The Legal Impacts of COVID-19 in the Travel, Tourism and Hospitality Industry

same-level playing field, referring to a possible situation where the organiser would have to refund the amount to the traveller as an out of pocket expense should the third parties on the other hand not be willing to refund the amount initially paid by the organiser. 7. The Maltese Insolvency Fund Legal Framework: Protection of travellers versus the possibility of insolvency of organisers Under Subsidiary Legislation No. 409.18, entitled ‘Package Travel Insolvency Fund Regulations’, an Insolvency Fund has been set-up the purpose of which is to provide security for the refund of all payments made by or on behalf of the travellers, insofar as the relevant services are not performed as a consequence of the organiser’s insolvency, including repatriation where applicable. The fund has been set up to partially transpose the provisions of the Package Travel Directive. The Maltese legal framework provides that the Fund shall, at all times, be kept at a minimum threshold of five hundred thousand euros (500,000 €) or any other higher amount, as shall be determined. Furthermore, the Insolvency Fund Management Board, which has been set up to administer the fund, shall be entitled to request any or all contributors to further contribute to the fund, should it be below the minimum threshold. The law also provides that, in the event that one of the organisers - who is a contributor to the fund - becomes insolvent, any claims made by the traveller of the insolvent contributor shall be paid first from the insolvent contributor’s share of the contributions made under the Fund. Should this share not suffice to cover all claims, then the balance shall be paid from the net funds collected through the certification scheme. The law provides further that the Board may request the other organisers, contributors to the Fund, to increase their bond to cover any shortfall of funds to settle the outstanding claims and ensure the minimum threshold is kept. Likewise, should the fund not be sufficient to cater for the demand of travellers seeking refunds, in the case of the organiser’s insolvency, then each organiser contributing to the fund will be asked to contribute further to the fund. It is the opinion of the author that due to the situation brought about by COVID-19, not only does the organiser have to refund the travellers as per Maltese law (and as mentioned, not all payments received will be at them due to payments made to third party providers), but also, the organiser has to ensure that expenses are paid, such as employees and other office expenses, in a time when no income is being generated. As a result, all these factors may act together as a catalyst to insolvency. As a result, it is crucial to consider a situation where the insolvency of one organiser would bring a shortfall in the fund, and whether it will lead to the insolvency of other organisers, since an additional contribution would be further requested from them, over and above their own