Brexit: What are the Potential Implications for British Holidaymakers Travelling in the EU?

28 Jun, 2016

The electorate’s momentous decision to leave the EU plunges the UK into unchartered and choppy waters. The vote will cause a period of uncertainty regarding the overarching EU legislation relating to European travel and the extent to which the relevant laws will continue to apply once the UK has withdrawn.

Over the years, European legislation has implemented various directives to ensure a high level of consumer protection for UK nationals travelling to EU member states.

For more than 20 years, British holidaymakers have relied upon the Package Travel Directive to claim damages against their own UK tour operator in circumstances where the operator (or its suppliers) breaches the rules. This gives the consumer a high level of protection against a range of potential problems – including cancellations, mis-selling, price changes, insolvency and accidents – which occur due to a supplier’s failure to comply with local standards.

The Directive has enabled British holidaymakers to pursue meritorious claims against operators in the UK Courts and to recover English levels of damages and associated costs, which often far outweigh awards that would be made in other member states.

In similar fashion, EC Regulation 44/2001 and the EU Court of Justice decision of FBTO v Odenbreit allow British holidaymakers to initiate claims against the EU insurers of negligent third parties in the English jurisdiction, provided the country of origin permits a direct right of action against an insurer.

This process is again very advantageous since it means that claims can be initiated in the English courts against the foreign insurer. Any such claims are subject to English procedural law and – in contrast to many other EU countries – the successful claimant is entitled to recover legal costs from the defendant.

The five EU Motor Insurance Directives were established to help protect the victims of road traffic accidents within the EU. These abolished green card checks at borders and also obliged all EU based insurers to nominate a handling agent in each of the member states. This allows the injured claimant’s legal representative to liaise directly with, and serve proceedings against, a UK handling agent, thereby avoiding tortuous communications with the foreign insurer.

Another obvious benefit derived from our membership of the European Union is the entitlement to rely upon a European Health Insurance Card (EHIC) in order to receive free medical treatment while on holiday in the 28 EU member states. This right will be extinguished once the UK officially relinquishes its membership of the EU.

Accidents abroad often involve disputes associated with applicable law arising from the two EU Regulations that govern this area. The Rome I Regulation covers contractual obligations, while the Rome II Regulation deals with non-contractual obligations. Prior to the implementation of Rome I and Rome II, travel law practitioners relied upon the Private International Law (Miscellaneous Provisions) Act 1995 and Contracts (Applicable Law) Act 1990 when determining disputes associated to applicable law.

It will be necessary for UK legislators to decide the extent to which the provisions of Rome I and Rome II will continue to apply once the negotiations between the EU and the UK are concluded.

Currently, claims against tour operators are based on breach of contract, albeit pursuant to the Package Travel Regulations rather than Rome I. Tour operator contracts with consumers incorporate English law (and English jurisdiction) and English holidaymakers will therefore still be able to pursue claims against them in the UK, and to recover English damages and costs. It remains to be seen, however, whether the changes in legislation will afford the same level of protection as the Regulations.

Although it is difficult to predict what the UK exit from the EU will mean for domestic law and legislation, we do at least know the approximate timescales for this to happen. The onus is now on the UK to notify its intention to leave though it seems unlikely the UK Government will be in any particular hurry to do this.

Once the UK has triggered Article 50 of the Treaty on European Union, the UK and the EU “shall negotiate and conclude an agreement…setting any arrangements for its withdrawal” and “taking account of the framework for its future relationship with the union.”

The UK and the EU (specifically the European Council) have two years from the date of the notification to reach agreement and the treaty shall cease to apply at the end of that two year period, unless the European Council, in agreement with the UK, unanimously decides to extend it. There is a huge amount of work to be done and it may well be that the UK and the EU are forced to agree an extension – but this will only be possible if all EU member states agree.

Brexit will therefore have no immediate impact on the UK’s domestic law and negotiations could foreseeably run well beyond the two year negotiation period.

The extent of any domestic legislative changes will largely be decided by the terms of the withdrawal agreement and our future relationship with the EU. There therefore remains a high degree of uncertainty regarding the level of protection for British tourists post Brexit.

During the negotiating period, the Government will have the mammoth task of negotiating new trade deals, considering its stance on immigration and identifying which of the UK’s laws need redrafting and those which should be repealed. As EU regulations will cease to apply in the UK, these will all have to be replaced or re-enacted by equivalent laws.

Once the negotiations are finalised, there should be a much greater degree of clarity as we will then better understand how the new relationship between the UK and the EU is to work and, importantly, which rules and legislation will continue to apply and which will not.

Although it is too early to give any clear indications as to the likely changes, consumer groups will wish to safeguard the high level of protection previously afforded to British holidaymakers as a consequence of our membership of the EU.

Written by Mark Lee, Partner and Head of the Travel Law Team at Penningtons Manches LLP.

(Source: Penningtons Manches LLP)

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