As the holiday season begins, travel law is taking off with fraud, group actions, personal injury, and airline and corporate work littering the runways, reports Lucy Trevelyan
The definition of embarrassment: a trade association announcing a crackdown on fraud within its industry, and then having to sue the very man charged with leading the rout after he was allegedly caught with his hands in the till to the tune of nearly £1 million.
You could not make it up could you? But that is exactly what happened to the Association of British Travel Agents (ABTA) earlier this year after fraud allegations against the association’s head of legal services, Riccardo Nardi.
Mr Nardi was dubbed ‘Mr Clean’ after being given the job of uncovering rogue travel companies and credit card fraudsters who cost the industry millions each year.
His assets, including his home and Porsche, have been frozen pending civil fraud proceedings.
Trevor Sears, a partner at London firm Davenport Lyons, says: ‘Over the last two or three years, ABTA has mounted a campaign within the travel industry, quite successfully bringing proceedings against high-profile fraudsters. Unfortunately, most of the recent stories in the papers are about the ABTA’s head of legal [Mr Nardi] who has allegedly had his hand in the till. I have been busy this year acting for ABTA in the action against him.’ Mr Nardi also faces criminal charges.
Look Chih Wang, a partner at London firm Fisher Meredith who acts for Mr Nardi in the criminal proceedings, said the matter is sub judice and that it would be inappropriate for him to comment.
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Mr Sears, who is the UK counsel to the International Air Transport Association (IATA) and has acted in several high-profile bankruptcy and travel fraud cases, says fraud in the industry has become much more sophisticated and electronic based.
He adds: ‘I find it terribly exciting. I like to be able to safeguard airlines’ money and fight fraud. I don’t get involved in buckets and spades and holidays. I get to court a lot and it tends to be quick justice – very few of my cases last longer than one day.
‘There are all sorts of different remedies available – injunctive relief, search and seize, that sort of thing – it’s very much at the sharp end in terms of interesting law.’
The work of Michael Gwilliam, a partner at London firm Vizards Wyeth, is predominantly at the other end of the travel law field, handling personal injury claims brought by holidaymakers against tour operators and travel agents and claims brought by employees of operators and agencies against their employers following injury.
He says: ‘We are busier than ever before. Although there is still a very wide range of claims out there – and you would be amazed at the innovative ways that tourists manage to get themselves into peril – the group action is still on the rise, mostly in relation to food poisoning en masse in a particular hotel or resort, or from bugs picked up in swimming pools.
‘It is difficult to deal with claims one step removed. There is no substitute for a visit to the scene of an accident to interview witnesses face-to-face. With the more serious claims, that is still possible and preferable.
He goes on two or three trips each year. ‘For many claims, however, it is simply disproportionate to get out there and you spend a lot of time on the telephone tracking people down and persuading them to help. It is even worse when you have to persuade them to come to the UK to trial. You are dependent greatly on their goodwill as it is not possible to serve witness summonses upon them.’
Ian Skuse, a partner with London firm Piper Smith Watton who acts for three major scheduled airlines and various travel agents and tour operators, says the definition of a ‘travel lawyer’ has widened recently: ‘There are those that specialise in personal injury claims both for customers and tour operators. Others specialise in airline work and others the corporate commercial side.
‘There has been a massive expansion on the low-cost carrier side with the introduction of connections to other Internet sites such as links to accommodation and car-hire sites. This has attracted legal expertise in fields such as IT law.
‘There is also the field of business travel, which is the arrangement through which major corporate business organises large travel budgets to enable executives to travel on business meetings overseas and which is an important and growing sector.’
He says commercial and employment law advice have been the busiest areas of late, but adds: ‘It has not been unduly busy this year, nor was last year particularly frantic. The leisure market is down by about 10%, and budgets are tight. There is still, however, reasonable activity at the corporate and commercial end.
‘The biggest events affecting the industry have been 11 September 2001, the Sars virus, the Gulf War and terrorism affecting destinations such as Turkey and Kenya.’
He adds: ‘Travel law has blossomed in the past five-to-ten years – it is now a mature industry. Some of the larger companies are enormous, and are able to use the best available company, commercial and regulatory advisers. Having said that, there are many, many smaller players in all the sectors.’
Richard Gimblett, a partner at London firm Barlow Lyde & Gilbert, and a former in-house legal adviser at the UK Civil Aviation Authority (CAA) whose department focuses mainly on regulatory issues, says the future of financial protection is high on the travel industry’s agenda. He says: ‘The CAA has conducted a large consultation exercise on financial protection for the last year and is due to come up with advice to the government later this month.’
He explains that under the present Air Travel Organisers’ Licensing (ATOL) system, tour operators who sell trips that include a charter flight are obliged to take out a bond which protects holidaymakers if the tour operator goes bust. Similar requirements are placed on package holiday organisers by the Package Travel Regulations.
‘There are a lot of gaps in financial protection at the moment. For example, if you buy a flight directly off a carrier, the regulations do not apply. Since the low-cost airlines are now posing huge competition for tour operators, they think it’s massively unfair.
‘It is very likely the CAA will recommend that all flights will be covered by some kind of financial protection. It may mean the setting up of some sort of common fund with passengers having to pay a pound or two extra to go into this common fund. If they do go down that route, it will be a long time before there will be enough money built up to cover a major event. There will have to be some sort of interim measure to cover.’
Mr Skuse says a change to the financial protection regime is not before time. ‘There is presently the ATOL licensing regime regulated by the CAA, IATA regulating scheduled ticket sales, and other trade bodies such as the ABTA bonding for its members. There are also trade body regulators such as the Travel Trust Association and I believe the consumer is rightly confused by these various bodies and their logos which purport to give a badge of consumer protection.’
He says the only real new legislation currently ‘hot off the press’ is the Montreal Convention, which improves passenger rights for those travelling on scheduled airlines.
As Mr Gimblett explains, this will provide protection for European passengers travelling on non-European carriers and abolish the artificial limits passengers can be paid in compensation if, for example, their luggage is lost.
Mr Gwilliam says the Package Travel Regulations 1992 (PTR) have had the biggest impact on travel law in the past few years, with several cases refining and interpreting what the regulations mean.
He says: ‘The case of Gerard Hone v Going Places Leisure Travel [The Times (2001), 6 August]– one of mine – gave the Court of Appeal the opportunity to confirm that it was necessary for the holidaymaker to prove fault on the part of the tour operator supplier to succeed under regulation 15 of the PTR. Before that, there were still some commentators who believed the PTR sought to impose some sort of quasi strict liability regime.’
Mr Sears, who wrote the chapter on travel insolvency in Tolley’s Insolvency Law, says the travel industry – particularly through cases such as Royal Brunei Airlines Sdn.Bhd v Philip Tan Kok Ming [1995] 3 All ER 97 – has played a big part in the evolution of personal liability cases against directors of companies.
Most of the lawyers questioned agree that ‘no-frills’, low-cost airlines will continue to boom and that consolidation in all the travel sectors will continue.
Mr Skuse says: ‘There has been a lot of consolidation in all sectors with the bigger boys getting bigger. In each sector, there are giant players but also numerous medium-to-small operations. Most pundits expect the popularity of the package holiday to decline with the rapid growth of low-cost carriers and associated Internet-based hotels and car-hire products resulting in consumers putting their own holidays together at home (who needs a travel agent?) or travel agents putting together holidays in front of the consumer on the high street.’
While other lawyers jet off for their holidays this year, the constantly changing travel sector will not let up on the work it demands from its lawyers.
Lucy Trevelyan is a freelance journalist
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