On 12 February 2013, the Russian Ministry of Transport published on its website the draft Federal Law on the Accession of the Russian Federation to the Convention for the Unification of Certain Rules for International Carriage by Air, dated 28 May 1999 (hereinafter - the "Montreal Convention"). If this federal law is adopted, Russia will become a party to the Montreal Convention on the sixtieth day after the deposit of the instrument of accession with the International Civil Aviation Organisation (ICAO).

The Montreal Convention entered into force in 2003. 103 countries are now party to it, including all members of the European Union, the USA, China and Japan. Between State Parties, the Montreal Convention prevails over the unexpired Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air, 1929 (152 States Parties) and its additional protocols. Hence, after Russia’s accession to the Montreal Convention, the carriage of passengers and cargo by air between Russia and other States Parties will be governed by the rules of the Montreal Convention, and it is these rules that Russian air carriers and insurers will have to follow.

The main changes to the legal regulation of carriage by air made under the Montreal Convention are considered below.

The main innovation of the Montreal Convention is an amendment to the conditions and amounts of air carrier liability. For instance, in the event of damage sustained in case of death or bodily injury of a passenger, the Montreal Convention establishes a so-called "two-tier" system of liability:

  1. for each passenger the carrier shall not be able to exclude or limit its liability for damages not exceeding 113,100 SDRs (about EUR 129,000); 
  2. for each passenger the carrier may be liable for damages to the extent that they exceed 113,100 SDRs, unless the carrier proves that such damage was not due to its negligence or other wrongful act or omission, or such damage was solely due to the negligence or other wrongful act or omission of a third party.

Therefore, an air carrier will incur liability regardless of its fault when liability falls within 113,100 SDRs. The recovery of any amount above this requires the air carrier to cause damage in an accident on board the aircraft or during passenger embarkment/disembarkment. This provision fundamentally differs from the concept in the Warsaw Convention, according to which the carrier is not liable if it can prove that it took all necessary measures to avoid damage, or that it was not possible for the carrier to have taken these steps.

In the case of destruction, loss of or damage to baggage, which includes both checked baggage and personal items of passengers in the cabin (unchecked baggage), the Montreal Convention limits the air carrier’s liability to 1,131 SDRs (approximately EUR 1,290) per passenger, regardless of the baggage weight. In the case of checked baggage, however, the carrier is not liable if and to the extent that the damage resulted from the inherent defect, quality or vice of the checked baggage, and in the case of unchecked baggage, the carrier is liable only if the damage resulted from its fault or that of its servants or agents.

The carrier is liable in the amount of up to 19 SDRs (about EUR 22) per kilogram for damage sustained in the event of the destruction or loss of or damage to cargo. However, the carrier is not liable if and to the extent it proves that the destruction, loss of, or damage to the cargo resulted from the inherent defect, quality or vice of that cargo; defective packing of that cargo; an act of war or an armed conflict; or an act of public authority carried out in connection with the entry, exit or transit of the cargo.

An important aspect of the Montreal Convention is a more detailed regulation of air carrier liability for delay. First, it sets specific amounts of liability in case of delay: for each passenger the carrier's liability is limited to 4,694 SDRs (approximately EUR 5,350). This is allocated as follows: in respect of baggage – 1,131 SDRs (approximately EUR 1,290) per passenger, and in respect of cargo - 19 SDRs (approximately EUR 22) per kilogram. Also, the Montreal Convention provides that the carrier shall not be liable for damage occasioned by delay if it can prove that it took all measures that could reasonably be required to avoid the damage or that it was impossible for it to take such measures.

It should be noted that all of the above-mentioned limits of liability in respect of passengers, baggage and cargo are subject, under the Montreal Convention, to review every five years by the ICAO (as a result of which new limits of liability may be set depending on the rate of inflation). A simplified procedure has been introduced whereby limits of liability can be changed: any such change shall take effect six months after notification to the States Parties, provided that, within three months of the notification, a majority of the States Parties do not register their disapproval of the change. In accordance with this procedure, the first such review by ICAO took place in 2009, as a result of which all limits of air carrier liability, originally established in the text of the Montreal Convention of 1999, were increased by approximately 10%. It is these increased limits of liability that apply today and are specified in this client alert.

The innovations of the Montreal Convention also include the possibility of bringing an action against an air carrier for damages that occurred as a result of death or injury of a passenger before the national court of that passenger’s residence. In this case, in order to bring an action it is only necessary that the carrier has a representative office in and operates air services to that country. Furthermore, the Montreal Convention introduces the mandatory insurance of carrier liability to passengers and cargo owners, and any State Party to which the air carrier operates air services may require it to furnish evidence that it maintains adequate insurance covering its liability.