By Asya Vladimirova, Dimitrov, Petrov & Co. Law Firm
With effect frоm May 11, 2020, cultural events on open-air stages and cinema visits were allowed with a limitation of attendees of up to 30% of their maximum capacity. The return of mass events in full and in closed halls, however, is currently uncertain in terms of time. Along with the economic instability, organisers are facing a plethora of legal issues regarding the cancelled events and the holding of new ones in the perilous situation during the Covid-19 pandemic.
Can organisers postpone events and for how much longer?
In practice, the ban on holding mass events found a large number of planned events and purchased tickets for them, and the holders were offered a new date, postponement with unclear further date or full/partial refund. While part of the audience considers the postponement reasonable, another part is seeking its right to a refund in the short term.
In line with the guidelines of the European Commission supporting tour operators, Bulgaria has adopted legal measures regarding the return of amounts for cancelled tourist travels due to the state of emergency. Tour operators have the right to offer vouchers for the amounts paid and alternative travel packages, and the traveller has the right not to accept them, in which case they should be reimbursed within twelve months of the lifting of the state of emergency, i.e. until May 13, 2021. Similarly, such measures can be applied by the event organisers, but as long as these are not enshrined in an act or instructions by a state body, their legality will remain in question. In other European countries, special public policies have been adopted with view of clarity and support for event organisers (Belgium, France, Germany, the Netherlands, etc.), which allow them to propose new dates and postpone the refund of tickets paid for a long period of time.
Currently, in Bulgaria such legislative decision or instruction by the Consumer Protection Commission does not exist. In the absence of such a ruling by a public authority, it is advisable for the organisers to adhere to the following general rules:
- In case the ticket purchasers have agreed to general terms and conditions, check if these contain force majeure clauses or other general clauses that give you the right to cancel or schedule the event for another date.
More often than not, mass events are held in accordance with the rules of terms and conditions set in advance by the organisers and which are binding for consumers who have agreed with them.
If in the terms and conditions applicable to the event there are clauses governing the rights of the organisers in case of force majeure or general provisions allowing the cancellation of the event, it is possible to exercise these rights. In any case, in order to rely on them, it should be assessed whether they comply with the requirement of good faith and fairness applicable with consumers.
- You can refer to clauses in the terms and conditions only if they comply with the Consumer Protection Act (CPA).
Your customers are considered “consumers” if they purchase a product or service from you as natural persons for purposes outside their business or professional activity.
Our legislation (in line with that of the EU) provides strong consumer protection and is based on the principle that the consumer is in a weaker position as opposed to the trader in terms of both the ability to negotiate and the degree of awareness. This situation results in the consumer accepting the terms and conditions established in advance by the trader, without being able to influence their content.
The CPA aims to ensure that the contract clauses proposed to consumers are clear and fair. Clauses in the terms and conditions, which contradict the good faith and create significant imbalance between the parties to the detriment of the consumer shall be invalid. In this sense, a potentially invalid clause may be one according to which the organiser has the right to reschedule an event indefinitely (even for reasons beyond its control), while retaining all prepaid ticket amounts.
- Your terms and conditions may not contain cancellation/postponement clauses, or you may not be able to rely on them due to the possibility of them proving invalid. In case the event has become impossible as a result of the ban on holding mass events and the tickets have been sold before the ban occurs, the legal rules for objective impossibility of performance (force majeure) will apply. You will have the right to not hold the event, but you will owe a refund of the amounts received for tickets in the short term.
Scheduling a new date for the event or providing a voucher/alternative event will be considered lawful with the consent of the ticket holders. This can be achieved by amending the applicable terms and conditions, for which you can notify your customers via telephone, e-mail or mailing address provided by them. However, if a customer does not agree with the change, he/she has the right to cancel the ticket and request a refund within one month of the notification. In the absence of such an objection, the ticket holder will be bound by the new conditions.
Essential tips when selling tickets for upcoming events
Even when the ban on mass events is lifted, the risk of the COVID-19 pandemic will still impact their holding for a long time. It is advisable for the organisers to be mindful about this risk in the terms and conditions of the event, formulating fair and clear force majeure clauses. Although the fairness assessment applies on a case-by-case basis, the following general guidelines may be drawn:
- The cancellation or postponement of the event should take place in the existence of circumstances beyond the organisers’ control, which make it objectively impossible. Generally worded clauses, according to which you reserve the right to cancel/postpone the event at your discretion as organisers, are likely to not comply with the requirement of fairness.
- It is important whether the clause is fair in relation to the time when the consumers will agree to the terms and conditions for the event. Circumstances of which you as an organiser should be aware at that time and which may affect further performance will be of importance. For example, if on May 15 it is still unclear when the ban on mass indoor events will be lifted and you schedule such an event for June 15, it would be fair to fully assume the risk that the event will not take place on that date if the restrictions are still in place. However, if the mass events were allowed on May 15, there could be some risk distribution between the organiser and the consumers from not holding the event due to the introduction of a new ban.
- The clauses should be clear and easy to understand. Consumers should be informed in a transparent manner about the real risk of cancellation/postponement of the event and the consequences for them related to this risk (e.g. options to revalidate tickets for another date, receive vouchers for other events, to be refunded within a certain term, etc.).
- Settle the cases in which consumers have the right to cancel the event. Such clauses should also meet the “fairness test” and provide an equal opportunity for the consumer to cancel the event should an objective impossibility occurs (for example, if travel to the place where it will take place is prohibited).
Definitely, there will be more certainty and clarity for organisers of mass events if mitigation measures are adopted at state level.
*This article has been prepared for informational purposes only and does not constitute legal advice.