Opinion ID: 433398
Heading Depth: 3
Heading Rank: 2

Heading: Prejudgment Interest on the Warsaw Convention Damage Award

Text: 5 The Public Administrator asserts that the district court erred in holding that the plaintiff could not recover prejudgment interest pursuant to New York law 14 on the $75,000 damage award that it received from Eastern. We disagree. 6 Article 22 of the Warsaw Convention 15 provides in pertinent part that: 7 (1) In the transportation of passengers the liability of the carrier for each passenger shall be limited to the sum of 125,000 francs [about $8,300 in 1934]. Where, in accordance with the law of the court to which the case is submitted, damages may be awarded in the form of periodical payments, the equivalent capital value of the said payments shall not exceed 125,000 francs [about $8,300 in 1934]. Nevertheless, by special contract, the carrier and the passenger may agree to a higher limit of liability. 16 8 See supra note 3. 9 In 1965, the United States, dissatisfied with the inadequate liability limits afforded its citizens under Article 22, filed a formal notification of denunciation of the Convention to be effective May 15, 1966. Fearful that the world's largest air power would withdraw from the Convention, the majority of airlines signed what has become known as the Montreal Agreement. See Reed v. Wiser, 555 F.2d 1079, 1087 (2d Cir.), cert. denied, 434 U.S. 922, 98 S.Ct. 399, 54 L.Ed.2d 279 (1977); Day v. Trans World Airlines, Inc., 528 F.2d 31, 36 (2d Cir.1975), cert. denied, 429 U.S. 890, 97 S.Ct. 246, 50 L.Ed.2d 172 (1976); see generally Lowenfeld & Mendelsohn, supra note 15, at 563-596. Under the agreement the airlines agreed to be subject to absolute liability unless the passenger himself was at fault, 17 see Day v. Trans World Airlines, Inc., supra, 528 F.2d at 36. Furthermore, paragraph 1(1) of the Agreement states that: 10 The limit of liability for each passenger for death, wounding, or other bodily injury shall be the sum of US $75,000 inclusive of legal fees and costs, except that, in case of a claim brought in a State where provision is made for separate award of legal fees and costs, the limit shall be the sum of US $58,000 exclusive of legal fees and costs. 11 See supra note 4. 12 The Public Administrator argues that since paragraph 1(1) of the Montreal Agreement specifically states that the $75,000 [is] inclusive of legal fees and costs but makes no reference to the payment of prejudgment interest, 18 the absence of express language addressing prejudgment interest should be construed to mean that the figure is exclusive of prejudgment interest. According to the Administrator, his interpretation would advance one of the main purposes of both the Convention and the Agreement, namely, the speedy resolution of claims. 13 We are not convinced that the payment of prejudgment interest would necessarily have any impact on the speed with which claims under the Convention are resolved. See 1 L. Kreindler, supra, at Sec. 12 A.08. Further, we are not satisfied that this is one of the main purposes of these agreements. In Reed v. Wiser, 19 supra, a previous case in which this court examined the underlying purposes of the Warsaw Convention, we stated that: 14 It is beyond dispute that the purpose of the liability limitation prescribed by Article 22 was to fix at a definite level the cost to airlines of damages sustained by their passengers and of insurance to cover such damages.... 15 .... 16 ... [A]t no time has this country ever abandoned the basic principle that, whatever the limits may be, air carriers should be protected from having to pay out more than a fixed and definite sum for passenger injuries sustained in international air disasters. 17 Id. at 1089 (emphasis in original) (footnotes omitted). We also noted that: 18 Another fundamental purpose of the signatories to the Warsaw Convention, which is entitled to great weight in interpreting that pact, was their desire to establish a uniform body of world-wide liability rules to govern international aviation, which would supersede with respect to international flights the scores of differing domestic laws, leaving the latter applicable only to the internal flights of each of the countries involved. 19 Id. at 1090 (footnotes omitted). 20 There is no indication that the contracting parties to the Montreal Agreement intended to modify these principles so that they would be liable for more than the fixed and definite sum of $75,000. See id. at 1089. See generally 1 L. Kreindler, supra, at Sec. 12 A.02-.06; Sheinfeld, From Warsaw to Tenerife: A Chronological Analysis of the Liability Limitations Imposed Pursuant to the Warsaw Convention, 5 J. of Air L. & Com. 653, 665-71 (1980). Although the $75,000 limitation may be anachronistic, the awarding of prejudgment interest in excess of this amount would be contrary to the purposes of the two agreements and would thus undercut the fundamental intent of their framers. 21 Nor can any support be found for the Public Administrator's position in the language of either document. We have noted that the specific words of a treaty should be given  'a meaning consistent with the genuine shared expectations of the contracting parties.'  Reed, supra, 555 F.2d at 1090 (quoting Day v. Trans World Airlines, Inc., supra, 528 F.2d at 35). The fact that the $75,000 figure in the Agreement is inclusive of attorney's fees cannot be read to mean that it excludes prejudgment interest. Paragraph 1(1) of the Agreement also provides for an award of $58,000 exclusive of attorney's fees in States where provision is made for separate award of legal fees and costs. In light of the damage limitation principle established in Article 22 of the Convention, see id. at 1089, it would appear that, if the signatories to the Agreement had intended to create any exclusions to the damage limitation figures, they would have included a specific provision in the agreement similar to the one concerning the separate award of legal fees and costs. See Block v. Compagnie Nationale Air France, 386 F.2d 323, 329 (5th Cir.1967), cert. denied, 392 U.S. 905, 88 S.Ct. 2053, 20 L.Ed.2d 1363 (1968). Cf. Lowenfeld & Mendelsohn, supra note 15, at 563, 568. 22 Furthermore, the Montreal Agreement must be read in the context of the Warsaw Convention. See id. at 597. The Convention indicates that any liabilities that the airlines may be subject to must be found within that document. Article 24 states that: 23 (1) In the cases covered by articles 18 and 19 any action for damages, however founded, can only be brought subject to the conditions and limits set out in this convention. 24 (2) In the cases covered by article 17 the provisions of the preceding paragraph shall also apply .... 25 See supra note 3 (emphasis added). In the five instances where the law of the forum is applicable, the articles so state explicitly. Reed, supra, 555 F.2d at 1092 (citing Sundberg, Air Charter: A Study in Legal Development 242 (Stockholm 1961)). An award of prejudgment interest pursuant to the law of the forum is not a condition set out in the Convention. See Husserl v. Swiss Air Transport Co., 388 F.Supp. 1238, 1246 (S.D.N.Y.1975). 26 As a treaty adhered to by the United States, the Warsaw Convention is the supreme law of the land, see Reed, supra, 555 F.2d at 1093; Smith v. Canadian Pac. Airways, Ltd., 452 F.2d 798, 801 (2d Cir.1971), and our duty is to enforce its provisions according to the intent of the framers. In the absence of any contrary intent on the part of the framers, we may not read into that document a provision that allows the payment of prejudgment interest above the $75,000 liability limitation. 20