France: French Supreme Court Overturns Court Of Appeal's Decision To Apply Warsaw Convention To Claim By Manufacturer Against Airline

In March this year the French Supreme Court overturned the decision by the Toulouse Court of Appeal to apply the Warsaw Convention to a claim by a manufacturer against an airline. Disappointingly, the Supreme Court has not provided any reasoning for its decision to overturn the judgment of the Toulouse Court of Appeal, which held that the Warsaw Convention 1929 applies not only to passenger claims brought directly against an airline, but also to an attempt by a manufacturer to join an airline as a third party to an action brought by passenger interests against the manufacturer of the aircraft involved in an accident.

Background

On 2 May 2006, flight RNV967 from Yerevan in Armenia to Sochi in Russia crashed into the Black Sea during an attempt to land in difficult weather conditions, tragically causing the death of all those aboard. After settling their claims with the airline and its insurers against a full release and discharge, the relatives of some of the victims began legal proceedings against the aircraft manufacturer in Toulouse, France, claiming further compensation on the basis that the aircraft had been a defective product with technical faults. The manufacturer subsequently attempted to join the airline to the action as a third party, claiming crew error had caused the accident and not any product defect. The purpose of such third party proceedings was effectively for the manufacturer to claim indemnity or contribution from the airline in respect of any liability the manufacturer might have towards the passengers.

In its defence, the airline pleaded that claims against an airline can only be brought subject to the conditions and limits set out in the Warsaw Convention 1929. Moreover, Article 28 of the Convention states that an action for damages can only be brought in either the country where the carrier is ordinarily resident or has its principal place of business or has an establishment by which the contract was made (in this case, Armenia), or the country of destination (in this instance, Russia). Accordingly, the French court did not have jurisdiction to hear the claim against the airline.

In May 2011, the Toulouse District Court declared that the manufacturer's claim was indeed governed by the Convention and, accordingly, the Court did not have territorial jurisdiction to hear the claim. The manufacturer appealed the decision, but it was upheld by the Toulouse Court of Appeal in March 2013.

Arguments on behalf of the manufacturer

The manufacturer then appealed to the French Supreme Court. The manufacturer argued that the Convention has a limited scope of application that governs only actions for damages relating to loss occurring during carriage by air brought by the victims of the loss (or by their relatives). This, it was said, excluded third party claims by the manufacturer, as a manufacturer has not sustained loss during carriage by air, but rather chooses to join an airline to the proceedings as a warranty for any order to pay compensation to the victims' relatives.

The manufacturer relied on a number of arguments to support its interpretation. First, it stated that the discussions undertaken during the drafting of the Convention focused on actions brought by passengers and did not consider actions as between a manufacturer and an airline. Secondly, the wording of Article 30 of the Convention – which states that in the case of carriage performed by successive carriers, the passenger or his representative can take action only against the carrier who performed the carriage during which the accident occurred – read in conjunction with the wording of Article 22(1) of the Convention – which expressly refers to the amount of compensation for which the carrier is liable – show that the Convention governs a particular relationship between the passengers and the airline only. It was argued that this was further evidenced by the lack of any connection between the competent courts provided for in Article 28 of the Convention and the place of residence of the aircraft manufacturer.

The manufacturer argued that the Convention should be read as a whole, providing a balance between the strict liability of the carrier in the event of a fatal accident and the compensation limit for the victims and their relatives. This means that the rules on jurisdiction cannot be read in isolation in order to restrict the manufacturer in its third party action against the airline, when the same manufacturer cannot rely upon the other rules regarding strict liability or limits of compensation. In particular, the manufacturer submitted that it was unrealistic to impose the two year limitation period provided for by the Convention on a manufacturer wishing to bring an action against the carrier, as the time to bring suit could lapse before any claim had even been commenced against the manufacturer. The manufacturer went so far as to argue that imposing such a limitation period would contravene the right to a fair and public hearing, guaranteed by the Convention for the Protection of Human Rights and Fundamental Freedoms.

Three associations also intervened in support of the manufacturer. They put forward further objections to the Court of Appeal's decision: the significant imbalance in the protection of manufacturers' interests as opposed to those of airlines; the possibility of conflicting decisions from different courts if the manufacturer was obliged to bring separate proceedings against the airline; and the undermining of jurisdiction clauses in aircraft sales agreements.

Arguments on behalf of the airline

The airline, on the other hand, argued that the international Convention took precedence over any domestic French law which allowed the extension of jurisdiction to the French courts. It contended that issues regarding jurisdiction must be resolved before considering any other aspect governed by the Convention. The airline held that Article 24 of the Convention – which states that any action for damages, however founded, can only be brought subject to the conditions and limits set out in the Convention – must be applied whether an action is brought by a victim's family or by a third party and whether in main proceedings or through a third party action. Moreover, nothing prevents the two year limitation period from being interrupted or suspended if the law of the court to which the matter is referred allows this and, in France, it is arguable that the time limit would not start to run until the main proceedings were brought (as limitation cannot commence against a party who is unable to take action due to an impediment resulting from the law). Accordingly, the manufacturer's right to a fair trial would not be prejudiced.

Another association also intervened in support of the airline, stating that a separate manufacturer's action against the carrier for damage caused to the passengers would conflict with the balance struck by the Convention between passengers' interests and those of the airline, as such a third party action would potentially go beyond the provisions of the Convention, including the limit of compensation. It also pointed out that Article 28 of the Convention regarding jurisdiction did not in any way undermine aircraft sales agreements, since the Convention does not apply to these.

Comment

In its decision, the Supreme Court overturned the Court of Appeal judgment, but chose not to give any reasoning for its decision. Accordingly, one is left to presume that it agreed with some or all of the arguments put forward by the manufacturer.

It is arguable that this is a flawed decision, as Article 24 of the Convention– which states that any action for damages, however founded, can only be brought subject to the conditions and limits set out in the Convention – should provide consistency regardless of either the identity of the claimant (be it a passenger, his or her relative or a manufacturer) or the nature of the claim (contractual or otherwise). Being an international Convention, this consistency should take precedence over any national law to the contrary.

This is the case not least because, although the action is not being brought by the passengers or their relatives directly against the airline, it is essentially for reasons of compensation that the relatives in this instance are bringing proceedings against the manufacturer and so, by extension, the third party action should be governed by the same rules and laws that would usually govern claims brought directly by passengers against the airline.

The predictability of the interpretation of the Convention is essential for carriers if the Convention is to have the effect intended when it was first enacted almost ninety years ago. Moreover, it is of concern that this reasoning could also be applied to similar situations arising under the Montreal Convention 1999.

The next step would now be for the matter to return to the Toulouse Court of Appeal, where the arguments would be heard again by a different panel of judges; hopefully, the Court of Appeal would provide more of an insight into its reasoning than the Supreme Court.

This case was handled on behalf of the airline by Clyde & Co LLP London and Paris.

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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