Collective Commentary about the New Package Travel Directive

ARTICLE 22 | DAVID GRANT 475 Limited [2014] UKSC 16 6 gives a clue as to how this might work. It is a case about the collection of VAT but it has wider implications on how to interpret agency agreements. The defendant in the case argued that they were only an agent whereas HMRC argued they were principals. Although the bedbank had assumed many of the functions of a principal it was ultimately decided by the Supreme Court that they were only agents. However if the HMRC had prevailed then it might have opened the door to imposing liability on so-called agents who are in fact principals. It is difficult to draw any firm conclusions on this case as it turns on its own facts but it holds open the possibility that if an intermediary like a bedbank overreaches itself it could be classified as a principal and therefore open itself up to being sued by the travel agent/organiser. However this only opens up other difficulties such as have already been discussed – which law prevails and which courts have jurisdiction. Interestingly being able to sue the bedbank as well as, or instead of, the third party supplier is akin to the situation regarding compensation under Reg. 261/2004 on Denied Boarding 7 . In the EU Commission’s guidance on the interpretation of Reg. 261 8 it states that if a passenger on a package holiday flight is delayed or the flight is cancelled the passenger could seek redress against either the organiser or the airline. Which of the two would end up paying the compensation would depend on the contractual relationship between them and the application of domestic law: “However, neither the Regulation nor the Directive deals with the question of whether the package organiser or the operating air carrier ultimately has to bear the cost of their overlapping obligations. Resolving such a matter will thus depend on the contractual provisions between organisers and carriers and the applicable national law”. If the travel agent/organiser failed to establish liability against the bedbank on the basis of their agency contract it is unlikely that Art. 22 could be invoked 6 For commentary on this case see HMRC v Secret Hotels2 Limited [2014] UKSC 16 [2014] TLQ 16; “Principal or Agent. VAT or No VAT. Implications of Med Hotels Ltd v HMRC” Richard Venables and Katie Bevan-Jones [2010] TLQ 139 and “The Medhotels Case – A Heavyweight Battle in Four Titanic Rounds” Stephen Mason [2014] TLQ 95, all available at www.tlq.travel . The decision is also available on this website. 7 Regulation (EC) No 261/2004 of the European Parliament and of the Council establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights. 8 Brussels, 10.6.2016 C(2016) 3502 final.