Trade & Transport Bulletin - Montreal Convention 1999 to apply in Australia

On 20 March 2008, the Australian government introduced into Parliament the Civil Aviation Legislation Amendment (1999 Montreal Convention and Other Measures) Bill 2008. The Bill aims to bring Australia's aviation laws up to speed with the international trend, hopefully leading to a clearer and more unified liability regime for carriers.

The Bill, if passed, will give the Convention for the Unification of Certain Rules for International Carriage by Air, Montreal 28 May 1999 (Montreal Convention), force of law in Australia by amending the Civil Aviation (Carriers' Liability) Act 1959 (Cth) (Civil Aviation Act) and various other Australian Acts relating to aviation. 

The introduction of the Bill follows lengthy consultation with industry, a Discussion Paper having been issued in January 2001.

The Montreal Convention can be expected to apply to international carriage by air in the near future.

The present system: the Warsaw System

Australia is presently signatory to the Convention for the Unification of Certain Rules Relating to International Carriage by Air (Warsaw Convention) Warsaw 12 October 1929, which established between member States a uniform liability framework for air carriers at a time when aviation was a new and burgeoning industry.   

The Warsaw Convention was subsequently amended seven times (Australia has ratified three of the amendments), unfortunately without the uniformity in ratification by States enjoyed by the original Warsaw Convention.  The amendments gave rise to what is known as the Warsaw System, whereby the rules for liability in respect of international carriage depend upon the iteration of the Warsaw Convention adopted by States of destination and departure for the carriage concerned.

Not surprisingly, the result is a complex web of international agreements, each with differing liability limits, for particular types of loss and damage arising out of air carriage.

The proposed system: the Montreal Convention

If acceded to, the Montreal Convention will apply only to international carriage and as mentioned above, only where it has been ratified by the countries of destination and departure.  Where the countries of destination and departure have not ratified the Montreal Convention, the Warsaw System will still apply in respect of liability. 

The principal changes which the implementation of the Montreal Convention would have, if acceded to by Australia, relate to a carriers' liability for injury or death to passengers.

The Montreal Convention also prescribes limits on damages for loss or damage to cargo and baggage, and damage arising from delay in the scheduled arrival of a passenger, baggage and freight.

Injury or death to passengers during carriage

Depending upon which amendments to the Warsaw System countries of departure and destination have ratified, a carrier's liability for personal injury or death to a passenger caused by an accident on board or during embarkation or disembarkation, varies from anywhere between US$10,000 (the cap set in 1929 which has not been adjusted for inflation) to 260,000 SDRs, (which at current rates equates to about AU$450,000). 

It should be noted that the Civil Aviation Act presently imposes higher liability limits on Australian carriers.  However these limits cannot be imposed upon foreign carriers.  The comparatively generous limits of liability imposed (from a claimant's perspective) may explain the hesitance of the previous government to ratify the Montreal Convention.

Under the Montreal Convention, a two-tiered framework for liability is imposed upon carriers depending on whether a claim for personal injury or death is in strict liability, or based upon the failure by a carrier to exclude fault on its behalf.  Significantly, the cap on damages against a carrier under the Warsaw System is lifted for fault based liability. 

The Montreal Convention provides the following for personal injury and death cases:

• For strict liability cases, subject to any reduction on the grounds of contributory negligence, a claim of up to 100,000 SDRs (about AU$172,000) can be made for personal injury or death, without demonstrating fault on the part of the carrier.  This is the first tier of liability under the Montreal Convention.
• For personal injury or death cases where the carrier is unable to prove that the damage was not a result of its own negligence or wrongful act, or that the damage was caused solely by the negligence or wrongful act of a third party, there is no limit on damages recoverable.  This is the second tier of liability under the Montreal Convention and significantly, the burden is upon the carrier to prove an absence of fault on its part.

Damages for delay and loss or damage to cargo and baggage

Under the Warsaw System carriers' liability for registered baggage is capped at AU$1,600 and at AU$160 for hand baggage.

The Montreal Convention limits a carrier's liability for destruction, loss, damage or delay of baggage at 1,000 SDRs (about AU$1,720), unless the passenger has declared a special interest in the baggage and paid a supplementary sum.  For cargo, a carrier's liability is limited to 17 SDRs (about AU$30) per kilogram of the packages concerned, unless a special interest is declared and a supplementary sum is paid.

For damage caused by delay in carriage by air of passengers, baggage or cargo, where a carrier cannot demonstrate that it took or it was not possible to take all reasonable measures to avoid the damage, the carrier's liability is limited to 4,150 SDRs (about AU$7,200).

Other changes

The Montreal Convention also provides for an additional jurisdiction in which claims for damages can be brought.  Under the Warsaw System damages claims could be brought in:

• A court in the State in which the carrier is ordinarily resident.
• A court in the State where the carrier has its principal place of business.
• A court in the State where the ticket was purchased or the contract made and where the carrier has an establishment.
• A court in the State of the passenger's destination.

The Montreal Convention allows a claim for personal injury or death to be brought in a court in the territory of a State party in which the passenger ordinarily resides, if the carrier has an establishment in that State and is a State to and from which the carrier operates.

In addition, the Montreal Convention provides that the limits of liability prescribed by it are to be reviewed at five-year intervals to account for inflation.

Finally, the Montreal Convention permits electronic ticketing and air waybills, simplifying passenger and cargo documentation.

Summary

At present 86 countries have ratified the Montreal Convention.

The Montreal Convention aims to modernise and consolidate the Warsaw System, to ensure the protection of the interests of consumers with respect to compensation and promote the development of international air transport operations and the smooth flow of passengers, baggage and cargo. 

To this end it:

• Implements a two-tier liability system in respect of passenger injury and death.
• Updates liability caps for loss arising from lost or damaged baggage and cargo.
• Makes provision for electronic ticketing and cargo documentation.
• Extends the jurisdictional grounds on which claims for personal injury and death may be brought.
• Makes provision for liability limits to be reviewed at five year intervals.

Readers will be notified when the Bill takes effect. 

For more information, please contact:

Marcus Saw, Solicitor
Tel +61 3 9274 5178
marcus.saw@dlaphillipsfox.com

Andrew Tulloch, Partner
Tel +61 3 9274 5825
andrew.tulloch@dlaphillipsfox.com