STATEMENT OF

 

JEFFREY N. SHANE

 

UNDER SECRETARY FOR POLICY

 

U.S. DEPARTMENT OF TRANSPORTATION

 

BEFORE THE

 

COMMITTEE ON FOREIGN RELATIONS

 

UNITED STATES SENATE

 

ON

 

ADVICE AND CONSENT TO RATIFICATION OF

 

THE 1999 MONTREAL CONVENTION AND

 

THE 1955 HAGUE PROTOCOL

 

JUNE 17, 2003

 

 

Chairman Lugar, Senator Biden and Members of the Committee, it is with great pleasure that I appear before you today in support of Senate ratification of the 1999 Montreal Convention and the 1955 Hague Protocol.  Together, these two treaties will facilitate a long overdue modernization of the rules governing airlines’ liability to passengers during international flights. 

 

Montreal Convention of 1999

 

The Montreal Convention was signed by 52 countries, including the United States, on May 28, 1999.  To date, 29 countries have ratified the Convention, just one short of the 30 needed for it to become effective.  This new Convention is intended to replace the outdated 1929 Warsaw Convention and the regime that has developed around it.  It represents the culmination of a 40-year effort, by the Department of Transportation, the State Department and many others, to rectify the injustices to international airline passengers and their families created by the archaic and now grossly inadequate passenger liability limits established under the Warsaw Convention.  Currently, absent a voluntary waiver of the Warsaw liability limits by a carrier, recoveries for deaths or injuries arising as the result of an accident that occurs during an international flight to or from the United States are subject to a limit of $75,000, and can be limited to as little as $10,000 for flights in other markets, unless the passenger or the passenger’s estate is able to prove “willful misconduct” on the part of the airline.   Ratification of Montreal ‘99 would therefore facilitate a long overdue modernization of the liability regime governing international air travel. 

 

First and foremost, the new Convention entirely eliminates all artificial monetary limits on recoveries from the airline for proven damages with respect to the death or injury of a passenger occurring as the result of an international airline accident.  It also provides for “strict” liability -- recoveries regardless of the carrier’s fault -- for proven damages up to 100,000 Special Drawing Rights, or approximately $141,000 under the current conversion rate. 

 

Moreover, there would be no limit on the recovery of additional proven damages.  Above the 100,000 SDR amount, the airline would retain its ability to show that the damage done was either not due to its own negligence or other wrongful act or omission or that the damage was solely due to the negligence or other wrongful act or omission of a third party.  If a third party were only partially at fault, the carrier would remain liable as joint tortfeasor.  In other words, if both the carrier and, for example, an aircraft repair station were each partially negligent, the carrier would be liable for the full amount of the proven damages, subject to contribution toward the recovery by the repair station.

 

Another major passenger benefit provided by this Convention -- not available under the Warsaw Convention -- is the right of claimants to bring their action in a forum based on the passenger’s principal and permanent residence.  This provision will assure, for the vast majority of cases, that an injured American passenger or a claimant acting on behalf of a deceased American passenger would be able to bring action in a U.S. court.   Under the Warsaw Convention, when a ticket is purchased on a foreign carrier outside the United States and the destination is also a place outside the United States, claims arising out of an accident on such a flight could not be brought in the United States.  Under the new Convention, an action on behalf of a U.S. citizen or other passenger that was permanently resident in the United States at the time of the accident may be brought in a U.S. court as long as the carrier meets certain reasonable tests to determine whether it has a commercial presence in the United States, including through code sharing operations with other carriers. 

 

The new Convention also includes provisions that clarify the liability regime for cooperative marketing arrangements such as code sharing.  One very important aspect of these provisions is the clarification that, for carriage pursuant to a code-sharing agreement, both the operating carrier on whose aircraft the accident occurs and the carrier whose airline designator code is used for ticketing purposes are jointly liable to the passenger.  Given the proliferation of code-share arrangements through the global alliances that have developed in recent years, this is a significant and important new protection for international air travelers.

 

Finally, for the carriage of air cargo, the new Convention retains, in all substantive respects, the important improvements brought about by Montreal Protocol No. 4, which became effective in the United States on March 4, 1999.  Probably the most conspicuous advance in that treaty permitted the use of state-of-the-art electronic data transmission in documenting air cargo shipments.  The Warsaw Convention’s documentation requirements are wholly out of step with today’s just-in-time, information-technology-driven approach to logistics.  The new Montreal Convention retains those critical provisions.  Importantly, the new Convention also has a provision for periodic inflation-related adjustments of the liability limits for baggage, cargo, delay, and the level up to which “strict” liability applies for passenger deaths and injuries.

 

As I indicated at the outset, in order to become effective the new Convention requires 30 ratifications to come into force.  Twenty-nine ratifications already have been deposited with the International Civil Aviation Organization and so we have every reason to anticipate that the new treaty will enter into force very soon.  It would be both unfortunate and ironic if it did not enter into force for the United States -- one of the principal advocates of a more humane liability regime for international passenger travel -- because we ourselves had not yet ratified it.  It also seems clear that many more countries will ratify this Convention once the United States does so.  Accordingly, if the Senate were to ratify this Convention, we anticipate that it would be very widely adhered to, just as the predecessor Warsaw Convention was.

 

The 1955 Hague Protocol

 

I am also here today to articulate the Department’s strong support for ratification of the 1955 Hague Protocol to the Warsaw Convention.  The Hague Protocol amended the Warsaw Convention.  Montreal Protocol No. 4, which updates the liability regime for air cargo in important ways, is actually an amendment of the Warsaw Convention as amended by the Hague Protocol.  Montreal Protocol No. 4 -- which became effective for the U.S. in 1999 -- is in fact predicated on cargo documentation improvements that first appeared in the Hague Protocol, although the new Protocol refined those provisions even further.  

 

Unfortunately, because Hague contained such low passenger liability limits -- a ceiling on recoveries of $20,000 per passenger -- the U.S. was not willing to ratify it until now.  In effect, we intentionally sacrificed an opportunity to update the air cargo liability regime through Hague because of its inadequate benefits for passengers.

 

You may wonder why we are proposing ratification of Hague now, when its modernization of the air cargo liability regime has already been accomplished -- and more -- in Montreal Protocol No. 4.  The reason is that it will be some time before all possible journeys are covered by the benefits of Montreal Protocol No. 4 or the 1999 Montreal Convention.  In the interim, it is important to assure that the Hague documentation improvements would prevail in situations where the origin and destination of the cargo is in a country that had not ratified either Montreal Protocol No. 4 or the Montreal Convention. 

 

Recent litigation has drawn attention to the question of whether the Hague documentation provisions would apply as between the United States and countries that are party to the Hague Protocol, but not to Montreal Protocol No. 4.  Ratification of the Hague Protocol would eliminate this issue.  It is important to do so because the vast majority of countries that have not yet ratified Montreal Protocol No. 4 or the Montreal Convention have ratified Hague.  U.S. ratification of Hague therefore would facilitate the use of modern documentation in almost all cargo movements between the U.S. and other countries, even where those other countries have not yet ratified Montreal Protocol No. 4 or the Montreal Convention.  Ratification of the Hague Protocol thus is deemed essential by our airlines. 

 

The problem of the low passenger liability limits contained in the Hague Protocol should no longer be an impediment to its ratification.  Recognizing the inadequacy of existing passenger liability limits under the Warsaw-Hague regime, most of the world’s major airlines signed intercarrier agreements in 1996 that waive the Warsaw-Hague passenger liability limits in their entirety.  Many have also agreed to pay up to 100,000 Special Drawing Rights to accident victims regardless of whether the carrier was negligent or not.  Thus, in those situations where the Montreal Convention of 1999 does not apply, but where Hague would apply if ratified for the purpose of modernizing the air cargo regime more widely, these voluntary carrier agreements will go a long way towards filling the residual passenger liability gap until the Montreal Convention of 1999 is more widely adopted.

 

Prompt ratification of the Montreal Convention of 1999 has been called for by victims’ families’ organizations, the airline industry, plaintiffs’ and defense lawyers, and manufacturers of aircraft and aircraft engines.  After years of work by a great many interested groups, I am pleased to report that ratification now would be a win-win achievement of historic significance

 

That concludes my prepared statement.  I would be pleased to answer any questions you may have.