New Treaty Governs Lawsuits in Airlines Crashes

A new international treaty that will make it easier for victims of international airline crashes to obtain compensation from airlines will bring a new sense of order to international aviation litigation, but its greatest impact will not be felt in U.S. courtrooms, litigators say.

President Bush deposited the Montreal Convention with the International Civil Aviation Organization, a United Nations agency, on Tuesday. With the U.S. having signed off on the agreement, the convention now has the participation of 30 nations necessary to make it binding.

It will take effect Nov. 4, ICAO spokeswoman Denise Copper said.

The treaty finally puts to rest longstanding contradictions within the old Warsaw Convention, a 1929 treaty which had been rendered all but obsolete, lawyers and experts say.

Nonetheless, lawyers and experts added that many of the reforms written into the treaty have been taking on life for several years. The treaty’s biggest impact, lawyers and experts say, is in codifying what had been a loose collection of agreements and protocols.

"I don’t believe it’s going to have a significant impact," said Kevin P. Durkin, a partner at Clifford Law Offices P.C. and chair of an American Bar Association aviation litigation committee. "From a plaintiff’s standpoint, in many ways it doesn’t change what has already been the law."

Among its numerous provisions, the convention formally changes the rules for compensatory awards in aircraft crashes, shifts the burden of proof in liability cases from the victims to the airlines in the victims’ national courts – the so-called Fifth Jurisdiction rule.

"The practical result is that with this new convention you’ll have strict liability and no limit on recoverable damages," said George N. Tompkins Jr., a New York aviation defense attorney who was one of the delegates to the 1999 conference that drafted the Montreal Convention.

With United and Boeing both headquartered here and with O’Hare being a hub for most major airlines, Chicago is already a major center of aviation litigation.

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Some experts say that the Fifth Jurisdiction rule might increase the amount of litigation heard in Chicago’s courts, which has a reputation in some circles as a jurisdiction whose verdicts tend to be generous.

Under the treaty, a new two-tiered system of liability will take effect and existing caps on damages stemming from a plane crash will be abolished, according to the treaty text.

Airlines will also have to accept the burden of proof in liability cases and will pay out up to about $135,000 to the victims of air disasters regardless of fault, the treaty states.

The actual dollar value of the strict liability awards may change slightly, because it is based on Special Drawing Rights, which is an International Monetary Fund currency-measuring unit. The treaty states that airlines must pay out up to 100,000 SDP’s– currently, about $135,000— for strict liability.

In cases where plaintiffs allege that the airlines were liable for damages beyond strict liability, airlines assume the burden of proof and will be responsible for all damages unless they can prove they came about "solely due to the negligence or other wrongful act or omission of a third party," the treaty states.

"One key element of this is getting help to victims and families fairly quickly," ICAO spokeswoman Cooper said.

The treaty also calls for five-year reviews of its provisions and allows for the strict liability caps to be adjusted based on inflation.

The Montreal Convention, drafted in 1999, formally replaces the Warsaw Convention of 1929.

Under the Warsaw rules, those injured or killed in airline accidents were entitled to a total of 125,000 Gold Francs, about $8,300, unless they could prove that the airline had acted with "willful misconduct."

The U.S. government and many lawyers had argued for a new treaty for decades, in part because the "willful misconduct" clause had become all but meaningless, experts say.

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John D. Ingram, a professor who teaches insurance law at The John Marshall Law School, said that the Warsaw caps had lost their impact in part because of the ripple effect of liability litigation that comes out of an airline disaster.

"When a big craft goes down, it’s not just the carrier that gets sued, everybody in the line of sight gets sued," he said.

As it stands, fewer that 5 percent of damage cases go to trial in the U.S., Tompkins said.

Tompkins said that the airlines have supported the treaty because they realized it was against their interests to "fight with the families of the people who die in their crashes."

"In the United States since the 1970s, it was very hard for the airlines to hold down limited liability, so, realistically, insurers did not expect the limits of liability of Warsaw to hold up," he said.

In practice, most U.S. airlines have tried to settle quickly with crash victims and then have pursued third parties, like manufacturers or air traffic controllers, to recoup their losses, Tompkins said.

With the Montreal Convention in place, Tompkins said he expects that trend to continue.

Perhaps the most important provision of the treaty, experts say, is the section that sets up a so-called Fifth Jurisdiction, which allows victims of air crashes, or their estate administrators, to sue airlines in the victims’ home countries as long as the airline has a business connection there.

That is a change from the Warsaw rules, which required suits to be heard in the jurisdiction of the airline’s headquarters or principle place of business, or the final destination of the flight.

The Fifth Jurisdiction provision is "one of the positives" of the treaty, Durkin said, but it will be meaningful to Americans only in the "unique" situation of having purchased their airline tickets abroad and not having a final destination in the U.S.