Daily Times

The new Convention introduces a two-stage test to establish liability against the carrier and to obtain damages more than US$75,000.

It is an understood notion that no price can ever match a person’s life and that no matter how much money is given to the families of the deceased, it can never bring them back. In the past decade or so, we have witnessed several air crashes, four of which were in Pakistan. Just to mention a few, the Malaysian Airlines flight MH370 on March 8, 2014, MH17 on July 17, 2014, Germanwings Airbus A320, flight 9525 on March 24, 2015, Lion Air Boeing 737-800 MAX, flight LNI 610 on October 29, 2018, AirBlue Airbus A320, flight PA202, on July 28, 2010, Bhoja Air Boeing 737-200 on April 20, 2012, PIA ATR 42-500 on December 17, 2016, flight PK661 flying from Chitral and PIA Airbus A320-200 on May 23, 2020, flight PK8303 flying from Lahore to Karachi.

These crashes, irrespective of their reasons, have caused irreparable trauma to the families of those onboard and significant losses to the airlines as well since they lost crew and their aircraft. The lost aircraft can be replaced. The issue is regarding those who lost their lives in these unfortunate incidents and how they could be compensated. Most of the times, the families are compensated monetarily.

The rules of compensation were originally written and governed through the Warsaw Convention of 1929. In the Convention, damages for the injury or death of a passenger were capped at $8300 per passenger. These rules were updated and replaced by the Montreal Convention in 1999, the limits of which were prescribed in 2003 and later revised in 2009.

The new Convention is an updated version that aims to establish a uniform set of rules relating to the international carriage of passengers, baggage and cargo. The approach taken in the new Convention is in consonance with the modern world. It introduces a two-stage test to establish liability against the carrier and to obtain damages more than US$75,000. As of September 2018, there are 156 signatories to the Convention, in which Pakistan is also included, along with the European Union and the Cook Islands.

The Montreal Convention was adopted by the International Civil Aviation Organization, making it easier to decide what rules will be followed. The Convention has seven Chapters and 57 Articles, each recognising the importance of protecting the interests of consumers in international carriage by air and the need for equitable compensation based on the principle of restitution. The scope of the Convention has been defined and explained in Chapter I, Article 1 which states that “the Convention applies to all international carriage of persons, baggage or cargo performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking.”

Chapter III, Article 17 is most relevant in terms of liability, which states that “the carrier is liable for damage sustained in case of death or bodily injury of a passenger upon condition only that the accident which caused the death or injury took place on board the aircraft or in the course of any of the operations of embarking or disembarking.”

The amount of compensation has been stated in Article 21, which states that “for damages arising under paragraph 1 of Article 17 not exceeding 100 000 Special Drawing Rights for each passenger, the carrier shall not be able to exclude or limit its liability. The carrier shall not be liable for damages arising under paragraph 1 of Article 17 to the extent that they exceed for each passenger 100 000 Special Drawing Rights if the carrier proves that (a) such damage was not due to the negligence or other wrongful act or omission of the carrier or its servants or agents, or (b) such damage was solely due to the negligence or other wrongful act or omission of a third party.”

The original amount of 100,000 SDRs was updated on December 28, 2019, to 128,821 SDRs as compensation per person for any death or injury arising due to the negligence of the carrier. Special drawing rights (SDR) refer to an international type of monetary reserve currency created by the International Monetary Fund (IMF) in 1969. The SDR is an artificial currency used by the IMF as an international reserve asset and built from a basket of important national currencies. The SDR basket is reviewed every five years to ensure that the basket reflects the relative importance of currencies in the world’s trading and financial systems. These currency amounts remain fixed for a period of five years, but the actual weights of currencies in the basket fluctuate as cross-exchange rates among the basket currencies in the international market move. The current make-up on the SDR for a fixed number of units of Currency for five years starting October 1, 2016, is US Dollar–0.58252, Euro–0.38671, Chinese Yuan–1.0174, Japanese Yen–11.900 and Pound Sterling–0.085946.

The value or weight of each SDR is calculated using the sum of specific amounts of each basket currency valued in U.S. dollars, as per the exchange rates quoted at noon each day in the London market. Since the value of each SDR fluctuates daily, for example, as of 22.05.2020, the value of 1 SDR is equal to 1.369 USD. This means that the value of 128,821 SDRs will be equal to 176,355.949 USD per person, as per Article 21 of the Montreal Convention.

The Convention gives passengers various options regarding a claim for compensation before a Court of Law. The first option is to exercise their right in the home country of the carrier, for example, the United Kingdom, in the case of British Airways. The second option available is the airline’s principal place of business or in other words, their base. For example, RyanAir is an Irish airline but also has its principal place of business in London, United Kingdom. The third option is to claim compensation at the place where the contract was made, for example, if a ticket of Qatar Airlines was purchased in Karachi, Pakistan, an action can also be brought there.

The rules governing the compensation scheme for passengers have been laid down clearly in the Montreal Convention 1999. It must also be noted that some member states have not ratified the Montreal Convention and as such, its rules are not binding on them. They may settle claims if they have any other laws in place.

The writer is a barrister at law and has an avid interest in aviation law and air crash investigation