CJEC, 5th chamber, February 11, 1999, No C-237/97

THE COURT (Fifth Chamber),

1 By order of 23 June 1997, received at the Court on 27 June 1997, the Korkein hallinto-oikeus (Supreme Administrative Court) referred to the Court for a preliminary ruling under Article 177 of the EC Treaty two questions on the interpretation of Council Directive 90-314-EEC of 13 June 1990 on package travel, package holidays and package tours (OJ 1990 L 158, p. 59, hereinafter `the Directive').

2 Those questions arose in the context of administrative proceedings brought by AFS Intercultural Programs Finland ry (`AFS Finland'), a non-profit-making association operating in Finland which coordinates student exchanges at international level, with regard to whether the Directive, and in particular Article 7 thereof, applies to activities such as those engaged in by AFS Finland.

3 The first recital of the preamble to the Directive provides that one of the main objectives of the Community is to complete the internal market, of which the tourist sector is an essential part; the fifth recital provides that the Council welcomed the Commission's initiative in drawing attention to the importance of tourism and took note of the Commission's initial guidelines for a Community policy on tourism; and the seventh recital provides that tourism plays an increasingly important role in the economies of the Member States and that the package system is a fundamental part of tourism.

4 According to Article 1, the purpose of the Directive is to approximate the laws, regulations and administrative provisions of the Member States relating to packages sold or offered for sale in the territory of the Community.

5 Article 2 is worded as follows:

`For the purposes of this Directive:

1. "package" means the pre-arranged combination of not fewer than two of the following when sold or offered for sale at an inclusive price and when the service covers a period of more than twenty-four hours or includes overnight accommodation:

(a) transport;

(b) accommodation;

(c) other tourist services not ancillary to transport or accommodation and accounting for a significant proportion of the package.

The separate billing of various components of the same package shall not absolve the organiser or retailer from the obligations under this Directive;

2. "organiser" means the person who, other than occasionally, organises packages and sells or offers them for sale, whether directly or through a retailer;

...'

6 Articles 3 to 6 contain provisions relating to the protection of the consumer against certain risks inherent in package travel, namely misleading information in the descriptive matter concerning a package, the method of payment of the price of the package and blurring of the responsibility to be apportioned as between the organiser and/or the retailer of the package and the various suppliers of services whose combined services constitute said package.

2000

7 Article 4(3) of the Directive provides that the consumer may transfer his booking, where he is prevented from proceeding with the package, after having first given the organiser or the retailer reasonable notice of his intention before departure, to a person who satisfies all the conditions applicable to the package.

8 Article 7 of the Directive provides that `the organiser and/or retailer party to the contract shall provide sufficient evidence of security for the refund of money paid over and for the repatriation of the consumer in the event of insolvency'.

9 The Directive was implemented in Finland by two laws: the valmismatkaliikelaki (Law on package travel firms) No 1080-1994 and the valmismatkalaki (Law on package travel) No 1079-1994.

10 Under Law No 1080-1994, persons engaged in the business of organised travel must be registered in the register kept by the Kuluttajavirasto (`Consumer Protection Office'). Paragraph 8 of that Law requires travel organisers to provide a security approved by the Consumer Protection Office to protect the rights to which the traveller is entitled under Law No 1080-1994, in the event of insolvency.

11 According to its statutes, AFS Finland's object is to promote international cooperation and exchanges between various cultures. To that end, like its sister organisations in other countries, it organises exchange programmes for students aged between 16 and 18 years of age. AFS Finland relies for its activity on the support of various donors and foundations as well as on the work of volunteers. It receives aid from the Finnish State in order to finance its activity.

12 AFS Finland sends students abroad twice a year, usually for a period of 6 to 11 months. The students attend school in the host country and lodge with families which put them up free of charge. AFS Finland selects the students and places them in families on the basis of interviews. Next, the association arranges the students' transport to the host country by scheduled flights and, as a rule, the host family collects the student at the arrival point. Before departure, the students and their parents follow preparatory courses on conditions abroad.

13 10% of the cost of the journey is paid when the student is admitted to the exchange programme, that is to say normally about 10 months before departure. The balance is then paid before the beginning of the visit, in three instalments. On departure, the student receives a pre-paid return air ticket. Part of AFS Finland's fees goes to a reserve fund which ensures, in particular, the students' transport home where the return ticket issued to them cannot be used.

14 On 25 August 1995 the Consumer Protection Office informed AFS Finland that it considered the student exchange activities of that association to be comparable with the exercise of package travel business. The Consumer Protection Office set a time-limit of one month for AFS Finland to register in the register of package travel businesses warning it that, should it fail to do so, it could prohibit it from pursuing its activities. Since AFS Finland did not comply with the request to register, the Consumer Protection Office, by decision of 14 October 1996, ordered it to suspend its business.

15 AFS Finland applied to the Korkein hallinto-oikeus for an order annulling the decision, claiming that it was not a package travel organiser within the meaning of the directive.

16 In those circumstances, the national court decided to stay proceedings pending a preliminary ruling by the Court of Justice on the following two questions:

`(1) Does a student exchange of approximately six months' or one year's duration, the purpose of which, so far as the student is concerned, is not a holiday or tourism but to attend an educational establishment in a foreign country and familiarise himself with the people and culture of that country by staying free of charge with a local family as a family member fall, wholly or in part, within the scope of Council Directive 90-314-EEC of 13 June 1990 on package travel, package holidays and package tours? Are certain characteristics which indicate the non-commercial nature of the organiser of the exchanges, such as the facts that participants in the exchange programme are only required to pay part of the costs of the programme, that the exchanges are devised by way of collaboration between non-profit-making associations in various countries, and that they rely largely upon voluntary work and are financed with public funds set aside for cultural activities, relevant to the question whether the student exchanges fall within the Directive's scope?

(2) In the event that the student exchanges do fall with the general scope of the Directive, the Court is then asked to answer the following questions concerning the detailed interpretation of Article 2:

(a) Is a long-term stay, free of charge, with a family, where the guest is treated almost like a child of the family, to be considered accommodation within the meaning of Article 2(1)(b)?

(b) Are the training of the students and their parents, the selection of the host families and educational establishments in the host country and the preparation of documentation relating to the host country to be considered other tourist services within the meaning of Article 2(1)(c)?'

17 By the first part of its first question, the national court is asking essentially whether the Directive applies to journeys:

- consisting of student exchanges of six months' or one year's duration;

- the purpose of which is attendance by students at an educational establishment in a host country in order to familiarise themselves with the people and culture of that country; and

- during which the students are accommodated free of charge with a local family as a family member.

18 AFS Finland submits that applying the Directive, in particular Article 7 thereof, to its activity would cause it to incur excessive costs for providing a security and these would give rise to an increase in costs to each student, which would have a detrimental effect on student exchanges at both international and national level. It observes that the purpose of such exchanges is to promote education in an international spirit as well as international peace and understanding. In order to attain that objective, AFS Finland must convey young people to host countries and find them host families, but that package is not organised with touristic purposes in mind and the journey cannot be considered to be a significant proportion of the experience to be gained from the student exchange.

19 AFS Finland further submits that the specific need to protect the consumer, for which the Directive is intended to provide, has been brought about by the stiffening of competition in the tourist industry. However, non-profit-making organisations do not operate in a similar competitive context and their operation does not present characteristics which could undermine consumer protection. AFS Finland takes the view that travel in the context of a student exchange programme is therefore excluded from the scope of the Directive.

20 The Finnish Government submits that the Directive cannot be interpreted as meaning that only holiday travellers benefit from the protection introduced by the Directive. Nor does the Directive mean that journeys must be organised or offered for sale in the context of a business. Only an activity pursued occasionally is excluded from its scope. Moreover, no special condition as to the type, level or duration of accommodation was provided for in the Directive. According to the definition given, packages are to be sold or offered for sale at an inclusive price. The fact that, in the case in the main proceedings, accommodation is of a certain duration and free of charge is of no relevance to the application 2000 of the Directive. The essential element is whether the organisation of accommodation is included in the package. Travel in the context of student exchanges includes therefore the organisation of transport and accommodation simultaneously, so that it is not appropriate to interpret the concept as `other tourist services'.

21 The United Kingdom Government submits that it is plain from the purpose and general scheme of the Directive that it applies to the tourist sector and that it does not cover educational activities of the kind engaged in by AFS Finland. The fact that Article 2(1)(c) of the Directive refers to `other tourist services' means that, in order for the package to fall within the scope of the Directive, the other two elements must also be offered within the context of the provisions of tourist services.

22 According to the Commission, the Directive is applicable irrespective of the purpose of the journey, even if, for example, the consumer is travelling to his destination for educational purposes. Moreover, student exchanges do not fall outside the scope of the Directive merely because their organisers are not engaged in a commercial activity. Furthermore, the Directive is applicable even where the consumer does not himself pay the full cost of the journey.

23 The Commission claims in addition that the fact that admission to exchange programmes is subject to an assessment of the student's personality and of his ability to adapt to the place where the programme is held and to the family which hopes to host him indicates that it is not a package within the meaning of the Directive. Thus, participation in student exchanges is not based on objective factors and Article 4(3) of the Directive, under which the consumer is entitled, where he is prevented from proceeding with the package, to transfer his reservation to a person who satisfies all the conditions applicable to the package, does not apply. Next, the Commission submits that the student exchanges organised by AFS Finland are not a package within the meaning of the Directive on the ground that a long-term stay free of charge with a family where the student is treated as a member thereof cannot be considered to be accommodation within the meaning of the Directive. Finally the Commission states that the tourist services which they comprise are not a significant proportion of the packages.

24 First of all, it should be borne in mind that, according to Article 2(1) of the Directive, a package is comprised of the pre-arranged combination of not fewer than two of the following three elements: `transport', `accommodation' and `other tourist services not ancillary to transport or accommodation and accounting for a significant proportion of the package' when the service covers a period of more than 24 hours or includes overnight accommodation.

25 Since AFS Finland organises student travel to the host country on scheduled flights, the journey in question contains the transport element required by Article 2(1) of the Directive.

26 So far as concerns the interpretation of `accommodation', it should be observed that, even if, traditionally, it is hotels, hostels or similar establishments which provide such a service for consideration, the fact that the stay is at such an establishment providing such service for consideration does not constitute an essential element of the definition of accommodation for the purposes of the Directive.

27 It should further be pointed out that, even if the accommodation included in package travel is normally of relatively short duration, that cannot be regarded as a defining element of the term `accommodation' within the meaning of the Directive. As the Finnish Government points out, under Article 2(1) of the Directive, any travel exceeding 24 hours falls within the definition of packages, since no `maximum' duration has been provided for.

28 None the less, it does not necessarily follow from the foregoing that the period spent by a student with a host family where he is treated as a member of that family and as if he were another child should be described as accommodation within the meaning of the Directive. Even though the type of accommodation, the fact that it is free of charge and the duration thereof are not, as such and taken in isolation, defining elements of the concept of accommodation for the purposes of the Directive, their combined effect is such that `hosting' which possesses all those characteristics cannot be described as accommodation within the meaning of the Directive.

29 It must therefore be concluded that student exchanges such as those at issue in the main proceedings do not contain the element of accommodation required by Article 2(1) of the Directive. It is therefore necessary to come to a conclusion on the question whether such exchanges comprise `other tourist services not ancillary to transport or accommodation and accounting for a significant proportion of the package'.

30 In this connection, it should first be observed that selection of a school by the organiser of the package cannot in itself be regarded as a tourist service within the meaning of Article 2(1)(c) of the Directive. The specific purpose of such a service, offered to the students taking part in international student exchanges, is the education of the participants.

31 Next, the service constituted by the selection of a family to host a student during his stay is in any event an ancillary service within the meaning of Article 2(1)(c) of the Directive and is therefore not covered by the concept of other tourist services.

32 Finally, even supposing that preparation of the documentation necessary for a stay in another country and the courses which the students follow with their parents before departure in order to prepare for life abroad could be considered to be covered by the concept of other tourist services, they do not fulfil one of the criteria specified in Article 2(1)(c) of the Directive, namely that of accounting for a significant proportion of the package.

33 In those circumstances, it must be held that student exchanges such as those in issue in the present case do not contain the necessary elements to be regarded as package travel within the meaning of the Directive.

34 The answer to the first part of the first question must therefore be that the Directive does not apply to travel:

- comprising student exchanges of about six months' or a year's duration;

- the purpose of which is attendance by the student at an educational establishment in the host country in order to familiarise himself with its people and culture; and

- during which the student stays with a host family as if he were a member thereof free of charge.

35 In view of the foregoing, there is no need to reply to the other questions put by the national court.

Costs

36 The costs incurred by the Finnish Government, the United Kingdom Government and the Commission, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the proceedings pending before the national court, the decision on costs is a matter for that court.

On those grounds,

THE COURT (Fifth Chamber),

in answer to the questions referred to it by the Korkein hallinto-oikeus by order of 23 June 1997, hereby rules:

Council Directive 90-314-EEC of 13 June 1990 on package travel, package holidays and package tours does not apply to travel:

- comprising student exchanges of about six months' or a year's duration;

- the purpose of 299 which is attendance by the student at an educational establishment in the host country in order to familiarise himself with its people and culture; and

- during which the student stays with a host family as if he were a member thereof free of charge.