UK: EU Air Carrier Liability Regulation Updated

With effect from 30 May 2002, Council Regulation (EC) 2027/97 on air carrier liability in the event of accidents has been amended, by Regulation (EC) No. 889/2002 of the Parliament and of the Council. Although the amending regulation is in force, it does not yet "apply". That must await the entry into force of the Montreal Convention 1999 "for the Community", and we comment on those provisions in the second article to be published in the next issue of BLG Aviation News. First we set out the main elements of the revised Regulation and the principal changes.

The revised Regulation is expressed as an amendment. In fact, though, every provision is spelt out in full. Although there are some areas of common text it is not immediately apparent why the draftsman did not simply start afresh. Certainly it would make the presentation simpler. For instance the amendment process results in a regulation which will feature Articles 1, 2, 3, 3a, 5 and so on, but not 4.

Briefly the principal changes are as follows:

• Instead of referring to air carrier liability "in the event of accidents" the title is now "Regulation (EC) No. 2027/97 on air carrier liability in respect of the carriage of passengers and their baggage by air". This reflects the main purpose of the amendment, which is to apply the passenger and baggage elements of the Montreal Convention 1999. Baggage was not covered in the earlier regulation; cargo still remains excluded.

• The fundamental operative clause is changed. Originally the Regulation assumed that the Warsaw regime governed and removed the limit of liability in passenger cases. Now it seeks to impose Montreal directly, for passengers and baggage, subject to amendments.

• The insurance obligation is expressed differently. Previously it appears to have required insurance up to SDR100,000 per passenger and thereafter up to "a reasonable level". The amended Regulation will simply require a Community air carrier to have a level of insurance adequate to pay full compensation in accordance with the principles of the Regulation. Neither formulation reflects the reality of the structure of passenger legal liability insurance policies as routinely taken out by modern airlines.

• Although some provisions extend to non-Community air carriers (albeit only in the context of ticket sales within the Community) the insurance obligation does not extend to carriers outside the EU. No reference is made to ECAC Resolution 25-1 or to the insurance minima prescribed therein.

• If passengers wish to declare a value for their baggage to increase the Article 22 limit upon the carriers’ liability, the carrier may only charge a supplementary sum if a tariff exists. That tariff must be based on the additional cost of insurance in excess of the liability limit. The tariff is to be provided to passengers on request. Given the present basis and pricing structure of airline liability insurance it is difficult to see how any carrier could, at present, determine the additional cost of insurance. If, of course, the effect is that carriers do not charge a supplementary sum, and passengers declare values, insurance costs (and thus the cost of travel) must inevitably rise.

• The advance payment provisions remain, though the minimum interim payment in fatal cases has risen to SDR16,000. The uncertainty remains as to whether an advance payment must only be made if there is hardship. It seems anomalous that in a case where, for instance, relatives are in no way economically dependent on the deceased there would be an automatic payment equal to those in cases of genuine economic hardship.

The amended Regulation also contains detailed provisions obliging carriers to identify such matters as liability limitations and ticket notice requirements. In the next issue we will outline these and comment on some of the other issues associated with the new Regulation.