Developments Since Seagate

Liability Under the Warsaw Convention in Singapore

This short article looks at the law governing international air carriage in Singapore. It focuses on recent case-law developments, involving certain aspects of the liability provisions of the Warsaw Convention. This article does not include a discussion of the SilkAir case, presently awaiting the decision of the Court of Appeal.

The Statutory Law: The Carriage by Air Act (Cap 32A)
The liability of airline carriers, and their servants or agents, for the injury, loss or damage to passengers, baggage or cargo in the course of any international carriage by air is governed by the Carriage by Air Act (Cap 32A) ('the CAA'). The CAA came into operation on 16 September 1988. The basis for the applicability of the Warsaw Convention in Singapore prior to this Act is an interesting academic question. The UK, which is a signatory of the convention and its successive protocols, had incorporated the convention into UK law by virtue of their Carriage by Air Act 1932, which was replaced by the Carriage by Air Act 1961. Two local cases decided prior to the promulgation of the CAA - Shriro (China) Ltd & Ors v Thai Airways International Ltd [1967] 1 MLJ 109, 2 MLJ 91 and Wai Wah Enterprises & Eastern Watch Co Pte Ltd v China Airlines Ltd [1986] 2 MLJ 269 - had applied the Warsaw Convention as part of Singapore law, referring to, as the basis for its importation into Singapore law, the 1932 and 1961 UK Acts respectively.¹

The CAA imposes three alternative liability regimes depending on the agreed points of departure and destination of the subject air carriage. The three regimes are the Convention for the Unification of Certain Rules Relating to International Carriage by Air, signed at Warsaw in 1929 (more simply referred to in the Act as 'the Warsaw Convention'), the Warsaw Convention as amended by the Hague Protocol of 1955 ('the Warsaw (Hague) Convention') and the Warsaw (Hague) Convention as amended by the Montreal Protocol No 4 of 1975 ('the Warsaw (Hague) (Montreal) Convention'). The three versions of the Warsaw Convention (collectively referred to in this Article as 'the Convention') are set out respectively in the Second, First and Third Schedules of the CAA.

At its simplest, the question of which liability regime - the Warsaw Convention, the Warsaw (Hague) or the Warsaw (Hague) (Montreal) Convention - applies to a particular contract of carriage depends on which convention and its subsequent protocols the countries of the agreed points of departure and destination are parties to (referred to in the CAA as 'high contracting parties'). Thus, for example, in the case of a carriage between Singapore and Indonesia, the Warsaw Convention regime would be applied, as Indonesia is a high contracting party to the Warsaw Convention of 1929, but not the Hague Protocol of 1955 or Montreal Protocol No 4 of 1975. On the other hand, if the carriage were between Singapore and Australia, the Warsaw (Hague) (Montreal) Convention would be applied as both countries are high contracting parties of Protocol No 4.

The applicable regime would apply irrespective of the nationality of the aircraft performing that carriage (s 2 of the CAA).

The aim of the Warsaw Convention was to create a uniform body of rules that governs the liability of airlines in international airlines transportation. It structured liability on the basis of a trade off: the airline would be liable for death or injury to any passenger on board the aircraft or during embarking or disembarking (art 17), for damage to baggage or cargo sustained during the carriage by air (art 18) and for damage caused by delay in the carriage of passenger, baggage or cargo (art 19), in return for which the airlines' liability would be limited. The airlines' liability within the limits for death, injury and damage is strictly presumed. The only circumstances in which the liability can be avoided are where the airline can prove that it has taken all necessary measures to avoid the damage or that it was impossible to take such measures (art 20) or where there is contributory negligence which exonerates the airline wholly or partly from liability (art 21). In exchange for this presumptive liability, the carrier's liability is limited under art 22 of the Convention - in the case of injury or death of a passenger to 125,000 francs² (under the Warsaw Convention) or 250,000 francs³ (under the Warsaw (Hague) and Warsaw (Hague) (Montreal) Conventions) and for damage and delay to baggage and cargo⁴ to 250 francs⁵ per kilogram of the package, unless the consignor had made a special declaration of value and paid the airline a supplementary sum.

The monetary limits of the airlines' liability can be overcome only in the case where the passenger embarks without a passenger ticket being delivered to him (art 3(2)) or if the passenger or cargo owner can prove under art 25 that the damage was caused either by 'wilful misconduct' or conduct equivalent to misconduct in the case of the Warsaw Convention or by an act or omission 'done with intent to cause damage or recklessly and with knowledge that damage would probably result in cases governed by the Warsaw (Hague) and Warsaw (Hague) (Montreal) Conventions.

Under art 25A of the Warsaw (Hague) and the Warsaw (Hague) (Montreal) Conventions - but not in the Warsaw Convention - the limits of liability under art 22 are expressly extended to the carrier's servants or agents provided that the servants or agents were acting within the scope of their employment and the damage did not result from art 25 circumstances - ie an act or omission done with intent to cause damage or recklessly and with knowledge that damage would probably result.⁶

The Intercarrier Agreements
With the passage of time, the limits imposed by the different versions of the Warsaw Convention began to look increasingly paltry and unfairly tilted towards the carriers. To address this imbalance, IATA members in October 1995 agreed under the IATA Intercarrier Agreement ('IIA') to take steps to waive all limits of liability, retaining only the right to invoke the 'all necessary measures' defence in art 20 for the portion of any claim in excess of 100,000 Special Drawing Rights ('SDRs'). This was followed in April 1996 by the Agreement on Measures to Implement the IATA Intercarrier Agreement ('MIA'). As of April 2001, 123 carriers had signed the IIA and 91 carriers had signed the MIA.⁷

In contrast to the Warsaw Convention and its subsequent protocols, the IIA and the MIA are not treaties but private agreements by the carriers who are parties to them. These agreements were not intended to amend the Warsaw Convention, which would have required statutory action, but were instead entered into pursuant to the provisions of art 22, which permits individual carriers to increase the limitation of liability by special contract with the passenger.

Exclusivity of Convention - The Seagate Case
Article 24 of the Warsaw Convention provides that in cases covered by the liability provisions of art 17, 18 or 19, any action for damages however founded can only be brought subject to the conditions and limits set out in the Convention. This means that where there is a claim under the Convention, a claimant has no remedy at common law. This exclusivity of actions under the Convention against the carrier is a fundamental pillar of the Warsaw regime. As noted in the House of Lords' decision in Sidhu v British Airways [1997] AC 430 at 447, the purpose of the Convention was to ensure that in all questions relating to the carrier's liability, the provisions of the Convention would apply. Should the passenger have access to some other remedy, whether under common law or otherwise, which may be available within the particular country where he chooses to raise his action, the whole system - intended to provide a secure regime for international carriage by air - would be distorted.

The issue of exclusivity of the Convention was tested in Seagate Technology International v Changi International Airport Services Pte Ltd [1997] 3 SLR 1. The appellants, the owner of hard-disk drives to be shipped from Singapore to Amsterdam on KLM Royal Dutch Airlines, sued, inter alia, the respondents CIAS, who were KLM's cargo handling agents, for the loss of one pallet of the drives, which was found missing when the plane landed in Amsterdam. The issue before the Court of Appeal was essentially a pleading point. The appellants had pleaded the common law causes of action of negligence, bailment and conversion in their claim against the respondents. The respondents contended that this was not permissible. Relying on the House of Lords' decision in Sidhu, the respondents argued that the exclusivity of actions under the Convention against the carriers must apply to their agents as well.

The Court of Appeal disagreed. While it accepted the principle of exclusivity as laid down in Sidhu, in respect of actions against carriers, it held that the liability of the carrier's agent is not imposed under arts 17, 18 and 19, and that therefore the agent's liability must by default be under the common law in negligence, bailment, conversion or whatever the cause of action may be.

The Purposive Approach and the Availability of Limitation to Carrier's Servants and Agents: The Yusen Case
As mentioned earlier, while art 25A of the Warsaw (Hague) and the Warsaw (Hague) (Montreal) Conventions expressly extends the limits of liability enjoyed by a carrier in art 22 to the carrier's servant or agent, no such express provision exists in the original Warsaw Convention.

The Court of Appeal in Yusen Air & Sea Services (S) Pte Ltd v Changi International Airport Services Pte Ltd [1999] 4 SLR 135 was faced with the issue of whether to extend the limitation protection of the carrier to its agent or servant despite the absence of express provision under the original Warsaw Convention.

Yusen involved a loss of cargo shipped, like Seagate, on the carrier KLM, whose cargo-handling agents were CIAS. This time the appellants were the freight forwarders, who had shipped cargo described in the airway bill as integrated circuits weighing 19kg. When the cargo was received by CIAS, however, it was recorded as weighing only 9kg. The cargo was then subsequently misplaced whilst in the custody of CIAS.

The Court of Appeal agreed with the appellants that CIAS were liable for the loss of 9kg cargo in its custody. It held, however, that CIAS, as carrier's agents, were entitled to rely on limitation.

The Court of Appeal applied a purposive approach towards the interpretation of the Warsaw Convention, pointing out that in the interpretation of an international convention, it was permissible to make use of the travaux preparatoires, as well as decisions by foreign courts. It held that the word 'carrier' in art 22 should be interpreted to include the carrier's agents or servants, so that they would enjoy, as under the Warsaw (Hague) Convention, the limits of liability. In applying the purposive approach, the Court of Appeal adopted the pronouncements of the House of Lords in Sidhu v British Airways and Fothergill v Monarch Airline Ltd [1981] AC 251 that such an approach should be taken when interpreting international conventions which have the force of law in the country.

The court, therefore, did not regard any inconsistency between its decision in Seagate - which interpreted 'carrier' in arts 17, 18 and 19 to exclude servants or agents - and their interpretation in Yusen that the same word 'carrier' in art 22 included servants or agents, as the former articles dealt with the causes of action, while the latter dealt with limitation of liability.

The court was also referred to the position under the Warsaw (Hague) Convention where the limitation of liability accorded to the carriers was extended to the carrier's agents or servants under art 25A of that Convention. Agreeing with the US and persuasive academic propositions on point, the court accepted the view that art 25A of the Warsaw (Hague) Convention was a clarifying amendment to the Warsaw Convention, ie that the limitation of liability accorded to the carriers under art 22 of the Warsaw Convention was also intended to be extended to their agents or servants, and art 25A was an amendment that merely clarified that position in the amended text.

In preferring the purposive approach, the court also referred to art 9A(1) of the Interpretation Act (Cap 1), which provided that an interpretation of a provision of a written law that would promote the purpose or object underlying the written law would be preferred to an interpretation that would not promote that purpose or object.

To adopt an interpretation that excluded agents or servants from the ambit of the limits of liability would be contrary to one of the main purposes of the Warsaw Convention to protect the carrier from the claims beyond the prescribed limits, for if the carrier's servants or agents are liable for claims beyond the prescribed limits, this would expose the carrier to an indemnity claim for that higher amount from the servants or agents. Hence, the court held that the term 'carrier' in art 22 of the Warsaw Convention ought to be given a purposive interpretation to include the carrier's servants and agents when these parties act in furtherance of the contract of carriage.

Attempts to Break Limit - Article 25/25A and the Fujitsu Case
A cargo owner who fails to make a special declaration of value in the airway bill (usually to avoid paying the additional handling charges) runs the risk of having the damages, for cargo lost or damaged in the custody of the carrier or its agents or servants, severely curtailed by the Convention limitation of 250 francs per kilogram. This is particularly the case where the cargo is of a high-value but low-weight nature, like computer or electronic items.

In such situations, the claimant generally tries to break the limit by attempting to establish, depending on which regime applies, either wilful misconduct or an act done with intent to cause damage or recklessly and with knowledge that damage would probably result under art 25/25A of the relevant convention.⁸

In certain circumstances - for instance, loss through internal theft by an employee committed in the course of employment - wilful misconduct or an intentional act to cause damage can be proved. In situations, however, where there is no direct evidence of intentional default, the onus on the claimant to prove that the carrier or its agents/servants was guilty of a reckless act under art 25/25A is much harder. Consistent with the object of the Convention to protect the carrier from unlimited liability, the courts have restricted the ambit of reckless act in art 25/25A of the Warsaw (Hague) Convention to situations where the claimant can prove that the act or omission complained of was committed with the actual subjective knowledge that damage would probably result from such act or omission.

In Singapore Airlines Ltd & Anor v Fujitsu Microelectronics (Malaysia) Sdn Bhd & Ors [2001] 1 SLR 241, seven packages containing IC dies were shipped from Tokyo to Kuala Lumpur via Singapore by Singapore Airlines. When the consignment arrived at Kuala Lumpur, it was placed into the custody of the carrier's cargo handlers, MAS, at their cargo complex. On the following day, however, only six packages could be located and delivered to the consignee's agent. At the trial, the plaintiffs alleged, inter alia, that the loss was either due to an intentional act - ie internal theft - or a reckless act by the MAS Cargo Centre in allowing the loss to occur.

Significantly, the learned trial judge at first instance held that there was no evidence to find internal theft. He went on, however, to hold that there was evidence of reckless conduct under art 25A in that the operational system, adopted in the MAS Cargo Centre, exposed imported air cargo to a huge risk of loss through theft or non-delivery, and that amounted to the cargo handlers having acted recklessly with knowledge that damage would probably result.

The Court of Appeal overturned the learned trial judge's decision. Applying the purposive approach laid down in Yusen, it followed the English Court of Appeal decision in Goldman v Thai Airways International Ltd [1983] 3 All ER 693 that the condition of knowledge that damage would occur from a reckless act requires that the carrier or its agent have actual knowledge that damage would happen from the reckless act. There was insufficient evidence to show that the loss of the missing package was due to the practices of MAS Cargo Centre. The court held that there might at its highest have been a lack of care on the part of the defendants in adopting the operational system at the MAS Cargo Centre, but this falls short of the evidence sufficient to prove that the defendants, in adopting this system, did so with the subjective actual knowledge that damage would probably result, as required before art 25 would apply.

Attempts to Break Limit - The SilkAir Case
One of the more sensational cases last year was the first instance trial of Beryl Claire Clarke & Ors v SilkAir (Singapore) Pte Ltd (Suit Nos 1746, 1748 to 1752 of 1999).

The case arose from the tragic air crash on 19 December 1997 of a SilkAir B737-300 aircraft flying from Jakarta to Singapore. The crash near Palembang, Sumatra, killed all 104 crewmembers and passengers on board.

The cause of the air crash was a mystery. SilkAir Flight MI185 had taken off from Jakarta at about 3.37pm (Indonesian time) and had climbed to its normal cruising altitude of 35,000 ft. Sometime after 4pm the radar revealed the aircraft some 400 ft below the cruising altitude and was descending rapidly. After the last recorded data showing it at 19,500 ft, it disappeared from the radar screen. The crash of the aircraft into the Musi River resulted in highly fragmented wreckage.

Three years after the crash, the Indonesian National Transport Safety Committee, tasked with the job of investigating the crash, released its final report, concluding that it was unable to find the reasons for the departure of the aircraft from its normal cruising level.

The plaintiffs represented six passengers, two of whose contract of carriage was governed by the Warsaw Convention, while the other four passengers were governed by the Warsaw (Hague) Convention. At trial, the plaintiffs asserted, inter alia, that art 25/25A should apply: that the crash must have been caused by sustained manual inputs from the cockpit and that there was an irresistible inference that the crash was the result of wilful misconduct or default of either or both of the pilots, or was done by either or both with intent to cause damage or recklessly and with the knowledge that damage would probably result.

In a 132-page (currently unreported) judgment, the learned trial judge cited the Court of Appeal's approach in Fujitsu (following Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152) that inference must be distinguished from conjecture or speculation and must be based on positively proven facts. Given the paucity of evidence and the fact that the plaintiffs' case rested on circumstantial evidence, the learned trial judge held that the plaintiffs' onus of proving that flight MI185 was intentionally crashed was not discharged. As for the contention of recklessness on the part of the pilots, he reiterated the test for recklessness under art 25 of the Warsaw (Hague) Convention as set out in Goldman and SS Pharmaceutical Co Ltd v Qantas Airways Ltd [1991] 1 Lloyd's Rep 288 (and endorsed in Fujitsu) that it must be proved not only that the pilots committed a reckless act but that they did so with the actual subjective knowledge that damage would probably result. He held that there was no such recklessness proved.

With respect to the contention of wilful misconduct under the Warsaw Convention, he cited with approval the definitions of 'wilful misconduct' in Horabin v British Overseas Airways Corporation [1952] QBD 1016 and Thomas Cook v Air Malta [1997] 1 Lloyd's Rep 399 - that it involves a knowledge or appreciation that the act being done was wrong - and held for the reasons stated, in respect of the allegation of recklessness, that no wilful misconduct was proved.

A total of five expert witnesses gave evidence at the trial. In the course of his judgment, the trial judge noted the court's remarks in Rhesa Shipping Co SA v Edmunds & Anor (The Popi M) [1985]
2 AII ER 712 that the court is entitled - even after a prolonged inquiry with a mass of expert evidence - to conclude simply that the plaintiffs have failed to discharge the burden of proof, if at the end of the day the cause of the crash remains in doubt.

At the time of writing this article, the SilkAir case was under a pending appeal to the Court of Appeal. It remains to be seen whether the Court of Appeal will agree with the learned trial judge's decision. Whatever the outcome, however, the first instance judgment does illustrate, like Fujitsu, the enormous difficulty any plaintiff faces in satisfying the onus of proof under art 25 in any case where the alleged default of the carrier or its agents or servants cannot be directly proven.

The Future: A New Regime?
What lies ahead for the Warsaw Convention?

The lack of universal acceptance of the various protocols to the Convention and the development of initiatives independent of the Convention have resulted in the evolution of the Warsaw regime into a somewhat fragmented system of liability.

Such a system could result in a situation where passengers in the same flight may be subject to different regimes depending on, inter alia, where the ticket was purchased and where their final intended destinations are.

On 28 May 1999, a new convention (known as 'the Montreal Convention') was adopted and signed by representatives of 52 countries. The new convention consolidates the existing regime of the Warsaw Convention and its subsequent protocols into a single treaty and revises certain principles and articles in accordance with modern realities and concerns.

One significant aspect of the Montreal Convention is that it eliminates the cap on the carrier's liability for death or injury to passengers. Article 21 of the Montreal Convention holds the carrier strictly liable for proven damages up to 100,000 SDRs. The carrier is further presumptively liable to an unlimited amount unless it can prove that the damage was not due to its negligence or was due solely to the negligence of a third party. At the same time, the new convention preserves all the significant advances made by the Montreal Protocol No 4 with respect to cargo loss and damage.

The Montreal Convention requires, however, that 30 states ratify it before it would come into force. In the two and a half years since the convention's adoption - although it has now been signed by 70 states and one Regional Economic Integration Organisation (ie the European Community ('EC')) - only 14 states have actually ratified it.

Against the context that the Montreal Protocol No 4 took over 20 years from its inception to come into force, the pace of ratifications for the Montreal Convention is not as troubling as it may first appear. The Montreal Convention was transmitted to the US Senate for advice and consent in September 2000 and the EC Council adopted a decision in April 2001 approving the Montreal Convention on behalf of the EC, and authorising the President of the Council to deposit an instrument of ratification on behalf of the EC at the same time as instruments of ratification are deposited on behalf of all the member states.

It is envisaged that once the US and the EC ratify the Montreal Convention, it will soon come into effect and many other countries (including Singapore, which has not yet adopted it) would inevitably follow suit.

Lok Vi Ming & Ng Hwee Chong
Rodyk & Davidson

Endnotes