The Greek Conference - Mykonos, September 2005 Papers

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AIRLINE RIGHTS v INDIVIDUAL RIGHTS

SOPHIA PARAS*

The aim of this paper is to explore whether it is ‘just’ or ‘right’ for airlines to be allowed to exclude liability for injuries to passengers or their deaths, including deep vein thrombosis ("DVT"), food poisoning and loss of life after recent air diasters are but few examples where airlines may be called to account.

Of course, if you are lucky enough to overcome the first hurdle, you still may have a real battle on your hands, as the airlines will try to limit their liability. We will explore whether it is just and equitable for airlines to be allowed to limit their liabilities. Finally, as we move through this analysis, we will consider whether the Warsaw Convention in its various forms is outdated. Can a balance be struck between airline rights and individual rights? Has the Montreal Convention 1999 achieved this balance?

Of course, when speaking of airlines I am invariably talking about their insurers. Rarely would a battle against an airline be a one to one combat. Given that the Convention imposes a system where there is a presumption of fault on the carrier and the carrier bears the burden of proving that it was not at fault why do many plaintiffs fail against the airlines?

When I began my studies at Sydney University one of the first things we were taught in contracts was that there was this basic principle of freedom of contract. GH Treital in his text The Law of Contract says:

In the nineteenth century, judges took the view that persons of full capacity should in general be allowed to make what contracts they liked: the law only interfered on fairly specific grounds such as misrepresentation, undue influence or illegality”1

The law generally did not interfere if one of the parties was in a stronger position than the other. You either put up or did without. This theory of freedom of contract even found its way into aviation law.

Lord Craighead in the 1996 landmark decision of Abnett v British Airways; Sindu v British Airways in the House of Lords said

“Along these principles, however, there lies another great principle, which is that of freedom of contract. Any person is free, unless restrained by statute, to enter into a contract with another on the basis that his liability in damages is excluded or limited if he is in breach of contract. Exclusion and limitation clauses are a common feature of commercial contracts, and contracts of carriage are no exception. It is against this background, rather than a desire to provide remedies to enable all losses to be compensated, that the Convention must be judged. It is not designed to provide remedies against the carrier to enable all losses to be compensated. It is designed instead to define those situations in which compensation was to be available. So it sets out the limits of liabilities and the conditions under which claims to establish that liability, if disputed, were to be made. A balance is struck, in the interests of certainty and uniformity”.

The Warsaw Convention was ‘flogged off’ as a way of striking a balance between the passenger and carrier. For the passenger, no matter where or whenever he flies, he/she knows that there is a certain degree of uniformity in the rules governing liability while the carrier being aware of the extent of his liability can make arrangements to insure against possible losses.

The complexity and volatility of this area of law is probably best illustrated by the following scenario. Imagine bringing a claim for damages in Australia in respect to a Italian person whilst travelling in a Singapore airlines aircraft on a ticket brought in London for a journey from Greece, via Thailand, to Australia.

Or what if a British aircraft under the command of an American crew were to crash on German soil injuring passengers of French, Japanese and Brazilian nationality. How would we untangle the contractual and tortious liability of the airline? Would all the passengers be able to recover the same damages or will they recover different amounts depending on where they bring their causes of action?

To answer this question, I need to say something about the Warsaw Convention and the various protocols which have amended the Convention. In brief, rules regulating the aviation industry are usually derived from multilateral conventions (Warsaw Convention 1929, the Hague Protocol 1955, Guadalajara Convention 1961, Guatemala protocol, Additional Protocols and Montreal Protocol 1975, Montreal Convention 1999), bilateral agreements, national laws (statute and common law or civil law), contracts between states and airline companies, contracts between airline companies and general principles of international law.

Now is probably a good time to slip in a few disclaimers about this presentation. This paper does not deal with real life problems one is faced with when a particular member country, although a signatory to the convention, has not ratified the convention or better still where a country has ratified a particular version of the convention but with various reservations. That will be tackled in another session at another time.

I need to also make a brief comment about jurisdiction. In aviation law it mainly depends on the location of the aircraft. This is important, particularly these days, in terms of who conducts the investigation into the air crash, who gets to hold the wreckage and bodies of victims etc. It is also important in terms of where legal action should be commenced, particularly as the older versions of the Convention had some very strict rules that needed to be followed in order to bring an action under the Convention. Invariably, plaintiffs are faced with motions for dismissal from the insurers of airlines. You need to make sure that all t’s are crossed and all i’s need are dotted to survive the onslaught.

Over time the Warsaw Convention had been amended to keep up with the times. The Hague Protocol of 1955 doubled the maximum damages payable but at the same time simplified the otherwise stringent requirements for passenger tickets and baggage checks. The Guadalajara Convention of 1961 expanded the operation of the Warsaw Convention to international chartered flights. The Guatemala Protocol of 1971 had important amendments to the provisions of the Convention which covered passengers including inter alia, a five-fold increase in the passenger limitation figure and the introduction of a strict liability system. There was also revision to the rules regulating jurisdiction so that a claimant passenger could bring their action in the fori of their country of domicile or permitted residence. This allowed for the first time, a choice commonly criticised as forum shopping. Australia is not a party to this protocol.

The additional protocols made some adjustment to the currency referred to in the Convention by reference to Special Drawing Rights (SDRs)2. At the beginning of this paper I mentioned passenger rights. It may surprise you to know that academic opinion is divided about whether an airline employee is a passenger for the purposes of the Convention. I haven’t been able to find any reported case on this issue.

Which brings me to the next matter I need to discuss - the passenger ticket. My paper began by stating one of the main principles of contract law is the freedom of contract. So how many of you negotiated the terms of your airline ticket. Imagine the queue at Sydney or Melbourne airport if we were bargaining the terms of the contract of carriage. Some of you may have come from a country where English is not the native language. So what happens to the passenger who cannot read the writing on the ticket.

The Greek High Court of Justice in X and Y v Olympic Airways3 held that the fact that the plaintiff’s could not read English and understand the Notice concerning the applicability of the Warsaw Limits was irrelevant. Same issue however led to a different result in the French Courts in Vandelay & Association Generale des Usagers de la Langue Francaise v Roberts & British Airways4 which held, not at all surprisingly, that issuing a ticket in the English language was contrary to French law. Now that I have introduced some general concepts, I would like to have a look at some specific provisions in the Convention which regulate the rights of individuals. First, Article 17 imposes liability on the carrier for the death or wounding of a passenger or any other bodily injury suffered by the passenger, if the ‘accident’ which caused the damage occurred on board the aircraft or in the course of embarking or disembarking. That seems simple enough. If the accident which caused the damage occurred on board the aircraft or in the course of embarking or disembarking the passenger can recover damages against the airline for bodily injury. So why has there been so much litigation and failed passenger cases against airlines at the interlocutory preliminary stage of proceedings

The first obstacle is satisfying the court that the injury you have suffered is the result of an accident. In DeMarines v KLM Royal Dutch Airlines5, the Court held that an accident was an unexpected and sudden event that takes place without foresight. In Husserl v Swissair6, the US District Court held that a hijacking was an accident because it was an unexpected and sudden event. So is DVT an accident as defined by the Convention?

This is probably the most hotly contested topic in air law at the moment. Not surprisingly many if not all cases have failed against the airlines.

One of the first cases to deal with DVT was McDonald v Korean Air7. Very briefly, the facts involved a passenger plaintiff who flew from Toronto to Hong Kong on the defendants aircraft. When he arrived he complained about pain in his leg which eventually was diagnosed as deep vein thrombosis. The plaintiff sued for damages, pain, anguish and loss of enjoyment of life, out of pocket expenses, loss of income, competitive advantage, alleging that the defendants failed to warn him of the risk of DVT on long flights and failed to take measures to reduce the risk.

Of course, this action was governed by the provisions of the Warsaw Convention. As is typical with airline cases, a motion for summary dismissal was filed by the airline asserting that the statement of claim disclosed no reasonable cause of action and should be dismissed. His Honour Justice Hermiston held that Article 17 is exclusive and exhaustive and determines the liability of an international carrier.8 His Honour was persuaded by the decision of Air France v Saks9. In Saks case, the US Supreme Court which held that Article 17 refers to an accident which caused the passenger’s injury and not an accident which is the passenger’s injury. Justice O’Connor defined a passenger’s injury as being caused by an unexpected or unusual event or happening which is external to the passenger. Her Honour said: “When an injury results from the passenger’s own internal reaction to the usual normal expected operation of the aircraft, it has not been caused by an accident.The passenger must be able to prove that some link in the chain was an unusual or unexpected event external to passengers.”

So unless an unusual occurrence happens on a flight which can be said to aggravate an existing condition, there will be no accident. The plaintiff as you’d imagine failed in the action. Interestingly, the judge said that failure to warn the passengers may be negligent but that did not make it an accident as defined by the Convention. This line of reasoning was recently considered and adopted in Australia in our very own DVT case. In Povey v Qantas & Anor10 the High Court of Australia considered whether DVT could constitute an accident for the purposes of Article 17 of the Convention. Mr. Povey, the plaintiff alleged that an accident had occurred under

Article 17 of the Convention by reason of:

(a) the flight conditions

(b) the failure of the air carrier to warn the passenger of the risk of DVT; (c) the failure to advise the passenger of precautions that he should take to minimise the risk of DVT;

(d) the discouraging of the passenger from moving about the aircraft;

(e) the encouraging of the passenger to remain in his seat during the flight and

(f) the supply of alcohol and caffeine beverages during the flight

Not surprisingly, the Court adopted the definition of Saks and held that the passenger could not succeed in his cause of action because he had failed to satisfy the prerequisites of accident in the Convention.

Proving that while embarking or disembarking the passenger sustained some adverse physiological change does not identify the occurrence of an accident.11. The Majority held that the failure to warn against DVT did not assist Mr. Povey because this argument was based on an unstated premise about the origin or duty to warn.12 In other words, Mr. Povey had failed to show that there was an accident. There was nothing unusual or unexpected in the airlines failure to warn as this was a non-event. The majority of the Court was influenced by the English decision in Re Deep Vein Thrombosis Litigation where the English Court of Appeal held that inaction was a non-event and could not therefore by definition constitute an ‘accident’ under the Convention. An accident requires some positive act.

On the other hand, His Honour Justice McHugh said13 that there can be an accident for the purposes of Article 17 when the employees of an air carrier engage in conduct that causes an injury which is unintended or reasonably foreseeable. So it would and could be open to a tribunal of fact to find that, as a result of the airline employees’ conduct such as discouraging the passenger from moving about the aircraft, or encouraging the passenger to remain seated during the flight or supplying alcohol or caffeine beverages, there was an accident for the purposes of Article 17. His Honour was prepared to concede that as in Olympic Airways v Husain had the flight attendant failed to follow company policy or industry practice that could constitute an accident under the Warsaw Convention. But a bare omission to do something could not constitute an accident.

Article 20 allows the carrier to escape liability if it proves that all necessary measures were taken to avoid the damage or that it was impossible for them to take such measures. It is therefore no surprise that the airlines would also plead this in their defence or contributory negligence as in Article 21 to plaintiff’s claims. In the Chutter v KLM Royal Dutch Airlines & Allied Aviation Services International Corporation14 where a passenger who ignored the ‘Fasten the Seat Belts’ sign was denied compensation when she fell out of the plane whilst farewelling her family, mainly because the airline was successful in proving the injury was all due to the passenger’s own negligence in failing to keep a proper lookout.

Another instance where a claim has failed against an airline is Stephen Graham Olding v Singapore Airlines Limited15. In this case the plaintiff was a passenger on a Singapore flight to Hong Kong. The plaintiff’s companion ordered some pineapple juice. She drank a quarter and the plaintiff decided to finish it off. In the course of drinking, he felt a sharp sensation in his throat and quickly came to the conclusion that he had swallowed glass. The action claimed damages for personal injury, pain and suffering and pecuniary losses.

His Honour Judge Carlson held on the balance of probabilities the events did occur and that the airline was negligent. Medical evidence was advanced that he suffered some physical discomfort and the judge held this was bodily injury. The plaintiff’s claim for damages was reduced from $80,000 to $52,000. The claim for pecuniary loss failed; except for $1,000 awarded as costs.

What options are available to a plaintiff they fail under Article 17 of the Convention. Well not many. The Convention operates to the exclusion of all other causes of action including all remedies available under domestic law.

This issue was discussed in the House of Lords in 1996 in Abnett v British Airways and Sindu v British Airways. The facts there were that the plaintiffs were on a flight from the UK to Malaysia via Kuwait. The planes stopped over at Kuwait at which time the Iraqi forces had begun to invade Kuwait. This was the beginning of the first Gulf War. The passengers and crew were detained.

When they returned to the UK they sued the airline for personal injury at common law because no remedy was available under the Convention. The operation of the limitation period had extinguished the cause of action and because the Court held that:

(a) there was no accident on board the aircraft; and,

(b) psychological damage per se does not amount to bodily injury as defined by Article 17.

The Court was faced with the question of whether or not any action against the carrier could be founded outside the provisions of the Convention. Pivotal to this answer was Article 24 which provides that ‘any action for damages, however founded, can only be brought subject to the conditions and limits set in this Convention’. The Court held there was no other action or remedy and that the Convention applied in a blanket fashion to prevent recourse to domestic law to fill in the gaps.

The House of Lords was adamant that domestic courts are not free to provide a remedy according to their own law, because to do this would be to undermine the Convention. It would lead to establishing alongside the Convention of an entirely different set of rules which distort the operation of the whole scheme.

Lord Craighead concluded:

“The Convention is, of course, tightly drawn on these matters. This has been done in the interests of the carrier, whose exposure to these liabilities without the freedom of contract out of them was a principal consequence of the system which laid down. Were remedies outside the convention to become available, it would encourage litigation in other cases to restrict its application still further in the hope of obtaining a better remedy, against which the carrier would have no protection under the contract. I am in doubt that the Convention was designed to eliminate these difficulties. I see no escape from the conclusion that, where the Convention has not provided a remedy, no remedy is available”.

Having discussed the string of failures by plaintiffs, there is also an issue as to the extent of recoverable damages. What sums of money are we talking about? Normally, the carrier will be liable according to the limits set in Article 22 of the Convention.

The exact value will depend on which of the amending Protocols apply to the particular flight. Under the original Convention, this was set at 125,000 francs per passenger, raised under the Hague Protocol to 250,000 francs, and whilst the Guatemala Protocol increased this to 1,500,000 francs, this Protocol never came into force. Further amending protocols increased this to SDR100,000 (about US$135,000).

Some countries, including Australia, impose their own conditions for international aircraft during their period of occupancy of Australian airspace (that is A$500,000 per seat). There are no punitive damages available not even in that punitive loving country – the US.

Once the unlimited liability applies by successfully invoking Article 25 of the Convention, then damages recovered are limited to actual loss suffered, which too is not likely to lead to multi-million dollar payouts.

And next time you decide to buy a loved one a ticket as a birthday gift make sure you give them complete disclosure about the conditions of carriage. In Fosbroke- Hobbes v Airwork Ltd and British –American Air Services Ltd16, Goddard J held that it was up to the host to inform the passenger of the conditions of carriage. “The obligations of the owner cannot be increased by the fact that the person with whom he has made his contract chooses to bring along persons who are in no contractual relation with the owner”. Not surprisingly, there were calls for reform of the draconian provisions of the Warsaw Convention.

THE CALL FOR REFORM & THE MONTREAL CONVENTION 1999

The ICAO hailed the Montreal Convention as a ‘deliberate balance between the needs and interests of all partners in international civil aviation, States, the travelling public, air carriers and the transport industry’.17 The new Convention with unlimited liability introduced a two tier system of compensation. The first tier provides for strict liability up to SDR 100,000 (about US$135,000) irrespective of the carrier’s fault. The second tier is unlimited, but is based on the presumption of fault on the part of the carrier.

The Convention is subject to periodic review and may be revised once every five years.

Dr.Kenneth Rattray of Jamaica, elected as President of the air law conference in Montreal proclaimed that the Montreal Convention ‘will contribute immensely to rationalising what had become a fragmented and ineffective method of dealing globally with liability proceedings in cases of accident’.

But with so much promise comes the reality that Australia has not ratified the Convention - yet. So, for travel to and from Australia, the problems alluded to in this discussion persist.

Our own High Court, Callinan J in Povey’s Case18 pointed out that “it is at least open to question whether air carriers and their insurers are enjoying, as arguably sea carriers also are, the benefit of an anachronistic approach to the perils of travel as defined by outmoded international instruments”. But my question is how much can be achieved by adopting a new Convention to regulate air travel, when the provisions dictating passenger rights are in identical terms to the replaced Warsaw Convention. Next time we spread our wings and fly we should tell ourselves it is at our own risk.

* Sophia Paras - 1 Admitted to practice in the Supreme Court of New South Wales, Supreme Court of England and Wales and High Court of Australia.

1 Page 2

2 A Special Drawing Right is calculated amount based on a "basket of currencies", created by the International Monetary Fund in 1969 to supplement the existing official reserves of member countries, the value being recalculated on a daily basis.

3 (1976) 1 Air Law 259

4 (1979) RFDA 97

5 (1977) 14 Avi. 18, 212

6 (1977) 14 AVi. 18, 297

7 (2002) Ontario Superior Court of Justice

8 para.6

9 105 S.Ct. 1338 (1985)

10 [2005] HCA 22

11 para.36

12 Ibid. para 41

13 Ibid. para48

14 (1955) USAvR 250

15 (2002) Hong Kong District Court

16 [1937] 1 ALL ER 108

17 Dr Rattray President of Air Law Conference- ICAO Headquarters on 28 May. – Press Release

18 para. 205

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Copyright 2005. Greek Legal and Medical Conference