Warsaw Convention

The Warsaw Convention is an international convention which regulates liability, in

the event of accident, for international carriage of persons, luggage or goods
performed by aircraft for reward. It was the first comprehensive legal framework
governing aviation at the international level, playing an essential role in supporting
the development of the sector and establishing a set of principles, most of which are
still effective and constitute the basis of modern aviation law.

This Convention mandates carriers to issue

 passenger tickets;

 requires carriers to issue baggage checks for checked luggage;

 creates a limitation period of 2 years within which a claim must be brought;

and

 limits a carrier's liability (maximum of 125,000 francs for personal injury; 250
francs per kilogram for checked luggage and cargo; 5,000 francs for the hand
luggage of a traveller). The sums limiting liability shall be deemed to refer to
the French franc consisting of 65 milligrams gold of millesimal fineness 900,
which may be converted into any national currency in round figures.

Hague Protocol

The Hague at which the Warsaw Convention of 1929 was amended on 28

September 1955 by The Hague Protocol. The limit of liability with respect to
persons had been doubled to 250,000 francs; in other respects, the Protocol made
only minor adjustments or clarifications, and contributed to some simplifications of
the documents of carriage.
Guatemala Protocol

The Guatemala Protocol contained a number of controversial points: the liability

limit for passenger claims was substantially increased and fixed limits were
introduced (i.e. it is not possible to break the limits), the force majeure defence was
removed in relation to passenger claims, and the fifth jurisdiction (i.e. the court of the
place of residence of the passenger) was introduced. This Protocol never came
into force.

Montreal Agreement of 1966

Early in the 1960s, it became clear that the United States were not prepared to ratify
The Hague Protocol of 1955 as they considered the liability limits for carriage of
persons in the said Protocol too low. Pursuant to the Montreal Agreement the airline
companies adjusted their conditions of carriage and set out that the liability
limit with regard to death, wounding or other personal injury suffered by a passenger
would be US$ 58,000 exclusive of legal costs and US$ 75,000 including legal
costs.

Montreal Convention 1999

A major feature of the new legal instrument is the concept of unlimited liability.
Whereas the Warsaw Convention set a limit of 125,000 Gold Francs in case of death
or injury to passengers, the Montreal Convention introduces a two-tier system. The
first tier includes strict liability up to 100,000 Special Drawing Rights (SDR),
irrespective of a carrier’s fault. The second tier is based on presumption of fault of
a carrier and has no limit of liability.

*SDR- IMF instrument to measure relative value of the national currency

Malaysian Aviation Law

Malaysia has ratified the following conventions in relation to international carriage of

passengers, baggage and cargo by air through domestic legislation - namely, the
Carriage by Air Act 1974 (CAA 1974):

 Warsaw Convention 1929 as amended at The Hague 1955: The Warsaw-

Hague Convention was given force of law by its incorporation in the First
Schedule of the CAA 1974.

 Warsaw-Hague Convention amended by Montreal Protocol No.4: The

Warsaw-Hague Amended Convention was given force of law by its
incorporation in the Fifth Schedule of the CAA 1974.

 Guadalajara Convention 1961, a convention supplementary to the Warsaw

Convention signed in Guadalajara: The Supplementary Convention was given
force of law by its incorporation in the Second Schedule of the CAA 1974.

 Montreal Convention 1999, a convention signed in Montreal on 28 May 1999:

The Montreal Convention was given force of law in 2007 through amending
legislation, Carriage by Air (Amendment) Act 2007, which amended the CAA
1974 and incorporated the Montreal Convention in the Sixth Schedule of the
CAA 1974.

Key cases- With regards to Carrier Liabilities

1. All Nippon Airways Co Ltd v Tokai Marine & Trading Co Ltd [2013] 4 MLJ
744

Facts:
All Nippon Airways Co Ltd, the consignor ('the plaintiff'), had sent a
consignment of 30 cartons of fresh tuna fish ('the cargo') by air to
Kuwatanatoukaimutu Co Ltd ('the consignee') in Japan. MAS Kargo, the
defendant's ground handling agent ('the defendant's agent') had received the
cargo in good condition. While the cargo was under the care and control of the
defendant's agent, part of the cargo, namely 20 of the 30 cartons, was crushed
and damaged and became unfit for human consumption. Consequently, the
plaintiff could only bill the consignee in Japan for the 10 cartons that were intact
instead of the entire 30 cartons. The plaintiff's loss arising from the damaged
cargo led to the plaintiff sending the defendant a notice of intention to claim for
damages ('the notice') under article 26(2) of the Convention for the
Unification of Certain Rules Relating to International Carriage by Air ('the
Warsaw Convention'). This led to the plaintiff commencing legal action against
the defendant and obtaining judgment in the sum of RM198,144.16 with interest
and costs in the sessions court. On appeal the Judicial Commissioner ('the JC')
affirmed the sessions court judgment. The defendant appealed to the COA to
either wholly repudiate or limit the plaintiff's claim.

Law:
 Whether defendant's liability was governed by the Carriage by Air Act
1974 ('the Act'), which incorporated the Warsaw Convention, to the
exclusion of common law.

 Alternatively, the defendant argued that its liability was capped at the
total amount of RM110,400.

Decision:
 The carriage of the cargo from KLIA to Japan in the present case was
an international carriage by air within the definition of article 1(2) of the
Warsaw Convention, which had the force of law in Malaysia
under s3(1) of CAA 1974 The trite principle, which may be gleaned from
the case authorities, was that in any carriage by air such as the
transaction in the present case, the governing law was the Act read with
the Warsaw Convention, to the exclusion of common law causes of
action

 Under article 22(2)(a) of the Warsaw Convention, the defendant's

liability as carrier was limited to a sum of 250 francs per kg unless the
plaintiff/consignor had made a special declaration of interest. In the
 present appeal, the plaintiff had not made a special declaration of
interest and the defendant's liability was thus regulated by the limit
prescribed in article 22(2)(a) of the Convention read with the Carriage
by Air Order 1978, which was RM48 per kg. Thus the defendant's
liability was limited to the sum of RM110,400 (2,300kg x RM48 per kg).

2. Wang Bao’An & Ors v Malaysian Airline System Bhd and other
cases [2018] 11 MLJ 585

Facts:
The court directed Malaysian Airline System Bhd, a common defendant in all
cases, to file applications under O 14A of the Rules of Court 2012 for the
determination of two questions of law. In broad terms, the first question was
whether the Convention for the Unification of Certain Rules for International
Carriage by Air 1999 (‘the Montreal Convention’) and the Convention for the
Unification of Certain Rules relating to International Carriage by Air 1929 (‘the
Warsaw Convention’) provided exclusive causes of action against a carrier and,
as a consequence, ousted all common law causes of action. The second was
whether the cap on liability for a dependency claim imposed by s 7 of the Civil
Law Act 1956 applied in respect of a claim made under the Montreal
Convention. The present cases arose out of the disappearance on 8 March
2014 of a Boeing 777 bearing the registration No 9M-MRO and flight code
MH370. At the material time, MH370 was operated by Malaysian Airline System
Bhd.

Law:
Whether Montreal Convention and Warsaw Convention provided exclusive
causes of action against carrier?

Decision:
Court upheld and endorsed the exclusivity principle in that the Montreal
Convention and Warsaw Convention provides for the exclusive cause of action
 in connection with liability of the carrier resulting in the personal injury or death
of passengers in an international carriage by air within the scope of both the
Conventions.

Aviation Insurance

Types:
 Hull insurance – for the aircraft itself

 Passenger legal liability – if passengers are harmed

 Third party liability – which covers damage caused by the operation of

an aircraft, for example if it crashes on the ground.

 Hull War Market- special cover can be bought for losses arising from
acts of war or terror against an aircraft. This insurance protection also
covers civil war, sabotage, strike, civil unrest, internal commotion,
hijacking, etc. Losses caused by nuclear weapons are always excluded

Hull Claims

Risk Assessment:

Considerations in regards to the size of the fleet, the age of the aircraft, and
how much they are still worth. Other matters to be considered are: How often
are they serviced, and by whom? What claims have there been in the past?
What routes are flown and – above all – where will the aircraft be starting and
landing?
 Risk Spread:

1. A primary insurer takes on 100% of the policy, and then divides that part of the
risk that it does not wish to hold between other insurers, who all then technically
act as reinsurers.

2. Several primary insurers are involved in the policy, with one acting as lead
insurer. When there is a loss claim, it is handled by the lead insurer.

3. Some countries have a statutory requirement that insurance policies — such

as for an airline – should be issued by a local insurer. When this local insurer
has neither the financial strength nor the specific know-how to take on this
transaction, the risk is passed on to the international aviation market in the form
of reinsurance. A lead reinsurer then often takes over the administration and
claims settlement.

Most primary and reinsurance policies are placed by specialist brokers, and the
London market plays a major role in aviation insurance.

Passenger Claims

Nature of carrier liability:

An air carrier’s liability is strict and subject to the conditions set out in article
17.1 of the Montreal Convention, namely that a carrier is liable for damage
where a passenger suffers a bodily injury while in the process of embarking
or disembarking or on board the aircraft.

Liability Limits:

Damages for personal injury or death are unlimited unless the carrier can prove
that: (1) such damage was not due to the negligence or other wrongful act or
omission of the carrier or its servants or agents; or (2) such damage was solely
due to the negligence or other wrongful act or omission of a third party.
If a carrier is able to prove that it was not negligent or that it did not commit a
wrongful act, damages will be subject to a limit of 128,821 special drawing rights
(approximately £133,000).

What are the main defences available to the air carrier?

The English courts will apply the defences of contributory negligence of a

passenger, all reasonable measures and wilful misconduct.

Whether a carrier can rely on the contributory negligence of a passenger

depends on the precise facts of a case. The English courts have held that
contributory negligence did not feature in a case of injury as a result of
turbulence where the passenger did not fasten his seat belt during a fight
(Goldman v Thai Airways International Ltd [1981] 170 ER 266).

It is well established by the English courts that ‘all reasonable measures’ should
be interpreted as ‘all reasonably necessary measures’; Chisholm v British
European Airways [1963] 1 Lloyd’s Rep 626

Statute of limitations

The English courts uphold the Montreal and Warsaw two-year period of
limitation, which is absolute and not subject to tolling; Sidhu v British Airways
plc [1995] PIQR P 427 and Phillips v Air New Zealand [2002] 1 All ER
(Comm) 801.

A claim must be fled and issued at court within that two-year period and
thereafter served within either four or six calendar months of issue depending
on whether it is to be served within or outside the jurisdiction.

What damages are recoverable for the death of a passenger?

In the event of death of a passenger, section 5 of the CAA 1974, read together
with the Third Schedule, enumerates the identity of persons who are entitled to
enforce the benefit of the liability provision under article 17(1) of the Montreal
 Convention or article 17 of the Warsaw Convention. Members of the
passenger’s family entitled to enforce this right have been specified as the wife
or husband, parent or step-parent, grandparent, brother or sister, half-brother
or half-sister, child or step-child and grandchild. These members of the
passenger’s family would be the dependants who are permitted to make a
dependency claim in the event of an international aviation accident resulting in
death.

The High Court ruled in Wang Bao’ An & Ors v Malaysian Airline System
Berhad & Other Cases [2018] 11 MLJ 585 that in the case of a death of a
passenger under section 5 of the CAA 1974 read together with article 17(1)
of the Montreal Convention, the applicable law to determine the measure and
quantum of damages would be that laid down in section 7 of the CLA (as
amended by the Civil Law (Amendment) Act 2019). This action would be a
dependency action for the benefit of the deceased dependants as described in
the Third Schedule of the CAA 1974.

Under the amended section 7 of the CLA:

 the dependant is entitled to a fixed sum of 30,000 ringgit representing damages

for bereavement;

 damages for loss of support is to be computed in accordance with the

prescribed statutory formula laid down under section 7(3) of the CLA; and

 expenses that may be awarded would include funeral expenses and services
incurred owing to the death.

As regards punitive damages, article 29 of the Montreal Convention disallows

such damages. Section 7 of the CLA also envisages that there would be no
award for exemplary damages.

Investigatory Authority

The governing statutes relating to aviation accident investigation are the CAA
1969 (as amended by Civil Aviation (Amendment) Act 2017), the Civil Aviation
Regulation 2016 (as amended by the Civil Aviation (Amendment) Regulations
2018) and the Civil Aviation Authority of Malaysia Act 2017. Under Part
XXVI of Malaysian Civil Aviation Regulation 2016, the Minister of Transport will
appoint persons as investigators to conduct investigation of an accident or
incident, and among them an investigator in charge who will have powers to
direct, organise and supervise the overall investigation. This investigation will
be conducted in accordance with Annex 13 to the Chicago Convention 1944.

Mandatory Insurance Requirement

Apart from the provisions under article 50 of the Montreal Convention, where it
is mandatory for state parties to require the carrier to maintain adequate
insurance covering their liability, there are no statutory requirements for
mandatory insurance apart from the specific insurance to be taken out by the
Authority of Civil Aviation Authority Malaysia on any aircraft detained for default
of payment of fees or charges against the loss of or any damage to the aircraft
during detention as provided under Regulation 182 of the Civil Aviation
Regulation 2016. The beneficiary of this insurance policy would include the
owner of the aircraft.

Different types of Passenger Claims

 Passenger bodily injury liability protects the insured from liability

imposed for damages for bodily injury, disease, sickness, mental
distress, or death suffered only by passengers in the case of insurance
event stated in the insurance contract.

*A passenger is defined as any person who is in, on, or boarding the

aircraft for the purpose of flying therein or any person who alights (exits)
the aircraft following a flight or attempted flight. Limits of liabilities are
stated per person and per accident.

 Bodily injury excluding passengers protects the insured from liability

imposed for damages for bodily injury, disease, sickness, mental
 distress, or death suffered by any person or persons other than
passengers in the case of an insurance event stated in the insurance
contract.

Insurance Coverage Held by Airlines

Montreal treaty holds the carrier liable, because an aircraft accident can create a
financial catastrophe for both small and large operators. Limits vary by country. In the
United States, for example, any passenger carrier is required to “maintain aircraft
accident liability insurance coverage for bodily injury to or death of aircraft passengers,
with minimum limits of $300,000 for any one passenger, and a total per involved
aircraft for each occurrence of $300,000 times 75 percent of the number of passenger
seats installed in the aircraft.

Major airlines carry total liability limits of up to $1 billion and, in some cases, make
additional payments simply to avoid further costs in court.

Ie: Right after the US Airways Flight 1549 crash landed in the Hudson River in 2009,
the airline offered each passenger $5,000 to cover immediate needs. This was aside
from any legal liability limits.