Montreal Convention 1999 – increase in limitation on liability

As most readers will know, the 17SDR/kg limitation on damages provided under Art.22(3) of the Montreal Convention 1999 (MC99) will be increased at the end of calendar 2009 to 19 SDR/kg. The SDR is a notional currency based on the weighted value of a basket of international currencies and is currently worth about USD$1.60.

It may seem strange to some readers that this change is occurring without an international conference, new diplomatic negotiations, and ratification by States party to the Convention. However, the Montreal Convention contained a provision at Art.24(1) known as an ‘escalator clause,’ permitting the the International Civil Aviation Organisation (ICAO) to review the limits at five-year intervals and make suitable changes. The ICAO based the increase on data suggesting a 13.1% increase in inflation during the period.

As with the Convention generally, this change will apply only to carriage falling with the ambit of MC99, that is, contracts for international carriage of cargo by air where both origin and destination country are States party to the convention.

IATA Standard AWB

Strangely, the same amendment formula does not apply to the IATA conditions of Contract: changes to the standard IATA conditions must be approved by ratification of changes to IATA Resolution 600b at an IATA Cargo Service Conference (CSC) authorized by key government regulators (such as US DOT). Since it is extremely unlikely such a conference will take place prior to 1 January 2010, there will be a period during which the only approved IATA AWBs contain a contractual 17 SDR/kg limitation which is different from the 19SDR/kg Convention limitation. The TT Club has advised members to continue using the existing FIATA AWBs until a new standard form is approved at a designated IATA CSC.

House AWBs

For Forwarders issuing their own House Bills, the TT Club has also recommended continuing to use the approved 600b language. However, in this case they have also recommended adding a NOTE to the face of the document, specifying that if the AWB is used by the forwarder as a contracting carrier for transport not subject to an air carriage convention, then the carriage will not be subject the the terms and conditions on the HAWB but rather the forwarders Standard Trading Conditions will apply.

Readers are reminded that in States part to the MC99 the convention limit has the force of law and will override any lower contractual limit provided for on the HAWB or STCs. Readers are also reminded that STCs do not apply to a contract simply because they are stated to apply: customers must be given adequate notice of the STCs prior to concluding a contract for carriage if the STCs are to be enforceable.