withdrawal shall be returned immediately to the consumer, including any costs monetarily updated.27 In the EU, one of the top barriers to cross-border trade is language, along with culture.28 The European Parliament in a 2011 Resolution29 has stated that there is more need in terms of legal certainty, language barriers and transparency of proceedings. Language and cultural differences may exacerbate other barriers. In addition, many problems arise because of miscommunication.30 Recently, the Court of Justice analysed substantial divergences between EU law and the law of Spain concerning taxation on special scheme for travel agents. The national law systematically uses the term traveller, whilst other language versions of Directive 2006/112/EC use the terms ‘traveller’ and/or ‘customer’, sometimes interchanging their use. The discrepancies between language versions in view of the coexistence of the traveller-based approach and the customer-based approach lead to double taxation and distortions of competition.31 Concerning the second approach, the most obvious difference between languages is the different labels established to express concepts, and these labels are anything other than cultural conventions. The majority of such labels are arbitrary,32 as for instance consumer, Verbraucher, consumidor, consumatore, consommateur, 消费者 or traveller, traveler, Reisenden, viajante, viaggiatore, voyageur, 旅客, passenger, business traveller, user. In the modern world, every country with a legal system has its own set of artiﬁcial words. The labels have almost nothing of nature in them. However, this is rather simplistic at ﬁrst glance. Whilst language can grant labels as particularly fancy, it cannot apply the same fancifulness to the concepts and meanings behind the labels and hence to culture. In practice, culture not only controls the labels but also interferes incessantly in the borders of what ought to be the right of nature. Whilst by nature some concepts are clearly delineated like ‘man’ and ‘bird’, cultural conventions do manage many other concepts, in ways that sometimes disturb the common sense.33 Linguists have a view on ‘requesting’. Requests are an interesting pragmatic feature to examine because there are identiﬁable ways in which requests are made in different languages, as well as differences in how they are expressed across languages and cultures. Social linguistic interaction is not always simple. It may also include elaboration, slower speech rate, gesture or the provision of additional

27 TJRS Ap.197267263/RGS, j.1998, another case was deemed one year before; TJRS Ap.196182760/RGS, j.1997. 28 COM (2011) 635, (1). 29 Resolution 2011/2117 (INI) (25 October 2011). 30 IP/A/IMCO/ST/2010-08 (2011), p. 102. 31 ECJ 26.09.2013 C-189/11. 32 Ross (2003), p. 206. 33 Deutscher (2010), p. 14.

4.3 Vulnerability

161

contextual cues. Some examples are comprehension checks, clariﬁcation requests, and self-repetition or paraphrase.34 Taking into account the English words ‘law’ and ‘right’, the Brazilian Portuguese uses only one label for both: ‘direito’. This uniqueness, in place of the two words commonly found in other legal systems, requires further explanation. In German, like in English, there are two labels: Gesetz (law) and Recht (right). The single word ‘exit’ in English or ‘saída’ in Brazilian Portuguese covers a single meaning independently of whether it is addressed for cars or for people. In contrast, it is found in German with double labels—one set up for cars ‘Ausfahrt’, another for people ‘Ausgang’—with two different meanings—one for the object (the car), the other for the person. In Germany, the type of bread named Brötchen, which is usually found in the east of Germany, has different labels such as Bemme (Saxonia) or Schrippe (Berlin). It is a matter of social and cultural convention within the same country. Why do some other languages not bear gender distinctions, such as Finnish, Vietnamese, Indonesian and Hungarian?35 According to experts, such languages are grammatically and consistently simple because they have no grammatical gender at all, whilst on the contrary, the great majority of languages have particular genders, like French, Italian, Spanish, Portuguese, Romanian, German, Dutch, Swedish, Norwegian, Danish, Russian, Polish, Czech and Greek.36 Many languages are morphologically much more complex than English. There are languages in which each verb has many hundreds of distinct inﬂections. The more frequent forms of high-frequency verbs may well be stored in the mind as separate items. Nevertheless, many forms are infrequent and likely to be created on the spur of the moment, using allomorph shapes and descriptions of word shapes.37 A recurrent problem found in many languages relates to logical principles. It is the use of double negatives. The grammatical tradition of English, for instance, has prohibited the use of double negatives for hundreds of years. Nevertheless, the double negatives continue to thrive across the world. Thus, phrases such as ‘He didn’t say nothing’ or ‘Are you going to spend your whole life not trusting nobody?’ are double negatives. In other languages like Portuguese, Spanish, Italian and Ancient Greek, double negatives regularly perform a reinforcing, rather than a cancelling, function.38 For example, in Portuguese, the phrase ‘Eu não vi nada’ (I did not see nothing) is commonly used to emphasise the context. Curiously, other languages, like German, chose one negative to express the same meaning: ‘Ich habe nichts gesehen’. That is to say, the natural language is not to be appealed to in logical investigation, and the validity of logic has nothing to do with whether it turns out to be useful

34

Lightbown and Spada (2011), pp. 44,102. Deutscher (2010), pp. 201–202. 36 Idem, p. 200. 37 McGregor (2009), p. 74. 38 Riemer (2014), p. 187. 35

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4 Analysis: Consumer, Traveller and Vulnerability

as a representation of the meaning of natural language. The value of logic is precisely that it takes us beyond the imperfections of natural language, allowing us to discern logical structures, which the messiness of natural language obscures. Two different conclusions may be drawn from this: one that logical investigation is in fact often oriented away from natural language, embodying assumptions designed to put mathematical notions on a sound footing,39 another that each language has a structure that places logic in a particular way. Actually, natural languages typically do not contain precise words whose meanings correspond to those of the logical operators. For instance, the propositional connectives ‘and’, ‘or’, ‘not’ and ‘if . . . then’ are the words in English for the logical operators like &, V, Ø and Ͻ, which underlie the meanings of natural language at a certain degree of abstraction. This does not mean that logical operators are not representative of the meanings relevant to the analysis of natural language nor that logic as a whole has nothing to do with the study of natural language. For linguists, there is no clash between logic and linguistics because the two ﬁelds share a subject matter called ‘meaning’. ‘Meaning’ is the core of language. Only when sequences of sounds or letters have a meaning do they qualify as language.40 The branch of linguistics that study the ‘meaning’ in language is the so-called semantic. As a result, it is logically acceptable for the consumer traveller who speaks Portuguese to say, ‘Eu não vi nada’ (I didn’t see nothing), but it is not logically acceptable for the consumer traveller who speaks English to say, ‘I didn’t see nothing’. Whilst one language accepts the double negative as a reconﬁrmation, the other refuses it. Therefore, it is not difﬁcult to comprehend why misunderstandings are frequent when the consumer traveller uses a second language. He may substitute similar syntax from his ﬁrst language by the words of the foreign language. Usually, they use the logic of their native language to speak another language. Over the years, linguists without deep empirical evidence spread the understanding that all languages are equally complex. New studies are now coming out to show that evidence suggests that the complexity of some areas of grammar reﬂects the culture and society of the speakers and that the idiosyncrasies of the mother tongue do, after all, affect the mind. Different languages lead their speakers to different perceptions and therefore to different worldviews. Generally, the communication between speakers and hearers corresponds well, that is to say, the meaning intended by the speaker and the meaning inferred by the hearer in general works. But, of course, mismatches do occur. A hearer may take offence when none was intended or fail to take offence when it was intended. Nevertheless, things normally work relatively smoothly.41 Overall, language is an active instrument of coercion through which culture imposes its conventions into the mind. What the individual ﬁnds natural depends 39

Idem, pp. 188–189. Idem, pp. 3, 188. 41 McGregor (2009), p.145. 40

4.3 Vulnerability

163

largely on the conventions that have been set up. In other words, what common sense ﬁnds natural is what it is familiar with.42 The language is not the manifestation of thought. Language is the thought itself. Each language has its own structure at the repertory, rules of combination and use. This means that each language organises reality differently from another. The important thing is not that a language has more words to cut reality, but to know that the existence of these words leads to the perception of reality differently.

4.3.1.2

Racism, Xenophobia and Ethnocentrism

This topic is partially related to the latter topic because racism and xenophobia are transmitted, inter alia, by language through learning from generation to generation. Some aspects of language and culture are impressed so deeply in the individual’s mind as the individual does not recognise them as such. Even where some legal systems explicitly speciﬁed racism and xenophobia along with crimes and even when there is the interest of every state to suppress such offences, which justiﬁes their status as crimes, why are they still persistent or even growing worldwide? The combat of racism and xenophobia is an important pillar of the EU Treaty.43 The European Union rejects theories that attempt to determine the existence of separate human races. In addition, the European Parliament has adopted a number of resolutions on the ﬁght against racism in Europe.44 However, the problem of racism and xenophobia persists. Racism may be odious, but racist groups and political parties are organised around an opinion. Many liberal thinkers defend their right to exist on the ground of protecting ‘freedom for the thought that we hate’.45 In this regard, EU law has provided a minimal framework to mitigate the incitement to hatred on grounds of race, sex, religion or nationality.46 The term ‘hate speech’ is to be understood as covering all forms of expression that spread, incite, promote or justify racial hatred, xenophobia, anti-Semitism or other forms of hatred based on intolerance, including intolerance expressed by aggressive nationalism and ethnocentrism, discrimination and hostility against minorities, migrants and people of immigrant origin.47

42

Deutscher (2010), pp. 19–21, 234. TEU and TFEU (2010), Art 67 (3): ‘The Union shall endeavour to ensure a high level of security through measures to prevent and combat crime, racism and xenophobia (..)’ Regulation (EC) 1035/ 97, Regulation (EC) 1652/2003 and Regulation (EC) 168/2007, the later established a European Union Agency for Fundamental Rights. 44 Directive 2000/43/EC, Recital (5) (6). 45 Oliver Wendell Holmes famous statement. Cited in Bleich and Lambert (2013), p. 123. 46 Directive 89/552/EEC. 47 OPINION of Advocate General C-244/10 and 245/10 (2011). 43

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4 Analysis: Consumer, Traveller and Vulnerability

Xenophobia is irrational. It is the feeling of dislike or fear of people from other countries based on various aspects, carrying fear of losing identity, aggression, targeting a foreigner who does not belong to the community. All of these things taken together and accepted as true, or very likely true, make up the package of background beliefs of the individual. Worryingly, it produces aggression and violence by thought, and it is extremely contagious and dangerous. The transmission occurs from mind to mind.48 There are real differences between people, but such differences cannot be used as the basis for discrimination and inequality because in this sense, they cannot be used to justify unequal treatment, and in such a point, there are somehow several reasons why it still happens. Studies point to a distinction between political parties and private groups. When a government dismantles a racist group, it limits important freedoms, but when it bans a political party, it strikes at the foundations of democracy itself. Hence, since political parties play a central role in democratic societies, they are more protected from the interference of the state than are small private groups.49 This is why in the EU, the Member States have a wide variety of opinions for limiting racist associations. In many cases, the word racism is not found in any legislation targeted to limit racist organisations. In some Member States like Germany, the Constitution allows for the dissolution of parties that ‘seek to undermine or abolish the free democratic basic order or to endanger the existence of the Federal Republic of Germany’ or of groups that ‘contravene the criminal laws, or that are directed against the constitutional order or the concept of international understanding’. Though not explicitly written into a country’s law, racism is often associated with fascism and antidemocracy.50 Manifestations of racism could generate strong state repression. This can be illustrated in the 1990s with the dissolution of the Free German Workers Party (FAP), associated with racism and anti-Semitism. However, other political parties remain, such as the NPD (with the similar connections and nature of FAP)51 or REP (which exercises opposition to immigration).52 Likewise, in France was imposed precautionary bans on demonstrations in the 1990s. In 2005, the Interior Ministry ordered the national intelligence service to conduct a survey of the racist and violent far-right groups, leading to the dissolution of Elsass Korps.53 Nevertheless, political parties like Le Pen’s party, actual Front National (FN), which criticises immigration, remains active. According to Bobbio, an Italian philosopher, there is no need for a racist party exists for racism to be born, but it is unavoidable that the formation of such a party

48

Chomsky (2011). Bleich and Lambert (2013), p. 124. 50 Idem, p. 124. 51 Idem, 141. 52 Die Republikaner, cited by Bobbio (2000), p. 129. 53 Idem, p. 141. 49

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reinforces racism. The racial conﬂict is inescapable whenever they come into contact through mass immigration.54 In Brazil, the Federal Constitution sets forth the repudiation of terrorism and racism as one of the main principles of the country.55 The practice of racism is a non-bailable crime, with no limitation, subject to the penalty of conﬁnement, under the terms of the law.56 All persons are equal before the law, without any distinction whatsoever. It is ensured to Brazilians and foreigners residing in the country the right to life, to liberty, to equality, to security and to have a property.57 In contrast to the EU, in Brazil, there are no explicit racist political parties, but private informal groups exist, such as the Skinheads. The group strives to spread that not all skinheads are racist; however, the main motivation of the Brazilian Skin is hatred toward Northeasterners (Nordestinos). They are against those from northeastern states who migrated to the large cities searching for a better life. In 2005, the name of the group was involved in a harmful incident in Sao Paulo, resulting in the death of two homosexuals. Often the group appears in criminal court decisions of the TJSP. The report states that the group is a threat against social minorities, trying to eliminate black people, Jews, homosexuals and Northeasterners.58 Another decision repeated these statements, concluding to condemn those who participated in the violent activities of the group.59 In this context, both ‘freedom of association’ and ‘freedom of speech’ are fundamental principles of the Brazilian Federal Constitution. However, the rights of association and expression are not absolute, being subjected to appropriate limitations. Those principles meet the same concerns to protect the foundations of democracy. Thus, an association of individuals whose purpose is to commit crimes or to threaten the moral or public order is forbidden. As the Federal Constitution sets forth racism as a crime, being the ‘freedom of association’ and the ‘freedom of speech’ not absolute principles, any political party with such slogan would be unlawful. According to authors, regionalism and colonialism might be the starting point that keep xenophobia and racism alive. In Western Europe, there is an increase in regionalism. As the European Union slowly consolidates towards executive power, reﬂecting big economic concentration, people are trying to ﬁnd other ways to preserve their identity. That leads to a lot of regionalism, with both positive and negative aspects. Colonialism is tied with the idea of racism. It is very striking to see nations justifying the conquest of other nations with oppression, dictating others’ lives and oppressing them.60

54

Bobbio (2000), p. 129. CF (1988), Art 4. 56 Idem, Art 5 (XLII). 57 Idem, Art 5. 58 TJSP RSe 332.853-3/0-00/SP, j.2005. 59 TJSP RSe 408.209-3/0-00/SP, j.2005. 60 Chomsky (2011), p. 117. 55

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4 Analysis: Consumer, Traveller and Vulnerability

It is the same in the broader social environment, where there are institutions functioning as systems of oppression and domination. The people who are in control, who are harming others, will create justiﬁcations for themselves. They may do it in sophisticated or non-sophisticated ways, but they are going to do it, and that is part of human nature. One of the consequences of that can turn into racism.61 By contrasting the principles of the TFEU with the principles of the Brazilian Federal Constitution, it is noteworthy that whilst TFEU carved to prevent and combat crime, racism and xenophobia, the Brazilian Federal Constitution treats the repudiation of racism as an immediate need. In contrast to the TFEU, the Brazilian Constitution deﬁned racism as a crime,62 but it does not mention xenophobia. This can be explained in terms of concepts. Although xenophobia and racism have different concepts, they have an identical target, that is, discriminating someone. There are different measures and different ways of treatment in each legal system. The Racial Equality Directive63 does not use the word ‘crime’ on racism or xenophobia, but the EU Commission provides ﬁnancial support to ﬁght against racism, xenophobia and anti-Semitism. There is also ﬁnancial support to activities targeted to facilitate the integration of third-country nationals.64 Even so, wrong discrimination occasionally appears in the law. In the EU, Article 20 of the Services Directive permits unequal treatment to be based on the nationality or place of residence of the recipient of the service where such treatment is objectively justiﬁed, which is to be ascertained in each individual case.65 It is an exception as well pointed out by the ECJ, but the law permits it. The main provision, however, emphasises non-discrimination. Article 20 (1) sets forth that ‘Member States shall ensure that the recipient is not made subject to discriminatory requirements based on his nationality or place of residence’. Pragmatically in time of peace, the criteria ‘nationality’ and/or ‘place of residence’, even if subjected to objective components, are mistaken and reveal one kind of vulnerability created by law affecting the recipient of the services: the traveller. It is to be noted that discrimination is not always pervasive. Sometimes the discrimen is needed to justify different conditions. For instance, physical power between women and men is obviously different on account of nature. Thus, women cannot be submitted to certain jobs, which only men are able to do. In this regard, the employer in Brazil cannot offer a job that demands physical power exceeding 20 kg continuously or 25 kg occasionally to women.66 By nature, the discrimen is readily

61 Chomsky (2011), p. 124. Note: As e.g. the British conquest of Ireland, the earliest of the Western colonial conquests. 62 CF (1988), Art. 5 (XLII) ‘The practice of racism is a non-bailable crime, with no limitation, subject to the penalty of conﬁnement, under the terms of the law.’ 63 Directive 2000/43/EC. 64 http://ec.europa.eu/justice/fundamental-rights/racism-xenophobia/index_en.htm, webpage visited on 15.04.2015. 65 ECJ 07.12.2010 C-585/08 and C-144/09. 66 Brazilian Labour Law, CLT—Consolidação das Leis do Trabalho, Art 390.

4.3 Vulnerability

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understandable. Conversely, discrimen regarding ‘nationality’ or ‘place of residence’ is not readily understandable because it is ﬁctitious rather than natural. A major argument would be needed to explain that such ﬁctitious discrimination ﬁts in the context, as in an extreme situation, e.g. in case of war. Otherwise, nowadays it is unacceptable. Sometimes, to justify the discrimination, the law uses the argument of ‘public interest’. It is correct when the criteria to establish a discrimen ﬁt well. For instance, consumer protection is tied with the concept of ‘overriding reasons relating to the public interest’. The Directive on Services sets forth that the concept has been developed by the ECJ and may continue to evolve.67 One of the possible explanations for that is that the balance between suppliers and consumers is only feasible through measures that protect consumers. The consumers ought to be protected because of the several risks they are exposed to in the actual market, mainly abroad. Amongst the many kinds of bias touching the traveller, the last focus of this chapter is ethnocentrism. It is not a crime as a category of bias, except when it turns into a pervasive consequence. It affects the traveller’s experience in an invisible way. It means broadly judging another culture by the standards of one’s own culture. It may also involve prejudicial attitudes towards outsiders, stereotypical thinking and in-group bias. Often only people who are perceived as being similar to oneself receives more favourable attitudes.68 Experts in intercultural cognition have drawn attention that ethnocentrism comes naturally to us because our cultural background provides us with a set of habitual ways of construing events, something referred to as framing.69 Therefore, stereotypes about faraway people and places are unavoidable. The danger is that negative stereotypes can hijack the interpretations of the person’s experiences.70 Whilst some stereotypes are neutral, as how to represent categories or groups to scientiﬁc purposes, others are perniciously wrong, as how to separate races. It is hard to overcome fully ethnocentrism because it is deeply founded into our perceptual process. Stereotypical thinking and cognitive bias easily inﬂuence it. As a result, intercultural sensitivity needs to be worked out. Many experts see ethnocentrism in terms of shared patterns of interpretation. It reﬂects the natural tendency to frame things using the patterns the individual is familiar with. Simply travelling to a foreign country does not automatically provide the access to the shared worldview there, nor does it automatically take the traveller beyond ethnocentrism.71 Thus, there are two perspectives to be noted in respect of ethnocentrism: the traveller’s perspective when visiting a foreign country and the resident’s perspective when interacting with the traveller. Both may behave ethnocentrically before each other.

67

Directive 2006/123/EC, Recital (40). Shaules (2015), pp. 125, 126. 69 Idem, p. 127. 70 Idem, p. 124. 71 Idem, pp. 129, 130. 68

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4 Analysis: Consumer, Traveller and Vulnerability

As intercultural sensitivity needs to be worked out, both travellers and residents are exposed to several levels of vulnerability in the context of racism, xenophobia and ethnocentrism. Although racism and xenophobia are more pervasive, so much that there are legal systems that already set forth these as crimes, there are many ‘unknowns’ in the magnitude and cultural patterns of ethnocentrism because of the complexity of the subject and the need for further research.

4.3.1.3

Foreign Currency

Dealing with different currencies from different systems must result in vulnerability too. There are two perceptions on this issue: (1) the internal market perception, which relates to contracts offered in the consumer’s domicile in foreign currency, and (2) external perception, related to dealing with foreign currency outside of the consumer’s domicile (for instance, on travelling). With regard to the ﬁrst perception, there are legal tools developed by different legal systems that prevent abuses of businesses when the offer to sell package travel is shaped in foreign currency in the internal market. In promoting their goods and services, many ﬁrms have had few qualms about providing distorted information. In Brazil, the contract must comprise a set of standardised principles, which are considered as general clauses. For example, with few exceptions, a clause that set out payment in foreign currency is invalid.72 The court of Sao Paulo has repealed lawsuits involving foreign currency. One of the cases was about a travel agency that claimed that the advertisement of a package travel in US dollars did not offend legislation. The travel agency was punished by PROCON, which controls misleading advertisements relating to this issue. After being penalised for doing so, the travel agency ﬁled a claim against PROCON without success.73 In the EU, neither the Directive on unfair terms nor the Directive on business-toconsumer commercial practices addresses the issue of foreign currency in advertisements in the internal market. The exception is Directive 2007/64/EC on payment services in the internal market, but with a different scope. The Directive regulates currency exchange and other ﬁnancial issues rather than consumer-related contractual obligations.

Decree 857 (1969), and Act 8.078, 1990, Art 53 § 3. TJSP Ap.0009326-39.2011.8.26.0053/SP, j.2013. The travel agency announced the package travel in Sao Paulo’s newspaper with general circulation advertising on it in US dollar. The offer announced the payment in instalments without interest, but the sum of the instalments was different to the payment in cash. The price published in dollars lacks any consumer’s immediate understanding of the currency. The consumer needs to ﬁgure out the current rate used by the company and seeks the rate of the day to know the real price of the offer. Therefore, the offer lacked accurate information required by the consumer legislation, particularly Art 31 and 37 § 1, of the CDC. 72 73

4.3 Vulnerability

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It is noteworthy that EU cannot change drastically from one day to another the languages spoken in the Member States. However, with few exceptions,74 seeking to achieve the strengthening and the convergence of Member States’ economies and to establish an economic and monetary union, EU decided to shift from many different currencies to a single and stable one, the euro. Thus, Member States shall coordinate their economic policies within the Union.75 From the perspective of the EU single market, including the consumer traveller perspective, such step represents an achievement because in the internal market, a single currency indeed decreases part of the level of vulnerability, but it has minor impact on external markets. Remarkably, the main problem with currency arises because of social interactions in a foreign country regarding the different currency. This is the point of the second perception,76 as mentioned before. For instance, having to convert a ﬁgure expressed in the currency of the consumer’s domicile into another country’s currency is always a factor of uncertainty and loss in view of the volatile exchange rates and applied fees. One striking aspect of foreign currency is the ﬂuctuation between the value of local currency and the value of the currency of the country of destination. Such ﬂuctuation affects the ‘purchasing power of currency (PPC)’. It makes difﬁcult for the traveller to realise the quantity of goods or services that a monetary unit of currency can acquire in a foreign country. The so-called purchasing power of currency means the relative values of different currencies. It is measured in the amount of goods or services that one unit of money can purchase. For example, a traveller resident in Brazil planning a trip to China would like to ﬁgure out in advance how much currency he or she would need during his/her visit. He/she would need to know how much in Brazilian reais it would cost for accommodation, coffee, meals and sightseeing. For the estimation, he/she may think, mistakenly, to check the price in his/her city and convert it to yens using the exchange rate. However, as exchange rate movements tend to be more volatile than changes in national price levels, a better estimate would be based on the price of coffee or meals in China, not in Brazil. In the last two decades, governments and supranational entities have undertaken efforts to compare currencies of different countries to determine whether the money of a certain country is overvalued or undervalued. Essentially, it involves choosing a subset of countries to price a common product list in addition to their regional lists. It requires the preparation of a global list of products that will maximise an overlap in products for a maximum number of countries, thereby creating links for comparison.77

74 Denmark, Sweden and UK did not adopt the EU single currency. So far, Croatia as a new Member State still uses its own currency the ‘kuna.’ 75 TEU and TFEU (2010), Preamble and Art 5 (1). 76 The external perception of dealing with foreign currency outside of the consumer’s domicile. 77 Eurostat, The Eurostat-OECD PPP Programme and the ICP – a shared commitment (2005), p. 3.

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4 Analysis: Consumer, Traveller and Vulnerability

To do so, they use indicators of price level differences across countries, the so-called purchasing power parities (PPPs). PPPs are currency conversion rates that convert economic indicators, expressed in nominal national currencies, to a common artiﬁcial currency called purchasing power standard (PPS), which equalises the purchasing power of different national currencies and thus allows meaningful pure volume comparison of GDP and its aggregates between countries. In other words, PPPs are both price deﬂators and currency converters; they remove the differences in price levels between countries in the process of conversion.78 However, PPPs intend to remove the differences between economies rather than literally remove them. It works as estimation to approximate economies. Studies have pointed out that even between economies as similar as that of the United States and Canada, there remain important differences in expenditure patterns because of the differences in climate, tastes, packaging, regulations and the like. Therefore, PPPs are estimates derived from the relative price levels reﬂecting the rate of each currency to purchase equivalent goods and services.79 The Eurostat and OECD share a common programme to contribute with the International Comparison Programme (ICP) of the World Bank. Although the programme is shared, it operates with different approaches. Whilst Eurostat comparisons are made annually, the OECD makes comparisons every three years. The shared programme Eurostat-OECD comparisons have been three yearly—1993, 1996, 1999, 2002 and 2005.80 The major users of PPPs have traditionally been international organisations such as Eurostat, the International Monetary Fund, the OECD, the United Nations and the World Bank, which have used the data for international comparisons of global income. Individuals often refer to PPPs when moving from one country to another.81 In practical terms, the PPPs are to determine comparative price levels, or in ordinary language where it is most (or least) expensive to live.82 The same applies for travel and tourism as the consumer traveller is interested to know in advance whether the country of destination is expensive or not for travelling. For example, in South America in 2005, the most expensive countries to live in were Chile, Brazil and Uruguay. Paraguay and Bolivia were the cheapest. However, whilst estimates of per capita expending on speciﬁc products are not very reliable, the PPPs for some speciﬁc products are more trustworthy. Dining out is cheap in Brazil, Bolivia, Paraguay and Colombia but expensive in the top three per capita countries (Argentina, Chile and Uruguay).83 There is no doubt that the consumer traveller, as a natural person, has the ability of human learners to acquire the perception of different currency within a variety of

COM (2006) 135 ﬁnal, p. 3. Vachris and Thomas (1999), p. 4. 80 Eurostat, The Eurostat-OECD PPP Programme and the ICP – a shared commitment (2005), p. 2. 81 Idem, p. 2. 82 IBGE International Comparison Program (2006), p. 8. 83 Idem, p. 10. 78 79

4.3 Vulnerability

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social and cultural environments. The consumer traveller, who is cognitively mature, is able to engage in problem solving, deduction and complex memory tasks. But he or she has not the beneﬁt of enough time to be familiar with the cultural and ﬁnancial environment of the foreign country. This view refers to the idea that the traveller has a critical period for environment acquisition. In addition to possible cognitive differences, there are also attitudinal and cultural differences between residents and travellers. Whilst residents are able to recognise automatically a penny, a coin or any other kind of currency in any form of national money, the traveller has to think about that because the cognitive process to differentiate the purchasing power of 10, 100 or 1000 is not automatically processed by the brain in the ﬁrst contact with the foreign money. There is a cognitive gap, which exposes travellers to detriment, increasing vulnerability. A simple and practical example to draw an idea about PPC refers to ﬁgures. There are countries where a bar of chocolate costs an amount of 1000, whilst in other countries the same bar may cost 10 or even 1. Intuitively, one may realise that the ﬁgures are detached from the real value of the money, the ‘purchasing power of currency’. Therefore, the traveller may pay the price of 10,000 dinars for a bar of chocolate in Iraq, whilst in Brazil the same bar costs R$5.00 reais. Even though the world economy is very complex, with extreme differences in the overall size of economies,84 the traveller will never be sure whether the estimation process is overestimated or underestimated. In sum, whilst purchase power currency (PPC) refers to the power of the currency in a regional market, purchase power parities (PPPs) refer to estimation to approximate economies. The latter provide an orientation of the price of goods and services between different markets. Nevertheless, through the consumer’s ﬁrst contact with the foreign money, in a broad sense PPPs impact vulnerability to the consumer traveller.

4.3.2

Legal Vulnerability

In both locations, Brazil and Europe, the normative inﬂuence on the contract when a dispute arises is translated into legal vulnerability mainly because of jurisdictional issues. For instance, international consumer contracts usually fall within the exclusive or concurrent jurisdiction of two legal systems of law. However, though there is access to court, there is a lack of a concrete solution. In Brazil, the cornerstone for jurisdiction is LICC/42, which prescribes in Article 12 that ‘the Brazilian authority is competent if the defendant is domiciled in Brazil or if the obligation shall be performed in Brazil’. Such a provision, combined with CPC Article 88, sets forth: ‘It is competent of the Brazilian authority if I. the defendant, whatever his citizenship, is domiciled in Brazil, II. the obligation shall be performed

84

World Bank (2015), p. 163.

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4 Analysis: Consumer, Traveller and Vulnerability

in Brazil, and III. The action has its grounds on facts occurred or committed in Brazil.’ Although these provisions are the pillars of jurisdiction issues, they are detrimental to the consumer if he/she brings an action to court. This is mainly because in the international consumer contract where the supplier (defendant) is situated in another country, the consumer would not have access to court based on the legal framework above described. However, Article 101 (I) of the CDC states that in matters relating to the supplier’s civil liability, a lawsuit shall be brought in the court of the consumer’s domicile. This rule implicitly shows that the consumer is the only one interested in claims against supplier’s civil liability, and therefore the consumer’s domicile is presumed. Experts and the courts without criticism recognise the presumption of the supremacy of the rule on ‘consumer’s domicile’. The supremacy of the consumer’s domicile is absolute and leads court judgments. Notwithstanding the remedy of the CDC on issues on where to ﬁle a claim, there is not a legal certainty on the enforcement of a judgment provided to the consumer domiciled in Brazil who ﬁles a claim against a supplier located in another country. A Brazilian judgment authorising enforcement of a consumer award is not enforceable under a foreign jurisdiction. If the supplier does not have a branch or ofﬁce established in Brazil, a legal decision in favour of the consumer under Brazilian jurisdiction is a mere recognition of the consumer’s right, without enforcement. The same is true for Europe regarding non-Member States. Nevertheless, if the focus is on the Member States, the structure of jurisdiction on consumer contracts is Regulation 593/2008, the so-called Rome I Regulation; Regulation 864/2007 (Rome II); and Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, which repealed Brussels I Regulation (EC) 44/2001. It is particularly noteworthy that although the EU relies also on the rule on consumer’s domicile when the issue is jurisdiction, the concept of ‘directed activity’ (Article 6 (1) (a)) introduced by Rome I Regulation has brought ambiguity to the issue. Hence, authors have argued that it sounds deliberately vague, so much so as to raise doubts about its meaning just in the realm of e-commerce. The vagueness of the concept of ‘directed activity’ not only causes interpretative problems regarding e-commerce but may also do so for traditional consumer contracts.85 In theory, the general rules regarding preference for defendants over plaintiffs in matters of jurisdiction has deep historical roots and encounters coherence with a qualitative relationship in contractual terms, whereas the consumer is always in a weaker bargaining position than the supplier. However, if a dispute has to be resolved on the basis of general connecting factors, such as those prescribed in

85

Ragno (2009), pp. 147, 149.

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Article 6 (3) Rome I Regulation,86 the consumer, as a consequence, could easily be penalised,87 which may imply consumer vulnerability in a plain and strict sense. Inevitably in a modern high-technology society where the consumer traveller is located in a country and has the means to contact directly the hotel, the car rental, the restaurant or the travel agency established in another country, that is, through the Internet, concluding a contract through electronic means, the legal doubt concerning ‘how to enforce a foreign judgment’ is a prominent, challenging and worldwide issue. Obviously, such cross-border consumer relationship is not compatible with the national consumer protection framework because of the problem of jurisdiction. That is to say, it depends on international agreements amongst countries to protect consumer travellers. This point is particularly signiﬁcant in the context of encouraging consumers to travel and shop cross-border.

4.4

Travel and Tourism Contracts and Other Service Contracts

There is no global consensus for a correct terminology in the sector, such as whether the contract should be called travel contract, contract of tourism, contract of tourist services and the like. Different legal systems and even different laws show different wording or, rather, no particular wording at all, only service contract. The laws in Brazil and in the EU have a common core: consumer law is the ﬁeld of law that regulates travel and tourism contracts, meaning that consumer rules are the grounds for those contracts. However, they differ in the classiﬁcation of contracts—the grammar of law. Whilst the EU decided to spread the consumer rules in many pieces of legislation,88 Brazil opted for a codiﬁcation of consumer rules, the so-called Consumer Defence Code—(CDC). It applies to all consumer relationships along with other statutes, treaties and infra-rules (decrees or administrative rules), whereas the 86

Regulation (EC) 593 (2008), Art 6 (3): If the requirements in points (a) or (b) of paragraph 1 are not fulﬁlled, the law applicable to a contract between a consumer and a professional shall be determined pursuant to Articles 3 and 4. Art 3 sets forth: ‘Freedom of choice’ and Art 4 ‘Applicable law in the absence of choice’. 87 Ragno (2009), p. 164. 88 For example, to name the important ones for travel and tourism law: Directive 93/13/EEC, on unfair terms in consumer contracts; Directive 2005/29/EC, on unfair business-to-consumer commercial practices; Directive 2011/83/EU, on consumer rights; Directive 2006/123/EC, on services in the internal market; Directive 2008/122/EC, on timeshare contracts, and Directive 90/314/EEC, on package travel contracts and linked travel arrangements. Moreover, there are also ‘Regulations’ directly applicable in all Member States on transport sector (Air, Rail, Bus/coaches, and Waterborne), as well as some particular regulation such as the Regulation (EC) 593, 2008 on the law applicable to contractual obligations (Rome I), Regulation (EC) 864, 2007 on the law applicable to non-contractual obligations (Rome II), Regulation (EC) 44, 2001 on jurisdiction (Brussels I).

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4 Analysis: Consumer, Traveller and Vulnerability

legislation89 works only in subsidiary functions if needed and appropriated in a speciﬁc case. Under Brazilian law, the Civil Code did not nominate travel contract (also known as contract of tourist services or contract of tourism). There is no piece of legislation that regulates solely travel contracts. Nevertheless, ‘travel and tourism’ comprises an economic activity of particular importance in view of the amount of money involved in the sector, as well as the multiple legal relationships that imply various services, as for example transportation, accommodation, catering and leisure services such as tours and/or events. Although these services are the core of the economic activity of travel and tourism, they may also include other services such as insurance, travel cards, loans for travels, fairs, exhibitions and so on. In Brazil and in the EU, travel contract (contract of tourist services or contract of tourism) is perfected basically in two ways: ﬁrst by the traveller, who personally or through a representative concludes the contract, which includes every service needed to fulﬁl his/her expectations, either for leisure or business travel, and, second, through an intermediary, who might be a tourist agency or a tour operator contacted by the traveller. According to Brazilian authors, travel contract is an intermediary agreement in which the tourist agency undertakes the duty to seek, on behalf of the traveller, for another contract that comprises either the travel package or separated components of the package allowing the traveller to achieve the travel. The contract has a broad performance comprising both the intermediation on bookings to provision of services by any mode of transport, into the country or abroad, and the intermediation to contract hotel services, travel arrangements to individuals or groups, excursions, cruises and to assist travellers during their travels.90 However, the concept of the ‘travel contract’ is not fully harmonised in Brazil. There are other approaches. For instance, it is not included in the concept of contract of tourism or travel contract the individual components purchased by the traveller through the travel and tourism agency such as air, rail and road tickets, hotel booking, ticket to tourist destinations, services such as assistance to obtain a visa or any other documents and so on. In this case, there is the carriage contract, the accommodation contract or any other service contract rather than a ‘contract of tourism’.91 In Brazil, neither travel contract nor consumer contract has been explicitly deﬁned by a piece of legislation. Rather, the Consumer Defence Code (CDC) sets forth the legal deﬁnition exclusively for ‘service’.92 This is because the core of the consumer law concerns the protection of the consumer relationship. Provisions

89 For example: the Civil Code, Commercial Code, statute of elderly, statute of disabled person, or even international treaties, like Montreal Convention. 90 Lorenzetti (1999), pp. 215, 216. 91 Scartezzini Guimarães (2010), p. 231. 92 Act 8.078/90, Art 3 §2: ‘Service is any activity available in the consumer market, for it there is ﬁnancial compensation, including those derived from bank activities, with a ﬁnancial, credit, or insurance nature, excluding those resulting from labour relations.’

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regarding contracts (in general) are found in the Civil Code (CC), which covers certain types of contracts such as purchase and sale, donation, rental, loan, deposit, amongst other types of agreements.93 These are called typical or nominated contracts because the law regulates them. But a vast majority of contracts are not nominated by law. They are the so-called atypical or innominate contracts and are allowed to be made according to Article 425 of the Civil Code. The tourism contract is an atypical contract. Although the tourist services offered by tourist agencies or tour operators are not literally included in the CDC, they are widely covered by its provisions being a matter of consumer relationship between the ‘consumer traveller’ and the provider. Under the European law, there are differences between consumer contracts and travel contracts. Although both contracts belong to the consumer law rules, in a strict view, travel contracts concerns combined services rather than single services. Thus, for instance, accommodation or car rental94 are services belonging to the coverage of general EU consumer law95; on the other hand, transport96 and ‘package travel and linked travel arrangements’97 are services covered by special laws. Special laws are those that establish preferential treatment for certain legal persons. They may enlarge or restrict, the rights of those for whom it is established. Regarding transport, regulations refer to passengers; regarding ‘package travel and linked travel arrangements’, the Directive refers to traveller. In spite of the different framework in a broad sense, there are similarities in a strict sense. Nevertheless, some small differences are also found in a strict sense in both systems. The advantages and disadvantages of such different legal frameworks will be further examined.

4.4.1

Combined Service Contracts and Single Service Contracts

In Europe, studies have used a precise terminology. The distinction between combined service contracts (packages) and single service contracts (accommodation, car rental, transport, other tourist services such as excursions, tours, events) is crucial to 93 Act 10.406/02, Arts 481 (purchase and sale), 538 (donation), 565 (rental), 579 (loan/lease), 586 (loan/credit agreement). 94 COM (2013b) 513, p. 3. 95 To name the important ones for travel and tourism: Directive, 93/13/EEC on unfair terms in consumer contracts; Directive, 2005/29/EC on unfair business-to-consumer commercial practices; Directive, 2011/83/EU on consumer rights; Directive, 2006/123/EC on services in the internal market. 96 Air-Regulation 261/2004, Rail-Regulation 1371/2007, Bus and coaches-Regulation 181/2011, Waterborne transport-Regulation 1177/2010. 97 Directive 2015/2302/EU.

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4 Analysis: Consumer, Traveller and Vulnerability

determining the rights of the parties in view of the different pieces of legislation in consumer and contract laws.98 The concept of ‘combined services’ stems from the deﬁnition of ‘package’ in the former PTD, that is, a pre-arranged combination of not fewer than two of the following: (a) transport, (b) accommodation, (c) other tourist services not ancillary to transport or accommodation. Discussions on the deﬁnition of ‘package’ have arisen over the years, and the CJEU clariﬁed that travel services combined together into a package upon the request of the consumer and not strictly prearranged are also considered a package, and hence the PTD applies.99 The current Directive 2015/2302/EU drastically changed the focus on ‘package’, highlighting the ‘travel service’. In Article 3, (1) it provides a deﬁnition for travel services as including (a) carriage of passengers, (b) accommodation that is not intrinsically part of the carriage of passengers and is not for residential purposes, (c) car rental or other motor vehicles (. . .) or (d) any other tourist service not intrinsically part of a travel service within the meaning of (a), (b) or (c). In a row, it states in Article 3 (2) that ‘package’ means a combination of at least two different types of travel services for the purpose of the same trip or holiday (. . .). Whilst there are services that are within the scope of general EU consumer law, like accommodation and car rental,100 other services are within the scope of special law, like transport101 and package travel and linked travel arrangements.102 The importance of determining whether the service is combined or single is not in what they say about the particular format itself (e.g., hotel booking service) but in what they reveal about how to identify the law applicable to the contract. In the wording of the Directive, both ‘package’ and LTA combine travel services.103 In Brazil, although few authors make the same distinction on combined and single services104 the approach is different because the CDC concentrates the rules on consumer relationships, covering everything in the ﬁeld. It is irrelevant whether the service is combined or single because the rules protecting the consumer as a legal person (natural person or legal entity) are found primarily in the CDC in a standard frame, and only if appropriate will other general laws (the Civil Code) or special laws (like the Statute of disabled person) apply. The terms ‘combined services’ (serviços combinados) and ‘single services’ (serviços singulares) are neither in the statutes nor in the regulations. Brazilian law did not consider ‘package’ as a main subject of law, like the EU did with the

SWD (2013) 263 ﬁnal. ECJ 30.04.2002 C-400/00 Club Tour. 100 COM (2013b) 513, p. 3. 101 Air- Regulation 261/2004, Rail—Regulation 1371/2007, Bus and coaches—Regulation 181/2011, Waterborne transport—Regulation 1177/2010. 102 Directive 90/314/EEC. 103 Idem, Recital (17). 104 Scartezzini Guimarães (2010), p. 231. 98 99

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former PTD and the current Directive 2015/2302/EU; it makes brief reference to ‘package travel’ in Tourism Act 11.771/08 and its regulation, Decree 7.381/10, but with a different scope. Although ‘package travel’ is mentioned in Article 28, Item I, of the Tourism Statute, it did not relate exclusively to its general meaning or legal concept. On the contrary, the article makes the following classiﬁcation under the chapter ‘Tourist Carriers’: (I) package travel (. . .), (II) local tour (. . .), (III) transfer (. . .), (IV) special (...), placing package travel in a role less prominent. In addition, the term ‘package travel’ is also used three times in the regulation of the Tourism Statute, Decree 7.381/10, but lacks any discernible concept as to its meaning. The ﬁrst reference in Article 32 states that the contracts relating to tourist services offered by a travel agency shall inform (. . .) (II) the companies and ventures included in the ‘package travel’. The second is found in Article 33, which speciﬁes that services of ‘package travel’ offered by travel agencies shall include the name, address and tax number of the suppliers. Finally, Article 41 adds that cruise or river roadmaps, rail and road, as well as their variations made by suppliers that sell ‘package travel’ must be reported to the Ministry of Tourism, respecting the competencies of public agencies and other federal public administration bodies. Thus, in the framing of the concept of ‘package travel’, neither the Regulation nor the Tourism Statute has developed a clear legal deﬁnition. Nonetheless, the courts consider ‘package travel’ as a service offered to consumers in a commercial practice rather than as a product.105 However, whether package travel is a service or a product is irrelevant in ascertaining a remedy against consumer right violations. A legal deﬁnition of ‘package travel’ is signiﬁcant only concerning to grasp a concept precisely. The deﬁnition should provide tools for legal analysis rather than affect consumers’ rights. That is to say, in Brazil, the CDC grants consumers’ rights in milestones, and special laws will be welcome only to embrace those rights in harmony with the CDC, never to weaken rights or eliminate them. On the other hand, in the EU, consumers’ rights are found in different pieces of legislation, which shall be applied according to the scope of the contract, whether it covers combined or single services.

4.4.2

Liability

Liability is one of the striking points between Brazil and the EU. In Brazil, suppliers are liable according to the principle of solidarity.106 It is a variation of American and British terminology called ‘vicarious liability’ or ‘vicarious responsibility’.

105

STJ, AgRg no RE 850.768/SC, j.2009. Act 8.078, 1990 Art 7, Sole paragraph: lf the offense was carried out by more than one author everyone will be jointly liable for the compensation of damages according to the norms of consumption. Note: This means that according to the CDC the different roles of the suppliers in

106

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4 Analysis: Consumer, Traveller and Vulnerability

Whilst the CDC carries the main principle of no-fault strict liability (tort law)107 applicable to everyone in the chain of suppliers (providers), in Europe, according to the law applicable to the contract, the suppliers’ liability shall be divided or shared.108 In matters of package travel, for example, the European law relies on Directive 2015/2302/EU, which places the liability for the proper performance of the obligations arising from the contract exclusively on the organizer and/or retailer. The liability remains on fault with the reversal of the burden of proof, which shift the risk of providing evidence such as negligence to the other party to the contract. The EU limits the liability of the organizer and/or retailer with respect to damages by virtue of the provisions of the Directive.109 However, there is the right of redress too. For instance, for a single service contract of carriage of passenger by air, if the air carrier pays compensation or meets other obligations, there are no restrictions to seek compensation from any person, including third parties. In addition, the air carrier may seek reimbursement from a tour operator or another person with whom the air carrier has a contract. Similarly, the tour operator or a third party, other than a passenger, can seek reimbursement or compensation from the air carrier.110 The Brazilian Consumer Defence Code and the Civil Code do not impose any limitation of liability at all, allowing judges to decide on the amount requested by the parties as compensation for damages, without restrictions, but always on reasonable grounds. Although the juxtaposition of national and international laws is observed, if a treaty restricts consumer rights granted by the CDC, there is the need to enforce the supremacy of the Consumer Defence Code over that treaty. Actually, the CDC does not exclude any other rights that may come subsequently as a result of international

travel and tourism services are not relevant because they are jointly liable. The consumer may sue anyone in the chain of providers and in the event that the provider fails in the lawsuit, he may have the third-party claim against the supplier who ﬁrst contracted with the consumer. 107 Act 8.078, 1990 Art 14: The supplier of services is liable regardless of guilt, for damages caused to consumers due to defects relating to the provisions of services, as well as insufﬁcient or inadequate information about the use of the service and the risks involved. 108 For example, to combined services the Directive 2015/2302/EU applies; to single service of carriage of passenger by air the Regulation N 261/2004 and the Montreal Convention apply; to carriage of passenger by rail the Regulation N 1371/2007 applies; to carriage of passenger by bus the Regulation N 181/2011 applies; to carriage of passenger by sea and inland waterway the Regulation N 1177/2010 applies; to single service of accommodation the Consumer rights directive 2011/83/EU applies. 109 Directive 2015/2302/EU, Recital (35). 110 Regulation (EC) 261 (2004), Art 13.

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treaties or conventions ratiﬁed by the country.111 Moreover, other legislation will be applied, but only if it proves beneﬁcial to the consumer.112 Brazilian law allows three grounds for the supplier’s exclusion of liability: (1) fault of the victim (culpa da vítima), (2) fault of a third party (culpa de terceiro) or (3) extraordinary circumstances, e.g. (a) caso fortuito, an event that the supplier could not have avoided even if all due care had been exercised, and (b) force majeure ( força maior).113 Another cornerstone provision contained in the Civil Code is the concurrent liability (shared liability) provision: ‘if the damage occurred with the victim’s own contributory fault, the compensation will be established taking into account the gravity of the victim’s fault in comparison with the fault of the author of the damage’.114 Thus, if the damage occurred because of the consumer’s active or passive behaviour, it is to be considered fault of the victim. The burden of proving exclusion of liability lies with the supplier. According to the CDC, the manufacturer, producer, builder or importer will not be liable if he or she proves that (I) he/she did not put the product in the market; (II) even though the product has been put in the market, the defect does not exist; (III) there is an exclusive fault of the consumer or the fault is attributable to a third party.115 A similar exclusion applies to the supplier of services, who will not be liable if he/she proves that the service has no defect or there is an exclusive fault of the consumer or the fault is attributable to a third party.116 Thus, for instance, most of the purchasers of counterfeit goods do not really believe that the goods are counterfeit. They may sue the company whose brand is well known in the market. Although the consumer has been injured by the product, there is not any link between the damage and causality if the supplier can prove that he or she did not produce the product and that it is counterfeit. This is a case of exclusion of liability. Another ‘exclusion of liability’ is when the business can prove no defect on the product or service. Under Brazilian law, whilst the consumer must prove the damage and the link between the damage and the good or service, the supplier must prove that the defect does not exist.117 This principle is the same for goods and services covered by consumer contracts. It is noteworthy that the CDC only set up exclusive liability and not concurrent liability (shared liability) between the consumer and the supplier. However, the courts have considered both, depending on the particular case.118 This is because

111

Act 8.078, 1990, Art 7. STJ REsp 489.895/SP, j.2010. 113 Note: 1. Fault of the victim, 2. Third-party fault, 3. Extraordinary circumstances. 114 Act 10.406, 2002, Art 945. 115 Act 8.078, 1990, Art 12 § 3, (I) (II) (III). 116 Idem, Art 14 § 3, (I) (II). 117 Benjamin et al. (2010), p. 154. 118 STJ REsp 287.849/SP, j.2001. 112

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4 Analysis: Consumer, Traveller and Vulnerability

Article 945 of the Civil Code sets forth concurrent liability between the parties where they are equally blameless or equally at fault. In Europe, the ‘exclusion of liability’ on consumer matters is spread out over many pieces of legislation. There is not a standard framework like a code. The ‘exclusion of liability’ found in the Directive on package travel and linked travel arrangements was set forth in different provisions. The organiser and/or retailer is liable unless the organiser proves that the lack of conformity is (I) attributable to the traveller,119 (II) attributable to a third party unconnected with the provision of the travel services included in the package travel contract and is unforeseeable or unavoidable,120 (III) due to unavoidable and extraordinary circumstances,121 (IV) impossible122 or (IV) entails disproportionate costs, taking into account the extent of the lack of conformity and the value of the travel services affected.123 Whilst in Brazil the liability and the ‘exclusion of liability’ rules are found in the CDC and also (if applicable) in special laws, in the EU the liability and the ‘exclusion of liability’ rules have to be found in the speciﬁc legislation applied to combined services or single services. In Brazil, it is irrelevant whether the service is combined or single. Therefore, as already mentioned, regarding package travel contract in the EU, both organiser and retailer are liable for the performance of the contract. In Brazil, everyone in the chain of suppliers are liable for the performance of the contract in view of the business risk. The company ought to make sure that their partner companies were well chosen and that risks were managed. In Brazil, the traveller may sue any company before the court. Companies have the right to seek reimbursement from other companies with whom they have business contracts. In addition, the organiser and/or retailer may assert their ‘exclusion of liability’ if the failure was attributed to the consumer, third party, force majeure or an unavoidable event. The Brazilian model of joint liability of all suppliers involved in the chain of services may sound strong at ﬁrst glance. However, mainly in the travel and tourism sector, where partnership is a requirement to sell package travel in the market, such presumption of liability means a kind of certiﬁcation amongst the suppliers. The businesses have to ascertain that they conclude partnerships only with other reliable businesses.124 This means that the different roles of the suppliers in travel and tourism services are not relevant because they are jointly liable in a lawsuit.125

119

Directive 2015/2302/EU, Art 14 (3) (a). Idem, Art 14 (3) (b). 121 Idem, Art 14 (3) (c). 122 Idem, Art 13 (3) (a). 123 Idem, Art 13 (3) (b). 124 Feuz (2003), p. 114. 125 Act 8.078, 1990, Art 7, Sole paragraph. 120

4.4 Travel and Tourism Contracts and Other Service Contracts

4.4.3

181

Right of Withdrawal

The consumer’s right of withdrawal is another critical point in the two systems. The right of withdrawal means that the consumer shall be entitled to a period of days granted by law to withdraw from a distance or off-premises contract, without giving any reason and without penalty. With respect to the traveller’s right of withdrawal on ‘package travel contract’, Directive 2015/2302/EU sets forth different treatments. It focuses on the termination of the contract by the organiser or the traveller. There are three instances when a traveller can exercise the right of withdrawal. First, the traveller may terminate the contract, but he or she shall be required to pay a fee to exercise the right of withdrawal before the start of the package.126 Second, in the event of unavoidable and extraordinary circumstances occurring at the place of destination or within its vicinity, the traveller may withdraw without fee and shall receive full refund.127 Third, with respect to off-premises contracts, the traveller has the right to withdraw from the package travel contract within a period of 14 days without giving any reason.128 On the other hand, the organiser may terminate the ‘package travel contract’ in two situations: ﬁrst, if the number of persons enrolled for the package is smaller than the minimum number stated in the contract and, second, in the event of unavoidable and extraordinary circumstances that prevent the organiser from performing the contract. In both cases, the organiser has to provide the traveller with a full refund of any payments made and shall not be liable for additional compensation.129 The right of withdrawal is one of the most signiﬁcant consumer rights, allowing the consumer a chance to reﬂect on the contract, removing the danger of rash decision and, in the case of distance and off-premises contracts, ensuring that the consumer is able to enter into contract after the withdrawal period by making a fully informed choice. The consumer shall have a right of withdrawal unless he or she has consented to begin the performance of the contract during the withdrawal period and has acknowledged that he/she will consequently lose the right to withdraw from the contract.130

126

Directive 2015/2302/EU, Art 12 (1); Member States shall ensure that the traveller may terminate the package travel contract at any time before the start of the package. Where the traveller terminates the package travel contract under this paragraph, the traveller may be required to pay an appropriate and justiﬁable termination fee to the organiser.(..) 127 Idem, Art 12 (2); (..) the traveller shall have the right to terminate the package travel contract before the start of the package without paying any termination fee in the event of unavoidable and extraordinary circumstances occurring at the place of destination or its immediate vicinity and signiﬁcantly affecting the performance of the package, or which signiﬁcantly affect the carriage of passengers to the destination. In the event of termination of the package travel contract under this paragraph, the traveller shall be entitled to a full refund of any payments made for the package, but shall not be entitled to additional compensation.(..) 128 Idem, Art 12 (5); With respect to off-premises contracts, Member States may provide in their national law that the traveller has the right to withdraw from the package travel contract within a period of 14 days without giving any reason. 129 Directive 2015/2302/EU, Art 12 (3) (a) (b). 130 Directive 2011/83/EU, Recital (19).

182

4 Analysis: Consumer, Traveller and Vulnerability

What is more, Consumer Rights Directive 2011/83/EU, amongst many other exceptions, excluded the contract of accommodation in Article 16 (l) from the right of withdrawal. That is to say, in the single service contract of accommodation, the consumer traveller does not have the right of withdrawal at all. On the other hand, Timeshare Directive 2008/122/EC lays down a 14-day right of withdrawal to protect consumers against unwanted contracts. The Consumer Rights Directive has extended the period of withdrawal to 14 days but at the same time imposed many exceptions from the right of withdrawal, which more generally decreases the level of consumer protection in the travel sector. Such assessment delineates the speciﬁc single services not covered by the right of withdrawal. This is the accommodation provided by hotels or holiday cottages or cultural or sporting events, as mentioned in Recital (49) of the CRD. The provision sets forth: ‘The granting of a right of withdrawal to the consumer could also be inappropriate in the case of certain services where the conclusion of the contract implies the setting aside of capacity which, if a right of withdrawal were exercised, the trader may ﬁnd difﬁcult to ﬁll.’ It appears a kind of inequality amongst contracts, implying vulnerability. Conversely, in Brazil, every consumer contract performed away from the business premises, the so-called distance or off-premises contract, shall grant a right of withdrawal to the consumer within a period of seven (7) days counted from the day of the signing of the contract or the time the good or service was received. If the consumer exercises the right of withdrawal, every amount paid by him or her during the period of withdrawal shall be returned immediately, monetarily updated.131 In this regard, the right of withdrawal in Brazil is clearer to the consumer than the right of withdrawal in Europe. The EU legislation grants or denies the right depending on the type of the contract. This situation, which is not harmonised in the EU legislation, might increase the consumer traveller’s vulnerability in the EU.

4.4.4

Contract of Adhesion or Standard Contract

In contract matters, consumer vulnerability is more obvious in the so-called contract of adhesion (Brazilian terminology), also known as standard contract (EU terminology). This contract spares parties the need to negotiate the contract terms individually for every single transaction, providing a degree of uncertainty to the parties. It supposes that the rights and obligations of the parties may be clearly identiﬁed because they are not negotiated. But the standard contract, in view of its one-sided characteristic, may easily exclude essential consumer rights or insert unfair terms (EU terminology) or abusive clauses (Brazilian terminology) without the consumer’s consent. Although it is a named contract, it is in fact a method of contracting or a contracting model for improving the efﬁciency of a business.

131

Act 8.078, 1990, Art 49 and Sole paragraph.

4.4 Travel and Tourism Contracts and Other Service Contracts

183

In Europe, there is no legal deﬁnition for the concept ‘standard contract’. It stems from the doctrine and from the Directive on unfair terms in consumer contracts. The proposal for a regulation on a Common European Sales Law has drafted the following concept for ‘standard contract terms’: means contract terms which have been drafted in advance for several transactions involving different parties, and which have not been individually negotiated by the parties within the meaning of Article 7 of the Common European Sales Law.132 In Brazil, the CDC in its Article 54 deﬁned contract of adhesion as follows: the one where clauses have been approved by the competent authority or established unilaterally by the supplier of goods or services and the consumer has no chance to substantially change the content. The Civil Code prescribes that if the contract of adhesion includes ambiguous or contradictory clauses, the interpretation most favourable to the adherent shall be adopted.133 This provision is also conﬁrmed by the CDC, where it sets forth that contract clauses will be interpreted in such a way as is most favourable to the consumer.134 Likewise, in the EU, where there is doubt about the meaning of a term, the interpretation most favourable to the consumer shall prevail.135 Both systems point out that the language of the contract shall be clear. In the EU, it states: ‘In the case of contracts where all or certain terms offered to the consumer are in writing, these terms must always be drafted in plain, intelligible language.’136 In Brazil, the CDC sets forth: ‘the written form of the contract of adhesion shall be set up using clear language and legible characters, in order to facilitate comprehension by the consumer’.137 Whilst in the EU the scope and variation of this contracting model refers to terms in standard contracts, in Brazil it refers to clauses in contract of adhesion. Nevertheless, this comparison is merely simplistic whereas it only tackles the different labels on both systems. So far, the EU did not design an accurate legal deﬁnition for a standard contract as it stems from Directive 93/13/EEC on unfair terms in consumer contracts. In contrast, Brazil designed a deﬁnition for the contract of adhesion in Article 54 of the CDC, as previously mentioned. Despite these points, one slight difference may be noted: the CDC sets forth that it is allowed to insert into a contract of adhesion a defeasance clause (termination), taken as an alternative to the consumer’s choice. The insertion of such a clause does not change the nature of the contract of adhesion.138 Thus, according to § 1 of Article

132

COM (2011) 635, Art 2 (d). Act 10.406, 2002, Art 423. 134 Act 8.078, 1990, Art 47. 135 Directive 93/13/EEC, Art 5. 136 Idem, Art 5. 137 Act 8.078, 1990, Art 54, § 3. 138 Idem, Art 54, § 1, § 2. 133

184

4 Analysis: Consumer, Traveller and Vulnerability

54, not only a defeasance clause but also any clause inserted into the contract does not change its nature. On the other hand, in Europe, if the seller or supplier claims that a standard term has been individually negotiated, the burden of proof in this respect shall be incumbent upon him.139 Therefore, whilst in Brazil the insertion of a clause into a contract of adhesion does not change the nature of the contract, in the EU the seller or supplier must prove the insertion of a clause individually negotiated. European authors have argued that such provision is absurd because other parts of Article 3 focus on the nature of a term, not on the contract as a whole.140 Indeed, the requirement of proof to ascertain the contract as a whole based on few terms (or clauses) contradicts other provisions of Article 3 (2). The provision sets forth that the fact that certain aspects of a term or one speciﬁc term have been individually negotiated shall not exclude the application of this article to the rest of the contract. Moreover, as a contract is a written statement and provides documentary evidence for the agreement, usually proof will be limited to testimony of witnesses. It is important to know if the uncorroborated testimony of one witness is credible or not and whether it is sufﬁcient proof for changing the method of contracting. Even so, it will not change the nature of the contract as it shall face other strong provisions of the Directive, as for instance that interpretation most favourable to the consumer shall prevail. Therefore, regarding the method of contracting, whether it is pre-formulated standard contract or individually negotiated, such a method of contracting will not alter the nature of the contract, on both systems. That is to say, it will always be a consumer contract, and consumer rights shall apply.

4.4.5

Carriage of Passenger by Air: Delay, Cancellation and Denied Boarding

Both systems, Brazil and the EU, grant rights to the consumer traveller in the event of delay or cancellation of the ﬂight that affects the contract. The air sector uses the term passenger instead of consumer or traveller. Most signiﬁcant in both systems is the lack of a deﬁnition of passenger in the main pieces of legislation, but the rights granted are slightly different concerning compensation, assistance and care, as well as about material and immaterial damages. In the EU, the Montreal Convention provides the grounds to calculate the compensation for damages, which is assessed on a case-by-case basis. It depends on the individual circumstances of the passenger.141 In addition, Regulation 261/2004 establishes standardised entitlements (regarding assistance and care) applicable to all passengers, regardless of their individual circumstances, in the event of denied boarding, cancellation or long delay of ﬂights. 139

Directive 93/13/EEC, Art 3 (2). Howells and Wilhelmsson (1997), p. 93. 141 COM (2013a) 130 ﬁnal, (1) (1.1). 140

4.4 Travel and Tourism Contracts and Other Service Contracts

185

In relation to cancellation, depending on the ﬂight distance, the Regulation grants ﬂat-rate compensation between €250 and €600 per passenger. But compensation is not due if the passenger was informed of the cancellation at least 14 days before the departure date, if the ﬂight was rerouted close to the original time, or because of extraordinary circumstances the ﬂight was cancelled. If the passenger decides to continue the trip, the air carrier shall offer meals and refreshments; hotel accommodation, if necessary; and transport between the airport and the place of accommodation.142 If the ﬂight was cancelled without any notice and the passenger used the right of assistance with hotel accommodation, meals and transport, he or she can rely cumulatively on the right to compensation between €250 and €600, depending on the distance of the ﬂight.143 As a result, in case of cancellation, the air company must provide to the passenger both assistance and compensation. In delays of between 2 and 5 h, passengers shall be offered by the operating air carrier meals, refreshments, free-of-charge two telephone calls, telex or fax messages or e-mails. When the time of departure is at least a day after the time of departure previously announced, the air carrier shall offer hotel accommodation and transport between the airport and place of accommodation (hotel or others).144 In denied boarding (due to overbooking), the operating air carrier shall immediately compensate the passenger depending on the ﬂight distance, between €250 and €600 per passenger (Article 7) and assist them in accordance with rights to reimbursement or re-routing (Article 8), right to care with meals, refreshments, hotel accommodation, transport between the airport and the place of accommodation (Article 9). In Brazil, the Superior Court of Justice (STJ) has recognised that the contract of air carriage shall be understood as a contract of consumer relationship. In this case, the CDC does not exclude the Code of Aeronautics or the Montreal Convention.145 Since 1992, the STJ, an intermediary superior court, has held that immaterial and material damages are not strictly linked since cumulative compensation of damages can be claimed from the same fact.146 Even recognising that the CDC grants full compensation for material and immaterial damages, the court will take into account the law on which the claim was based to decide the dispute.147 After the Federal Constitution of 1988, there was no longer any doubt about immaterial damages in Brazil.148 If the air passenger suffers personal injury for

142

Regulation (EC) 261 (2004), Art 9 (1) (a) (b) (c). ECJ 04.09.2014 C-452/13 Germanwings GmbH v Ronny Henning. 144 Regulation (EC) 261 (2004), Art 9 (1) (a) (b) (c). 145 Nery and Nery (2006), p. 196. 146 STJ Sumula 37. 147 STJ REsp 240.078/SP, j.2001. 148 Federal Constitution, Art 5 (V): ‘the person’s right is guaranteed to respond in proportion of the offense, besides compensation for material and moral damages or image as well; (..) (X): the intimacy, private life, honour and images of people are inviolable, ensuring the right to compensation for material or moral damages, resulting from its violation’. 143

186

4 Analysis: Consumer, Traveller and Vulnerability

which the air carrier is liable, the passenger may request that the court award personal injury compensation. Personal injury causes not only pecuniary (material) damage but also non-pecuniary (immaterial) damage, such as pain, shock, psychological consequences of damage recognised by the Federal Constitution. Therefore, the CDC, along with other general laws, special laws and infra-rules, provides remedies, assessed on a case-by-case basis, that will allow the passenger to claim for cumulative compensation of damages from the same fact. On the other hand, the administrative rules enacted by ANAC, as Resolution 141/2010, revoked by 400/2016, provides standardised entitlements (relating to material assistance) applicable to all passengers, regardless of their individual circumstances in the event of denied boarding, cancellation or long delay of ﬂights. Cancellation (cancelamento), delay (atraso) and denied boarding (preterição de embarque) depend on the passenger’s departure point rather than on the ﬂight distance. The following tables set forth the passenger’s rights in cases of cancellation, delay and denied boarding (Tables 4.3, 4.4 and 4.5). Table 4.3 Passenger’s rights on cancellation of ﬂight Feasibilities 1

2

3

4

5

In the departure airport Right to full reimbursement, including boarding fee. In this case, the air company may not provide material assistance Rebooking the ﬂight, without cost, on a date and time most convenient for the passenger. In this case, the air company may not provide material assistance

If there are seats available, boarding shall be granted on the next ﬂight, without cost. The ﬂight may be provided by the same company or another. In this case, the air company may not provide material assistance

In the airport of connecting ﬂight Right to full reimbursement and carriage to the departure airport without cost. The air company shall provide material assistance If the passenger decides to stay at the location, there is granted the right to reimbursement of the part of the journey not used by him. In this case, the air company may not provide material assistance Rebooking the ﬂight, without cost, on a date and time most convenient for the passenger. In this case, the air company may not provide material assistance

Boarding on the next ﬂight, without cost. The ﬂight may be provided by the same company or another. In this case, the air company may not provide material assistance. Conclude the trip through other types of transportation (bus, van, taxi, etc). The air company shall provide material assistance

Source: ANAC, Atraso e Cancelamento de Voo e Preterição de Embarque. ASCOM, 2a. ed, jan.2014 Table: free translation, recompiled by the author

4.4 Travel and Tourism Contracts and Other Service Contracts

187

Table 4.4 Passenger’s rights on delay of ﬂight over 4 h Feasibilities 1

2

3

In the departure airport Right to full reimbursement, including boarding fee. In this case, the air company may not provide material assistance Rebooking the ﬂight, without cost, on a date and time most convenient for the passenger. In this case, the air company may not provide material assistance

If there are seats available, boarding shall be granted on the next ﬂight of the same air company to the same destination. The air company shall provide material assistance

4

5

In the airport of connecting ﬂight Right to full reimbursement and carriage to the departure airport without cost. The air company shall provide material assistance If the passenger decides to stay at the location, there is granted the right to reimbursement of the part of the journey not used by him. In this case, the air company may not provide material assistance Boarding on the next ﬂight of the same air company or another to the same destination without cost. In this case, the air company shall provide material assistance Conclude the trip through other types of transportation (bus, van, taxi, etc). The air company shall provide material assistance Rebooking the ﬂight, without cost, on a date and time most convenient for the passenger. In this case, the air company may not provide material assistance

Source: ANAC, Atraso e Cancelamento de Voo e Preterição de Embarque. ASCOM, 2a. ed, jan.2014. Table: free translation and recompiled by the author

According to Article 27 of Resolution 400/2016, ‘material assistance’ means to immediately satisfy passengers’ needs, without cost and compatible with the estimated lead time from the original time of departure (see Table 4.6 below). The critical point of this provision is the separation between appropriate accommodation and accommodation service. The provision did not mention hotel accommodation, thereby creating a gap. The term ‘appropriate accommodation’, which may include any kind of accommodation without service, is relatively vague and dispersed. This provision is unclear and hence consumer unfriendly. Whilst in Brazil in case of delays over four hours the right of appropriate accommodation and transport is granted,149 in the EU hotel accommodation, transport and meals are granted only the day after the departure as it was planned for the cancelled ﬂight.150 In addition, in Brazil, after one-hour delay, the passenger’s right of communication is unlimited,151 whilst in the EU it is limited to two phone calls.152

ANAC Resolution 141 (2010), Art 14 § 1 (III). Regulation (EC) 261 (2004), Art 5 (1) (a) (b). 151 ANAC Resolution 141 (2010), Art 14 § 1 (I). 152 Regulation (EC) 261 (2004), Art 9 (2). 149 150

188

4 Analysis: Consumer, Traveller and Vulnerability

Table 4.5 Passenger’s rights on denied boarding (overbooking) Feasibilities 1

2

3

In the departure airport Right to full reimbursement, including boarding fee. In this case, the air company may not provide material assistance Rebooking the ﬂight, without cost, on a date and time most convenient for the passenger. In this case, the air company may not provide material assistance

If there are seats available, boarding shall be granted on the next ﬂight of the same air company or another to the same destination without cost. In this case, the air company may not provide material assistance Conclude the trip through other types of transportation (bus, van, taxi, etc). The air company shall provide material assistance

4

5

In the airport of connecting ﬂight Right to full reimbursement and carriage to the departure airport without cost. The air company shall provide material assistance If the passenger decides to stay at the location, there is granted the right to reimbursement of the part of the journey not used by him. In this case, the air company may not provide material assistance Rebooking the ﬂight, without cost, on a date and time most convenient for the passenger. In this case, the air company may not provide material assistance

If there are seats available, boarding shall be granted on the next ﬂight of the same air company or another to the same destination without cost. The air company shall provide material assistance Conclude the trip through other types of transportation (bus, van, taxi, etc). The air company shall provide material assistance

Source: ANAC, Atraso e Cancelamento de Voo e Preterição de Embarque. ASCOM, 2a. ed, jan.2014 Table: free translation and recompiled by the author Table 4.6 Material assistance I II III § 1 § 2 § 3

Over 1 h Over 2 h Over 4 h

Communication facilities such as telephone calls, Internet access, and the like Food according to the time, offering meals or individual voucher Accommodation, hospitality service in case of overnight stay and transfer round trip The carrier should not provide appropriate accommodation to the passenger whose domicile is located in the city of the departure airport Apart from overnight stay, should be offered services under number III to passengers with special needs, according to Resolution 280/2013 The carrier may not offer material assistance if the passenger chooses for rearrangement in another ﬂight from the same air company, in a date and time most convenient, or receives full reimbursement of the ticket.

Source: ANAC Resolution 400/2016 Art 27 Table: free translation and compiled by the author

4.4 Travel and Tourism Contracts and Other Service Contracts

189

However, the consumer passenger’s rights in the EU in case of cancellation, delay and denied boarding are in good standard concerning to standardised entitlements (regarding assistance and care)153. It is because the air companies in Europe are obliged to pay ﬂat-rate compensation to the passenger according to the appropriated lenght of time of the journey. Conversely, consumer passenger rights in Brazil in case of cancellation, delay and denied boarding accounted for on a case-by-case basis, depending on the individual circumstances of the passenger, where the passenger brings an action to court, are in good standard. This is because Brazilian courts cannot restrict compensation in regard to misuse of service.154 The immaterial and material damages are not strictly linked since cumulative compensation of damages can be claimed from the same fact.155 The compensation system of international treaties (Warsaw and Montreal) is applicable but national law applies supletorily. That is to say, the courts use the treaties as a reference, but at the same time the CDC prevails.156 In spite of the above, however, is it worth saying that concerning a case-by-case basis where the passenger brings a ﬁle to the court, in the EU, each Member State has a particular way of strengthening the consumer’s rights. Thus, material and immaterial damages may also be granted separately in some Member States.

4.4.6

Carriage of Passenger by Air: Baggage Destruction, Loss, Damage or Delay

Under the Montreal Convention, the term ‘baggage’ means both checked baggage and unchecked baggage.157 In Europe, Regulation (EC) 889/02 extended the scope and changed the title of Regulation (EC) 2027/97 on air carrier liability in respect to carriage of passengers and their baggage by air. The Regulation implemented provisions of the Montreal Convention and laid down some supplementary rules. The consumer passenger in the EU is entitled to compensation concerning baggage destroyed, lost, damaged or delayed, which is limited to 1000 SDRs. In euro, it is approximately €1220, unless a higher limit has been agreed between the air company and the passenger to the extent that the passenger made a special declaration, at the latest, at check-in by paying a supplementary fee. In the case of damage to checked baggage, the passenger must write and complain within seven days, and in the case of delay, within 21 days, in both cases from the date on which the baggage was placed at the passenger’s disposal.158

153

Note: applicable to all passengers, regardless of their individual circumstances. STF REsp 351.750-3/RJ, j.2009. 155 STJ Súmula 37. 156 STJ REsp 575.486/RJ, j.2004. 157 Montreal Convention, O.J. L194, 18.07.2001, Art 17 (4). 158 Regulation (EC) 889 (2002), Annex: Baggage delays, Destruction, loss or damage to baggage, Higher limits for baggage, Complaints on baggage. 154

190

4 Analysis: Consumer, Traveller and Vulnerability

In Brazil, unlike the Montreal Convention (for international ﬂights) and the Brazilian Code of Aeronautics (for national ﬂights), there is no statutory limit for compensation in matters relating to baggage destroyed, lost, damaged or delayed. The air company has 30 days to locate lost baggage, and only after that, if the baggage was not found, shall it compensate the consumer passenger.159 Compensation is based on the limit established by the Montreal Convention for international ﬂights, 1000 SDRs, which in euro is approximately €1220 for each passenger, unless the passenger has made a special declaration and paid a supplementary fee.160 As already said, such a limit is merely for reference, and the consumer passenger is entitled to claim a different amount of compensation and also request material and immaterial damages cumulatively when he or she brings an action to court. Moreover, special declaration of baggage shall not place the burden upon passengers because according to the Civil Code (Article 734), if the company wants to establish a ﬂat-rate compensation scheme, it is lawful to request the passenger to fulﬁl the special declaration of baggage. In this context, the passenger may present a special declaration of baggage solely upon the request of the air company, not on a voluntary basis. The limit for compensation is only allowed in exceptional cases in consumer relationships between the supplier and a legal entity acting as a consumer.161 It is not enough, however, to be a legal entity. In order to limit the compensation, the courts are requiring several criteria, for example, the clause that limits the compensation shall be a result of negotiation between parties.162

4.5

International Law

Actually, on international level, both notions of ‘traveller’ and ‘travel contract’ were introduced by the CCV. The 1970 International Convention on Travel Contracts (CCV) and the OECD Council Recommendation on Package Holidays by Air dealt with the subject of travel.163 However, few countries have signed and ratiﬁed the CCV. From Europe, only Italy keeps its position to date. International law is derived from international agreements between countries and primarily regulates the relation of sovereign states with one another. International law in Brazil or any other country outside Europe has focused on the role of internationals treaties or conventions between or amongst countries. On the other hand, to a European, international means matters that straddle boundaries inside the

Portaria 675/GC-5 Aeronautic (2000), Art 35 § 2. Montreal Convention, O.J. L194, 18.07.2001, Art 22 (2). 161 Act 8.078, 1990, Art 51 (I). 162 Benjamin et al. (2010), p. 341. 163 Without mention the Montreal Convention regarding liability of air carriers that carries a particular content. 159 160

4.5 International Law

191

European Single Market and outside in a third country. Thus, taking into account this peculiarity, the notion of international law is slightly different from Brazilian and European perspectives. Currently, the need to protect the weaker party to the contract is premised upon the threat of no transnational liability and lack of justice. That is to say, there is a gap of effective international agreements on recognizing that the traveller is the weaker party to the contract. As further mentioned, two international organisations are working on the issue. Nowadays, the barriers between international and national law are being gradually eliminated. The doctrine of national sovereignty carrying the traditional aphorism lex non valet extra territorium is not absolute. Such recognition should be credited to the development of business relations, which have grown up in the last century. The markets that before were closed to exchanges started to open a revolution in international trade. Such revolution mitigates the classic notion of sovereignty through measures of cooperation. The phenomenon is clearly noted in the EU and less noted in Brazil. This asymmetry can be explained by the fact that in the EU, the issue is more sensitive because of the integration of the Members States into a single market with cultural diversity. Although the EU is trying to simplify the enforcement of a foreign judgment without the need for a declaration of enforceability (exequatur), the recognition is not automatic yet, and other details remain an obstacle. In Brazil, the ‘exequatur’ procedure is still a requirement and costly. The Superior Court located in the Capital (Brasilia) is the only competent court to receive the request. The issue on international jurisdiction requires international cooperation between countries in recognizing the need for consumer traveller protection beyond their borders. This would entitle the traveller to have the legal personality and capacity of a special consumer worldwide. A framework already developed by the EU to jurisdiction problems amongst Member States would achieve a result. That is to say, a judgment given in one Member State should be recognised in the other Member State without any special procedure being required.164 But, in practical terms this is not properly effective and not fully automatic yet. Nowadays, the need for protection of the traveller’s interest is increasingly being recognised, even if the traveller is named a tourist, visitor or even consumer. Because of the current need, two international organisations—the United Nations World Tourism Organization (UNWTO) and the Hague Conference on Private International Law (HCCH)—have captured the core of the problem initiating an exhaustive work towards an international agreement to protect tourists. The conventions being drafted by the UNWTO and HCCH are different in content and scope. Whilst the UNWTO’s Convention is fundamentally based on the goal to protect tourists in emergency situations, in line with rights and obligations of tourism service providers, the HCCH’s Convention deals with cooperation and access to justice for

164

Regulation (EC) 44 (2001), Art 33; Regulation (EU) 1215 (2012), (36) (1). The Regulation (EC) 44 (2001) was repealed by the latter.

192

4 Analysis: Consumer, Traveller and Vulnerability

international tourists. The UNWTO’s Convention underlies provisions in depth, whilst the HCCH deals mainly with principles and forms of cooperation amongst states. Although both target to protect the tourist, they are different in content, scope and essence.165 This year, the UNWTO Secretariat harmonised the UNWTO Draft Convention with the Draft Framework Convention on Tourism Ethics.166 According to UNWTO, the Draft Convention has changed the initial scope, intertwining the original purpose with the Convention on Tourisim Ethics. Till now, the organisation continues to work on the Draft Convention. Therefore, further developments are expected in the years to come. The Global Code of Ethics is a non-binding instrument, which depends of the parties’ will, whilst the other Convention aims to regulate rights and obligations of the parties. It will be interesting to see how the harmonisation between the Framework Convention on Tourism Ethics and the UNWTO Convention on the Protection of Tourists and Rights and Obligations of Tourism Service Providers will work in practice. On the other hand, the HCCH Draft Convention has reached the stage which the Council on General Affairs and Policy of the Conference has noted the Final Report on desirability and feasibility of a Convention, and an Expert Group has been set up to present further comments on the Final Report.167 It is to be noted that the Final Report of the Permanent Bureau of the HCCH has made a signiﬁcant point in stressing that ‘the intervention of a local authority appears to substantially alleviate the vulnerability of the foreigner, especially on a temporary visit, and to facilitate the communication between the tourist and the trader’.168

4.5.1

Tourist or Visitor, Traveller and Consumer

Fundamentally, tourists and visitors are travellers. There is no unanimity amongst countries on the classiﬁcation of such status. For statistics purposes, the UNWTO has published recommendations on the concepts of tourist, visitor and traveller, which is considered as guidelines by the travel and tourism sector. In this regard, visitor is a particular type of traveller,169 and tourist is a visitor.170 According to UNWTO, a traveller is someone who moves between different geographic locations, for any purpose and any duration.171 A visitor is a traveller taking a trip to a main destination outside his or her usual environment, for less than

165

Sanches Lima (2017), p. 74. UNWTO, CAP/CSA/29/7_Draft Convention_Protection of Tourists (2017). 167 HCCH| Council on General Affairs and Policy (2018), p. 2. 168 Guinchard (2018), p. 61. 169 UNWTO’s Glossary: travel/traveller. 170 IRTS 2008, 2.13. 171 IRTS 2008, 2.4. 166

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193

a year, for any main purpose (business, leisure or other personal purpose) other than to be employed by a resident entity in the country or place visited.172 A visitor (domestic, inbound or outbound) is classiﬁed as a tourist (or overnight visitor) if his/her trip includes an overnight stay, or as a same-day visitor (or excursionist) otherwise.173 As to tourist (or overnight visitor), a visitor (domestic, inbound or outbound) is classiﬁed as a tourist (or overnight visitor) if his/her trip includes an overnight stay, or as a same-day visitor (or excursionist) otherwise.174 The UNWTO linked the travel/traveller concepts in a way that tourism is a subset of travel. As to travel/traveller, travel refers to the activity of travellers. A traveller is someone who moves between different geographic locations, for any purpose and any duration (IRTS 2008, 2.4). Visitor is a particular type of traveller, and consequently tourism is a subset of travel. One might say that observing the principles of valid deduction, it sounds that UNWTO did not violate the standards of deductive logic, whereas it is possible to conclude that the main category is travel/traveller where visiting/visitor and tourism/ tourist are subset categories of travel/traveller. According to the Final Report elaborated by the Expert of HCCH, ‘An important point is that the UNWTO deﬁnition of a tourist goes beyond the non-professional deﬁnition of a tourist, which tends to focus on leisure activities’.175 Indeed, taking into account the diversity of situations in the ﬁeld, the point highlighted in the deﬁnition of tourist may facilitate the reasoning on further international policies. Tourist Overnight or Sameday. Excursionist otherwise

Visitor Less than one year for any purpose other than to be employed

Traveller Any purpose and any duration

Source: Author

172

IRTS 2008, 2.9. IRTS 2008, 2.13. 174 IRTS 2008, 2.13. 175 Guinchard (2018), p. 9. 173

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4 Analysis: Consumer, Traveller and Vulnerability

Time is the main criterion. That is to say, how long the individual stays in another environment will determine the person’s status: any duration (traveller), less than 1 year (visitor) or overnight and same-day trip (tourist). The ‘purpose’ criterion seems secondary but not less signiﬁcant. To the European, ‘traveller’ means any person who is seeking to conclude a contract,176 including business travellers as members of liberal professional, selfemployed or other natural persons.177 Although in the former Package Travel Directive the deﬁnition of traveller did not exist in European law, there are studies pointing out that some Member States included the term traveller in their codes. See the topic VII, Europe, 1. Consumer Law, 1.4 Traveller. In South America, emphasis falls on the consumer. The concept of consumer in Brazil,178 Peru179 and Paraguay180 is similar. They classify as consumer not only those who acquire goods and services but also those who use them. All victims of the event, the so-called bystander, and any person exposed to commercial practices are equated with consumers. In those cases, there is no need f or a contractual relationship. Conversely, in Argentina,181 to characterise a consumer, the contract must be always chargeable for goods and services, excluding from the concept of consumer those who received the product for free. It is feasible to say that travellers, visitors or tourists usually purchase goods and/or services that fall within the scope of consumer law. All of them are consumers in view of the need to acquire goods and services. However, not all consumers are travellers, visitors or tourists, inasmuch as not everyone travels. In this sense, ‘travel and tourism’ belongs to the ﬁeld of consumer law. Besides any legal consideration on visitors, one important point underlying the difference between the popular and scientiﬁc use of words ‘tourist’ and ‘traveller’ is that ‘tourist’ is an economic concept, whilst ‘traveller’ is easily attached with the fundamental right of ‘freedom to travel’182 or ‘free movement of persons’.183 So far, in a purely legal perspective, whilst ‘traveller’ is a natural person with subjective right, ‘tourist’ is a creation being used by policies targeting the tourism industry.

176

Directive 2015/2302/EU, Art 3 (6). Idem, Recital (7). 178 Act 8.078/90, Consumer Defence Code (CDC). 179 Decree (DL) 716/91—Ley de Protección al Consumidor. 180 Act 1.334/98—Ley de Defensa del Consumidor y Del Usurário. 181 Act 24.240/93—Ley de Defensa del Consumidor. 182 TEU and TFEU, 2010/C 83/01, ‘Freedom to travel’ is set forth by Art 77 (2) (c) of the. Consolidated versions of the Treaty on European Union and the Treaty on the Function of the European Union. 183 The Brazilian Federal Constitution: ‘Art 5, item XV – it is free in time of peace the movement (of persons) within the national territory, and any person may, under the terms of the law, enter it, remain therein or leave it with her/his assets.’ 177

References

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References184,185 ANAC Resolution 141 (2010) General conditions on delay and cancellation of air carriage, overbooking and other issues Benjamin AH, Marques CL, Bessa LR (2010) Manual de Direito do Consumidor, 3rd edn. Rev.dos Tribunais, São Paulo Bleich E, Lambert F (2013) Why are racist associations free in some States and banned in others? Evidence from 10 liberal democracies. West Eur Polit 36(1):122–149 Bobbio N (2000) Elogio da Serenidade. E outros escritos morais. Unesp, São Paulo CF (1988) Constitution of the Federative Republic of Brazil Chomsky N (2011) How the world works. Hamish Hamilton, London COM (1998) 563 ﬁnal. (/). A European Community strategy to support the development of sustainable tourism in the developing countries COM (2006) 135 ﬁnal. Proposal for a regulation establishing common rules for the provision of basic information on Purchasing Power Parities and for their calculation and dissemination COM (2011) 635. Proposal for a regulation on a Common European Sales Law COM (2013a) 130 ﬁnal. Common rules on compensation and assistance to passengers in the event of dening boarding and of cancellation or long delay of ﬂights COM (2013b) 513. On bringing the EU package travel rules into the digital age Decree 857 (1969) Consolidate and amends the legislation on payment of obligations upon Brazilian currency Deutscher G (2010) Through the language glass. Why the world looks different in other languages. The Random House Group Ltd., London ECJ 04.09.2014 C-452/13. Germanwings GmbH v Ronny Henning ECJ 07.12.2010 C-585/08 and C-144/09. Joined Cases: Pammer and Reederei Karl Schlüter GmbH v Co KG & Hotel Alpenhof GesmbH v Mr Heller ECJ 26.09.2013 C-189/11. European Commission v Kingdom of Spain ECJ 30.04.2002 C-400/00. Club Tour Eurostat (2005) The Eurostat-OECD PPP Programme and the ICP – a shared commitment. Directorate C: Economic and monetary statistics Unit C-5: Prices Feuz PS (2003) Direito do consumidor nos contratos de turismo. Edipro, São Paulo Guinchard E (2018, february 3) Final report concerning a possible future convention on co-operation nd access to justice for international tourists (Tourism Project). Retrieved March 25, 2018, from HCCH: https://assets.hcch.net/docs/18e70dec-83ae-4a15-ac6f-309440cf74bc. pdf Harrison P (2013) A different view of consumer vulnerability HCCH, & Council on General Affairs (2018, March 13–15) HCCH| Council on General Affairs and Policy. Retrieved April 09, 2018, from HCCH: https://assets.hcch.net/docs/715fc166-2d404902-8c6c-e98b3def3b92.pdf Howells GG, Wilhelmsson T (1997) EC consumer law. Biddles Limited - Guildford and King’s Lynn, Great Britain

184

EUR-Lex is the source for EU court cases, legislation and documents. “Senado Federal” legis.senado.leg.br is the source for Brazilian legislation. Brazilian court cases were researched on different sources: Supreme Federal Court” stf.jus.br/portal/jurisprudencia/pesquisarJurisprudencia.asp. “Superior Court” stj.jus.br/SCON. “Sao Paulo Court of Appeal” esaj.tjsp.jus.br/cjsg/consultaCompleta.do?f¼1. “Rio Grande do Sul Court of Appeal” tjrs.jus.br. “Federal Regional Court of 3rd Region” trf3.jus.br/NXT/Gateway.dll?f¼templates&fn¼default. htm&vid¼trf3e:trf3ve.

185

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IBGE International Comparison Program (2006) First results from the International Comparison Program in South America household consumption in 2005. Rio de Janeiro INT/608-CESE 802/2012-2011/0340 (COD). Proposal for a regulation of the European Parliament and of the Council on a Consumer Programme 2014-2020 IP/A/IMCO/ST/2010-08 (2011) Consumer behaviour in a digital environment. European Parliament, Brussels Lightbown PM, Spada N (2011) How languages are learned. Oxford University Press, Oxford Lorenzetti R (1999) Tratado de Los Contratos, vol III. Rubinzal-Culzoni Editores, Buenos Aires McGregor WB (2009) Linguistics. An introduction. Bloomsbury, London Montreal Convention (O.J. L194, 18.07.2001) Convention for the uniﬁcation of certain rules for International Carriage by Air. EU Nery N Jr, Nery RD (2006) Leis Civis Comentadas. RT, São Paulo Opinion of Advocate General C-244/10 and 245/10 (2011) Mesopotamia Broadcast A/S METV and Roj TV A/S v Bundesrepublik Deutschland Portaria 675/GC-5 Aeronautic (2000) Aproves general conditions of carriage Ragno F (2009) In: Ferrari F, Leible S (eds) Rome I regulation. The law applicable to contractual obligations in Europe. Sellier, European Law Publishers GmbH, Munich Regulation (EC) 261 (2004) On air passengers rights Regulation (EC) 44 (2001) On jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I) Regulation (EC) 593 (2008) On the law applicable to contractual obligations (Rome I) Regulation (EC) 889 (2002) Amending Council Regulation (EC) 2027/97 on air carrier liability in the event of accidents Regulation (EU) 1215 (2012) On jurisdiction and the recognition and enforcement of judgments in civil and commercial matters Resolution 2011/2117 (INI) (25 October 2011) On alternative dispute resolution in civil, commercial and family matters Riemer N (2014) Introducing semantics. Cambridge University Press, Cambridge Ross A (2003) Direito e Justiça. Edipro, São Paulo Sanches Lima M (2017) The supranational organizations’ initiatives aimed at protection of tourists. Why international conventions are needed. In: Lima Marques C, Wei D (eds) Consumer law and socioeconomic development. Springer International Publishing, Basel, p 469 Scartezzini Guimarães P (2010) Dos contratos de hospedagem, de transporte de passageiros e de turismo. Saraiva, São Paulo Shaules J (2015) The intercultural mind. Connecting culture, cognition and global living. Intercultural Press, Boston Stearn J (2012) Tackling consumer vulnerability. Consumer Focus, London STF REsp 351.750-3/RJ (j.2009) Varig S/A - Viação Aérea Rio Grandense v Ana Maria da Costa Jardim. rel. Min. Carlos Ayres Britto STJ REsp 1.195.642/RJ (j.2012) Empresa Brasileira de Telecomunicações S/A - EMBRATEL v Juleca 2003 Veículos Ltda. rel. Min. Nancy Andrighi STJ REsp 240.078/SP (j.2001) José Andiara Trench da Silva e outros v American Airlines Incorporation. rel. Min. Waldemar Zveiter STJ REsp 287.849/SP (j.2001) Agencia de Viagens CVC Tur Ltda. e outro v Renato Steves Versolatto. rel. Rui Rosado de Aguiar STJ REsp 489.895/SP (j.2010) Souza Cruz S/A v Milton Taborda. rel. Min. Fernando Gonçalves STJ REsp 575.486/RJ (j.2004) South Africa Airways - SAA v Paulo Roberto Bonavita e conjuge. rel. Min. Cesar Asfor Rocha SWD (2013) 263 ﬁnal. Impact Assesment, accompanying the document on package travel and assisted travel arrangements, amending Regulation (EC) 2006/2004 and Directive 2011/83/EU and repealing Council Directive 90/314/EEC. European Commission, Brussels TEU and TFEU, 2. (2010) Consolidated versions of the Treaty on European Union and the Treaty on the Functioning of the European Union

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TJRS Ap.197267263/RGS (j.1998) Jose Landio de Oliveira Viana v Edel Passport Vacation SA TJSP Ap.0009326-39.2011.8.26.0053/SP (j.2013) Operadora e Agência de Viagens Tur Ltda. v Fundação de Proteção e Defesa do Consumidor de São Paulo - PROCON/SP. rel. Maria Laura Tavares TJSP RSe 332.853-3/0-00/SP (j.2005) Fernando Azadinho dos Santos e outros v Justiça Pública. rel. Passos de Freitas TJSP RSe 408.209-3/0-00/SP (j.2005) Henrique Velasco v Justiça Pública. rel. Ricardo Tucunduva TNS Opinion & Social, Special Eurobarometer n 342 (2011) Consumer Empowerment. Brussels UNWTO, CAP/CSA/29/7_Draft Convention_Protection of Tourists (2017) Bangladesh Vachris MA, Thomas J (1999) International price comparisons based on purchasing power parity. Mon Labor Rev 122:3 World Bank (2015) Purchasing power parities and the real size of world economies: a comprehensive report of the 2011 International Comparison Program. World Bank, Washington, DC. https://doi.org/10.1596/978-1-4648-0329-1

Chapter 5

Conclusion: Travellers’ Protection

The traveller, in contrast with the consumer, has not a legal status deﬁned by the law in Brazil. Conversely, in the EU, a deﬁnition of traveller is found in Directive 2015/ 2302/EU. In a broad sense, to both Brazil and the EU, the traveller is a consumer. The traveller consumes goods and services under speciﬁc conditions demanding speciﬁc legal attention. The vulnerability of the traveller is not about personal characteristics, but about external factors such as language and cultural differences or legal vulnerability such as jurisdiction. Languages have a direct inﬂuence on the traveller’s ability to perceive the environment. It alters the sense of perception under a foreign environment. The traveller is prompted into a more fragile condition than the regular consumer when buying goods and services because he/she is out of his/ her domicile or jurisdiction, for a medium or short period of time. The most obvious point of this condition is that the traveller is always outside of his/her domicile and jurisdiction when travelling and is subjected to much vulnerability. The vulnerability exists regardless of the fact that the traveller is rich, poor, educated, non-educated, credulous or wise.1 The ﬂuidity of vulnerability in view of the risk of the situation that the traveller is involved leads to the conclusion that it is impossible to put an end to vulnerability through speciﬁc measures on the individuals’ state and his/her characteristics. It also is not possible to put an end to vulnerability through external factors, but it is possible to mitigate the vulnerability through assertive consumer policy and an appropriate legal framework. This is because risks are heightened by the fact that markets are becoming increasingly complex and sophisticated, and the consumer lacks the capacity to assess them reasonably in a traditional private law scheme that emphasises party autonomy. Legal vulnerability mainly related to jurisdiction is one of the most signiﬁcant barriers for the traveller, particularly for the international one, who will face a number of obstacles to obtain a result through a lawsuit or even administratively

1

Benjamin et al. (2010), p. 259.

© Springer Nature Switzerland AG 2018 M. G. Sanches Lima, Traveller Vulnerability in the Context of Travel and Tourism Contracts, https://doi.org/10.1007/978-3-319-98376-9_5

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5 Conclusion: Travellers’ Protection

through consumer agencies. The consumer traveller may have access to court but may get no effective result if he or she ﬁles a claim in his/her domicile against a supplier located in another country. The consumer traveller will have to overcome language and foreign currency problems. He/she will have to hire an expert in another country. This usually entails delays and implies higher costs and have become time-barred. In consumer societies, contractual relationships are less personalised, appearing to display contractual standard methods such as the standard contract (EU terminology) or contract of adhesion (Brazilian terminology). Whilst the standard contract may contain unfair terms (EU terminology), the contract of adhesion contains abusive clauses (Brazilian terminology). The standard method, however, is a practice to improve the efﬁciency of the business rather than to satisfy consumers’ immediate needs. If the contract hides unfair terms or abusive clauses, this would increase vulnerability. Thus, predicting the likelihood of their occurrence, both systems set forth particular provisions. In the EU, if the contract contains a term providing for the applicability of another law pertaining to another Member State, such a contractual term under the conditions of Article 6 (1) of the Rome I Regulation shall not deprive the consumer of the protection of the mandatory provisions of the law of his/her habitual residence.2 In Brazil, such a clause is also voided by Article 112 of the Code of Civil Procedure, combined with Article 101 (I) of the CDC. It sets forth that the judge immediately shall assess the clause included in a contract of adhesion that establishes jurisdiction. The judge shall not recognise his/her capacity to handle the case and must send the ﬁles to the court of jurisdiction of the defendant’s domicile. In this case, the judge can act without the party’s request. The vulnerability of the traveller when travelling is relevant both in national and international journeys, but the international environment is far more risky than the national, whereas components of language, cultural differences, foreign currency and bias such as xenophobia and racism, along with uncertainty about legal risks and rights, may increase the traveller’s vulnerability in another country. Interestingly, the understanding of vulnerability is rather different in Brazil than in the EU, and its application to policies and legal cases is more doubtful in the EU than in Brazil. This is because in the EU, although recognising that the consumer is the weaker party to the contract, he/she is concerned as an average consumer, who is reasonably well informed and reasonably observant and circumspect.3In the EU the notion of conﬁdent consumer prevails. Vulnerable consumers in the EU are those whose characteristics make them particularly vulnerable to unfair commercial practices, such as age, physical or mental inﬁrmity or credulity. Only such consumers are likely to be distorted by the practice in a way that the trader can reasonably foresee.4 It is

2

Regulation (EC) 593 (2008), Art 6 (2). Directive 2005/29/EC, Recital (18). 4 Idem, Recital (19). 3

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noteworthy that the EU refers to consumer detriment, which is a negative outcome experienced by individual consumers, relating to some benchmark such as reasonable expectations. It focuses on the outcomes of the negative experiences encountered by consumers, comprising ﬁnancial and non-ﬁnancial detriment, including loss of time. That is to say, the EU considers the detriment concerning all consumer travellers and the vulnerability related solely to speciﬁc groups.5 Nevertheless, the presumption of the average consumer in the EU as the person who is reasonably well informed and reasonably observant and circumspect contradicts the recognition that the consumer is the weaker party to the contract.6 In contrast, Brazil understands that under a consumer relationship, everyone is vulnerable under the principle of vulnerability contained in the CDC Article 4 (I). Whilst all consumers are conceived as vulnerable, the hypervulnerable persons (elderly, children and disabled) have special protection through special laws and courts’ approach to the interpretation of legislation. When they are acting as consumers, not only the CDC applies but also their particular laws.7 Vulnerability is assessed in abstracto on all consumers or in concreto on a group of consumers who are particularly vulnerable, like those hypervulnerable persons.8 They are not in a position to have equal bargaining power mainly on account of the difﬁculties in obtaining accurate information from the supplier/retailer. However, hypervulnerables, owing to speciﬁc reasons, are more vulnerable than others. Such reasons justify the creation of special provisions to fulﬁl the principle of equality. More importantly, as a principle, the vulnerability of the consumer is the foundation of consumer law. Furthermore, a given subject of law is a ﬁeld of law if singular principles and norms are exclusively related to that ﬁeld. Those principles and norms identify the ﬁeld and differentiate it from other ﬁelds of law.9 In consumer law, there are at least two strong main principles: (1) the vulnerability of the consumer and (2) the transparency of the consumer relationship (duty of information). Would it be possible to recognise any exclusive principle to the travel and tourism sector that would place the subject as an independent ﬁeld of law? So far, the set of laws is not sufﬁciently precise and developed to permit this assertion. In this context, this work assumes that both Brazil and the EU shall increase the travellers’ protection within the scope of the consumer protection scheme since the traveller is a consumer by logic causation. In most of the cases, consumption is the intimate cause of travelling, even when encapsulated in business, religion, education, health and family or leisure purposes. In such cases, the component of consumption will be there. There is often a reason for travelling but not often a reason for consumption. Even if someone travels without a reason, in the strict sense the travel itself is the reason for travelling. 5

Directive 2015/2302/EU. See for example Regulation (EC) 1371 (2007) Recital (3): “Since the rail passenger is the weaker party to the transport contract, passengers’ rights in this respect should be safeguarded.” Regulation (EC) 593 (2008), Recital (28). 7 For instance: Act 10.741, 2003, Statute of elderly; Act 7.853, 1989, Statute of disabled person. 8 Act 10.741, 2003, Statute of Elderly; Act 8.069, 1990, Statute of children and teenager; Act 7.853, 1989, Statute of disabled person. 9 Bandeira de Melo (2003), p. 45. 6

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5 Conclusion: Travellers’ Protection

Is it possible for a traveller to not be a consumer? Actually, there are those travelling in extreme vulnerability such as an ‘asylum seeker’, the so-called refugees. As they move mainly across nation-state borders, they are travellers too, but hardly in the concept of consumption. They have a reason for travelling but not a reason for consumption. These individuals travel because of a well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion. They are outside of the country of their nationality and are unable to or, owing to such fear, are unwilling to avail themselves of the protection of that country.10 Therefore, in such an extreme vulnerability, any regulation of refugees ought to prescribe that such a travel is outside of the scope of consumer regulation. In the EU, the current Directive 2015/2302/EU is focused on the traveller. The Directive is the ﬁrst step to a better and more coherent approach in the travel and tourism sector as it refers to traveller and no longer solely on consumer. However, in a broad perspective, there is room for improvement, whereas distortions on particular issues raise doubts as to precisely what the consumer protection law in the EU might end up with. For instance, there is no right of withdrawal for hotel accommodation (single services) that meets the concept of vulnerability. Regarding the right of withdrawal, there are different remedies in the Directive. First, the traveller may exercise the right of withdrawal before the start of the package provided he/she pays a fee.11 Second, he/she may exercise the right without a fee in the event of unavoidable and extraordinary circumstances.12 Third, with respect to off-premises contracts, the traveller has the right to withdraw from the package travel contract within a period of 14 days without giving any reason. Even more, the Directive clariﬁed and modernised the scope of travellers’ protection when purchasing combinations of travel services for the same trip or holiday by bringing within its scope different forms of online packages and linked travel arrangements.13 The Directive considers the traveller as a legal person stating: Art 3 (6), ‘traveller’ means any person who is seeking to conclude or is entitled to travel on the basis of a contract concluded within the scope of this Directive;[. . .].

Finally, the Directive points out that the majority of travellers buying packages or linked travels arrangements are consumers within the meaning of Union consumer law.14 Although the Directive is consistent with market needs, it carries many exceptions requiring a combined and exhaustive analysis that much often distorts accuracy. It could have been reduced to a more consistent legal instrument.

10 United Nations High Commissioner for Refugees—UNHCR. Convention Relating to the Status of Refugees (2012). 11 Directive 2015/2302/EU, Art 12 (1). 12 Idem, Art 12 (2). 13 COM (2013) 512, (3) (3.1). 14 Directive 2015/2302/EU Recital (7).

5 Conclusion: Travellers’ Protection

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In spite of the arguments on codiﬁcation in the European level in view of the difﬁculties of national implementation, among other arguments, this study shares the idea with European authors, who advise to consolidate the various different pieces of EU legislation into one legislative instrument, which could be called the ‘EU Travel Code’15 or ‘Consumer Travel Directive’.16 Thus, in the EU, there would be two possible ways to improve the current scenario: (a) the more ambitious development of a comprehensive code or (b) the now technically feasible Consumer Travel Directive. The code would ensure that each term was used consistently, and a set of principles, particularly the vulnerability of the traveller, may be considered to guide the reasoning of legal practitioners. This would also allow the consolidation in one instrument of different provisions from different directives that apply to travel and tourism.17 On the other hand, the Consumer Travel Directive, technically by nature, would establish the connection between consumer and traveller and beyond consumerrelated issues, and it could disclose the obvious path already published by the UNWTO—that ‘Tourism is therefore a subset of travel and visitors are a subset of travellers’.18 In Brazil, although the legal scenario is technically more complex, it is reasonable to conceive the travellers’ protection scheme, that is to say, traveller’s protection more speciﬁcally as a subset of consumer protection. However, to mention the travellers’ protection in a legal framework would demand a new provision in the Constitution or an international convention (treaty) signed by the country in the scope of human rights establishing the traveller as a legal person. In addition, a new statute as a special law that would set up the rights of this person would be welcome. This special law would meet the microsystem of consumer protection in line with the CDC.19 The judges from the STF have stated that the main focus of the CDC is not to regulate a particular ﬁeld of law but rather to protect a category of persons, even if such a person is indirectly also protected by other special laws.20 This is why a special law in a strict sense should protect the traveller, because there is room for a new special travel law.

15

IP/A/IMCO/ST/2011-17 (2012), p. 33. Tonner and Schuster (2005), p. 3. 17 For instance: Directives on unfair terms in consumer contracts, on unfair business-to-consumer commercial practices, on consumer rights, on services in the internal market, on timeshare contracts, and on package travel contracts. Yet, it would also consider regulations regarding contract law (Rome I and II) transport and jurisdiction (Brussels I). 18 UNWTO, United Nations World Tourism Organization (2010), International Recommendations for Tourism Statistics 2008, (2.12). 19 Note: the current laws that protect the hypervulnerable persons have grounds in the Constitution, such as Art 230 CF and Act 10.741, 2003, Elderly; Art 227 CF and Act 8.069, 1990, Children and Teenager; and Art 7 XXXI and Act 7.853, 1989, Disabled person. 20 STF REsp 351.750-3/RJ, j.2009, re vote of Min. Cezar Peluso. 16

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5 Conclusion: Travellers’ Protection

It is noteworthy that the vulnerability of the traveller is not about personal characteristics that make he/she particularly vulnerable, like the elderly, children and teenager or disabled. All of them may also be a traveller in a particular time and situation. The traveller’s vulnerability is seen in external factors like language and cultural differences, whereas even when the traveller travels inside his/her own country he/she may typically face different dialect, accents and different cultural behaviours. Different languages lead their speakers to different perceptions and therefore to different worldviews. Languages have a direct inﬂuence on the traveller’s ability to perceive the environment. Languages represent barriers as they alter the sense of perception under another environment. Moreover, in both legal systems, the traveller can be exposed to intolerance on account of racism, xenophobia and ethnocentrism, with limited capacity to react properly. Nevertheless, in this regard, the problem is more accentuated in the EU rather than in Brazil. The EU combats racism and xenophobia but at the same time tolerates political parties that exercise ‘hate speech’. In contrast, Brazil repudiates racism directly and xenophobia indirectly. However, private groups with ‘hate speech’ do exist in the EU and in Brazil, but in both locations, they are repressed. The traveller’s vulnerability is identiﬁed as abstract vulnerability of all consumers and concrete vulnerability of special groups of consumers, herein already mentioned. The traveller’s vulnerability mainly stems from consumers who travel to different markets and different cultures and are submitted to different laws. It requires special worldwide attention. The ‘travel and tourism’ sector in Brazil is based on the Tourism National Statute, the CDC, the Civil Code and scattered laws. However, the Tourism National Statute focuses on the relationship between the government and the tourist service providers rather than on the consumer relationship. Therefore, the traveller is not protected by the Tourism Statute but rather by the CDC as a regular consumer. In the EU, in view of the variety of laws where different norms govern different issues in the absence of a consumer code, an intensive analysis can lead to unpredictable results. As it happens, a Consumer Travel Code or a Consumer Travel Directive would ﬁt to empower rights of the travellers and, hence, the economy as a whole. In contrast, in Brazil, a provision inserted into the Federal Constitution or an international convention elevating the traveller to the status of a legal person would be welcome, and secondarily, a ‘Statute of Traveller’ regulating the traveller’s rights could ﬁll the legal gap. Without any questionable cause, the traveller is the main pillar of the economic activity related to travel and tourism. Whilst tourism is an economic activity tied with travel, travel itself refers to the activity of travellers. Therefore, the existence of the traveller is the intimate cause of travelling, which makes tourism an economic activity. There would be no tourism and no economic activity without the traveller, who obviously travels. Hence, promoting the traveller to a legal status is signiﬁcant in relation to laws that include protection, mainly the fundamental right of ‘consumer protection’. Travel and tourism itself has a complex nature. It can refer to a leisure or recreational activity, business, religion, health, study and sport activities. It also includes the

References

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activity of visiting relatives or friends, or even exclusively consumption. Overall, such activities fall within the scope of economic activity, given the environmental impact on the place of destination where the traveller is the central player. This work thereby leads to conclude that without a legal status in Brazil but with a legal status in the EU, the traveller is indeed a consumer that consumes speciﬁc goods and services when travelling. Because the traveller is always out of his domicile and jurisdiction, this particular situation turns into speciﬁc vulnerability. It is translated into external vulnerability (language, xenophobia, racism, foreign currency and ethnocentrism) and legal vulnerability (jurisdiction), boosting the assumption of vulnerability of the traveller. The points explored in the book demystify the strong illusion of invulnerability of the consumer traveller like the notion of conﬁdent consumer, because the most experienced traveller has always several difﬁculties abroad. It means that in such conditions, the traveller is a special consumer and needs protection.

References21,22 Bandeira De Melo C (2003) Curso de Direito Administrativo. Malheiros, São Paulo Benjamin AH, Marques CL, Bessa LR (2010) Manual de Direito do Consumidor, 3rd edn. Rev.dos Tribunais, São Paulo COM (2013) 512. On package travel and assisted travel arrangements, amending Regulation (EC) No 2006/2004, Directive 2011/83/EU and repealing Council Directive 90/314/EEC Directive 2005/29/EC. On Unfair Commercial Practices Directive 2015/2302/EU. On package travel and linked travel arrangements, amending Regulation (EC) No 2006/2004, Directive 2011/83/EU and repealing Council Directive 90/314/EEC IP/A/IMCO/ST/2011-17 (2012) Study on implementation of the package travel directive. EU Regulation (EC) 1371 (2007) On rail passengers’ rights and obligations Regulation (EC) 593 (2008) On the law applicable to contractual obligations (Rome I) STF REsp 351.750-3/RJ. (j.2009). Varig S/A - Viação Aérea Rio Grandense v Ana Maria da Costa Jardim. rel. Min. Carlos Ayres Britto Tonner K, Shuster A (2005) Protecting the rights of passengers and holidaymakers. ECLG/039/05. European Consumer Law Group, Brussels UNWTO, United Nations World Tourism Organization (2010) International recommendations for tourism statistics 2008. New York: Series M N 83/Rev.1

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EUR-Lex is the source for EU court cases, legislation and documents. “Senado Federal” legis.senado.leg.br is the source for Brazilian legislation. Brazilian court cases were researched on different sources: “Supreme Federal Court” stf.jus.br/portal/jurisprudencia/pesquisarJurisprudencia.asp. “Superior Court” stj.jus.br/SCON. “Sao Paulo Court of Appeal” esaj.tjsp.jus.br/cjsg/consultaCompleta.do?f¼1. “Rio Grande do Sul Court of Appeal” tjrs.jus.br. “Federal Regional Court of 3rd Region” trf3.jus.br/NXT/Gateway.dll?f¼templates&fn¼default. htm&vid¼trf3e:trf3ve.

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Brazilian Consumer Defence Code (Part) The Articles referred to are solely those mentioned in this book. Act 8.078 enacted on 11th of September 1990 TITLE I Consumer Rights CHAPTER I General provisions Article 1: This Code sets forth the norms for consumer protection and defence, regarding public order and social interest, according to Articles 5, paragraph XXXII, 170, and paragraph V of the Federal Constitution and Article 48 of its Transitional Dispositions. Article 2: A consumer is any physical person or legal entity who acquires or uses goods or services as a ﬁnal addressee. Sole paragraph: The concept and status of consumer is extended to a collective of individuals, that may even be indeterminate, who have participated in consumer relationships. Article 3: A supplier is any individual or legal entity of public or private nature, national or foreign, as well as other entities not legalized, that develop production activities, assembly, creation, construction, transformation, importing, exporting, distribution, or commercialization of goods or services. § 1. Goods are any good, portable or not, material or immaterial.

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§ 2. Service is any activity available in the consumer market, for which there is ﬁnancial compensation, including those derived from bank activities, with a ﬁnancial, credit, or insurance nature, excluding those resulting from labour relations. CHAPTER II National Policy for Consumer relationships Article 4: The objective of the National Policy for Consumer relationships is to assist consumers in their needs for protection, imposing respect for the consumer’s dignity, health, and safety, protecting their interests and ensuring transparency and harmony in consumer relationships, based on the following principles: (text added by Act 9008 of March 21st, 1995) I. recognition of consumer vulnerability in the consumer market; II. government action in order to effectively protects the consumer; a. Through direct initiatives. b. Through incentives given toward the creation and development of representative associations. c. Through State presence in the consumer market. d. Assuring that goods and services will abide to appropriate quality, safety, durability and performance standards.

CHAPTER III Basic Consumer Rights Article 6: The following are basic consumers’ rights: I. the protection of the consumer’s life, health, and safety against any risks arising from any practices due to the supply of goods and services considered harmful or dangerous; II. the education and information about the adequate level of consumption of goods and services, ensuring freedom of choice and equality in contractual procedure; III. the appropriate and clear information about different goods and services, with correct details in regard to quantity, characteristics, composition, quality, tax and price, as well as the risks involved; IV. the protection against misleading and abusive publicity, unfair commercial methods that are coercive or unlawful, as well as against practices and abusive clauses that or imposed as part of the goods or services supplied; V. the modiﬁcation of contractual clauses that impose disproportionate instalments or its revision based on supervening facts that make the contractual clauses exceedingly expensive; VI. the effective prevention and reparation against material and immaterial damages, even if the damage is individual, collective, and diffused;

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VII. the access to justice and to administrative entities preventing and repairing material and immaterial damages, even if the damage is individual, collective, and diffused, as well as ensuring the judicial, administrative, and technical protection to those in need; VIII. the facilitation of consumer defence when there is a litigation, including the inversion of the burden of proof in favour of the consumer in a civil action when, by the discretion of the judge, to decide that the claim holds truth or when the consumer is hipossuﬁciente (disadvantaged) according to ordinary rules of experiences; IX. (vetoed) X. the provision of appropriate and effective public services, in general. Article 7: The rights set forth in this Code do not exclude any other rights that may come as a result of international treaties or conventions ratiﬁed by Brazil. In addition, they do not exclude the internal legislation on regulations set forth by administrative authorities with jurisdiction, as well as any other rights that stem from the general principles of Law, analogy, custom and equity. Sole paragraph: lf the offense was carried out by more than one author everyone will be jointly liable for the compensation of damages according to the norms of consumption. CHAPTER IV Quality of Products and Services and Damage Prevention and Reparation SECTION I Health and Safety Protection (..) SECTION II Liability due to the fact of the good and service Article 12: The manufacturer, producer, builder (whether domestic or foreign), and the importer are liable, regardless of guilt, for damages caused to consumers due to defects linked with the project, manufacture, construction, assembly, formulas, manipulation, presentation or packaging conditions of their products, as well as lack of information or providing inadequate information about public use and risks. § 1(..) and § 2 (..);

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§ 3. The manufacturer, producer, builder or importer, will not be liable if s/he proves that: I. s/he did not put the product in the market; II. even though the product has been put into the market, the defect does not exist; III. there is an exclusive fault of the consumer or the fault is attributable to a thirdparty. Article 14: The supplier of services is liable regardless of guilt, for damages caused to consumers due to defects relating to the provisions of services, as well as insufﬁcient or inadequate information about the use of the service and the risks involved. § 1. (..) § 2. (..) § 3. The supplier of services will not be liable if s/he proves that: I. There is no defect in the service s/he provided for. II. There is an exclusive consumer’s fault or the fault is attributable to a thirdparty. § 4. The personal liability of individual professionals will be assessed based on fault liability. Article 17: For the purpose of this section, all victims of the event have the same rights as consumers. SECTION III Liability on defect of good or service (..) Article 20: The supplier is liable for any defective service by low quality that makes the service unsuitable for consumption or diminishes the value of the beneﬁt accruing to them. The supplier is also liable for defects found on the difference between the service acquired by the consumer and what was offered and advertised by the supplier. In such a case, the consumer may choose: I. the re-execution of the services without additional costs, whenever suitable, II. the restitution of money paid, updated on a daily basis and compensation for personal injury, III. proportional price reduction. (..) Article 25: It is forbidden for any contractual clause to seek to exclude, hinder, or diminish the liability to provide compensation mentioned in this article or in the previous ones.

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§ 1. If there is more than one party liable for the damages, all parties involved will be collectively liable to provide compensation as mentioned in this section, as well as in the previous sections. § 2. If the damage is caused by a component that is part of the good or service, the manufacturer, the supplier, or intermediary, as well as the one who introduced the component or the service in the market, shall be jointly liable. SECTION IV Loss of rights and limitation of actions Article 26: The right to complain about defects, which are of easy and apparent perception, can be invoked within: I. Thirty days, referring to non-durable goods and services. II. Ninety days, referring to durable goods and services. § 1. These periods of time start to be counted at the time the good is effectively delivered or at the time the services are concluded. § 2. To stop the loss of rights, there will be needed: I. A complain formulated by the consumer to the supplier of goods or services to receive a negative answer, which shall be transmitted in an unambiguous form. II. (vetoed) III. The start of a civil investigation up to its end. § 3. If the defect is not visible the period to not lose the right of complaint starts at the moment the defect is uncovered. Article 27: The intention of achieving compensation for the damages caused by facts of goods or services as set forth in Section II of this Chapter is limited to ﬁve years. The period of time to claim starts at the time the damage and the author of the damage were identiﬁed. SECTION V Disregarding the Legal Entity (..) CHAPTER V Commercial Practices SECTION I General Provisions Article 29: Any person exposed to what is described in this chapter and the next will be considered equal to consumer.

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SECTION II Offer Article 30: All information or advertising sufﬁciently precise, broadcast through any means of communication, in regard to any good or service offered or presented by the seller, obliges him and accounted as part of the contract, will be performed by the parties. Article 31: The offer of goods or services shall assure transmission of information correctly, clearly, precisely, comprehensive and in Brazilian Portuguese language in regard to goods and services’ characteristics, quality, quantity, composition, price, warranty, period of validity and place of origin, among other pieces of information. The offer shall also inform about eventual risk that the good or service may pose to the health and safety of the consumer. Article 34: The supplier of a good or service is jointly liable for the actions taken by their representatives. Article 35: In the case that the seller who offers a good or service refuses to follow the terms of the offer or advertising, the consumer may choose one of the following: I. to demand that the seller follow the terms of the offer or advertising, II. to accept another equivalent good or service, III. to cancel the contract and pursue the restitution of money paid in advance updated on a daily basis, and compensation for personal injury.

SECTION III Advertising Article 37: Any misleading or abusive publicity are forbidden. § 1. It is misleading in any type of information or communication of advertising, entirely or partially false, or in any other way, even by omission that is able to mislead the consumer in regard to the nature, characteristics, quality, quantity, properties, origin, price and any other data related to products and services. § 2. It is abusive, among other discriminatory publicity of any nature, that incites violence, exploits fear or superstition, takes advantage of the weaknesses of children’s judgment and their behaviour, disrespects environmental values, or that is capable of inducing the consumer to behave in a harmful or dangerous way that affect their health or safety. § 3. For the purpose of this code, the publicity is misleading by omission if it fails to inform about essential data of the good or service. Article 38: The burden of proof regarding the truthfulness and correctness of the information or advertising communication is up to whom produces it.

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SECTION IV Abusive Practices Article 39: The seller of goods or services is forbidden, among other abusive practices, to: I. condition the good or service delivered to the delivery of another good or service, as well as speciﬁc quantitative limits without just cause; II. refuse to accept a consumer request, if there is enough quantity available in stock and, also, taking into account uses and customs; III. send or handle any good or service to the consumer without it having been requested; IV. take advantage of any weakness or ignorance of the consumer, with respect to his age, health, knowledge or social condition, in order to impose its goods or services; V. request an excessive advantage of the consumer; VI. execute services without having provided a budget and obtained explicit authorization from the consumer, except if the parties had already entered in previous agreement. VII. forward diminishing information related to any action exercised by the consumer while practicing his rights; VIII. insert any good or service into the consumer market that is not in accordance with the norms set forth by ofﬁcial agencies or, in case these norms do not exist, by the Brazilian Technical Norms Association—ABNT or another entity accredited by the National Metrology, Normalization and industrial quality council (CONMETRO); IX. refuse to sell goods or services directly to one who is willing to acquire it and can afford to pay for it, except in cases of intermediation regulated by special laws; X. increase the price of the good or service without just cause (included by Act 8.884 of June 11, 1994); XI. (..) XII. not establish a deadline for the delivery of his contractual obligations or leave the establishment of the initial term of his obligation open to on convenience (added by Act 9.008 of March 21, 1995); XIII. apply a mathematical formula or rate to the contract different to the legal rates or to what had been established in the contract (added by Act 9.870 of November 23, 1999). Sole paragraph: The products delivered or services provided to the consumer in the hypothesis of item III are also extended to free samples, for which there is no payment.

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SECTION V Charging for Debts Article 44: The public agencies that protect the consumer will maintain and update a database of substantiated claims against suppliers of goods and services. They shall divulge a list of those claims annually. The list will provide the information on whether the claim was settled or not by the supplier. § 1. The information input in the database will be available for consultation by any interested parties. SECTION VI Consumer Registration and Databases (..) CHAPTER VI Contractual Protection SECTION I General provisions Article 47: Contract clauses will be interpreted in such a way as it is most favourable to the consumer. Article 49: The consumer has the right of withdrawal from a distance or off-premises contract, in a period of seven days, counted from the date of signing the contract, or at the time the good or service was received. Sole paragraph: If the consumer exercises the right of withdrawal, every amount paid by the consumer, during the period of withdrawal, shall be returned immediately to him including any costs monetarily updated. SECTION II Abusive Clauses Article 51: Are null and void, inter alia, clauses that impose any of the following situations: I. to remove, exonerate or lighten the supplier’s liability for any nature of defects found in goods or services that leads to waiver or abandonment of rights. ln any consumer relationships between the supplier and a legal entity acting as a consumer, the compensation may be limited in justiﬁable situations; ll. that void consumers’ option for the reimbursement of any amounts already paid, in the cases foreseen by this Code; lll. that transfer responsibilities to a third party;

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IV. to set up unfair obligations, which are taken as abusive or that may place the consumer in exaggerated disadvantageous situation or be incompatible with the principles of good faith and equity; V. (Vetoed); VI. transfer the burden of proof to the consumer; VII. determine the compulsory use of arbitration; VIII. elect a third party to conclude or undertaking any other legal obligation, on behalf of the consumer; IX. that leaves to the seller the option to conclude or not the contract. X. enable the supplier, directly or indirectly to change the price unilaterally; XI. allow the supplier to cancel the contract unilaterally without providing the same right to the consumer; XII. oblige the consumer to repay any costs incurred in the process of collecting the debts, if the same right is not also given to the consumer against the supplier; XIII. authorize the supplier to unilaterally change the content or the quality of the service, after the contract has been signed; XIV. break environmental laws or make possible to infringe these Laws; XV. be in disagreement with the consumer protection system; XVI. allow the waiver of right to be reimbursed due to necessary betterment. § 1. It is presumably exaggerated, among other cases, the disadvantage that: I. offends the fundamental principles of the judicial system; II. limits fundamental rights or obligations intrinsic to the nature of the contract, so as to threaten the objective or the balance of the contract; III. is exceedingly costly for the consumer, considering the nature of the contract, the interests of both parties, and other circumstances that may be pertinent to the case. § 2. lf a clause considered abusive is nulliﬁed, this does not void the contract, unless in the absence of that clause, and spite of any efforts of integration, the result is excessively costly to any of the parties involved. § 3. (Vetoed). § 4. Any consumer or consumers’ organizations are entitled to require to the Public Prosecution, to take the appropriate measures to nullify the clause in the contract that goes against what is set forth by this Code or that in any other way fails to ensure a fair balance in the rights and obligations of both parties. Article 52: In the supply of goods or services involving credit or ﬁnancing provided to the consumer, the supplier must, among other requirements, inform the consumer in advance about: I. the price of the good or service in domestic currency; II. the amount of interest and the effective annual rate of interest; III. the extra costs that are legally foreseen;

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IV. the number and frequency of payments of the instalments; V. the total amount payable, with and without ﬁnancing. § 1. The late payment penalties resulting from breach of the obligations may not exceed 2% of the value of each instalment. § 2. It is granted to the consumer to advance payment entirely or partially before the end of the contract, taking into account the reduction of interests and other expenses proportionally. Article 53: In contracts related to movable or immovable property purchased by instalments, or in any ﬁduciary transfer of assets to guarantee, it is null-and void clauses those that set forth total loss of the instalments already paid to the creditor, who due to the lack of the payment requests to the consumer the termination of the contract and returning of the goods already transferred to him. § 1. (..) § 2. (..) § 3. The contracts referred to by the wording of this article shall be set forth in current national currency. SECTION III Contract of adhesion Article 54: “A contract of adhesion is one where clauses have been approved by the competent authority or established unilaterally by the supplier of goods or services without the consumer having a chance to change its content substantially”. § 1. The insertion of a clause into a standard form does not change the nature of the contract of adhesion. § 2. It is allowed to insert into a contract of adhesion a defeasance clause, taken as an alternative up to the consumer’s choice, with no prejudice of the provision in § 2 of the previous article. § 3. The written form of the contract of adhesion shall be set up using clear language and legible characters, in order to facilitate comprehension by the consumer. § 4. The clauses that limit consumers’ rights shall be highlighted, so that they can quickly and easily be understood. § 5. (Vetoed).

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CHAPTER VII Administrative Sanction Article 57: A ﬁne shall be imposed and the penalty shall be proportionate to the gravity of the infringement, to the advantages obtained and to the economic condition of the supplier. It shall be applied according to administrative procedures and reverted to a Fund, which is regulated by Act 7.347/85 turning the amount to the Union, States’ Funds or Municipals’ Funds of consumer protection. Sole paragraph: The ﬁne shall not be less than two hundred and not over three million times of the Fiscal Reference Unit (UFIR), or any other rate that may further replace the UFIR. TITLE II Penal Sanction Article 66: If the supplier misleads actions or omissions, which are relevant in relation to the nature, characteristics, quality, quantity, safety, performance, durability, price or warranty of products and services, the sanction is three months to one year of imprisonment and payment of a ﬁne. § 1. the same sanction will be applied to those who endorse the offer. § 2. If the supplier had no intention of incurring the crime, the sanction is one to six months of imprisonment or payment of a ﬁne. Article 67: If the supplier is aware or should be aware that the advertisement is misleading or abusive, the sanction applied is: three months to one year imprisonment and payment of a ﬁne. Article 68: If the supplier is aware or should be aware that the advertisement is misleading and may induce the consumer to behave dangerously against his health or safety, the sanction applied is: six months to two years imprisonment and payment of a ﬁne. Article 69: If the supplier fails to organize factual, technical and scientiﬁc data, which are the grounds of the advertisement, the sanction applied is: one to six months of imprisonment or payment of a ﬁne. TITLE III The defence of the consumer in the court CHAPTER I General provisions (..)

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Article 81: The defence of consumers’ rights and interests as well as the victims might be exercised in court either individually or in group. Sole paragraph: The collective defence in-group will be exercised in the following situations: I. (..) II. (..) III. Whether the rights or interests are individually homogeneous as well as those arising from the same source. Article 82: For purposes of Article 81, sole paragraph, are entitled concurrently with each other: I. The Public Prosecution; II. The Federal Union, the States, the Municipalities and the Federal District; III. The agencies or entities tied directly or indirectly with the Public Administration, even if not a legal person, that are particularly engaged to defend the interests protected by this Code. IV. (..) § 1. (..) CAPITULO II Collective redress for defending the homogenous and individual consumers’ interests (..) Article 92: The Public Prosecution whether or not ﬁling a claim, may always act as inspector of the law. Article 93: Apart from the jurisdiction of the Federal Courts, the local courts have capacity to access the case according to the following situations: I. In the local court where the damage occurred, or should occur, if it is of local scope. II. In the local court of the Capital of the State or the Federal District, for damages of national or regional scope, applying the Code of Criminal Procedure’s rules in cases of shared jurisdiction. CHAPTER III Lawsuits on liability of the Supplier of goods or services Article 101: In matters of supplier’s civil liability without prejudice of Chapters l and ll of this title, to bring a lawsuit to the court, the following rules shall be observed: I. the lawsuit shall be brought in the author’s domicile; (..)

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CHAPTER IV Res judicata (..) TITLE IV The National Consumer Defence System (..) TITLE V Collective Convention of Consumption (..) TITLE VI Final provisions (..)

Brazilian Tourism National Statute (Part) The Articles referred to are solely those mentioned into this book. Presidency of the Republic Casa Civil Cabinet Subcommittee for Legal Affairs Act 11.771 enacted on 17th of September 2008. Veto message It establishes the National Tourism Policy. It deﬁnes functions of the Federal Government in planning, developing and encouraging the tourism industry. It revokes the Act 6505 of 13th December, 1977, the Decree 2294 of 21st November, 1986 and provisions of Act 8.181 of 28th of March, 1991, among other measures. THE PRESIDENT OF THE REPUBLIC I make it known that the National Congress enacted and I sanction the following Statute: CHAPTER I PRELIMINARY PROVISION Article 1: This statute sets out rules on the National Tourism Policy, deﬁnes the functions of the Federal Government in planning, developing and stimulating the tourist sector, regulating the operating activities of tourist services, the

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registration on the database, and the classiﬁcation and supervision of tourist service providers. Article 2: For the purposes of this statute, tourism is accounted as the activities undertaken by a natural person while traveling and staying in places other than their usual environment for a period of less than 1 (one) year for leisure, business or other purposes. Sole Paragraph: The travel and the permanence mentioned in this article shall generate economic turnover, labour, employment, income and public revenues, constituting an instrument of economic and social development, promotion and cultural diversity and preservation of biodiversity. CHAPTER V TOURIST SERVICES PROVIDERS SECTION I TOURIST SERVICES SUBSECTION I OPERATING ACTIVITIES Article 21: For purposes of this statute, the following providers are considered tourist services providers: businesses companies, single societies, individual entrepreneurs and social services that provide tourist services in exchange for payment and carrying out the following economic activities related to the productive chain of tourism: I. tourist accommodation; II. tourism agencies; III. tourist carriers; IV. event organizers; V. theme parks, and VI. tourist camps. Sole Paragraph: May be also registered in the Ministry of Tourism, once complying with the relevant conditions, commercial businesses that provide the following services: I. The restaurants, cafes, bars and alike; II. The centres or conventions places and / or trade fairs and exhibitions and the like; III. The thematic aquatic parks and enterprises equipped with entertainment and leisure devices; IV. marinas and businesses enterprises that support nautical tourism or surfcasting;

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V. The concert halls and equipment for tourist recreation; VI. The organizers, promoters and providers of infrastructure services, equipment renting and auto trade shows, exhibitions and events; VII. The car rental for tourists; and VIII. The providers of specialized services in the development and promotion of various forms of tourist segments, including tourist attractions and business planning as well as the practice of its activities. Article 22: The Tourist services providers are obliged to register with the Ministry of Tourism, in the manner and under conditions determined by this statute and its regulations. § 1. The branches also need to be registered within the Ministry of Tourism, except in case of kiosk services installed by the tourism agency in place designed to hold a temporary event, the operation of which is limited to a short period of time. § 2. The Ministry of Tourism will issue a certiﬁcate for each registration approved including branches corresponding to the object of tourist activities to be carried out. § 3. The tourist services providers mentioned in this article when duly registered with the Ministry of Tourism, are entitled to provide tourism services to third parties or intermediate the service. § 4. The registration will be valid for 2 (two) years from the date of issue of the certiﬁcate. § 5. The foregoing shall not apply to air transport services. SUBSECTION II TOURIST ACCOMMODATION Article 23: Shall be considered “tourist accommodation enterprises” or “institutions”, those designed through any commercial form, that are addressed to provide temporary accommodation services, offered in individual units and exclusive use of the guest, as well as other services needed by users. The services are known as tourist accommodation services provided through a contract, whether the contract embeds express or implied contractual obligation payable on a daily basis. Article 24: To obtain registration, the supplier of accommodation must complete at least one of the following requirements: I. ownership of an ofﬁcial license to operate, issued by the competent authority to provide accommodation services, and such a license shall only relate to a speciﬁed building; and II. the enterprises or legal entity known as condominium hotelier, ﬂat, ﬂat-hotel, hotel-residence, loft, apart-hotel, apart-service condominium, condo hotel and the

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like, that own a license to construct or certiﬁcate of construction concluded, issued by the competent authority, accompanied by the following documents: (..). SUBSECTION III TOURISM AGENCIES Article 27: Tourism agency is the legal person that develops the economic activity of intermediation between suppliers and consumers of tourist services or provides those services directly. § 3. The intermediation activities conducted by tourism agencies comprise the offer, the booking and sale to consumers in one or more of the following tourist services provided by third parties: I. tickets; II. tourist accommodation and other services; and III. educational programmes and professional improvement. (..) VIII. sale or paid intermediation of insurance linked to trips, tours and excursions as well as cards of traveller’s assistance; IX. sale of books, magazines and other articles addressed to travellers; and X. (..) § 4. The complementary activities of tourism agencies include the intermediation or execution of the following services: I. obtaining passports, visas or any other documents needed for travel accomplishment; II. tourist transport; III. clearance of baggage in travel and excursions; IV. vehicle rental; V. acquisition or sale of tickets for public performances, artistic, sporting, cultural and other public events; VI. representing carriers, tourist accommodation providers and other tourist services providers; VII. support fairs, business exhibitions, congresses, conventions and similar events; VIII. selling or brokering of insurance linked with travel, tours and excursions cards for travel assistance;

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IX. selling books, magazines and other articles addressed to travellers; and X. tourist reception, namely the organization of visits to museums, historic monuments and other places of tourist interest. SUBSECTION IV TOURIST CARRIERS Article 28: Tourist carriers are legal entities that provide services of tourist transportation by surface. This is characterized by the transportation of people in vehicles and boats by land, maritime and inland waterways, including the following: I. package travel (..), II. local tour (..), III. transfer, IV. special (..). SUBSECTION V ORGANIZERS OF EVENTS Article 30: Event organizers are legal entities whose scope of the By-Law is to provide services of management, planning, organization, promotion, coordination, execution, production and event assistance. SUBSECTION VI THEME PARKS Article 31: Theme parks are entrepreneurial or legal entities whose scope of the By-Law is to provide services and activities deployed permanently in a ﬁxed location, thematically adapted in the environment, and deemed by the Ministry of Tourism as of tourist interest. SUBSECTION VII TOURIST CAMPS Article 32: Tourist camps are areas set up and arranged to receive tents, car-trailers, or similar equipment, yet having facilities, features and particular services to simplify the stay of outdoor users.

Flowcharts: Directive 2015/2302/EU

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Table A1: Neither Package nor Linked Travel Arrangement Neither Package nor Linked Travel Arrangements. The Directive 2015/2302/Eu does not apply to the following services Brief description Provision Less than 24 hours covering a period of less than 24 hours unless overnight Art 2 (a) accommodation is included; not-for-proﬁt basis facilitated, occasionally and on a not-for-proﬁt basis Art 2 (b) and only to a limited group of travellers; general agreement purchased on the basis of a general agreement for the Art 2 (c) arrangement of business travel between a trader and another natural or legal person who is acting for purposes relating to his trade, business, craft or profession. stand-alone, single The purchase of a travel service on a stand-alone basis Recital (15) contract as a single travel service less than 25% of the TS that not accounts for a signiﬁcant proportion of the Recital (18) combination’s value value of the package or linked travel arrangement, and not represents an essential feature of the trip or holiday. A signiﬁcant proportion is when the TS accounts for more than 25% of the value of the combination. residential purposes Accommodation for residential purposes, including for Recital (17) long-term language courses ﬁnancial services Financial services such as travel insurances Recital (17) intrinsic services services which are intrinsically part of another travel Recital (17) service, for instance, transport of luggage Recital (17) transport with overpassenger transport by road, rail, water or air, that night accommodation includes overnight accommodation should not be considered as a travel service if the main component is clearly transport.

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