07-04-2020 Transpo Lecture

Merchant vessel- personal property, can be a subject of appropriation

Doctrine of Limited Liability

In our Air Passenger Bill of Rights,  we were apprised that airline passengers have
the right to be compensated in case of  death or injury, or delay, loss or damage to
baggage in accordance with the relevant convention. The relevant convention that
the country now adheres to is the Convention for the Unification of Certain Rules
for International Carriage by Air, Montreal, 28 May 1999, otherwise known as
the Montreal Convention or “MC99”. This convention is more particularly relevant
for international flights where the places of departure and destination are located in
different countries which are State Parties to the convention.

MC99 is designed to be a single, universal treaty, governing airline liability

around the world relative to carriage of passengers, baggage and cargo. It
amended the now defunct Warsaw Convention and its related protocols – which
compensation system, over time has become outdated. As will be further
explained, MC99 espouses a more modern and fair liability regime than its
Warsaw counterpart.

MC99 was ratified by the Philippine Senate on 10 August 2015, and became
effective on 12 December 2015. To date, 132 of the 191 contracting states of
International Civil Aviation Organization are parties to the MC99.

With the Philippines’ accession to MC99, it has the force and effect of law in this
country. For purposes of this article, we focus on the rules pertinent to death or
injuries to passengers, and loss, delay or damage to baggage.

Accidental death or injury to passengers

One of the key aspects under the Montreal Convention is its establishment of a two-
tier liability for death or bodily injury to a passenger. The first tier is on the basis
of a strict liability where an airline carrier shall be made liable for damage
sustained in case of death or bodily injury of a passenger on the condition that the
accident which caused the death or injury took place on board the aircraft or in the
course of any of the operations of embarking or disembarking  (Article 17). Under
this first tier of liability, the carrier cannot limit or exclude its liability provided the
damages sustained does not exceed 113,100 Special Drawing Rights (“SDRs”). An
SDR is a type of foreign exchange reserve asset created by the International
Monetary Fund. Its value is based on an artificial basket of currencies consisting of
the US dollar, the euro, the pound and the Japanese yen. The liability limits are
reviewed every five years.

In this regard, the carrier may be held liable even if it is not negligent or at
fault. (Article 21)  The carrier is thus presumptively liable up to the amount of
113,100 SDRs. The carrier’s liability may be reduced or exonerated only in case
where damage was caused by contributory or sole negligence of the passenger or
person claiming compensation.  (Article 20)

Under the second tier of liability, or for all damages higher than 113,100 SDRs (or
approximately up to US$170,000 based on current IMF valuation), the carrier shall
be liable unless it can show that the damage was not due to its negligence or
wrongful act or omission, or that the damage was solely due to the negligence or
wrongful act or omission of a third party.  (Article 21) Otherwise stated, for those
claims above 113,100 SDRs, the carrier shall not be liable under this tier only if it
shall prove that it was not negligent or at fault. To emphasize, the burden of proof
is on the carrier.

This two-tier liability is a departure from the liability regime under the
Warsaw Convention (and its subsequent amendments) where the carrier’s
liability was limited to $25,000.00 (or its equivalent) regardless whether the
airline was at fault or not. Also, the full defense that the carrier or its agents
has taken all reasonable measures to avoid damage is not already availing
under the Montreal Convention.

Destruction, loss damage or delay in carrying baggage

In the case of destruction, or loss of, or of damage to, checked baggage, the carrier
shall be liable for damages  as long as the destruction, loss or damage took place on
board the aircraft or during any period within which the checked baggage was under
the carrier’s custody. The carrier may be held not liable if and to the extent that the
damage resulted from the inherent defect, quality or vice of the baggage. In case of
unchecked baggage, including personal items, the carrier shall be liable if the
damage resulted from its faults or that of its agents.   (Article 17)

Note further the time limits set under the MC99 in case of filing claims against the
carrier. In case of damage to baggage, the complainant must file his or her written
complaint within seven (7) days from the date of receipt of the checked-in baggage.
In case of delay of delivery , on the other hand, the complaint must be made at the
latest within twenty-one (21) days from the date of receipt of the baggage.  (Article
31)  These time limitations are important since no action can lie against the carrier
if the complaints were made beyond the period stated, save in the cases where the
carrier employed fraud.

The action for damages must be brought at the option of the plaintiff in the territory
of one of the State Parties, either before the court of the domicile of the carrier or
of its principal place of business, or where it has a place of business through which
the contract has belen made or before the court at the place of destination. This is
the so called four jurisdictional rules which similarly applied under the Warsaw
Convention. As supplement, the MC99 also allows, in respect of damage
resulting from death or injury of a passenger, the filing of action in the
territory of a State Party in which at the time of the accident the passenger has
his principal and permanent residence   and to and from which the carrier
operates services for the carriage of passengers by air. ( Article 33 ).

The right to damages shall be extinguished if the action is not brought within a
period of two years, reckoned from the date of arrival at the destination, or from the
date on which the aircraft ought to have arrives, or from the date on which the
carriage stopped. ( Article 35 )

On a final note, remember that along with the provisions of MC99, the carrier’s
responsibility shall be likewise governed by the carrier’s terms and conditions made
known to the passenger before the purchase of the airline ticket. Surely, it pays to
be informed.