UK: Conventions On Third Party Damage Move A Step Closer

Last Updated: 1 July 2009
Article by Mark Waters

Between 20 April and 2 May 2009, 81 states attended an ICAO diplomatic conference in Montreal to agree terms of long-awaited replacements for the Rome Convention on surface damage.

The new conventions are the culmination of almost a decade of discussions between ICAO members following the creation of an ICAO special group shortly after the events of 9/11. A summary of the key points of the conventions, both of which are now open for ratification, is set out below.

Unlawful Interference Convention

  • Strict liability is imposed on aircraft operators for third party damage caused by an aircraft as a result of an act of unlawful interference. Liability is subject to limits calculated by reference to the aircraft's take off weight, the highest limit being 700m SDRs (cUS$1.1bn) for an aircraft exceeding 500,000kg.
  • For claims in excess of the above limits, further compensation up to 3bn SDRs (cUS$4.65bn) may potentially be made available from a new "International Civil Aviation Compensation Fund". The fund is to be made up of monies to be contributed by way of levy on passengers/cargo shippers.
  • There is then a third layer of compensation, payable by operators in limited circumstances only namely where the damage exceeds the first two layers above and additionally where an operator is shown to have contributed to the damage by an act or omission done with intent to cause damage, or recklessly and with knowledge that damage might result.
  • Damages for death, bodily injury and mental injury are recoverable (although in the case of the latter the injury must be shown to be a recognised psychiatric illness which has resulted from bodily injury or direct exposure to the likelihood of imminent death or bodily injury). Damage to property is also recoverable. Damages arising from a nuclear incident are not recoverable, nor are punitive damages.
  • Both the fund and operators have a right of recourse against the perpetrators of the unlawful interference as well as 'other persons' (for example, air traffic control, ground handlers and so on) who may be responsible. Such other persons' liability is limited, however, to the extent that insurance is reasonably available (save where that person has acted recklessly and with knowledge that damage would probably result). The fund can, in addition, seek recourse against the aircraft operator.
  • Owners, lessors and financiers of aircraft shall not be liable (assuming they are not also the operator). Product manufacturers shall not be liable if they can demonstrate compliance with mandatory design requirements.

General Risks Convention

  • Strict liability is imposed on aircraft operators to compensate third parties for damage caused by aircraft other than as a result of an act of unlawful interference. Types of damages recoverable are as set out above for the UIC.
  • Whilst the liability limits for operators are identical to those in the UIC, claimants under the GRC do not have a compensation fund to call upon. Instead, damages above the initial operator limit are recoverable from the operator if it fails to show that the damage was not due to its negligence or other wrongful act/omission, or was solely due to the negligence or act/omission of another person.
  • Rights of recourse are unlimited, save that owners, lessors or financiers of aircraft shall not be liable where they are not the operator. However, unlike in the UIC, manufacturers of aircraft are not expressly exempted.

What happens next?

It now waits to be seen whether the conventions will be ratified by the 35 states required for them to come into effect (the UIC has the added hurdle of also requiring the 35 states to have passenger numbers in the previous year of at least 750m).

Early reports indicate that states are not rushing to sign up to the conventions. IATA, in its opening remarks at the Montreal diplomatic conference commented, "IATA will remain engaged in a good faith effort to find a principled, fair and balanced compromise among the interests of states, airlines and third-party victims of terrorist interference with aircraft operations. If this is not possible, however, IATA respectfully submits that the delegates should retain the status quo – leaving this issue to national law." However, only time will tell whether these conventions enjoy greater success than their ill-fated predecessor.

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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