COVID-19 has dramatically changed the world around us, and in an effort to limit the spread of the virus and safeguard public health, several industries have been significantly disrupted.
On a local level, organised events, including all cultural, recreational and entertainment events and exhibitions in public or private places and inside places subject to a closure order have been suspended. This suspension and closure has created an unsettling confusion to arrangements made in advance by businesses and consumers alike.
Unquestionably, most organisers have already forked out a substantial amount of money while consumers have probably secured their booking by means of a payment of deposit. This leaves both organisers and consumers in a state of uncertainty as to whether they would be refunded the monies forked out by them for such events and as to who has to assume responsibility for the cancellation of such events.
One may want to look carefully at insurance policies potentially covering such disruptions. In this regard, on March 24, the MFSA issued a circular stating that it is currently working closely with authorised insurance companies to safeguard the interests of the policy holders whilst keeping in mind the possible impact of COVID-19. To this end, it advised that insurance policies should cover claims surrounding COVID-19 treatments when such treatments are within the limits of the policy.
With regard to event cancellations, the MFSA recommended that affected consumers should contact the event organiser and verify whether the event would be rescheduled or whether the consumer will be refunded accordingly.
Those affected may want to have a look at the relative contractual provisions, or terms and conditions in order to ascertain their rights with respect to cancellations. Certain contracts would also cater for such extraordinary circumstances by means of a force majeure clause. Historically, where a significant unforeseeable and unavoidable change in circumstances rendered an obligation excessively onerous to perform, the Maltese Courts have recognised that such circumstances would constitute a ground of force majeure under the doctrine of rebus sic stantibus, meaning that a contractual obligation could potentially become inapplicable due to a fundamental change of circumstances. While situations have to be examined thoroughly, one would reasonably expect that the notions of good faith and equity are prioritised during an unprecedented crisis.
One industry being heavily impacted is certainly that of international transport of people. Travel bans have been imposed on an international level and most airports have been subject to closure for an indefinite period of time.
The vast majority of flights have consequently been cancelled. Consumers may be left wondering who will shoulder the responsibility of such cancelled flights, especially in light of payments and bookings made in advance. In this regard, the EU Commission has relaxed compensation rules regarding consumers’ rights imposed by the EU261/2004 regulation.
Authorities seem to still emphasise consumer protection
By means of a statement dated April 28, 12 European Union member states, including Malta, have called upon the European Commission to propose, as a matter of urgency, a temporary amendment of Regulation 261/2004 which would allow airlines to choose the means by which passengers are reimbursed. In their statement, the aforementioned member states outlined that for airlines to adhere to their present obligations and reimburse all their clients for cancelled flights, they would have to face serious financial difficulties and suffer major cash flow issues. They argued that such a measure would solve current cash flow issues whilst preserving suitable consumer protection. This could potentially allow struggling airlines some breathing space in order to maintain the European air traffic market post the COVID-19 crisis. To this end, the European Commission stated that it does not wish to make any changes to consumers’ rights and proposed the possibility of incentivising consumers to voluntarily accept a voucher instead of a refund.
The European Union has also issued guidelines which suggest that certain rights may be relaxed or even not applicable under current circumstances. In fact, in respect of package travel, i.e. where consumers purchase a combination of at least two different types of travel services from the same service provider, the 14-day limit imposed on the trader for refunds of cancelled travel services in terms of the Package Travel and Linked Travel Regulations has been replaced by a six-month period for all travel terminated between March 1 and May 31 (both dates included).
One other measure intended to protect consumers during this uncertain time and which merits taking a closer look from a legal perspective is price control. In normal circumstances, most European member states would be averse to the idea of interfering in markets by legislating price on controls regarding individual items.
Since most states have recommended, or in some cases, imposed, the mandatory use of face masks to limit the transmission of the virus, especially when visiting busy, closed spaces such as shopping centres or when using public transport, demand for such face masks or similar equipment has increased exponentially.
The government considered it right to step in and impose a 95c retail price cap on masks and a €5 cap on face shields. It would certainly be interesting, but still quite early, to analyse whether such measure could set a precedent for other items whose demand increases or supply decreases and the legal implications to both businesses and consumers.
It is evident that it has become a daunting task to somewhat find a balance between the protection of businesses that are crucial to the economy and the protection of consumers whose individual wealth may have also been significantly affected. Authorities, both on a European level and also on a local level, seem to still emphasise consumer protection.
It would not be surprising, however, to see a change in stance should matters take a turn for the worse or in the event that economies take longer to bounce back. Only time will tell.
Marlon Borg, lead senior associate, Natasha Planojevic, associate, DF Advocates.
Independent journalism costs money. Support Times of Malta for the price of a coffee.Support Us