International Agreements and Organizations — Page 39, Lesson 73

Let's start a fresh topic: the Warsaw Convention. This is the foundation of all modern air carrier liability law, so I want you to really understand it. The Warsaw Convention of 1929 was the first international agreement to standardize the responsibilities and liabilities of the carrier and the carrier's agents. It dealt with compensation for loss of life or injury to passengers, for delays, and for loss of baggage. Before this, every country had its own rules, and a passenger's rights depended entirely on where the accident happened. The key idea here is that the Convention limited the carrier's liability. The carrier was only responsible up to a certain amount, unless there was gross negligence. That original limit was roughly the equivalent of US$10,000, expressed in International Bank Special Drawing Rights, which we call SDRs. SDRs are an international reserve asset used as a unit of account, so the limit isn't tied to any single national currency. Now, in 1955, a diplomatic conference at The Hague adopted an amendment to the Convention. This is known as The Hague Protocol. It doubled the existing limits of liability. So the present limit became a maximum of US$100,000 per person. Here's the crucial part about how this works in practice. By agreeing to the terms of the Warsaw agreement, an airline agrees to pay compensation without further process of law. That means the airline accepts liability up to the limit and pays out without the passenger having to sue. However, in modern litigation, those amounts are relatively small. So some airlines state that they will not be bound by the Warsaw agreement and will pay higher amounts of compensation if a Court awards it. They voluntarily waive the limit to attract passengers. Now let's look at the ticket itself. The issuing of a passenger ticket, a luggage ticket, or a cargo consignment note forms a contract between the carrier and the person receiving that ticket or note. That contract is defined by the Warsaw Convention, including the exclusion or limitation of liabilities we just discussed. Here's a critical consequence. If a carrier accepts a passenger, luggage, or cargo on board an aeroplane without a ticket or note, then the carrier is liable for any loss without the protection of the limits set by the Warsaw Convention. In other words, the liability limit disappears — the carrier faces unlimited exposure. But note this important distinction: the loss, irregularity, or absence of a ticket or note does not affect the existence or the validity of the contract itself. The contract still exists and is still valid — it's just that the carrier loses the protection of the liability limits. So to summarize the structure: the Convention creates a contract through the ticket, it limits liability to US$100,000 per person after The Hague Protocol, and if you carry someone without a ticket, you lose that limit but the contract remains valid.