Malaysia Airlines flight MH 370 departed from Kuala Lumpur International Airport (KLIA) at around 12.41am on Saturday, 8 March 2014. It was due to arrive in Beijing Capital International Airport at 6.30am the same day.
More than 30 days later, and with search operations moving from the South China Sea to the southern Indian Ocean, there is a very slim chance that the black box will be found. The term “Montreal Convention” has also been mentioned several times during this period but very little is known about it – especially in Malaysia. This is because Malaysia, and especially Malaysian Airlines have not faced an accident of this magnitude in recent times.
The purpose of this article is to give readers a broad overview into what the Montreal Convention is. However, it is not meant to be an exhaustive analysis of the Convention. This article is broken down into key questions that one may look for when an aviation accident takes place, such as that of Malaysia Airlines MH 370.
Q: What is the Montreal Convention?
A: The first Convention for the Unification of Certain Rules for International Carriage by Air, or then known as the “Warsaw Convention”, was ratified in 1929. Over the years, the Warsaw Convention has had several provisions amended, updated and replaced through the Hague Protocol 1955, the Guadalajara Supplementary Convention 1961, the Guatemala City Protocol 1971, the Montreal Protocol No. 4 1975 and the International Air Transport Association Agreements 1955.
In 1999, the parties to the Warsaw Convention recognised the need to codify, consolidate, harmonise and modernise the Convention and related instruments – especially and including the protection of the balance of interests of consumers and air carriers in international carriage by air and reasonable compensation. This eventually became known as the Montreal Convention.
Q: Who are the parties to the Montreal Convention?
A: Although the Convention was adopted in 2003, the Convention only came into force in Malaysia in 2008.
As of 2014, there are also no less than 105 parties to the Convention, including Australia, Canada, China, France, India, Malaysia, Netherlands, New Zealand, Ukraine and the United States, all of whom had their respective nationals on board MH 370.
Other countries such as Indonesia, Iran and Russia have not ratified the Montreal Convention and are still subjected to the Warsaw Convention.
Q: How is the Montreal Convention applicable?
A: The Convention is expressly catered and designed to cover international carriage or flight where the place of departure and place of destination (final destination) must be made between the territories of two member State parties; or the territory of a Single state party if there is an agreed stopping place within a territory of a non-member State.
As flight MH 370 was scheduled to fly between Kuala Lumpur, Malaysia and Beijing, China, there are no doubts as to the application of the Montreal Convention in this situation, save for nationals whose States have not ratified the 1999 Convention.
Q: When does an airline become liable?
A: Under Article 17 of the Convention, compensation can be claimed for death or bodily injury if the accident took place “on board the aircraft or in the course of any of the operations of embarking or disembarking.”
This means that there must be three pre-conditions for liability against an airline:
(i) There must be an accident;
(ii) There must be bodily injury or death; and
(iii) The above must take place between embarking or disembarking an aircraft, including whilst on board an aircraft.
Q: What is the level of compensation offered?
A: Article 21 states that an airline cannot exclude or limit its liability for any damages of up to 113,100 Special Drawing Rights (SDR) arising from Article 17. Whilst, an airline cannot exclude or limit its liability, it does not guarantee an automatic right to the families of a passenger or a passenger to claim the stipulated amount of damages. It shall be subjected to the usual doctrine of strict proof and verification of documents.
The same Article 21 also allows families of a passenger or a passenger to claim higher than the current threshold of 113,100 SDR but this will still be subjected to strict proof and the airline is allowed to raise defences. The Convention allows for two types of defences to be raised by the airline:
(i) That such damage was not due to their negligence or other wrongful act or omission of the airline or its servants or agents; or
(ii) That a third party was responsible for the negligence, other wrongful act or omission.
Q: What does Special Drawing Rights (SDR) mean?
A: In simplistic terms, it is an asset based on a basket of four key international currencies – Euro, Japanese yen, Pound Sterling and U.S. dollar –determined by the International Monetary Fund.
The exchange rate of the Malaysian Ringgit to one SDR, as at 3 April 2014, is 5.0605, making the current compensation level under Article 21 at around RM572,342.
It will be useful to note that Article 23 states that any conversion made, especially in cases of judicial proceedings, would be determined at the date of judgment.
Q: Can an airline make advanced payments?
A: Article 28 allows airlines, especially in aircraft accidents, to make advanced payments without any delay to any party entitled to claim compensation. However, advanced payment does not mean that the airline is admitting any liability on its part and will be offset against any further amounts that an airline may have to pay as damages.
Q: Basis of Claims
A: Article 29 states that any action for damages against an airline made under the “Convention or in contract or in tort or otherwise” must be brought subject to conditions and limits to liability as set out under the Convention. In short, Article 29 renders the action under Article 17 as exclusive.
It further states that “in any such action, punitive, exemplary or any other non-compensatory damages shall not be recoverable.
Q: Where can the claims be filed?
A: The Convention is very clear and strict in this regard. It permits a party intending to bring a suit to do so in certain jurisdictions only. These are:
(i) In a country in which the “carrier” is domiciled; or
(ii) Has its principle place of business; or
(iii) Has a place of business through which the contract was made; or
(iv) At the place of destination; or
(v) Where passengers have their principle and permanent residence at the time of the accident.
In terms of (i) and (ii) above, it is clear that Malaysia Airlines is based and runs its commercial business from Malaysia. Therefore, any claim made under (i) and (ii) above shall be brought in Malaysia.
In terms of (iii) above, it may depend on where the ticket was purchased and how it was purchased, for example from a ticketing office of another country apart from Malaysia or from the Malaysia Airlines website in Malaysia or abroad. Passengers from China and Malaysia would have most likely purchased their tickets in these two jurisdictions. As such, families of passengers may opt to sue in either of these jurisdictions.
In terms of (iv), as Beijing, China was the destination, any party wishing to claim under this limb would have to file their action in China.
In terms of (v), regardless of the passengers’ nationalities, a claim can be brought where the passengers had their principle and principle residence at the time of the accident. This would mean that a Malaysian passenger, who was residing in Australia or the United States, could bring an action there after having proven so. There is a strict criteria to be met and will be subjected to strict scrutiny by the courts.
Q: Is there a time limit for bringing actions?
A: Unlike the limitation rules set for actions in contract or tort actions, the Montreal Convention, under Article 35, sets its own time limitations.
Article 35 makes it very clear that any action must be brought within two years:
(i) Reckoned from the date of arrival at the destination; or
(ii) From the date on which the aircraft ought to have arrived; or
(iii) From the date on which the carriage stopped.
Whilst Article 35(2) states that the method of calculation shall be determined by a court in which the action is being brought, the recent American case of Narayan v British Airways (2014) decided that time begins to run when an aircraft arrived or ought to have arrived at its destination. In the case of Malaysia Airlines MH 370, time to bring an action accrued on 8 March 2014 and will expire on 7 March 2016.
Q: Does code-sharing matter?
A: Malaysia Airlines flight MH 370 was a code share flight with China Southern Airlines and marketed as CZ 748. There may also have been many passengers who may have purchased their tickets through China Southern Airlines. Under Article 39, China Southern Airlines, although not using its own aircraft, is deemed to have acted as a “contracting carrier”. Under Article 41 (1), China Southern Airlines would be equally responsible and liable to pay compensation. Such compensation may not be claimed twice but once against either or both airlines jointly.
Q: Who else may be liable?
A: At present, without the recovery of the aircraft, and limited information available, it is difficult to determine who else can be sued. Even with the recovery of the aircraft, it may take years for investigation to be completed. Having said this, families of the passengers may consider an action such as against the aircraft manufacturer, the engine manufacturer, component manufacturers, and the maintenance company of an airline (if it has been outsourced).
Any action brought should be given much thought and thoroughly discussed, taking on board expert legal advice.
Q: Can crew members claim under the Montreal Convention?
There is no provision for crew members to claim under the Convention. Any claim brought by families of crew members would be subjected to their workers compensation agreement. However, families of crew members may be allowed to bring claims outside their agreement.
Shailender Bhar is a Barrister-at-law of England & Wales and an Advocate & Solicitor of the High Court of Malaya, practising at the firm of Messrs Brijnandan Singh Bhar & Co, Kuala Lumpur, Malaysia
