Collective Commentary about the New Package Travel Directive

738 COLLECTIVE COMMENTARY ABOUT THE NEW PACKAGE TRAVEL DIRECTIVE travel packages) 7 . Article 17 of the Law governs the provision of security through the conclusion of an insurance contract of a maximum duration of twelve (12) months with an insured insurer. The provision does not specify special “effectiveness” criteria that the insurance contract must meet but explicitly refers to those in Article 16 against which the Authorized Service must examine the insurance contracts that organisers have to submit to the Service for this purpose. In other words, there is no requirement with regards to a minimum amount that the insurance contract must cover, something which may be considered as being at odds with the fact that such a minimum amount is in fact required in the context of the alternative security arrangement discussed immediately below. Article 16 of the Law is also referred to in the context of the alternative security arrangement, namely that of a guarantee by a financial institution exemplified in Article 18 of the Law. However, this provision is far more detailed than Article 17 on insurance in that it lays down more specific “effectiveness” requirements as explained below. By virtue of Article 18(1) of the Law, the financial institution undertakes to pay the amount of the guarantee to an Approved Body, which, according to Article 18(9), can be a registered company or association of organisers, retailers and travel agents approved (and licensed) by the Minister following a relevant application as per Article 18(10), (11) and (12) of the Law. As the beneficiary of the guarantee is the Approved Body, not the organiser, a provision (in the draft law) obliging organisers to furnish travelers with a certificate establishing a direct right or claim against the financial institution has been removed following a suggestion of the Association of Cypriot Banks. By virtue of Article 18(13) of the Law, the relevant license granted to the Approved Body can be revoked by the Minister at any time if the Authorized Service determines that the particular Body does not comply with its obligations and commitments. The maximum duration of the guarantee is again twelve (12) months. Most importantly, Article 18(3) provides that for the guarantee to be deemed as affording effective protection, it must cover at least 20% of the payments that the organiser has received out of the sale of packages during the 12-month period immediately preceding the date of the guarantee or the maximum amount of all payments which the organiser expects to have in his possession at any time in relation to packages not fully performed, whichever of the two is bigger. The relevant provision further states that the amount covered by the guarantee cannot in any case be less than 5,000 euros (which is thus set 7 Article 20(1) of the Law.