Legal Case Study

Legal Case Study

This case study is based on Montreal Convention of 1999 and European Union's Regulation 261/2004. The Montreal Convention, formally the Convention for the Unification of Certain Rules for International Carriage, is a treaty adopted by a Diplomatic meeting of ICAO member states in 1999. It amended important provisions of the Warsaw Convention's regime concerning compensation for the victims of air disasters. The Convention re-establishes urgently needed uniformity and predictability of rules relating to the international carriage of passengers, baggage and cargo. Whilst maintaining the core provisions which have successfully served the international air transport community for several decades (i.e. the Warsaw regime), the new convention achieves the required modernisation in a number of key areas. It protects passengers by introducing a two-tier liability system and by facilitating the swift recovery of proven damages without the need for lengthy litigation.

Under the Montreal Convention, air carriers are strictly liable for proven damages up to 100,000 Special Drawing Rights (SDR), a mix of currency values established by the International Monetary Fund (IMF), approximately $138,000 per passenger at the time of its ratification by the United States in 2003 (as of June 2009, around $154,800). Where damages of more than 100,000 SDR are sought, the airline may avoid liability by proving that the accident which caused the injury or death was not due to their negligence or was attributable to the negligence of a third party. This defence is not available where damages of less than 100,000 SDR are sought. The Convention also amended the jurisdictional provisions of Warsaw and now allows the victim or their families to sue foreign carriers where they maintain their principal residence, and requires all air carriers to carry liability insurance.

The Montreal Convention changes and generally increases the maximum liability of airlines for lost baggage to a fixed amount 1000 SDR (the amount in the Warsaw Convention is based on weight of the baggage). Montreal Convention was brought about mainly to amend liabilities to be paid to families for death or injury whilst on board an aircraft.

While the Convention is a success (but with considerable flaws), the process of its formulation was painfully slow and controversial. The Warsaw Convention was a farsighted and progressive instrument in 1929 but in less than three decades became antiquated - in particular with respect to the unrealistically low limits of liability and excessive formalism of the documentation of carriage. Only the 1955 Protocol of The Hague and the 1961 Supplementary Convention of Guadalajara effectively introduced some improvements while the 1971 Guatemala City Protocol and the 1975 Montreal protocols remained in limbo for a quarter of the century. Governments took no action for the modernization of the “Warsaw system” for over 20 years between the Montreal Conference of 1975 and the session of the Legal Committee in 1996. The initiative for an effective action was not taken by states but by airlines themselves - the Japanese initiative of 1992 was a trailblazer for admission that airlines do not need the shield ...