The International Civil Aviation Organization (ICAO) Special Group, established to modernise the Rome Convention 1952 has produced two draft conventions; namely the Convention on Compensation for Damage Caused by Aircraft to Third Parties, in the case of unlawful interference (known as the Unlawful Interference Convention), and the Convention on Compensation for Damage Caused by Aircraft to Third Parties (known as the General Risks Convention).

Overview of the draft conventions The Unlawful Interference Convention (which encompasses acts of terrorism) caps the operator’s liability in return for strict liability. Further, claims in excess of the cap are to be paid from a compensation fund contributed to by the operators, through mandatory payments by passengers and freight forwarders. The introduction of strict liability and the cap should mean that:

i) claims will be less complicated as the claimant will not need to prove that the operator was at fault, thereby avoiding complex evidentiary arguments on liability; and

ii) the operator will be aware of its maximum liability under the convention and arrange its insurance accordingly.

As regards the General Risks Convention, this follows the same format as the Montreal Convention in that the operator is subject to strict liability for damage up to a limit and thereafter it is only liable in so far as it is negligent. No supplementary compensation scheme is envisaged for this convention.

Accordingly, the operators are potentially liable for all the damage caused and it is extremely unlikely that they would be able to obtain sufficient insurance to cover their potential exposure under the convention. However, this convention has received little interest as domestic law in this area is already well established with operators’ liability being limited to insurable levels. It is, therefore, unlikely that this convention will be ratified by many States, if it actually progresses to the ratification stage.

Unlawful Interference Convention

This convention applies to damage to third parties which occurs in the territory of a State party caused by an aircraft in flight as a result of an act of unlawful interference when the operator is based in another State, whether or not a party to the convention (article 2, para 1). The convention also applies, in certain circumstances, to damage to third parties in a non-State party where the operator causing the damage was from a State party.

The convention provides that the operator is strictly liable for the damage sustained by the third party caused by an aircraft in flight; the third party does not need to prove the airline was at fault (article 3). The third party’s exclusive remedy is against the airline (article 27), in addition to the party causing the unlawful interference. However, the airline’s liability is capped according to the weight of the aircraft – SDR 700 million for a wide-bodied aircraft1 – and which can only be exceeded in exceptional circumstances (article 24). Damages in excess of the cap would be paid through the Supplementary Compensation Mechanism (article 4) funded by mandatory payments by passengers and freight forwarders (article 12) collected by airlines and rendered to the scheme. The maximum amount of compensation under the scheme is currently set at SDR 3 billion (article 19).

General Risks Convention

This convention applies to damage to third parties occurring in the territory of a State party caused by an aircraft in flight, other than as a result of an act of unlawful interference, when the operator is based in another State party.

The operator is strictly liable up to a threshold tentatively set at SDR 250,000 to SDR 500,000 per claimant (article 3). The operator is also liable for all damage in excess of this limit unless it can prove that such damage was not due to its negligence or that it was solely due to the negligence of another party. There is no cap on the liability of the operator – the liability limit relates to each individual claim not to the event – and neither is there any compensatory scheme under this convention to reduce the financial impact on operators.

Current position

The final draft of these conventions is still to be agreed by the Legal Committee before they will go before the ICAO Council for consideration and approval before a diplomatic conference to approve the language in the conventions. After this it would be for the individual States to ratify the conventions, although it is still to be decided how many States need to ratify them before they would come into force.

Further, a working group has been set up to consider how to invest the compensation fund acquired under the Unlawful Interference Convention and is looking at other similar investment fund holding entities such as a superannuation fund in Canada with this in mind.