Order 2012-11-26 

UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY

WASHINGTON, D.C.

Issued by the Department of Transportation

On the Twenty-First day of November, 2012

Malaysia Airline System Bhd Docket OST 2012-0002

Violations of Article 17 of the 

 Montreal Convention and 49 U.S.C. § 41712 Served November 21, 2012

 

CONSENT ORDER

This consent order involves violations by Malaysia Airline System Bhd (MAS) of Article

17 of the Montreal Convention1 (Convention) and the statutory prohibition against unfair 

and deceptive trade practices, 49 U.S.C. § 41712, in connection with monetary claims 

resulting from loss of checked baggage on MAS flights to or from the United States. It 

directs MAS to cease and desist from future similar violations of Article 17 and section 

41712, and assesses the carrier a compromise civil penalty of $30,000.

Applicable Law

Article 22 of the Convention currently sets the liability limit for lost, delayed, or damaged 

checked baggage, at 1,131 Special Drawing Rights (SDRs) for each passenger.

2 The 

Convention sets forth rules on certain international flights that govern air carrier liability 

for lost, delayed, and damaged checked baggage. Article 17 of the Convention provides 

that carriers are liable for loss of or damage to checked baggage in the custody of the 

carrier, except to the extent that the loss or damage “resulted from an inherent defect, 

quality, or vice” of the baggage. Nothing in the Convention permits blanket exclusions or 

otherwise allows carriers to disclaim liability for any class or category of item, such as 

jewelry, electronics, or high value goods that they have accepted for transport as checked 

baggage. Rather, such exclusions contravene Article 17 because they have the effect of 

 1 Convention for the Unification of Certain Rules for International Carriage by Air, adopted on May 28, 

1999. The Convention entered into force for the United States of America on November 4, 2003, and for 

Malaysia on February 29, 2008.

2 Inflation Adjustments to Liability Limits Governed by the Montreal Convention Effective December 30, 

2009, 74 Fed. Reg. 59017 (Nov. 16, 2009) available at http://airconsumer.dot.gov/rules/guidance.htm.
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limiting—with respect to items falling within their ambit—a carrier’s liability to an 

amount lower, i.e., zero, than the minimum level required by Article 22. (By notice dated 

March 26, 2009, the Department reminded all airlines engaged in foreign air 

transportation of this proscription and gave them 90 days from the date of the notice to 

revise their tariffs, statements, and policies related to baggage liability.) Under 

Departmental enforcement case precedent, violations of Articles 17 also constitute an 

unfair and deceptive practice and an unfair method of competition in violation of 49 

U.S.C. § 41712.3 In addition, Article 26 prescribes that any contractual provision tending 

to relieve the carrier of liability or to fix a lower liability than set forth in the Convention 

is null and void. 

Facts

According to MAS’ contract of carriage on its website, the carrier states in Article 16.4.8, 

in apparent violation of the Convention that it is “not liable for damage to fragile or 

perishable items, artwork, cameras, money, jewelry, precious metals, silverware, 

negotiable papers, securities, or other valuables, business documents, passports and other 

identification documents, or samples, which are included in [a passenger’s] checked 

baggage, whether with or without our knowledge.” In addition, in a number of instances, 

MAS applied this blanket exclusion to deny passenger claims. 

Mitigation

In mitigation, MAS states that it is committed to complete compliance with all applicable 

laws and regulations, including the Montreal Convention and the Department's 

enforcement policies. MAS also prides itself on providing excellent customer service. 

Despite the unintentional misstatement of its baggage policy in its contract of carriage, 

MAS notes that the Department received no passenger complaints regarding denial of 

liability. 

MAS states that it has no enforcement history with the Department. MAS also states that 

upon receiving DOT's inquiry, MAS immediately conducted a thorough review of its 

internal baggage policies, website and contract of carriage, and issued a reminder of its 

policy to all of its customer service teams to ensure absolute clarity. MAS has fully 

cooperated with the Department in this matter and is committed to ensuring full 

compliance going forward.

Decision

The Office of Aviation Enforcement and Proceedings (Enforcement Office) has carefully 

considered the information provided by MAS but continues to believe that enforcement 

action is warranted. The Enforcement Office and MAS have reached a settlement of this 

matter in order to avoid litigation. Without admitting or denying the violations described 

above, MAS consents to the issuance of an order to cease and desist from future 

 3 See Societe Air France, Violations of Article 17 of the Montreal Convention and 49. U.S.C. §41712, 

Order 2010-12-26 (December 23, 2010).
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violations of Article 17 of the Montreal Convention and 49 U.S.C. § 41712 of the 

Department’s regulations, and to the assessment of $30,000 in compromise of potential 

civil penalties otherwise due and payable pursuant to 49 U.S.C. § 46301. 

This compromise assessment is appropriate considering the nature and extent of the 

violations described herein and serves the public interest. It represents a strong deterrent 

against future noncompliance with the Montreal Convention by MAS, as well as by other 

carriers. 

This order is issued under the authority contained in 49 CFR Part 1.

ACCORDINGLY,

1. Based on the above discussion, we approve this settlement and the provisions of 

this order as being in the public interest;

2. We find that Malaysia Airline System Bhd violated Article 17 of the Montreal 

Convention by excluding as a matter of course liability for certain classes and 

categories of baggage that it accepted for transport to and from the United States;

3. We find that by engaging in the conduct and violations described in ordering 

paragraph 2, above, Malaysia Airline System Bhd has also violated 49 U.S.C.

§ 41712; 

4. We order Malaysia Airline System Bhd and all other entities owned or controlled 

by or under common ownership with Malaysia Airline System Bhd, and its

successors, affiliates, and assignees, to cease and desist from further similar

violations of Article 17 of the Montreal Convention and 49 U.S.C. § 41712. 

Failure to comply with this cease and desist provision shall subject Malaysia Airline 

System Bhd and its successors and assignees to additional enforcement action;

5. We assess Malaysia Airline System Bhd a compromise civil penalty of $30,000 in 

compromise of civil penalties that might otherwise be assessed for the violations 

described above. Of this total penalty amount, $15,000 shall be due and payable 

within 30 days of the date of issuance of this order. The remaining $15,000 shall 

become due and payable immediately if Malaysia Airline System Bhd violates this 

order’s cease and desist provision within one year following the date of issuance of 

this order or fails to comply with the order’s payment provisions; and

6. We order Malaysia Airline System Bhd to pay the penalty through Pay.gov to the 

account of the U.S. Treasury. Payments shall be made in accordance with the 

instructions contained in the Attachment to this order. Failure to pay the penalty as 

ordered shall subject Malaysia Airline System Bhd Limited to the assessment of 
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interest, penalty, and collection charges under the Debt Collection Act and to further 

enforcement action for failing to comply with this order.

This order will become a final order of the Department 10 days after its service date 

unless a timely petition for review is filed or the Department takes review on its own 

motion.

BY:

SAMUEL PODBERESKY

Assistant General Counsel for

 Aviation Enforcement and Proceedings

(SEAL)

An electronic version of this document is available at

www.regulations.gov