In a judgment delivered on August 9 2011 the Supreme Court held that a state-owned foreign airline is not entitled to sovereign immunity in a consumer action for service deficiency. The case was heard by a full bench of the Supreme Court in an appeal by Ethiopian Airlines contesting an order handed down by the National Consumer Disputes Redressal Commission established under the 1986 Consumer Protection Act. This act was passed to provide an alternative redressal forum for consumers by following summary proceedings.
The case relates to an alleged delay in the delivery of a consignment of reactive dyes in Dar-es-Salaam, Tanzania in 1992, which led to deterioration of the goods. The consignment was booked by Ganesh Narain Saboo with Ethiopian Airlines. Saboo filed a complaint to the State Consumer Disputes Redressal Commission in Maharashtra under the Consumer Protection Act for alleged deficiency of service on Ethiopian Airlines' part. The state commission did not uphold the complaint because prior permission of the central government for proceeding against the instrumentality of a foreign state had not been obtained. An appeal against this order was referred to the national commission, which set aside the state commission's order and remanded the case to the latter so that it could be decided afresh in accordance with law. The appeal was heard by a division bench of the Supreme Court and subsequently referred to a larger bench.
The Supreme Court's judgment clarifies previous decisions and gives a clear position on the issue of sovereign immunity in consumer cases.
Proceedings before a consumer forum (district, state or national commission) instituted under the Consumer Protection Act have the same meaning as a 'suit' under the 1908 Code of Civil Procedure, as well as other statutes such as the 1865 Carriers Act and the 1972 Carriage by Air Act. With this, the Supreme Court struck down Ethiopian Airlines' contention that the presumption of negligence on the carrier's part for any loss, damage or non-delivery of goods entrusted to it as provided for in Section 9 of the Carriers Act is available only for suits filed before a civil court, and not to legal proceedings before an alternative forum such as consumer dispute redressal forums. Therefore, the onus of proving absence of negligence in such cases lies on the carrier, even in disputes before consumer forums.
Section 86 of the Code of Civil Procedure, which provides that a suit may be initiated against a foreign state only in certain cases with the prior written approval of the central government, does not apply to a foreign airline, even if it is state owned.
State-owned foreign airlines are not entitled to sovereign immunity under the Consumer Protection Act and the Carriage by Air Act; therefore, central government's consent is not required to sue a foreign state-owned airline before consumer courts in India. Section 7 of the Carriage by Air Act, read with Rule 2 of the Third Schedule (incorporated to give effect to the provisions of the Montreal Convention), provides that the rules prescribed therein apply to carriage performed by the state or by legally constituted public bodies.
The court also upheld the principle of restrictive immunity being followed by courts in several countries. It observed that "the principle of sovereign immunity can no longer be absolute", and that "countries which participate in trade, commerce and business with different countries ought to be subjected to normal rules of market".
The judgment removes technical legal uncertainty for a consumer suing a state-owned foreign airline, while making it clear to such airlines that sovereign immunity is not applicable in defending consumer claims.
For further information on this topic please contact Ananjan Mitter at ALMT Legal - Advocates & Solicitors by telephone (+91 22 4001 0000), fax (+91 22 4001 0001) or email ([email protected]).