Opinion of the Economic and Social Committee on the 'Proposal for a Council Regulation (EC) on air carrier liability in case of air accidents` ()

(96/C 212/09)

On 26 March 1996, the Council decided to consult the Economic and Social Committee, under Article 84(2) of the Treaty, on the above-mentioned proposal.

The Section for Transport and Communications, which was responsible for preparing the Committee's work on the subject, adopted its Opinion on 13 May 1996. The Rapporteur was Mr Moreland.

As its 336th Plenary Session (meeting of 29 May 1996), the Economic and Social Committee adopted the following Opinion by 83 votes for, 2 votes against and 2 abstentions.

1. Introduction

1.1. The Warsaw Convention of 1929 was a significant landmark in international aviation. Essentially it represented a deal between the airlines and the travelling public (represented by national governments) in the case of accidents occurring during international carriage by air. Normally the burden of proving fault lies with the claimant. The Warsaw Convention reverses this procedure. The airlines accept fault unless they can prove that they had taken all necessary measures to avoid damage. To balance this reversal of the normal burden of proof, airline liability was limited unless the claimant could prove 'wilful misconduct`.

1.2. The Convention also provided a single set of rules governing liability, thereby eliminating conflicts that would otherwise arise between the laws of individual countries. This was of considerable assistance to the travelling public and airlines in the event of accidents. Since 1929 the Warsaw Convention has been amended and supplemented by several other agreements, notably the Hague Protocol (1955), the Guadalajara Convention (1961), the Montreal Agreement (1966), the Guatemala Protocol (1971) and the Montreal Protocols (1975). Not all of these agreements have come into force because of the failure of sufficient states to ratify them.

1.3. The Warsaw Convention and subsequent related agreements have been a success. However, increasingly, problems have arisen. In particular, with the passage of time the limits on liability have become unacceptably low, despite attempts to raise them. This has led to several countries replacing the Warsaw limits, thereby removing one of the principal benefits of the Warsaw approach, its near universal applicability. It has been evident for some time that radical changes would be needed if the whole system was not to collapse. The US administration has indicated the need for new rules. IATA has agreed a solution: the main features are that limitation of liability is waived and that damages can be determined and awarded by reference to the law of the domicile of the passenger. Signing carriers must implement the provisions by 1 November.

2. Commission proposal

2.1. The European Commission's proposed regulation departs from Warsaw in several respects. First, it introduces unlimited liability for passenger accidents. (No changes are proposed for baggage and cargo.) Secondly, up to a liability of ECU 100 000 it removes an airline's defence under Article 20(i) of the Warsaw Convention. This Article enables an airline to be exonerated from liability if it can show that the damage was caused by the negligence of the injured person or if it took all necessary measures to avoid the damage or that it was impossible for such measures to be taken. However, in practice these defences are extremely difficult to sustain and in any case following the 1966 Montreal Agreement airlines operating to/from the United States have been required to waive them.

2.2. The proposed Regulation also provides for advance lump sum payments in the event of an accident. No later than 10 days after an accident an airline must pay up to ECU 50 000 to any person entitled to compensation. In addition, the established rules on jurisdiction would be supplemented. Under Warsaw claims for compensation must be brought in one of four places:

- the State where the airline is domiciled;

- the State where the airline has its principal place of business;

- the State of the place of ticketed destination of the passenger; or

- the State where the contract of carriage was entered into.

2.3. The Regulation would add to this list the State where a passenger has his 'domicile` or 'permanent residence`.

2.4. The draft Regulation provides also for the liability limits to be increased by the Commission following consultation.

2.5. The proposal would apply only to Community airlines. Non-Community carriers would be required to make clear to passengers at the time of ticket purchase and at check-in-counters within the EU that their liability rules were different from those applicable to Community carriers. Finally, the proposed rules would extend to domestic air services within the EU. At present the Warsaw system (and the tentative IATA system) covers only international journeys.

3. General comments

3.1. The reform of the Warsaw system is long overdue. The IATA approach is welcomed but is limited and (at time of writing) signed by only 29 airlines. Consequently the Commission's proposal is to be welcomed.

However the Commission approach needs amendment particularly to deal with:

- difficulties over the advance payment provision;

- legal interpretations over the words 'domicile` and 'permanent residence`;

- the need for proof of fault;

- possible effects of higher costs on smaller airlines;

- the limitation to EU carriers;

- the need to protect the interests of and provide clarity for the user.

3.2. The above limitations (which will be commented on in detail in section 4) need to be addressed with a view that the final regulation will act as a catalyst for a new, more appropriate world-wide system for the benefit of the travelling public.

4. Specific comments

4.1. Article 1

The 'Third Air Package` () and the trend of legislation under Article 84(2) has been by way of a regulation. Consequently, as the proposal should be introduced in a uniform manner across the European Union, the Committee supports the need for a regulation as opposed to a directive, but believes that this places an onus on the Council and Commission to ensure the new legal rights and obligations are clear and fully defined.

4.2. Article 2

'Domicile` and 'permanent residence` are defined in the Brussels Convention () and to avoid confusion these definitions should be repeated in Article 2. Different Member States apply different tests of domicile or permanent residence and it is possible that a passenger may be able to establish domicile or permanent residence in more than one Member State.

4.3. Article 4

4.3.1. The Committee welcomes the concept of swift payment of a lump sum to deal with immediate costs. However, the Committee is concerned that the proposal will be unworkable unless it is clear as to how certain difficulties will be met. For example, it can take time to identify victims and trace relatives. There may be difficulties in establishing who is entitled to payments. In addition, in the case of injury rather than death, what proportion of the advance payment is to be made? Who decides? The Committee accepts the need to set aside money within ten days of an accident, but the Commission should provide more detail of how and when payments are to be made.

4.3.2. The Committee welcomes the move to unlimited liability for passenger accidents. However, as the proposal will have some effect on costs - particularly for smaller airlines - the Committee considers that, for higher levels of payment, proof of fault may be justified.

4.4. Article 5

The Committee stresses the importance of clear information for the airline user. The requirement that non-Community carriers must make clear to passengers (beyond printing the information on tickets) that they do not apply the EU rules is likely to cause numerous problems and be difficult to enforce. The Commission needs to conduct further consultations about the practical implications.

4.5. Article 6

The article needs rewriting to make clear to which airlines it applies - presumably, those not based in

countries covered by the Third Air Package.

4.6. Article 7

The Committee welcomes this Article. However it underlines the need for a clear definition of 'domicile` and 'permanent residence`.

4.7. Article 9

The Commission should also consult airline, insurance, user and other relevant organizations. A report should be produced after, say, 3 or 4 years for the Council, Parliament and the Economic and Social Committee on the operation of the legislation.

Done at Brussels, 29 May 1996.

The President

of the Economic and Social Committee

Carlos FERRER

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

() OJ No L 240, 24. 8. 1992; ESC Opinion (OJ No C 169, 6. 7. 1992, p. 15).

() OJ No L 299, 31. 12. 1972, p. 32; OJ No C 97, 11. 4. 1983, p. 1.