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New year, new rules: changes to MC99 and new MP14 regime

We explore the recent changes to two existing international aviation treaties, MC99 and the Tokyo Convention 1963, and the likely impact on aviation industry stakeholders.

Background

The Montreal Convention 1999 (MC99) contains an inbuilt mechanism which ensures that the liability limits it prescribes (denominated in SDRs, Special Drawing Rights) keep pace with inflation and other global economic factors. Every five years the International Civil Aviation Organisation (ICAO) reviews the accumulated rate of inflation and the Consumer Price Index of various global jurisdictions, including the United States, Europe, United Kingdom, Japan and China and makes recommendations as to whether MC99 limits should change. Earlier this year, ICAO proposed an increase of 13.9%.

The last adjustment to the liability limits was made in 2009 because ICAO's 2014 review did not recommend any change.

Recent developments

State parties were given three months from the notification date to voice any objections. If a majority object, the changes have to be referred to a Diplomatic Conference. ICAO has now confirmed that no majority of states notified their disapproval by 30 September 2019, so the revised limits will come into force from 28 December 2019.

In real terms, the increase to the SDR amounts (see below) means that (subject to proof of loss) additional compensation is available of:

  1. Approximately US$21,642 for death/bodily injury;
  2. Approximately US$898 for delay claims;
  3. Approximately US$216 for baggage claims; and
  4. Approximately US$4/kg for cargo claims, compared to the compensation previously recoverable under MC99.

By way of reminder (and where MC99 applies) the amounts recoverable for death/bodily injury act as a threshold (not a "limit") since any claim above the stated amount, the airline may defend by proving that it was not negligent.

Implications for air carriers

Air carriers should review their current General Conditions of Carriage (GCC) for passengers and cargo to ensure that the limits in their current contracts are adjusted to reflect the new Special Drawing Rights (SDR) amounts. The limits are as follows:

Convention Article Type of liability Original limit (SDR) Revised limit as of 30 December 2009 Revised limit as of 28 December 2019 US$ equivalent of revised limit
21 Death/bodily injury 100,000 per passenger 113,100 128,821 177,773
22(1) Delay 4,150 per passenger 4,694 5,346 7,377
22(2) Baggage 1,000 per passenger 1,131 1,288 1,777
22(3) Cargo 17 per kilo 19 22 30

The new limits will be incorporated into MC99 as a matter of international law from 28 December 2019 and will override any conflicting provisions which may be contained in contractual documents such as Air Waybills (AWB) and standard conditions of contract.

Airlines and ground handlers should also review the ground handling agreements they are currently using to ensure that the SDR limit under Article 8.6 (Liability and Indemnity) references the correct limits.

Air carriers are also advised to consider measures to accept cargo tendered under AWBs printed prior to December 28 2019, which will still state the old liability limits. This is because where MC99 applies, the new limits of liability will apply to claims made under a pre-28 December 2019 version AWB.

Application by the courts

Parties seeking to rely on the increased limits should be mindful that, in some jurisdictions, the increased limits may not automatically be enforced by the courts.

For example, in Thailand, which ratified MC99 on 3 August 2017, the new MC99 limits will not take effect until either a Royal Decree has been passed increasing the limits or the carrier has amended its conditions of carriage to apply the new limits (and the parties agree a resolution on that basis). Without the revised decree or amended conditions of carriage applying the increase, the Thai Courts could apply the old limits in the Thai International Carriage by Air Act.

In most other states, the increased limits should be automatically applicable (by virtue of states having signed MC99 and/or a notice from the state's civil aviation authority announcing the changes) but it is our experience, post the 2009 increase, that lower courts and non-specialist lawyers are often unaware of the changes.

In order to minimise uncertainty, carriers should, as mentioned above, amend their GCC for passengers and cargo to take effect in relation to contracts concluded on or after 28 December 2019 and speak to their lawyers about how limits will be applied if they have an active case in a specific jurisdiction.

We can assist in providing indicative wording to be included in AWBs or GCCs that incorporate the new liability limits. Please speak to your usual HFW contact or the authors of this article for more information.

Other Convention developments

In September 2019, we published an article on the Montreal Protocol 14 (MP14) , which amends the Tokyo Convention 1963 (the Convention on Offences and Certain Other Acts Committed on Board Aircraft).

MP14 required ratification by 22 states in order for it to enter into force. On 26 November 2019, Nigeria became the 22nd state signatory. ICAO has since confirmed that MP14 will enter into force on 1 January 2020.

The proposed amendments are aimed at enhancing states' ability to prevent escalation of the severity and frequency of unruly behaviour by passengers on board aircraft.

One of the main changes includes extending jurisdiction over offences to the state of intended landing (destination) as well as the state of aircraft registration. It also provides jurisdiction for third-party countries in the event a flight is re-routed.

Kate Seaton
Partner, Singapore
D +65 6411 5317
M +65 8333 4102
E kate.seaton@hfw.com

Mert Hifzi
Partner, Singapore
D +65 6411 5303
M +65 8333 4101
E mert.hifzi@hfw.com

Research conducted by Lydia Redman, Trainee Solicitor.

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