COMMON POSITION (EC) No 16/97 adopted by the Council on 24 February 1997 with a view to adopting Regulation (EC) No . . ./97, of . . ., on air carrier liability in the event of accidents (97/C 123/02)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 84 (2) thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the Economic and Social Committee (2),

Acting in accordance with the procedure laid down in Article 189c of the Treaty (3),

(1) Whereas, in the framework of the common transport policy, it is necessary to improve the level of protection of passengers involved in air accidents;

(2) Whereas the rules on liability in the event of accidents are governed by the Convention for the Unification of Certain Rules Relating to International Carriage by Air, signed at Warsaw on 12 October 1929, or that Convention as amended at The Hague on 28 September 1955 and the Convention done at Guadalajara on 18 September 1961, whichever may be applicable each being hereinafter referred to, as applicable, as the 'Warsaw Convention`; whereas the Warsaw Convention is applied worldwide for the benefit of both passengers and air carriers;

(3) Whereas the limit set on liability by the Warsaw Convention is too low by today's economic and social standards and often leads to lengthy legal actions which damage the image of air transport; whereas as a result Member States have variously increased the liability limit, thereby leading to different terms and conditions of carriage in the internal aviation market;

(4) Whereas in addition the Warsaw Convention applies only to international transport; whereas, in the internal aviation market, the distinction between national and international transport has been eliminated; whereas it is therefore appropriate to have the same level and nature of liability in both national and international transport;

(5) Whereas a full review and revision of the Warsaw Convention is long overdue and would represent, in the long term, a more uniform and applicable response, at an international level, to the issue of air carrier liability in the event of accidents; whereas efforts to increase the limits of liability imposed in the Warsaw Convention should continue through negotiation at multilateral level;

(6) Whereas, in compliance with the principle of subsidiarity, action at Community level is desirable in order to achieve harmonization in the field of air carrier liability and could serve as a guideline for improved passenger protection on a global scale;

(7) Whereas it is appropriate to remove all monetary limits of liability within the meaning of Article 22 (1) of the Warsaw Convention or any other legal or contractual limits, in accordance with present trends at international level;

(8) Whereas, in order to avoid situations where victims of accidents are not compensated, Community air carriers should not, with respect to any claim arising out of the death, wounding or other bodily injury of a passenger pursuant to Article 17 of the Warsaw Convention, avail themselves of any defence pursuant to Article 20 (1) of the Warsaw Convention up to a certain limit;

(9) Whereas Community air carriers may be exonerated from their liability in cases of contributory negligence of the passenger concerned;

(10) Whereas it is necessary to clarify the obligations of this Regulation in the light of Article 7 of Council Regulation (EEC) No 2407/92 of 23 July 1992 on licensing of air carriers (4); whereas, in this regard, Community air carriers should be insured up to a certain limit laid down in this Regulation;

(11) Whereas Community air carriers should always be entitled to claim against third parties;

(12) Whereas prompt advance payments can considerably assist the injured passengers or natural persons entitled to compensation in meeting the immediate costs following an air accident;

(13) Whereas the rules on the nature and limitation of liability in the event of death, wounding or any other bodily injury suffered by a passenger form part of the terms and conditions of carriage in the air transport contract between carrier and passenger; whereas, in order to reduce the risk of distorting competition, third-country carriers should adequately inform passengers of their conditions of carriage;

(14) Whereas it is appropriate and necessary that the monetary limits expressed in this Regulation be reviewed in order to take into account economic developments and developments in international forums;

(15) Whereas the International Civil Aviation Organization (ICAO) is at present engaged in a review of the Warsaw Convention; whereas, pending the outcome of such review, actions on an interim basis by the Community will enhance the protection of passengers; whereas the Council should review this Regulation as soon as possible after the review by ICAO,

HAS ADOPTED THIS REGULATION:

Article 1

This Regulation lays down the obligations of Community air carriers in relation to liability in the event of accidents to passengers for damage sustained in the event of death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board an aircraft or in the course of any of the operations of embarking or disembarking.

This Regulation also clarifies some insurance requirements for Community air carriers.

In addition, this Regulation sets down some requirements on information to be provided by air carriers established outside the Community which operate to, from or within the Community.

Article 2

1. For the purpose of this Regulation:

(a) air carrier shall mean an air transport undertaking with a valid operating licence;

(b) Community air carrier shall mean an air carrier with a valid operating licence granted by a Member State in accordance with the provisions of Regulation (EEC) No 2407/92;

(c) person entitled to compensation shall mean a passenger or any person entitled to claim in respect of that passenger, in accordance with applicable law;

(d) ecu shall mean the unit of account adopted in drawing up the general budget of the European Communities in accordance with Articles 207 and 209 of the Treaty;

(e) SDR shall mean a special drawing right as defined by the International Monetary Fund;

(f) Warsaw Convention shall mean the Convention for the Unification of Certain Rules Relating to International Carriage by Air, signed at Warsaw on 12 October 1929, or the Warsaw Convention as amended at The Hague on 28 September 1955 and the Convention supplementary to the Warsaw Convention done at Guadalajara on 18 September 1961 - whichever is applicable to the passenger contract of carriage, together with all international instruments which supplement, and are associated with, it and are in force.

2. Concepts contained in this Regulation which are not defined in paragraph 1 shall be equivalent to those used in the Warsaw Convention.

Article 3

1. (a) The liability of a Community air carrier for damages sustained in the event of death, wounding or any other bodily injury by a passenger in the event of an accident shall not be subject to any financial limit, be it defined by law, convention or contract.

(b) The obligation of insurance set out in Article 7 of Regulation (EEC) No 2407/92 shall be understood as requiring that a Community air carrier shall be insured up to the limit of the liability required pursuant to paragraph 2 and thereafter up to a reasonable level.

2. For any damages up to the sum of the equivalent in ecus of 100 000 SDR, the Community air carrier shall not exclude or limit his liability by proving that he and his agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures.

3. Notwithstanding the provisions of paragraph 2, if the Community air carrier proves that the damage was caused by, or contributed to by the negligence of the injured or deceased passenger, the carrier may be exonerated wholly or partly from its liability in accordance with applicable law.

Article 4

In the event of death, wounding or any other bodily injury suffered by a passenger in the event of an accident, nothing in this Regulation shall

(a) imply that a Community air carrier is the sole party liable to pay damages, or

(b) restrict any rights of a Community air carrier to seek contribution or indemnity from any other party in accordance with applicable law.

Article 5

1. The Community air carrier shall without delay, and in any event not later than 15 days after the identity of the natural person entitled to compensation has been established, make such advance payments as may be required to meet immediate economic needs on a basis proportional to the hardship suffered.

2. Without prejudice to paragraph 1, an advance payment shall not be less than the equivalent in ecus of 15 000 SDR per passenger in the event of death.

3. An advance payment shall not constitute recognition of liability and may be offset against any subsequent sums paid on the basis of Community air carrier liability, but is not returnable, except in the cases prescribed in Article 3 (3) or in circumstances where it is subsequently proved that the person who received the advance payment caused, or contributed to, the damage by negligence or was not the person entitled to compensation.

Article 6

1. The provisions contained in Articles 3 and 5 shall be included in the Community air carrier's conditions of carriage.

2. Adequate information on the provisions contained in Articles 3 and 5 shall, on request, be available to passengers at the Community air carrier's agencies, travel agencies and check-in counters and at points of sale. The ticket document, or an equivalent shall contain a summary of the requirements in plain and intelligible language.

3. Air carriers established outside the Community operating to, from or within the Community and not applying the provisions referred to in Articles 3 and 5 shall expressly and clearly inform the passengers thereof, at the time of purchase of the ticket at the carrier's agencies, travel agencies or check-in counters located in the territory of a Member State. Air carriers shall provide the passengers with a form setting out their conditions. The fact that only a liability limit is indicated on the ticket document or an equivalent shall not constitute sufficient information.

Article 7

No later than two years after the entry into force of this Regulation, the Commission shall draw up a report on the application of the Regulation which, inter alia, takes into account economic developments and developments in international forums. Such report may be accompanied by proposals for a revision of this Regulation.

Article 8

This Regulation shall enter into force one year after the date of its publication in the Official Journal of the European Communities.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, . . .

For the Council

The President

(1) OJ No C 104, 10. 4. 1996, p. 18.

(2) OJ No C 212, 22. 7. 1996, p. 38.

(3) Opinion of the European Parliament of 17 September 1996 (OJ No C 320, 28. 10. 1996, p. 35), Council common position of 24 February 1997 and Decision of the European Parliament of . . . (not yet published in the Official Journal).

(4) OJ No L 240, 24. 8. 1992, p. 1.

STATEMENT OF THE COUNCIL'S REASONS

I. INTRODUCTION

On 15 February 1996, the Commission submitted to the Council its proposal for a Council Regulation, based on Article 84 (2) of the Treaty, on air carrier liability in case of accidents (1).

The European Parliament delivered its opinion at the first reading on 17 September 1996 (2). The Economic and Social Committee delivered its opinion on 29 May 1996 (3).

In the light of these opinions, the Commission amended its proposal and transmitted it to the Council on 11 December 1996 (4).

On 12 December 1996, the Council reached an agreement on the draft common position with a view to adopting the Regulation. The Council adopted its common position in accordance with Article 189c of the Treaty on 24 February 1997.

II. PURPOSE OF THE PROPOSAL

The proposal aims at improving the level of protection of passengers involved in air accidents on board a Community air carrier and constitutes a flanking measure in the context of the third liberalization package on air transport.

The obligations of air carriers in relation to liability in the event of accidents in international carriage is basically governed by the 1929 Warsaw Convention for the Unification of Certain Rules relating to International Carriage by Air, of which all Member States are contracting parties, and a number of other instruments which, together with the Warsaw Convention, are generally referred to as the Warsaw System.

However, the Warsaw System has not kept pace with the needs of today's aviation market. The proposal is therefore intended to introduce at Community level some major improvements concerning liability.

III. ANALYSIS OF THE COMMON POSITION

The common position adopted by the Council corresponds largely to the amended proposal submitted by the Commission and takes on board most of the amendments adopted by the European Parliament. The other amendments introduced by the Council clarify the limits of liability of air carriers and the rights of the persons entitled to compensation, while reducing bureaucratic obligations for Member States.

The main amendments introduced by the Council to the amended proposal submitted by the Commission are indicated below.

Recitals

The recitals were redrafted in order to make them consistent with the amendments introduced in the Articles. The new text of the recitals corresponds in substance to the Commission's amended proposal except for the following changes:

- deletion of the recital relating to former Article 7 of the Commission's amended proposal concerning the possibility of a fifth jurisdiction,

- deletion of the recital relating to former Article 6 (2) of the Commission's amended proposal concerning the Commission's endeavour to incorporate in future civil aviation agreements with third countries' provisions similar to those outlined in this Regulation,

- deletion of the recital concerning the need to address the liability of carriers for lost or damaged luggage and cargo,

- deletion of the reference to comitology in the recital relating to former Articles 8 and 9 of the Commission's amended proposal,

- addition of a recital concerning the overall aim of the Regulation,

- addition of three recitals relating to Articles 3 (1) (b), 3 (3) and 4,

- addition of a recital concerning the need to review the Regulation as soon as possible after the review of the Warsaw System presently undertaken by ICAO.

Article 1 (2) and (3)

The second and third paragraphs concerning insurance requirements for Community air carriers and information requirements for third country air carriers were added in order to clarify the main aims of the Regulation in Article 1.

Article 2 (1) (e)

The definition of a special drawing right was added in order to be consistent with the monetary unit used in the Warsaw Convention (see also amendments in Articles 3 and 5) and other recent international intercarriers' agreements under the aegis of IATA.

Article 3 (1) (b)

Point (b) concerning the obligation of insurance was added in order to clarify the level of such an obligation.

Article 3 (2)

The Council followed the Commission's amendment since it increased strict liability to the equivalent in ecus of SDR 100 000, which roughly amounts to ECU 120 000.

Article 5

- in paragraph 1, the 10 days' notice proposed by the Commission was raised to 15 days' notice since 10 days were not considered enough time to gather all the necessary elements to make the payments,

- a new paragraph 2 concerning a minimum amount of compensation in case of death was added in order to provide a higher level of protection for those entitled to receive it,

- in paragraph 3, the principle of non-returnability of the advance payment was modified in order to take into account the cases where the negligence of the injured or deceased passenger (Article 3 (3)), the negligence of the person who received the advance payment or a mistake in the identification of the person entitled to compensation, are proven.

Article 6 (3)

The obligation of third country air carriers to provide the passengers with a form setting out their conditions is no longer subject to the passenger's prior request. This modification provides better consumer protection.

Former Article 6 of the Commission's amended proposal

- paragraph 1 concerning the notification of a list of third country air carriers by Member States was deleted since the Council found that such a notification was too bureaucratic and did not represent any effective improvements for air transport users,

- paragraph 2 concerning future negotiations with third countries was not accepted since it was considered to refer to matters outside the scope of this Regulation.

Former Article 7 of the Commission's amended proposal

This Article concerning the possibility of bringing an action for liability before the Courts of the Member State where the passenger has his domicile or permanent residence (in addition to the four jurisdictions provided pursuant to the Warsaw Convention) was deleted since it was deemed to raise very complex legal and factual issues which would have to be resolved before settling the claim.

Article 7

This Article merges Commission's Articles 8 and 9a and establishes the Commission's obligation to provide a report on the application of the Regulation and, where appropriate, to present proposals for a revision of the Regulation.

The Commission shall draw up such a report no later than two years after the entry into force of the Regulation, i.e. by 31 December 2000, that is one year later than the original date proposed by the Commission. Such a period of time was considered necessary in order to benefit from the outcome of the review of the Warsaw System which is presently undertaken by ICAO.

Article 8

The Regulation will enter into force one year after the date of its publication in the Official Journal, instead of the six months' period proposed by the Commission. Such a time period allows air carriers to implement the changes needed for the application of the Regulation, in particular changes concerning their insurance contracts, which are negotiated on a yearly basis.

Former Article 9 of the Commission's amended proposal

This Article concerning the comitology procedure to be applied for the revision of the monetary amounts referred to in Articles 3 and 5 was deleted since the Council opted for the report procedure established in Article 7.

IV. AMENDMENTS BY THE EUROPEAN PARLIAMENT

A. Amendments by Parliament accepted by the Council

Most of the amendments proposed by Parliament were accepted either fully or partially, while others were accepted in substance and subject to redrafting.

All amendments below were also accepted by the Commission.

- amendment 1 (new recital): accepted in its entirety,

- amendment 2 (new recital): accepted subject to redrafting,

- amendment 3 (recital 7): accepted partially subject to redrafting,

- amendment 5 (recital 12): accepted subject to redrafting,

- amendment 7 (recital 13): accepted partially subject to redrafting,

- amendment 10 (Article 1, first paragraph): accepted in the modified form proposed by the Commission, which provides more clarity,

- amendment 11 (Article 2 (1) (c)): the definition of a person entitled to compensation was partially accepted (the person entitled to compensation may claim regardless of the death of the passenger), (Article 2 (1) (d)): the deletion of the definition of an advance payment was accepted, (Article 2 (1) (f)): accepted in the modified form proposed by the Commission and completed in order to make it more comprehensive,

- amendment 12 (Article 3 (1)): accepted partially (the actual reference to the Articles of the Warsaw Convention relating to the limitation of liability has not been maintained), (Article 3 (2)): accepted in substance (strict liability up to ECU 120 000),

- amendment 13 (Article 5 (1)): accepted partially (the notice shall be 15 days and not 10 days), (Article 5 (2)): accepted partially (the advance payment shall be returnable in certain cases),

- amendment 14 (Article 6 (2)): accepted partially,

- amendment 17 (Article 4): accepted in substance and developed,

- amendment 18 (Article 7) and amendment 19: accepted in substance and merged into Article 7.

B. Amendments proposed by Parliament rejected by the Council

All amendments below were also rejected by the Commission, unless otherwise indicated.

- amendment 3 (recital 7): the reference to a private agreement in a Regulation was deemed inappropriate,

- amendment 7 (recital 13): rejected partially since the inclusion of the Article to which this recital relates was considered inappropriate in a Regulation. However the Commission accepted this amendment,

- amendment 8: rejected since this recital refers to matters outside the scope of the Regulation. However the Commission accepted this amendment,

- amendment 13 (Article 5 new paragraph 1): this new paragraph establishing a maximum period of three months for the payment of the uncontested part of the claim was deemed to serve no purpose (since there is already a provision on advance payments) and to be unrealistic (the global compensation to be paid cannot be assessed in such a time period),

- amendment 15 (former Article 6): this new paragraph concerning the Commission's future negotiations with third countries was deemed to refer to matters outside the scope of the Regulation. However, the Commission accepted the first sentence,

- amendment 16 (former Article 7): the possibility for a fifth jurisdiction was rejected on the grounds that the other four jurisdictions provided pursuant to the Warsaw Convention were sufficient. However, the Commission accepted this amendment in its entirety,

- amendment 17 (Article 4): the possibility of mediation in a dispute with regard to a claim for damages was rejected since it was not considered useful.

(1) OJ No C 104, 10. 4. 1996, p. 18.

(2) OJ No C 320, 28. 10. 1996, p. 19.

(3) OJ No C 212, 22. 7. 1996, p. 38.

(4) OJ No C 29, 30. 1. 1997, p. 10.