Nepal | April 22, 2019

US-Bangla has to compensate passengers as per the Montreal Convention

Pushpa Raj Acharya
Prof. Prabhakar Adhikari

Photo: Balkrishna Thapa/ THT

The Parliament recently ratified the Convention for the Unification of Certain Rules for International Carriage by Air, popularly known as the Montreal Convention, 1999. This will ensure increase in the coverage of insurance of air passengers, baggage and cargo in international airlines. Along with the ratification, compensation for casualty, injury and losses of baggage and cargoes has been increased after 60 years, as Nepal had not reviewed the compensation after the Hague Protocol had fixed the insurance coverage of passengers at $20,000. As per the Montreal Convention, insurance cover of the passengers has been raised to 113,000 special drawing rights, equivalent to $169,000 for each passenger. Minister of Culture, Tourism and Civil Aviation Rabindra Adhikari had submitted the Montreal Convention for its ratification on the basis of the recommendation of an expert group formed by his ministry. Pushpa Raj Acharya of The Himalayan Times caught up with Professor Pravakar Adhikari, an expert of civil aviation law and one of the members of the expert group formed by the civil aviation ministry, who pushed for the ratification of the Montreal Convention, to learn about the benefits of being a member party of this convention. Excerpts:

The Parliament recently ratified the Montreal Convention, 1999. What significance does that have for Nepal?

Nepal had not reviewed the insurance coverage of air passengers, baggage and cargo in international flights since long. Nepali international airlines used to provide insurance coverage on the basis of the Montreal Convention for air passengers of other countries, however, there was partial treatment for Nepalis. The fundamental aspect of the ratification is Nepali international air passengers will get compensation at par with what the citizens of other countries receive. Till date, 131 countries and the European Union are the party nations of the Montreal Convention and Nepalis have now won the right to get compensation at par in terms of insurance coverage of air passengers in international airlines. The Montreal Convention was signed on the initiative of the International Civil Aviation Organisation (ICAO), thus replacing the Warsaw Convention of 1929 that had for the first time fixed the benchmark of compensation. However, some countries later distanced themselves from the convention and raised the insurance coverage for air passengers. For instance, the United States of America raised the compensation amount for air passengers flying to and from the country to $75,000 and other countries also did the same. There was no uniformity regarding the compensation before 1999, when the Montreal Convention was signed. In Australia, compensation for domestic air carriage was nearly double the compensation fixed for international air passengers. Ending the different compensation regimes in international flights, this convention has ensured equal treatment for every air passenger travelling in international airlines. Nepal should have also ratified the Montreal Convention a long time back.

How long will it take for the international community to recognise Nepal as a party to the convention?

Along with the ratification, the convention will come into effect 60 days after Nepal notifies the secretariat of the ICAO. The Montreal Convention has envisioned scientific ways for the compensation because it has envisaged adjustment of the compensation based on inflation every five years if inflation is at 10 per cent and above. As per this, the review meeting of 2009 raised the compensation amount for passengers (in case of casualty) to 113,000 special drawing rights (SDR) from 100,000 SDR of 1999. Another review meeting was held in 2014, but it was not adjusted because average inflation of five years (2009 to 2014) was below 10 per cent and another review meeting will be organised in 2019. Compensation for loss of baggage and cargo was adjusted to 19 SDR per kilogram after 2009 compared to 17 SDR per kg in 1999.

Nepali airlines operating in the international sector have said that they have been providing insurance coverage to passengers as per the Montreal Convention, though it had not been ratified. What do you have to say on this?

It is true that Nepali airlines operating international flights were providing insurance coverage to foreign passengers at par with the amount provisioned by the Montreal Convention to compete with other airlines, but they had a provision of only $20,000 for Nepali citizens. There was
discriminatory treatment against Nepalis using international carriers of their own country and the foreigners. I would say that it was a discriminatory mentality of the Nepali airlines flying in the international sector because the insurance premium of the airlines would have increased by only around $40,000. If they had raised the insurance premium by $40,000, then they would have been providing equal treatment to Nepalis.

While talking about compensation claim, 23 Nepalis were killed in the US-Bangla crash at Tribhuvan International Airport some five months back. Will they receive compensation as per the Montreal Convention?

Bangladesh is a signatory of the Montreal Convention since long and as a signatory state it cannot defeat the objective of the convention as per the international law. The aircraft that crashed at TIA was insured at $107 million. The insurance company has already settled claim worth $7 million and the rest of the insured amount worth $100 million is for compensation to the passengers’ families. US-Bangla has to compensate passengers as per the Montreal Convention, which means every passenger should receive $169,000. Compensation will be fixed in two tiers — i) fault based and ii) non-fault based. Non-fault based compensation is provided as fixed by the Montreal Convention. For fault based claims, there is unlimited liability for the airlines. Earlier, the compensation-seeker had to prove that the plane crash was because of a fault with the plane or the pilot, but now the airlines need to prove the crash did not happen due to the fault of the aircraft or the pilot to settle the claims as fixed by the Montreal Convention. The
investigation committee report is yet to be revealed, but the initial investigation has shown that the US-Bangla aircraft lacked air-worthiness and there was an error on the part of the pilot. If you look into the history of the aircraft, the plane faced problems multiple times due to lack of proper maintenance. If the company has adopted a policy of cutting down expenses on maintenance, then the shareholder United States-based company can also be liable to be a defendant and a case can also be filed in the United States. The Montreal Convention has given five jurisdictions for the compensation claim — place of origin; place of destination; place where company is registered; place of business (place from where the plane was purchased and where the aircraft was insured) and the place of passenger. It means, if claims are not settled, Nepalis can file a case in a Nepali court as well. If the airline has settled the claims by providing low compensation to the families of the victims, then they can file a case in that situation too. A public interest litigation cannot be filed. The locus standi (family/relatives) themselves have to file the case. If the investigation report shows it was because of the fault of the aircraft or pilot, the locus standi must look for the maximum compensation. In such situation, an unlimited liability occurs for the airlines and insurance companies. In such a situation, place of business is important for the locus standi to file the case. In fault based compensation calculation, the gross salary, provident fund, pension and leave encashment that the passenger (who is killed in the crash) could have earned in his/her life span is calculated at the present value, including the dependency factor.

US-Bangla has not yet provided compensation to the families and relatives of the deceased. So, can the affected go to the place of business to seek more compensation if the investigation report reveals crash was because of the fault of the plane or pilot?

For fault based compensation, first the families and relatives have to approach the airline company and insurance company. I feel we should not talk about an extreme situation whereby the families and relatives of the deceased have to go to court right now. In an extreme situation, the families and
relatives can file a case at the court of place of business, like, place from where the plane was purchased and where the aircraft was insured to get compensation. Injured victims of the US-Bangla airline crash will also be compensated as per the international practice. They will have to wait till the
investigation report is made public to approach for the compensation.

What is your recommendation regarding increasing compensation in domestic air carriers?

I have been recommending for increasing the insurance coverage of passengers, baggage and cargo in domestic flights as well. I believe that there will soon be equal treatment for domestic air passengers like in international flights. Rules enshrined in an international convention do not apply to domestic air carriage, but the government can bring a law provisioning equal treatment like for international air passengers.


A version of this article appears in print on August 28, 2018 of The Himalayan Times.


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