Legal issues triggered by pandemics

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ROSEHACHEAs the rapid pace of H1N1 swine flu infection ebbs, general public concerns will subside, but it will take time.

In the meantime, listening to media announcements with an educated ear and tapping online resources is helpful in navigating the impact of the infections on your group contracts and other bookings.

For example, probably the best website dealing with the flu's impact is PandemicFlu.gov. For agency clients who purchased travel insurance, the WorldTravelCenter.com website provides information and links to H1N1 virus updates, as does TravelWeekly.com's ongoing coverage.

My intention here is to provide a legal analysis for agency owners who now find themselves with group contracts, corporate incentive clients or destination wedding clients who did not purchase "cancel for any reason" travel insurance and now refuse to travel to some destination, particularly to Mexico.

Specifically, in the face of strict attrition clauses, what should you advise your clients who have confirmed travel plans to Mexico within the next 30 days?

Here are some issues you will want to take note of as you develop a client strategy:

• The CDC's Mexico travel alert. As of May 5, the U.S. Centers for Disease Control and Prevention had in place a Travel Alert advising against anyone traveling to Mexico on nonessential business.

In terms of agent liability, the applicable legal standard is the following: Would a reasonably prudent travel agency owner recommend that clients fulfill their contract to travel to an area where a CDC travel alert has been issued for nonessential business?

Employers who insist that their workers travel to Mexico at this time may be vulnerable to lawsuits by employees, their family members or estates of employees who are required to travel to Mexico, then fall ill or, heaven forbid, die.

• Force majeure. Does the H1N1 virus constitute a force majeure -- the contractual provision that provides under what conditions a party may terminate or refuse to perform an agreement without liability?

Typically, these are extraordinary events or circumstances beyond the control of the parties. An epidemic/pandemic normally constitutes such an event, so it is important to note that the World Health Organization's director general, Dr. Margaret Chan, used the term pandemic on April 29.

There is a process of escalating definition, which affects the point at which a force majeure provision is actually triggered. Once the spread of an infectious disease is formally declared an epidemic or pandemic, the force majeure should apply.

In Mexico, a five-day suspension of all non-essential services from May 1 to 5 amounted to a mandatory and, in many cases, unpaid furlough for a substantial number of workers. In Mexico, the National Chamber of the Manufacturing Industry announced that its members did not have to pay workers who stayed home for five days due to force majeure. In support of its determination, the Chamber's attorney cited Article 427 of the Mexican Federal Labor Law.

• Substantial risk. In addition to force majeure, another legal argument is that pandemic diseases pose a substantial risk to the health of travelers that is likely not covered in any contract language.

• Commercial impracticability. If a client's incentive trip or a destination wedding is nonessential business, they should be excused from contract performance. This situation falls under the legal principle known as the "doctrine of commercial impracticability," because in the case of a pandemic, a trip to reward high-performing employees or to celebrate with a family party has its central contractual purpose frustrated by the course of events.

• Event cancellation insurance. In the future, consider event cancellation insurance, which is designed to protect the client's investment should a meeting have to be canceled due to forces beyond the organization's control. Make sure to ask the insurance supplier if epidemics/pandemics are excluded, and if so, is optional epidemic/pandemic insurance coverage available?

If a disease or epidemic is listed as an uninsurable risk, negotiate so that the contract language covers this now-foreseeable event.

Finally, the importance of written agreements for corporate and group travel is more crucial than ever. Certainly, rebooking to a domestic location as an immediate substitution or for a future date in Mexico is a workable option.

Lawyer Rose A. Hache focuses on travel industry-related law and legal matters. Email her at [email protected].

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