On 4 April, Federal Law No. 52-FZ* on Russia’s joining the Convention for the Unification of Certain Rules for International Carriage by Air 1999 (the “Montreal Convention”) was published. Russia joined the Convention on the condition that it reserves the right not to apply its terms to non-commercial international air carriage and the transportation of cargoes, baggage and people for military purposes.

The ratification of the Montreal Convention will enable Russia to implement the legal regime established by the Convention in its legislation. This will ensure equal conditions for air carriers and better protection for those using their services.

Bill No. 28636-7*, which was drafted by the Russian Government that will introduce the relevant amendments to the Russian Air Code, is currently being reviewed by the State Duma. The Montreal Convention will start applying once the bill is enacted into law and itself comes into force.

Joining the Montreal Convention will also significantly reduce the freight costs through the use of standard e-freight, i.e. processing electronic documents not only for passengers, but also for cargo and mail transport by air.

At the same time, we expect the insurance market in this segment to grow and the insurance premiums for air carriers’ liability insurance to significantly increase due to the higher upper liability limit set by the Montreal Convention. 

Background

Currently, the international civil aviation industry is regulated by two carriage regimes.

The first regime is based on the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air 1929 (the “Warsaw Convention”). Russia is a party to the Warsaw Convention as the successor of the Soviet Union and will remain so until the amendments to the Air Code come into force. 

The second regime was introduced by the Montreal Convention. It significantly revised the Warsaw Convention rules as it took into account the development of legal relations in the field of civil aviation and technical progress that have been since the adoption of the Warsaw Convention. Currently, more than 120 countries are participants of the Montreal Convention, including all the members of the European Union, the United States of America and China. 

The key difference between the Montreal Convention and the Warsaw Convention is that the former has a higher limit for the carriers’ liability to passengers for damage caused to their lives and health in air carriage. The upper limit of compensation is five times higher: up to 113,100 special drawing rights (“SDRs”), the financial unit used by the International Monetary Fund (approx. EUR 129,000) per passenger. 

To counterbalance the increased limit of liability, the Montreal Convention allows the carrier to avoid such liability if it is successful in proving that the negligence, improper act or omission of the passenger contributed to the damage.

A carrier is also exempt from liability for damage to the life and health of a passenger that exceeds 113,100 SDRs per passenger, provided that it can prove either of two things:

  • that such damage resulted solely from the negligence, wrongful act or omission of third parties; or
  • the harm was not caused by the negligence or improper actions (or inaction) of the air carrier or its employees (for example, damage caused by force majeure, intent or gross negligence of the victim).

The Montreal Convention also increases the compensation in case of destruction, loss or damage to passenger’s baggage to 1,131 SDRs (approx. EUR 1,290), regardless of the weight of the baggage, and in respect of goods to 19 SDRs (approx. EUR 22) per kilogramme of cargo.

In addition, the Montreal Convention limits the air carriers’ liability for flight delays. Such liability is limited to 4,694 SDRs (approx. EUR 5,350) per passenger, to 1,131 SDRs (approx. EUR 1,290) in respect of baggage per passenger, and in respect of goods to 19 SDRs (approx. EUR 22) per kilogramme. Under this Convention, the air carrier will be relieved from liability for the delay provided it proves either (i) that it had taken all the possible and reasonable measures necessary to prevent the damage; or (ii) that it was impossible to adopt such measures.

It is important to note that the International Civil Aviation Organisation has to review the upper limit of the above compensations every five years to account for inflation (if it exceeds 10%).

Moreover, the Montreal Convention makes it possible to claim, from an air carrier, damages for death or injury of a passenger before the court located in a Montreal Convention member state, where the passenger resides permanently, provided the air carrier has a representative office in, and flies to, that country.

Under the Montreal Convention, air carriers are obliged to take up insurance towards passengers and cargo owners. Any participating State in which the air carrier operates flights may require the carrier to provide evidence of such insurance.

* In Russian