Which is the reach of compensation rights for victims of air accidents? What is the applicable law in the EU?

From the Insurance Law Department in Madrid, we will analyse this time the applicable European regulation on compensation rights for victims of air accidents.

The widespread accidents in recent years (UM Airlines Flight 4230, Tupolev, Spainair or Germanwings among others) have revealed how difficult is for courts of justice to quantify compensations, because, besides of material damages (general damages and loss of profits), there is a determination of possibly compensating non-material damages, which, according to our vast experience on the subject matter, is difficult due to challenges inherent to identifying this kind of damage because there are not criteria to quantify it.

Death benefits or compensations for injuries of carriage by air accidents are regulated by different national and international legal regulations that are applicable according to criteria such as the nationality of the air carrier to which the damaged aircraft belongs, the territory of origin or flight destination.

Under the primacy of International Law and European Union Law, both applicable legislation in Spain and in the European Union lead us to the liability system on Montreal Convention.

The Convention for the Unification of Certain Rules Relating to International Carriage by Air, agreed in Montreal on 28 May 1999 (of which the European Union is a party and which is incorporated in its legislations), sets up on article 17, paragraph 1 that “the carrier is liable for damage sustained in case of death or bodily injury of a passenger upon condition only that the accident which caused the death or injury took place on board the aircraft or in the course of any of the operations of embarking or disembarking.” Therefore, whoever is at fault must bear the compensation payments and for this purpose that party must have an insurance policy.

The Montreal Convention devotes the creation of a strict liability regime for the air carrier which, according to Regulation (EC) No 889/2002, is applicable in every service of carriage by air delivered by a community air carrier.

However, article 21 on Montreal Convention provides that the strict liability of the carrier is not unlimited, and it shall not exceed 100,000 Special Drawing Rights (foreign exchange reserve assets used by the International Monetary Fund and other international organisations) for each passenger, whereas, only regarding damages exceeding such figure, carrier’s liability ceases to be strict to be a liability with a rebuttable presumption, which is based on presumption that, where passengers are injured or die during carriage, the carrier has not fulfil their obligation of transporting passengers harmlessly to their destination.

Paragraph 2 of article 21 on Montreal Convention sets out the events where carriers shall not be liable regarding damages exceeding 100,000 SDR, i.e. in which circumstances air carrier presumption of guilt shall not apply and that are acts of God or force majeure or a third party negligence.

In the event of death or injuries on carriage by air by community air carriers, the liability is ruled under Council Regulation (EC) No 2027/97 of 9 October 1997, amended by Regulation (EC) No 889/2002 of 13 May.

Article 3 of Regulation (EC) No 889/2002 of the European Parliament and of the Council of 13 May 2002 which amends Council Regulation (EC) No 2027/97 on air carrier liability in the event of accidents provides that:

“The obligation of insurance set out in Article 7 of Regulation (EEC) No 2407/92 as far as it relates to liability for passengers shall be understood as requiring that a Community air carrier shall be insured up to a level that is adequate to ensure that all persons entitled to compensation receive the full amount to which they are entitled in accordance with this Regulation."

Regarding limits, we highlight, according to our expertise on this matter, that there are no financial limits to the liability for passenger injury or death in the event where the international carriage by air is performed by malicious or criminal omission, whether by the air carrier or its employees, that is an immediate and direct consequence of the “accident”.

Therefore, air carriers and aircraft operators flying within the territory of a Member State, whether arriving at their destination or flying over, shall be insured according to the provisions on the Regulation, regarding their specific liability on passengers, baggage, cargo and third parties.

Air carriers and aircraft operators shall ensure that insurance cover exists for each and every flight, regardless of whether the aircraft operated is at their disposal through ownership or any form of lease agreement, or through joint or franchise operations, code-sharing or any other agreement of the same nature.

As case law we highlight Judgement of the Supreme Court of 20 June 1998, Judgement of the Supreme Court of 28 May 2007 or the latest Judgement of the Commercial Court no. 8 of Barcelona of 4 February 2015 among others.

Belén Domínguez Jarque      José Garzón García 

Insurance Law department | Madrid (Spain)

Belzuz Abogados SLP

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