Kevin O'Toole/LONDON
THE WORLD'S major international carriers are aiming to abandon cash limits on passenger-liability claims from 1 November. The initiative will mark a radical departure from the existing limits, which have remained largely unchanged for more than 40 years.
Under the new rules, passengers will be able to recover "full compensatory damages" for any loss, which they can prove to have suffered. The Warsaw Convention had set a cap of as little as $20,000.
The move follows a year-long effort, by the International Air Transport Association (IATA) to update the Convention, which it admits was in danger of collapse.
The new rules were finally laid out in an Intercarrier Agreement presented at the IATA annual general meeting (AGM) in October 1995. With more than 50 airlines now signed up to that agreement, IATA is pressing ahead with implementation.
Although the agreement is being signed voluntarily and does not have the force of legislation, IATA says that enough carriers have signed to cover the majority of international flights.
The agreement will require approval by the US Department of Transportation (DoT) and by the European Commission (EC) before it can be implemented in these two regions. That process is expected to be complete by the end of September, in time for the new rules to be introduced before this year's IATA AGM in November.
The EC had already drafted its own set of proposals, but the only major difference with the IATA agreement centres on a requirement to make an advance payment of Ecu 50,000 ($63,000) to victims within ten days of an accident. IATA's legal expert, Lorne Clark, who has led the initiative, says that discussions are taking place to include this in a code of good conduct, rather than formal legislation.
The EC had also been pushing for the first portion of a claim to be paid out, regardless of fault. The IATA agreement already makes provision for this at up to $150,000, provided that the passenger is not guilty of contributory negligence.
Flag carriers in other regions, such as Asia and South America, are also talking to their governments about new legislation, says Clark.
In the longer term, it will be up to governments to enshrine the agreement in international law through the International Civil Aviation Organisation.
The failure of such efforts in the past was a key reason for airlines to take the initiative. Japan and Australia had already put their own revised rules in place, and the EC and the US DoT were preparing to follow suit, threatening a fragmentation of the shaky world consensus.
The low level of compensation is also blamed for encouraging victims to challenge decisions in the courts, in particular in the USA where proof of "willful misconduct" was enough to override the Warsaw Convention. "My view is that over the next ten years, we will see far more settlements out of court and far fewer legal actions," says Clark.
IATA's next challenge is to persuade the insurance markets that they, too, stand to gain, and not to use the agreement as an excuse to raise premiums. A team has been set up within IATA to help airlines in smaller or less developed areas to manage the impact of the change, possibly through clubbing together to buy insurance.
Source: Flight International
