Opinion ID: 772932
Heading Depth: 2
Heading Rank: 1

Heading: The Warsaw Convention's limitation of liability

Text: 17 International transportation of persons, baggage, and goods by air are governed by the series of laws, treaties, and individual contracts collectively referred to as the Warsaw Convention system, deriving that name from the international agreement commonly referred to as the Warsaw Convention. Convention for the Unification of Certain Rules relating to International Transportation by Air, opened for signature Oct. 12, 1929, 49 Stat. 3000 (1934), 137 L.N.T.S. 11, reprinted in note following 49 U.S.C.A. § 40105 (Original Warsaw Convention); see El Al Israel Airlines, Ltd. v. Tsui Yuan Tseng, 525 U.S. 155, 160 (1998); Chubb & Son, Inc. v. Asiana Airlines, 214 F.3d 301, 306 (2d Cir. 2000), petition for cert. filed, 69 U.S.L.W. 3335 (U.S. Nov. 2, 2000) (No. 00-720). The Warsaw Convention sets forth uniform rules of liability for loss, damage, or delay of international shipments by air, and embodies a tradeoff between the interests of carriers and shippers. Among its provisions is the rule that cargo carriers are entitled to a limitation of liability based on the weight of the shipment, presently established by the Government at $9.07 per pound. See Trans World Airlines, Inc. v. Franklin Mint Corp., 466 U.S. 243, 255 (1984); Warsaw Convention art. 22. 18 The carrier's right to limited liability revolves around the document called an air waybill, which contains details including the origin, itinerary, and destination of the cargo, and the weight, dimensions, and content of the containers. Specifically, Article 8 of the treaty states that 19 The air waybill shall contain the following particulars: 20 (a) the place and date of its execution; 21 (b) the place of departure and of destination; 22 (c) the agreed stopping places, provided that the carrier may reserve the right to alter the stopping places in case of necessity...; 23 (d) the name and address of the consignor; 24 (e) the name and address of the first carrier; 25 (f) the name and address of the consignee...;(g) the nature of the goods; 26 (h) the number of packages, the method of packing, and the particular marks or numbers upon them; 27 (i) the weight, the quantity, the volume, or dimensions of the goods; 28 ... 29 (q) A statement that the transportation is subject to the rules relating to liability established by this convention. 30 Warsaw Convention art. 8(a)-8(q). According to Article 9 of the treaty, [i]f the carrier accepts goods without an air waybill having been made out, or if the air waybill does not contain all the particulars set out in article 8(a) to (i)... the carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit his liability. 31 Due to the significant benefit that limited liability confers upon cargo carriers, the courts have generally required carriers to comply strictly with the terms of Article 8, and the omission of any required item from the air waybill, with exceptions not applicable here, will result in the loss of limited liability regardless of the commercial significance of the omission. See Intercargo Ins. Co. v. China Airlines, Ltd., 208 F.3d 64, 67 (2d Cir. 2000) (citing Brink's Ltd. v. South African Airways, 93 F.3d 1022, 1033-34 (2d Cir.1996)); Tai Ping Ins. Co. v. Northwest Airlines, Inc., 94 F.3d 29, 31 (2d Cir. 1996). 32 It is undisputed that AWB 3691, the first waybill for the shipment from Tokyo to Austin, contained all of the information for that shipment required by Article 8. It is also undisputed that the goods were shipped from Austin to Memphis without the issuance of a new air waybill, and that the air waybill created in Memphis for the return flight to Tokyo did not include the agreed stopping places for that return shipment as required by Article 8(c). 33 FedEx argues that the shipment from Austin to Japan was a return shipment pursuant to Article 12 of the Warsaw Convention, rather than a shipment pursuant to a new contract of carriage. Thus, FedEx contends it was not required to issue an amended or second air waybill for the return, but rather, could rely on AWB 3691, the air waybill issued for the shipment from Japan to Austin. Article 12 grants the consignor of the shipment the right to dispose of the goods by withdrawing them at the airport of departure or destination, or by stopping them in the course of the journey on any landing... or by requiring them to be returned to the airport of departure. Article 12, however, does not address whether the issuance of a second or amended waybill is required when a consignor orders the carrier to return the goods to the airport of departure. We need not resolve that question today, because, as discussed below, FedEx's shipment of the wafers from Austin to Japan was not a return of goods as defined by Article 12 but rather was a separate shipment based on a new contract of carriage. 34 Article 12 addresses the right of the consignor to have a carrier return the goods. Article 12 is inapplicable here because it was the consignee, Ross, not the consignor, Fujitsu, who ordered FedEx to return the goods to the airport of departure. FedEx Service Agent Cherri Field testified in a deposition that once goods in its possession were rejected, FedEx would not move the goods anywhere without written instructions and a guarantee of payment for the return shipping costs. Although FedEx asserts that instructions to return the shipment came from Fujitsu, the record indicates that FedEx treated the return shipment as having originated from Ross. After reviewing FedEx's computer records, Field testified at her deposition that authorization to return the goods came from Ross, not Fujitsu. When FedEx created the second waybill, AWB 3010, it listed Ross, not Fujitsu, as Shipper. An Air Cargo Manifest produced by FedEx dated June 18, 1996 also appears to list Ross as the shipper and Fujitsu as the consignee. Further, following the completion of the shipment to Japan, FedEx invoiced Ross, not Fujitsu, for payment of the return shipping charges and payment was made by Ross. Under these circumstances, we find that the trial court correctly determined that the instruction to return the goods to Japan was given by Ross, not Fujitsu. 35 Because it was Ross, not Fujitsu, that instructed FedEx to return the goods, we find that the shipment of the goods from Austin to Japan was not a return as defined by Article 12, but rather, was a shipment based on a new contract of carriage. Under the provisions of Articles 8 and 9, if FedEx wanted to avail itself of the Warsaw Convention's limited liability provisions for this second, separate shipment, it was required to prepare a complete air waybill when it accepted the goods for shipment from Austin to Japan. As previously discussed, FedEx did not create a second air waybill in Austin, and the air waybill it created en route was incomplete. 36 Our determination that FedEx was required to issue a complete and correct air waybill in order to gain the Convention's liability limitation for the shipment from Austin to Japan is not affected by FedEx's contention that pursuant to Article 9, limited liability is either gained or lost by the carrier at the time it initially accepts the goods for shipment and that there was only one acceptance of the goods in this case. Specifically, FedEx argues that at the time it accepted the goods in Japan for shipment to Austin, it secured the valid waybill AWB 3691, and thus, obtained the protection of the Convention for limited liability with regard to the shipment at issue. FedEx claims that a second acceptance did not occur in Austin because the shipment never left FedEx's custody and control, and thus, could not have been accepted by it from Ross in Austin. 37 The Warsaw Convention does not define accepts, and this Court has uncovered no cases interpreting that term in the context it is used in Article 9. While the notion of acceptance does appear to contemplate a receiving of an item by the person making the acceptance, BLACK'S LAW DICTIONARY 12 (6th ed. 1990), nothing in that definition warrants a conclusion that transfer must involve a physical delivery of the property. Here, FedEx entered into a new contract of carriage with Ross on or about June 4, 1996 to ship the goods from Austin back to Narita. In doing so, Ross implicitly assumed authority to direct and control the movement of the goods, and FedEx appears to have accepted the authority of Ross to do so. Under these circumstances, requiring Ross to physically receive and re-present the goods to FedEx to complete the transaction seems needlessly formalistic. By that logic, upon receiving notice that an inbound shipment was arriving, a consignee wishing to re-direct the shipment to a third-party would have to travel to the receiving airport to accept the shipment and physically re-tender it to the carrier before the carrier could accept it for shipment to the third-party. 38 Accordingly, we find that the record supports the determination by the trial court that a new contract of carriage was created in Austin and, by extension, a constructive acceptance took place there for purposes of Article 9. Because FedEx failed to obtain a proper air waybill in Austin for the return shipment by Ross, it is not entitled to the limited liability protection of the Warsaw Convention, and the decision of the trial court granting partial summary judgment to Fujitsu on FedEx's defense of limited liability is affirmed.