Brazil: The Effects Of The Supreme Court Decision On Aerial Transport Demands

Last Updated: 5 July 2018
Article by Bruno Melo

Since the Consumer Defense Code (Law 8.078/1990) came into force, in March 11th, 1991, most judicial demands filed by passengers against airlines due to occurrences during international flights are resolved utilizing this normative text. However, from the Brazilian Supreme Court's decision issued on 05/25/2017 - content which was only made public on 11/13/2017 - the case law panorama has a well-defined framework for consumer relations with the application of the International Conventions that regulate this matter.

The en banc Federal Supreme Court, by analyzing the appeals RE 636331 and ARE 766618 as topics of general1 repercussion, has defined, by 9 votes in favor to 2 against the following thesis: "in the terms of art. 178 of the Constitution, the norms and the international treaties limiting the responsibility of air carriers, particularly the Warsaw and Montreal Conventions, prevail over the Consumer Defense Code."

The appeals addressed the application of the indemnity limit provided for in the International Conventions in the event of baggage loss during an international flight (RE 636.331), and the limitation period to be observed in passenger complaints against airlines (ARE 766.618).

In the Extraordinary Appeal No. 766.618, reported by Minister Roberto Barroso, the discussion revolved around the limitation period of the lawsuit filed by Cintia Cristina Giardulli against the airline Air Canada. In this case, the plaintiff filed the action 2 years and 8 months after her arrival at the final destination. The air company defended the thesis that the limitation period had lapsed based on article 29 of the Warsaw Convention and its alterations (the limitation period in the Montreal Convention is provided by article 35).

Minister Roberto Barroso in his vote, after exhausting the constitutional theme on the hierarchy of international treaties when internalized in our legal system and the prevalence of Warsaw Convention and its alterations in relation to the Consumer Code, in light of the content provided by article 178 of the Federal Constitution of 1988, referenced the precedent of RE 297.901/RN2 reported by Minister Ellen Gracie and granted the Appeal to overrule the contested ruling - which rejected the preliminary argument of the limitation period lapse  - and ruled that the request was unfounded due to the limitation period provided by article 29 of the Warsaw Convention.

In regards to the Extraordinary Appeal 636.331, reported by Min. Gilmar Mendes, filed by Société Air France against Sylvia Regina de Moraes Rosolem, the objective consisted in the acknowledgement of the violation by Rio de Janeiro's Court's ruling of art. 178 of the Federal Constitution, aiming at the prevalence of the Warsaw Convention over the Consumer Defense Code, particularly regarding the indemnity limitation for material damages in the case of passenger's baggage loss during an international flight. 

After presenting his reasoning, Min. Gilmar Mendes voted to grant the extraordinary appeal "in order to reduce the value of the material damages, limiting it to the compensation ceiling established in article 22 of the Warsaw Convention, with the modifications effected by further international treaties."

Below are some points that are worth mentioning from Gilmar Mendes' vote: "Both regulations are in effect in the Brazilian legal system, excluding the Code [Consumer Defense], in the act of application, always when the consumer relation derives from an international transportation contract "

"Two aspects should be absolutely clear in this debate. The first is that the dispositions provided in the international treaties referred herein are applied exclusively to the international aerial transport of people, baggage or cargo. (...) The second aspect is that the limitation imposed by international treaties exclusively reaches the compensation for material damages and not the compensation for moral damage. Such exclusion is justified, as article 22 does not mention the compensation for moral damage, and because the imposition of pre-established quantitative limits does not seem to be in accordance with the very nature of the good, in the cases of compensation for moral damage."

"Corroborates the interpretation of inapplicability of the indemnity limit to the scenarios of moral damage provided by article 22, which grants the passenger the right to file a "special declaration" of the value of the baggage, as a way of escaping the applicability of the legal limit."

"Therefore, my vote is for the applicability of the indemnity limit established by the Warsaw Convention and other international treaties undertaken by Brazil, in relation to the compensation for material damage resulting from baggage loss during in international flights."

We also highlight some extracts from Min. Roberto Barroso's vote which has proven to be important to the development of aerial activity:

"Once the carrier undertakes the commitment to deliver the baggage, intact, at the destination it can only offer the service if it can minimally anticipate the risk to which it is exposed. After all, this is a component of the price that is going to be charged: it is reasonable that the carrier of works of art charges more than the carrier who transports dog food, for example. In the case of international aerial transport, which is a mass service, the individualized definition of price would be impossible; moreover, it would cause the passenger the discomfort of exposing their belongings to the carrier. However, nor would it be admissible that the compensation should to be determined exclusively by what the consumer stated in the proceeding – because as the company did not inspect the contents of the luggage, it would be impossible to provide proof of a different value."

"In such context, the solution given by the Convention is quite reasonable: the adoption of a standard, applicable to most cases, that allows the company to define an equally uniform price. However, it is allowed that the passenger declares a higher value - and that an extra amount is eventually paid- to ensure a higher compensation. Therefore, no restriction is imposed to the consumer - quite the opposite, they can always avoid it, by filling out a special baggage declaration."

Thus, both rulings converged to the understanding that the Warsaw Convention and its alterations prevail over the Consumer Defense Code when it comes to the international aerial transport and, from there, the previously mentioned general repercussion was established.

Therefore, it is understood, according to the Civil Procedure Code, articles 927, line V and 1.039, that the inferior instances shall abide by this interpretation, both in new proceedings and in existing ones.

What in fact is going to change after these decisions?

The first thing that one should observe is that the passengers will only be able to file judicial demands against the aerial international carrier for 2 years after the date of their arrival at their destination3, and no longer 5 years, as provided for in article 27 of the Consumer Defense Code.

The deadline of 02 years, although it represents a reduction of more than half of the prior deadline, is enough for the passenger to try and solve the standstill extrajudicially with the company, without representing hindering their right to file a lawsuit eventually.

Another important topic concerns baggage loss. After the Supreme Court's decision, the airlines' strict liability for material damages will be limited to 1.000 Special Drawing Rights (SDR) or BRL 4,605.60 (rate of 01/10/2018), according to  article 22.2 of the Montreal Convention (internalized through the Decree 5.910/2006), unless there is a special declaration informing a higher value of the baggage.

Strict liability, because article 22.5 of the Montreal Convention excludes the limit of 1.000 SDRs "if it is proved that the damage is result of an action or omission from the carrier or their representatives, with the intention to bring harm, or rashly and knowing of the probable harm they could cause, always when, in the case of an action or omission from the representative, it is also proven that they were acting in the performance of their duties." From this scenario, the airline's fault-based liability arises with relation to material damages, which should be demonstrated by the passenger as provided in article 373, I of the Brazilian Civil Procedure Code. 

However, in both kinds of liability, it is fundamental that the passenger provides proof, through suitable documentation, of the material damage as provided for in article 402 of the Brazilian Civil Code, under penalty of unjust enrichment.

It is important to stress that the Supreme Court's understanding came from an appeal regarding baggage loss in an international flight, however as addressed in Minister Gilmar Mendes' vote, the prevalence of International Conventions over the CDC, shall be extended to other cases:

"Incidentally, based on the above reasons, I understand that one should conclude in favour of the prevalence of the Warsaw Convention and other international treaties to which Brazil subscribes in detriment of the Consumer Defense Code not only in the case of baggage loss. The same judicial reasoning forces us to draw a similar conclusion in another scenarios in which there are normative conflicts between the same legal frameworks."

It is also important to highlight that the Supreme Court's thesis regarding the topic 210 of general repercussion does not limit its application to the cases of baggage loss:

In the terms of the art. 178 of the Constitution, the rules and international treaties limiting the responsibility of the aerial carriers of passengers, particularly the Warsaw and Montreal Conventions, prevail over the Consumer Defense Code.

We understand that the Brazilian Supreme Court's precedent shall be applied to all cases that involve international aerial transportation and, hence, the standstills are going to be solved based on the provisions of the International Treaties when there is any divergence with the Consumer Defense Code. Also, the CDC shall be applied when the International Treaties are omissive.

On the other hand, the matter of moral damage, which is not mentioned in the Warsaw Convention or in its alterations, was well defined by the Supreme Court's ministers. According to their understanding, the limits of the International Accords do not apply to moral damages suffered by the passengers for incidents that occurred during international flights.

The judges, therefore, will be able to base their decisions against airlines on the provisions of the International Conventions (Warsaw and its alterations) and on the Civil Code for material damage cases, and on the Consumer Defense Code for eventual moral damage, the latter currently being the most common conviction in 1st and 2nd instances.

Thus, airlines will be able to better outline their costs and risks, which has a direct impact on the calculation of fees for commercialized tickets.

Conclusions

It is still soon to name the effective changes in the judicial scenario of brazilian civil aviation, especially since there is already case law in place on the topic, and the change of positioning may bring about divergences that should be assessed individually.

However, the Supreme Court's ruling, by ensuring the applicability of the Warsaw Convention and its alterations, show signs that Brazil is taking necessary measures to ensure legal certainty that airlines crave for their operation, besides demonstrating that Brazil is following the steps of the foreign market in search for improvement in the quality of aerial transportation; one of the sectors that most impacts the national economy, and that, in 2016, transported 109.6 million passengers.

In conclusion, the decision does not aim to limit passenger's rights, but to bring balance to the judicial relation in the aerial transportation contract, whose operational costs are enormous with investments in safety, technology, modernization, etc., always aimed at ensuring effectiveness of the transportation contract, especially the safety clause.

Footnotes

1 By legal definition (art. 1.035, §1º of the Civil Procedure Code), the extraordinary appeal gains general repercussion if the appeal possess issues that are relevant to the economy, politics, society or legal and that surpasses the subjective interests of the legal proceeding. Thus, the Courts of 1st and 2nd instances shall act in accordance with the decision of the appeal considered of general repercussion.

2 "STATUTE OF LIMITATIONS. DEADLINE. WARSAW CONVENTION AND THE CONSUMER DEFENSE CODE. 1.Art. 5°, § 2º, of the federal constitution refers to the international treaties regarding the fundamental rights and guarantees, matter which was not present in the Warsaw Convention, which discusses the civil accountability of the international air carrier (RE 214.349, rel. Min. Moreira Alves, DJ 11.6.99). 2.Although the norm of the Consumer Defense Code is valid in relation to consumers in general, in the specific case of the international air transportation, based on article 178 of the Federal Constitution of 1988, the Warsaw Convention prevails, which determines a statute of limitation of two years. 3. Appeal granted."

3 Article 35 of the Montreal Convention (Decree n° 5.910/2006) mentions other two scenarios for the starting point of the limitation period: (i) on the day that the air carrier arrives, or, (ii) on the date of the transport interruption.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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