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Tuesday, January 4, 2011

Carriage of goods by Air - Indian Act - Montreal Convention and Liability of Air Carriers

Marine is all about movement of goods from one place to another and air is one of the modes of transportation.  Here are some goods at the airport :

Air carriage is primarily about carrying passengers, luggage and cargo.  The documents of carriage are : Passenger ticket and Air consignment note.   When goods are entrusted to an Air Carrier, the shipper is given a document called Air Way Bill which has eleven digits code (three digits carrier code, seven digits serial number and check digit).

With these digits Airlines across would be able to decipher and find out the whereabouts of the cargo pertaining to that carriage document.   Primarily,  Air Waybill (AWB  refers to a receipt issued by an  airline for goods and an evidence of the contract of carriage, but it is not a document of title to the goods and is not negotiable.   There are international agreements governing the liability of the carrier called conventions.   This and similar conventions applies to all carriages which include carriage of persons, luggage or goods performed by Airways for reward.

There are enactments governing the carriage and the Indian Carriage by Air Act, 1972 applies to international carriage of goods and passengers.  This Act replaced its earlier enactment of 1934.  The Indian Act which received the Presidential assent in 1972 read ‘Be it enacted by Parliament in the 23rd year of Republic of India’ as :

India is a signatory to the Warsaw Convention of 1929, which is an international agreement governing the liability of the air carriers in respect of international carriage of passengers, baggage and  cargo by air.  …………… The convention provides that when an accident occurring during international carriage by air  causes damage to a passenger or a shipper of cargo, there is presumption of liability of the carrier.  The carrier, however, is not liable if he proves that he or his agents had taken all necessary measures to avoid the damage or that it was impossible for him of them to take such measures…….”

The Warsaw convention had been given effect to in India by the enactment of Act of 1934 and extended to domestic carriage subject to certain amendments by a notification issued in 1964. 
Subsequently there was a diplomatic conference under the auspices of International Civil Aviation Organisation was held at the Hague and was known as The Hague Protocol which had some amendments effected to Warsaw convention.  By this the liability in respect of passengers was raised to  250000 gold francs per passenger.

The Indian Carriage by Air Act 1972 defined :
‘amended Convention’ as to mean the convention as amended by the Hague Protocol on 28th Sept 1955
‘Convention’ to mean the one of Warsaw of 12th Oct 1929.

The rules contained in the first schedule being the provisions of the convention relating to the rights and liabilities of carriers, passengers, consignee, consignors and other persons, shall, subject to the provision of the Act, have the force of law in India in relation to any carriage by air to which those rules apply, irrespective of the nationality of the aircraft performing the carriage.  The rules contained in the second schedule,  are  the provisions of the amended convention. 

The basic provisions of the Act are that the Air consignment note is prima facie evidence of conclusion of contract, of the receipt of the goods and of the conditions of carriage.  The consignee is entitled on arrival of the goods at the destination to require the carrier to hand over to him the air consignment note and to deliver the goods to him.  The rights against the carrier can be enforced either by the consignee or consignor and either in this own interest or in the interest of the other, provided that they fulfill the obligations imposed upon them by the contract. 

As the Statute mentioned of Francs, it was also provided that they be converted into rupees at the rate of exchange prevailing on the date on which the amount of damages to be  paid by the carrier.

Sec 17 mentions that the carrier is liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury.  Sec 18 is about carrier’s liability for damage, destruction or loss of any registered luggage or goods

Sec 22.  specified the limits of liability as  sum of 1,25,000 francs for passengers and 250 francs per kg in respect of registered luggage or goods.

There exists provision for special declaration of value at delivery and paying supplementary sum (if required), so that the Carrier will be liable for such declared value

The Indian  Carriage by Air Act was further amended by passage of Carriage by Air (Amendment) Bill, 2008.   This was necessitated by  the universal acceptance of another protocol. 

The ICAO  (International Civil Aviation Organisation)  embarked upon serious initiative for a socio economic study of the levels of compensation and finally the Montreal Convention 1999 was adopted for the unification of certain rules for international carriage by air which aims to achieve the dual purpose of modernizing as well as consolidating the various instruments comprising the Warsaw System.

The Montreal Convention was ratified by close to 100 countries and India  has direct air links with many of those countries.  India also became a signatory to this convention by depositing the instrument of accession with ICAO. 

With amendment to the  provisions of the Statute and including the text of the Montreal convention as its Third schedule,  this has the force of law in the Country.    The amendment also provided for  inclusion of domestic carriage to the ambit of this. 

Here is something on Montreal Convention for our better understanding and more clarity :

v     The Montreal Convention for unification of certain rules of international carriage by air took effect in France and in Nederlands in June 28,2004. 

v     This convention only applies to cargo whose place of destination and destination are both within the jurisdiction of member states which have already ratified MC, notwithstanding reference to Warsaw convention in general conditions of carriage by air for cargo.

v     MC provides for using all kinds of documentation (including electronic way bills)

v     MC stipulates stricter liability terms for carriers in terms of damage to the cargo.

v     MC introduces unbreakable limit of liability of carriers @ SDR 17 per kilo gram.  However, expansion of liability based on higher declaration of value continues.

As you would know, there is another Organ – The International Air Transport Association (IATA) which governs the commercial standards of the air transport industry.  Its members comprise more than 200 airlines.  They have resolved issuance of Airway bill conditions of contract effective 1st July 2010.  This principally harmonizes application of MC liability limit and standardizes the application of liability limit.   Here are some important conditions from the contract :

ü      Notice appearing on the face of AWB – which draws reference to notice concerning carrier’s limitation of liability and states that this can be increased by declaring higher value for carriage and paying supplemental charge
ü      The carrier’s liability limitation for cargo lost, damaged or delayed shall be 19 SDRs per kg
ü      When no part of the consignment is delivered, a claim with respect to such consignment will be considered even though transportation charges thereon are unpaid.
ü      In case of loss of, damage or delay to part of the cargo, the weight to be taken into reckoning for liability will only be the weight used for determining the charge for carriage of such shipment
ü      Receipt by person entitled to delivery of cargo without complaint shall be prima facie evidence of delivery in good condition
ü      Complaint be made to Carrier whose AWB was used, or to first Carrier or to the last carrier or Carrier  which performed  carriage at the time of loss, damage or delay.

Notice to the Carriers  shall be:
n      immediately upon receipt but not later than 14 days from the date of receipt of the cargo in respect of damage
n      for delay, within 21 days from the date on which the cargo was placed at the disposal of person entitled to delivery
n      in case of non delivery, within 120 days from the date of issue of the AWB

All rights against Carrier shall stand extinguished unless action is brought within 2 years from the date of arrival at destination, or from the date on which the aircraft ought to have arrived or from the date on which the carriage stopped. 

The MC provision on jurisdiction provides the filing of Suit against the Carrier
1)     at the place of incorporation of Carrying Company
2)     at the principal place of business of carrier
3)     at the place where the ticket was purchased
4)     at the destination of passenger
5)     in cases involving death or injury of passenger – in the country of the passenger’s principal and permanent residence, so long as carrier provides service to that country.  

As you certainly would have observed, the reference is to SDR, which is not a currency but a monetary unit created by International Monetary Fund.    SDR is a basket of currencies consisting of Euro, Yen, Pound Sterling and US Dollar.

Though the rules are crystal clear now, one should understand when monetarily represented in Rupees,  SDR is Rs.69/- approx and the limit of liability is Rs.1311/- per kg (19 * 69)

Trust this made an interesting reading and provide you an insight into carriage of cargo by air and the liabilities of Air carrier for such cargo

Regards – S. Sampathkumar


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