BREAKING CONVENTION: WHEN IS A CARRIER’S LIMIT OF LIABILITY UNDER THE WARSAW CONVENTION BROKEN? BEYOND BERYL CLAIRE CLARKE & ORS V SILKAIR (SINGAPORE) PTE LTD1

• Published date: 01 December 2003
• Date: 01 December 2003
• Author: JACK TEO CHENG CHUAH

Introduction

1 The crash of SilkAir Flight MI 185 (“MI 185”) was a milestone in Singapore’s aviation and legal history. The tragic events of 19 December 1997 not only marked the first time that either SilkAir or its parent company, Singapore Airlines (“SIA”), had lost a plane in an in-flight disaster, but it also gave Singaporean courts their first opportunity to consider the issue of when the limits on a carrier’s liability, as contained in the Warsaw Convention, can be broken in the event of injury or death to a passenger. Hitherto, SilkAir and SIA’s clean safety record had ensured an almost total dearth of local jurisprudence on this matter.

The Warsaw Convention

2 SilkAir’s General Conditions of Carriage for Passengers and Baggage2 state very clearly that any contract of carriage by SilkAir is subject to the Warsaw Convention. The Warsaw Convention, also known

as the “Convention for the Unification of Certain Rules Relating to International Carriage by Air” 1929,3 was the first ever international agreement to deal with a carrier’s obligations, liabilities and immunities. The rules laid down in the Convention are “in effect, an international code declaring the rights and liabilities of the parties to contracts of international carriage by air”.4

3 The need to establish such an international code stemmed from the existence of different substantive rules on international carriage in different countries, each based on the peculiarities of their own legal systems. For instance, while the legal systems of some countries view any attempt to use exemption clauses to limit liability with hostility, the legal systems of others take a more benign approach. In an arena as diverse as international aviation, the presence of such a myriad collection of laws would give rise to serious problems of private international law.

4 Thus, one of the main objectives of the Warsaw Convention was to harmonise international aviation law (and avoid problems of private international law) by means of the adoption of a uniform international code to be applied by the courts of the countries adopting the Convention. As it was signed in 1929, a time when the civil aviation industry was still very much in its infancy,5 another primary (and some say, the overriding) goal of the Convention was to ensure that the fledgling airlines of the time did not end up stillborn by falling victim to lawsuits with huge claims.6

5 The Warsaw Convention set about achieving the second objective in two ways. Firstly, the legal regime under the Convention was made an exclusive one. In other words, if a potential claim were to arise in the course of carriage of persons, luggage or goods performed by a carrier for reward,7 the only means by which a potential claimant could seek redress would be to bring an action under the Convention. In other words, it would not be possible for a potential claimant to circumvent the provisions of the Convention, for example, by pleading his case under the common law of tort or contract.8

6 Secondly, in the event of accidents causing “death or wounding… or any other bodily injury” to a passenger, the Convention provides for the carrier’s liability to be limited.9 The imposition of such a limit on liability would serve to defeat the fundamental purpose of a civil claim which is restitutio in integrum of the status quo ante and the exact rationale for this limitation of liability has been lost in the mists of time. However, Drion, in his excellent treatise on this matter,10 has suggested a number of possibilities. These include:

1. (1) an analogy with maritime law where the shipowner’s liability is also limited

2. (2) the protection of a financially weak industry

1. (3) catastrophic risks should not be borne by the aviation industry alone

2. (4) necessity for the carrier to obtain insurance

3. (5) possibility for potential claimants to insure themselves

4. (6) limitation of liability as a quid pro quo for a reversal of the burden of proof in lawsuits by the passengers against the carrier

5. (7) avoidance of litigation by facilitating quick settlements

6. (8) unification of law with regard to the amount of damages to be paid

7 While the matter is not free from controversy,11 it is generally accepted that the rationale for the limitation on passengers’ claims is to allow them to enjoy the benefit of a reversal of the burden of proof in lawsuits against the carrier.12 Fault on the part of the carrier would be presumed and there would be no need for the plaintiffs to discharge the burden of proof. In return for this regime of strict liability in which they would be relieved of the almost impossible task of having to prove fault on the part of the carrier,13 the plaintiff passengers had to accept a limit on the carrier’s liability.

Evolution of the Limits

8 Under Article 22 of the Warsaw Convention, the carrier’s liability was limited to 125,000 francs14 per passenger. This amount, which may have been a reasonable one in 1929, was quickly eroded by inflation and soon lost all relation to economic reality. The rapid rise in living standards over the years dictated that it had to be raised. And raised it was. Under the Hague Protocol in 1955,15 the limit was dramatically doubled to 250,000 francs.

9 Unfortunately, further attempts to keep the limit of liability up to date met with only limited success. Of the original 150 parties to the Warsaw Convention,16 almost all (134), ratified the Hague Protocol,17 but only 77 ratified the 1961 Guadalajara Protocol.18 There was an increasing divide between the developed nations (especially the United States) and the developing ones on whether and how much the limits of liability should be raised. Due to this and other differences,19 the 1971 Guatamala City Protocol,20 which tried to increase the limit of liability to 1,500,000 francs, did not even manage to secure the minimum number of ratifications necessary for it to come into force.21

10 This lack of progress in increasing the limit of liability led the United States to the verge of a formal denunciation of the Warsaw Convention.22 Only the signing of a last minute23 agreement in which carriers flying to the United States agreed to increase the limit of liability to USD75,000 on flights to and from the United States24 averted a unilateral withdrawal by the nation with the highest volume of international air traffic. While the agreement (which became known as CAB 1890025) ensured the survival of the Warsaw Convention, the end result was that a fragmented regime of international air law existed in which different limits of liability applied to different contracts of “international carriage”.

Applicability of the Warsaw Convention

11 The Warsaw Convention applies to all contracts of “international carriage”.26 Article 1(2) defines “international carriage” as:

“any carriage in which … the place of departure and the place of destination … are situated either within the territories of two High Contracting Parties27 or within the territory of a single High Contracting Party if there is an agreed stopping place within the territory of another State …..”

12 The fact that some countries are High Contracting Parties to only the Warsaw Convention, while others are High Contracting Parties to both the Warsaw Convention and the Hague Protocol, gives rise to complications when determining which limit of liability applies to a particular contract of international carriage. Whether the 125,000 francs

limit under the original Warsaw Convention, the 250,000 francs limit under the Hague Protocol or the USD75,000 limit under CAB 18900 applies depends on the place of departure and destination that a particular passenger is flying between. This means that it is possible for two passengers sitting beside each other on the same flight to have their contracts of carriage governed by two different versions of the Warsaw Convention simply because they have a different “place of departure and … place of destination”.

13 For example, on a flight from Jakarta to Singapore, a passenger with a one-way Jakarta — Singapore ticket or round trip Jakarta — Singapore — Jakarta ticket would have his contract of carriage subject to the 125,000 francs limit under the original Warsaw Convention. This is because Indonesia is a High Contracting Party to only the original Warsaw Convention. Similarly, a passenger with a one-way Jakarta — Bandar Seri Begawan ticket with a transit stop in Singapore would also be subject to the 125,000 francs limit as both Indonesia and Brunei are High Contracting Parties to the original Warsaw Convention. On the other hand, another passenger with a round trip Singapore — Jakarta — Singapore ticket on his way home to Singapore would be subject to the 250,000 francs limit under the Hague Protocol as Singapore is a High Contracting Party to the Hague Protocol. Finally, a passenger on his way from Jakarta to the United States via a transit stop in Singapore would be subject to the USD75,000 limit under CAB 1890

I Breaking the Limits — The Warsaw Convention

14 The limits noted above, were made subject to one important exception. Article 25(1) provides that the carrier would not be able to rely on the limits if the damage had been caused by “his wilful misconduct or by such default on his part as … is considered to be equivalent to wilful misconduct”.28 Besides the carrier, the wilful misconduct can also be on

the part of any servant or agent of the carrier who is acting “within the scope of his employment”.29 In this regard, the courts have applied the ordinary case law meaning of the phrase. An act is done in the scope of employment if it is either:

1. (1) a wrongful act authorised by the master or

2. (2) a wrongful and unauthorised mode of doing some act authorised by the master.30

15 The term “wilful misconduct” has been defined in a number of English cases. The most well known is that found in...