Air Transportation (Third-Party Liability)
A variety of legal relationships exist among parties involved in air transportation. Regarding the transportation of persons and goods by air, international conventions have led to an extensive unification of the law (air transportation (contractual liability)). However, third parties can also be affected by air transportation. The issue of tortious liability in air transport arises generally in cases of aircraft accidents or where, in the operation of the aircraft, third parties suffer damages. A non-contractual claim for damages can be pursued against one or several liable parties. In the field of air transportation, liability for third-party damages is generally incumbent on the aircraft operator. In addition to third-party liability, depending on the specific circumstances of the case, contractual claims may also arise.
1. Liability of the aircraft operator
a) International rules
The first efforts to standardize liability for damage caused by a foreign aircraft to third parties on the surface began in the early 1930s. These endeavours resulted in the Rome Convention of 1933, signed on 29 May 1933 (International Convention for the Unification of Certain Rules Relating to Damage Caused by Aircraft to Third Parties on the Surface), which was supplemented with additional insurance regulations by the Brussels Protocol of 1938, signed on 29 September 1938 (Protocol Supplementary to the Convention for the Unification of Certain Rules Relating to Damage Caused by Aircraft to Third Parties on the Surface). Since these two Conventions were only ratified by a handful of states, a revision followed World War II via the International Civil Aviation Organization (ICAO) and on 7 October 1952 a new Rome Convention was signed (Convention on Damage Caused by Foreign Aircraft to Third Parties on the Surface). The Rome Convention of 1933 is superseded by the new Rome Convention of 1952 between States which have ratified both Conventions (Art 29 Rome Convention of 1952). The revision of the Rome Convention of 1952 was undertaken by ICAO in the mid-1970s and led to the signing of the Montreal Protocol on 23 September 1978 (Protocol to amend the Convention on Damage Caused by Foreign Aircraft to Third Parties on the Surface).
In addition to unifying certain substantive and procedural legal issues, the Conventions aimed to provide adequate compensation for third-party damages on the surface. Through the establishment of limitations on liability, however, they were intended to do so without hindering the development of international aviation. In particular, the idea that the aviation industry should be protected as a young branch of the economy is also to be found in the Warsaw Convention of 1929, signed on 12 October 1929 (Convention for the Unification of Certain Rules Relating to International Carriage by Air), which harmonized the contractual liability of the air carrier for the first time (air transportation (contractual liability)).
The Rome Conventions on liability of 1933 and 1952 are based upon the same principles; the Rome Convention of 1952, however, is much more precise and detailed on many points. The Montreal Convention of 1978 mainly establishes higher liability limits.
The Rome Conventions of both 1933 and 1952 are in principle applicable where an aircraft that is registered in a contracting state causes damage in and to the territory of (to the surface of) another contracting state (Art 23 Rome Convention of 1952; Art 20(1) Rome Convention of 1933). The scope of application was adapted in the Montreal Protocol of 1978 and, in particular, was extended to include cases where, even though the aircraft itself is not registered in a contracting state, the aircraft operator’s principal place of business or permanent residence is in another contracting state (Art XII of the Montreal Protocol of 1978). Thus, even if the United States had ratified the Convention, the incidents of 11 September 2001 would not have fallen within its scope of application because all the aircraft involved were registered in the United States and all damages were caused on American territory.
Liability in the case of an aircraft collision is only rudimentarily regulated by the Rome Conventions. They only stipulate that the aircraft operators are either jointly and severally liable to third parties suffering damages (Art 6 Rome Convention of 1933), or that each aircraft concerned shall be considered to have caused the damage such that the operator of each aircraft shall be liable (Art 7 Rome Convention of 1952). However, the Convention does not apply to claims brought by the aircraft owner, the crew, the passengers or shippers of goods carried on board of one aircraft against the operator of the other aircraft involved (or vice versa) since such damages will not have occurred on the surface (Art 24 Rome Convention of 1952). Therefore, the applicable national law determines the non-contractual liability between the parties involved. A unification of the law pertaining to aircraft collision liability was attempted but not pursued by the ICAO.
The liable party in general is the aircraft operator (Art 2 Rome Convention of 1952; Art 4 Rome Convention of 1933). The operator and the registered or commercial owner of the aircraft are, particularly given today’s typical financing models, often not identical.
The aircraft operator is subject to strict liability (Art 2 Rome Convention of 1933; Art 1(1) Rome Convention of 1952; strict liability). He is liable provided that the damage is proven and attributable to an aircraft in flight. Thus, the takeoff and landing process is covered by the Convention while the so-called taxiing, ie the movement of aircraft on the ground at the airport, is not. In cases of contributory or sole negligence on the part of the damaged party, the liability of the operator shall be set aside or reduced accordingly (Art 6(1) Rome Convention of 1952; Art 3 Rome Convention of 1933).
The aircraft operator’s liability is limited per incident to a fixed amount determined by the weight of the aircraft. Originally, the limits of liability were expressed in Poincaré francs (Art 11 Rome Convention of 1952; Art 8 Rome Convention of 1933). In the Montreal Protocol of 1978, the limits were raised and set in Special Drawing Rights (SDRs) of the International Monetary Fund. One Special Drawing Right is approximately €0.90 (as of June 2011). The limits of liability range between 300,000 SDRs for an aircraft weighing 2,000 kg or less and 2.5 million SDRs for an aircraft weighing more than 30,000 kg, with 65 SDRs to be added to the 2.5 million SDRs for each additional kilogram above 30,000 kg. The liability with respect to loss of life or personal injury shall not exceed 125,000 SDRs per killed or injured person (Art III Montreal Protocol of 1978).
Particularly with regard to small aircraft, the limits of liability are not proportional to the damage potentially inflicted by the aircraft. For instance, when a Rockwell Commander 112 TC, a small aircraft with a flight weight of about 1300 kg, crashed into the Pirelli skyscraper in Milan in April 2002, it caused personal and property damage in excess of €50 million with more than 150 injured and three dead (including the pilot). If, as in this case, the total loss exceeds the limits of liability, then the distributable sum shall be allocated preferentially to cover personal injury damages over property damages (Art 8(3) Rome Convention of 1933; Art 14(b) Rome Convention of 1952; Art IV Montreal Protocol of 1978). The Rome Convention of 1933 states, for example, that only one-third of the total distributable sum is to be allocated for the reparation of property damages and the remaining two-thirds for personal damages. If claims exclusively relate to either personal or property damages, such claims shall be reduced in proportion to their respective amounts (Art 14(a) Rome Convention of 1952 and Art IV Montreal Protocol of 1978; Art 9 Rome Convention of 1933), taking into account the liability limits for personal injuries.
There are only a few instances in which the liability limits do not apply (Art 12 Rome Convention of 1952; Art 14 Rome Convention of 1933). For example, gross negligence, reminiscent of the approach adopted by the Warsaw Conventions of 1929 and 1955, leads to the unlimited liability of the aircraft operator. Other grounds for unlimited liability include failing to possess adequate insurance coverage and the wrongful taking and making use of an aircraft without the consent of the person entitled to use it (Art 12(2) Rome Convention of 1952; Art 14(b) Rome Convention of 1933).
Claims must be notified within a period of six months from the date of the incident that gave rise to the cause of action (Art 10 Rome Convention of 1933; Art 19 Rome Convention of 1952). Additionally, the absolute statute of limitations of three years as well as the relative statute of limitations both need to be observed. The latter was extended from the original one year to two years in the Rome Convention of 1952 (Art 17(1) Rome Convention of 1933; Art 21(1) Rome Convention of 1952).
In the Rome Convention of 1952, jurisdiction is allocated only to the place where the damage occurred (Art 20(1) Rome Convention of 1952). In the earlier Convention, the plaintiff could still choose between the place where the damage occurred and the defendant’s ordinary place of residence (Art 16 Rome Convention of 1933).
The introduction of compulsory insurance in the Rome Convention of 1933 was a new concept for that era (Art 12 Rome Convention of 1933). In addition, the Brussels Protocol of 1938 restricted the defences available to the liability insurer, which remained unaltered in subsequent instruments. From today’s perspective, compulsory insurance for aircraft owners and operators is very common. At the European level, compulsory insurance is provided for air carriers and aircraft operators in Regulation 785/2004. In addition, in many countries and in the European Union the issuance of an operating licence is contingent upon proof of adequate insurance. Finally, the Montreal Convention of 1999 (Convention for the Unification of Certain Rules for International Carriage by Air) demands that the contracting states require their air carriers to maintain adequate coverage (air transportation (contractual liability)).
b) National rules
The Rome Conventions of 1933 and 1952, as well as the Protocols of 1938 and 1978, were ratified by few states and are therefore only of marginal practical importance. Consequently, despite unification efforts, the respective applicable national law is not only decisive in domestic conflicts but also in many cross-border cases.
Many countries have developed bodies of legislation dealing with air transportation that regulate liability for surface damages. The corresponding liability systems, as well as their scopes of application, vary considerably. For example, while Belgium, as a ratifying state of the Rome Convention of 1952, transposed these rules into its national law, liability for surface damages in the Netherlands falls under the general rules on tortious liability. In contrast, Germany and a large number of other states provide for strict liability. The liability limits can also vary considerably. The United Kingdom, Finland and Switzerland, for example, do not limit liability whereas Germany and Italy set limits that are determined by the weight of the aircraft.
The problem of equally and fairly allocating the limited liability sum or insurance amount to a vast number of injured persons is rarely regulated from a procedural standpoint. The Italian legal system, following the concept of maritime law, provides a procedure (procedura di limitazione) by which assets (liability limit) and liabilities (claims for compensation) can be determined. This procedure can be initiated by the aircraft operator or by the insurance company. Based on the allocation plan established by the judge, the injured parties’ claims for damages are proportionally satisfied from the limited liability or insurance sum.
Independent of the applicable legal system, jurisdiction is generally accepted at the place where the damage occurred or at the place of the accident.
c) The modernization process
Since the Rome Conventions and the Protocols were not successful and the acceptance by the community of states was low, the ICAO began to address the modernization of the Convention in 2000. The events of 11 September 2001 gave this project a new impetus, with special attention being paid to the risk of terrorism.
The ICAO’s efforts resulted in two draft Conventions which, on the one hand, address the liability for acts of terrorism and unlawful interference (The Unlawful Interference Convention) and, on the other hand, address liability for situations without unlawful interference (The General Risk Convention).
In principle, the Unlawful Interference Convention provides for the strict liability of aircraft operators. It is no longer a requirement, as was the case in the Rome Conventions, that damage be caused by a foreign aircraft, but rather that the damage be caused by an aircraft on an international flight. The liability of the aircraft operator is determined by the weight of the aircraft and is limited to a maximum of 700 million SDR for an aircraft weighing more than 500,000 kg. Since this instrument is intended to regulate the compensation of incidents of the magnitude of 11 September 2001, the limited liability of the aircraft operator has been amended with a supplementary compensation mechanism. For the additional compensation level, an organization must be established which is financed with the contributions of the aircraft operators. A similar two-tiered compensation system and channelling of liability is foreseen in maritime law, under the HNS-Convention of 1996 on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea and also under the CLC- and Fund-Convention for Oil Pollution Damages (marine pollution (compensation)).
The predominant criticism of the Unlawful Interference Convention is that aircraft operators are financially responsible for the damages caused by terrorists notwithstanding their also being victims of the same terrorist acts. Critics argue that in such cases the affected states and governments should be responsible for the compensation of damages.
Like the Unlawful Interference Convention, the General Risk Convention requires an international flight and is applicable if there is no unlawful interference, as defined in the Unlawful Interference Convention. The two-tiered liability system of the General Risk Convention echoes the Montreal Convention of 1999 (air transportation (contractual liability)): the aircraft operator is liable up to the maximum liability limit, unless (contributory) negligence of the injured party applies. Furthermore, the aircraft operator is not subject to liability if it can prove that the damage was not caused by its own or one of its auxiliary person’s negligence. Liability extending beyond the maximum limits is also inapplicable if the damage can be solely attributed to a third party. In contrast to the Unlawful Interference Convention, no supplementary compensation mechanism is provided in the General Risk Convention.
During the Diplomatic Conference held in Montreal between 20 April and 2 May 2009, the final versions of the two Conventions were adopted and opened for signature. The General Risk Convention shall enter into force on the 60th day following the ratification by the 35th state; the Unlawful Interference Convention shall enter into force on the 180th day following the ratification by the 55th state, provided that these states together achieve a certain passenger volume. As of June 2011, the General Risk Convention has been signed by 10 and the Unlawful Interference Convention by 8 states. None of these states have ratified one or both Conventions yet.
2. Additional liable parties
Depending on the circumstances of the case, further parties beyond the aircraft operator might be subject to liability; prime examples here arise in product liability cases and in relation to acts and omissions by the providers of air traffic control.
a) Product liability
In air transportation, product liability, ie the manufacturer’s responsibility for a deficient product, has become increasingly important; this is also reflected in the corresponding number of court cases. Defective design, construction or manufacturing can all be the cause of damages. In the European Union, a certain level of harmonization was achieved via Dir 85/374 on product liability, requiring the imposition of strict liability. No harmonization exists on the international level. In a number of states, however, product liability is regulated separately. Eligibility to lodge a claim based on product liability is not limited to third parties on the ground but also extends to, among others, the aircraft owner, the passenger and the crew.
b) Liability for air traffic control
Air transport depends heavily on air traffic control. If the latter functions poorly, or not at all, it can be the cause of accidents and damages. Air traffic control is generally viewed as a public service; however, nowadays it is also open to privatization. According to Art 28 of the Chicago Convention of 1944 (International Civil Aviation Organization (ICAO)), the contracting states are in principle responsible for the provision of air traffic control services. In light of this understanding, it becomes clear that the liability for acts or omissions of air traffic controllers is often subject to the rules on general state liability.
Potential liability is assessed based on the relevant applicable national law since no unification of law has yet been achieved in this area, although the ICAO has made efforts in this regard. The discussion concerning the unification of the law has been given new impetus thanks to the initiative of the European Union regarding establishing a Single European Sky (SES). As in the case of a functional airspace block or in instances where foreign-located air traffic controllers carry out air traffic control duties, such activities reach both in- and outside state borders. Although the issue of the delegation of air traffic control duties between states in near-border regions is not new (eg as concerning the aircraft collision over Überlingen in the summer of 2002), the EU-initiative has pushed the topic forward with a new dimension. In this context, complex questions regarding the applicable (state) liability rules arise pertaining not only to private persons, but also relating to the recourse between the affected states.
Christopher M Shawcross, Peter Martin and KM Beaumont, Air Law, vols 1–2 (looseleaf); Francis Schubert, ‘Warsaw Claims and ATC Liability’  XXII-I Annals of Air and Space Law 237; Francis Schubert, ‘The Liability of Air Navigation Services in the Single European Sky’  XXVIII Annals of Air and Space Law 57; Walter Schwenk and Elmar Giemulla, Handbuch des Luftverkehrsrechts (2005); IH Ph Diederiks-Verschoor, An Introduction to Air Law (2006); Michael Chatzipanagiotis, ‘Liability Aspects of Air Traffic Services Provision’  XXXII Annals of Air and Space Law 326; Michael Milde, International Air Law and ICAO (2008); Michael Milde, ‘Liability for Damage Caused by Aircraft on the Surface’ (2008) 57 Zeitschrift für Luft- und Weltraumrecht 532; Ruwantissa Abeyratne, ‘The ICAO Conventions on Liability for Third-Party Damage Caused by Aircraft’, Air and Space Law 34, no 6 (2009), 403.