Spotlight: key liability issues for the aviation sector in Italy

All questions

Legal framework for liability

Air carriers' liability for death or injury to passengers, for loss of or damage to goods or baggage, and delay in international transport is governed by the Montreal Convention of 28 May 1999 on International Air Transport, which entered into force in Italy on 28 June 2004 following its simultaneous ratification by 13 Member States of the European Community (now the European Union), the Community itself and Norway. It replaced both the Warsaw Convention of 1929 and subsequent protocols and the Guadalajara Convention of 1961.

With the entry into force of the Montreal Convention, the European Parliament and the Council adopted Regulation (EC) No. 889/2002 of 13 May 2002, which amended Regulation (EC) No. 2027/1997 of 9 October 1997, to align European rules with those of the Convention. This Regulation broadens the extent and scope of Montreal Convention provisions on carriage of passengers, baggage and cargo. After the adoption of Regulation (EC) No. 889/2002, the most important piece of legislation relating to the INC was modified. Section II of the INC sets out rules entirely dedicated to aviation matters, while Section I concerns matters related to maritime law. With Law Decrees No. 96/2005 and No. 151/2006, several amendments were introduced to the INC's provisions governing the aviation sector with the aim of creating national rules in line with international and Community standards and, in particular, with regard to the transport of passengers and the consequent carrier's liability and protection of passengers' rights.

By means of the above-mentioned amendments, Italy has extended the enforceability of the Montreal Convention to every area of commercial aviation, which includes the ferrying of air passengers and baggage, as well as areas left out by the extension brought about by Regulation (EC) No. 2027/1997, as amended by Regulation (EC) No. 889/2002. The excluded areas concern transport services carried out by non-Community air carriers (in Italy, these services are governed by the above-mentioned ENAC Regulation of 21 December 2015), as well as services performed by unlicensed carriers (at present, pursuant to the Chicago Convention provision on cabotage rights, non-Community air carriers are not permitted). Unlicensed operators include, for example, carriers operating with light aircraft, as well as those involved in transport services with points of departure and arrival at the same airport.

Article 941 of the INC, concerning air carriage of passengers and baggage, and Article 951 on the transport of goods, extend the applicability of the Convention to the entire air transport sector, to which the domestic laws – Law Decrees No. 96/2005 and No. 151/2006 – become applicable.

Article 941, Paragraph 1 of the INC has extended the applicability of the Convention to personal injury caused to passengers. Although, according to the prevailing interpretation, the Convention applies only to bodily injury and not psychological injury, under national law the notion of personal injury includes psychological damage.

However, it is important to note that this extension is not applicable to areas of transport to which the Convention applies in its own right, or as a result of European rules.

Article 949 ter of the INC states that the two-year limitation period laid down by the Montreal Convention shall apply to any passengers' claims brought before Italian courts. With regard to carrier liability, the INC provides for a compulsory insurance system.⁷ Since Regulation (EC) No. 785/2004 on insurance requirements for air carriers and aircraft operators does not establish a complete regulatory framework on insurance, the civil liability insurance rules laid down in the Italian Civil Code apply, as well as the provision contained in Article 942, Paragraph 2 of the INC, which provides that the passenger has the right to bring a direct action against the carrier's insurer for any damage suffered or incurred. As for the transport of passengers and goods by air, the Italian legislature found in 2006 that the regulation on liability for damage caused to third parties on the surface was adequate and comparable to the international regulations in force. Indeed, Article 965 of the INC extends the rules of the Rome Convention 1952 to damage caused on Italian territory by aircraft registered in Italy, as well as damage caused by state aircraft.

There have been some changes in Italian law to the rules on liability for collisions between aircraft. These are in line with the regulation of liability of the operator for damage caused to third parties on the surface's amendments. Article 972 of the INC states that all rules governing the limitation of compensation and its implementation in the event of liability for damage caused to third parties on the surface (Rome Convention) shall also apply to liability for damage caused by collisions between two aircraft in flight, or between an aircraft in flight and a moving ship (where responsibility for damage falls on the aircraft). Article 971 of the INC modifies the extent of the limits laid down in the Rome Convention (which vary according to the weight of the aircraft⁸) and fixes it in accordance with the minimum amount of insurance required pursuant to Article 7 of Regulation (EC) No. 785/2004. The minimum coverage is determined by the maximum take-off mass of the aircraft and ranges from 750,000 to 700 million special drawing rights (SDRs).

As mentioned above, an air carrier's liability for cargo loss, damage or delay in international transport is governed by the Montreal Convention. Article 951, Paragraph 1 of the INC establishes that the air transport of goods is regulated by the rules contained in the Convention. The Montreal Convention does not apply to damage in the event of a carrier's outright non-performance of passenger carriage and, in fact, Article 952 of the INC reiterates the limitation of liability foreseen in the Montreal Convention for the carriage of goods but not for the carriage of passengers or baggage.⁹

Article 951 of the INC makes the liability rules set out in the Montreal Convention applicable to all air transportation of goods. In particular, the gaps in the Montreal Convention rules in relation to the carriage of goods have been filled by the INC both by referring to and extending the INC rules governing maritime transport and by introducing the provision regarding the non-performance of transport services set out in Article 952 of the INC; in fact, this Article corresponds to the liability regime established by the Convention in respect of delay.

The law governing the liability of the operator in general aviation activities is established by the INC and other domestic laws (see President of the Republic's Decree No. 133 of 9 July 2010).

Article 743, Paragraph 1 of the INC sets out a broad definition of aircraft, describing them as machines used for the transport of passengers and goods by air. Consequently, the activities performed by aircraft are subject to the rules of the INC.

With regard to aircraft used for leisure and microlight aircraft, a special regulation for insurance obligations has been introduced through Decree No. 133/2010. However, this special regulation refers to both the Community guidelines on insurance obligations and the principles established by the INC for such obligations. Decree No. 133/2010 introduces specific insurance requirements for single and double microlights without motor (two-seaters weighing up to 100 kilograms) for powered aircraft (weight not exceeding 330 kilograms for fixed-wing aircraft used for leisure flights, and not more than 450 kilograms for helicopters) and for two-seater powered aircraft (weighing not more than 450 kilograms, and not more than 495 kilograms on devices with fixed wings used for recreational flying and helicopters). This Decree has amended Law No. 106 of 25 March 1985 in light of developments in technology and the safety needs of leisure aviation.

Article 20 of Decree No. 133/2010 establishes a compulsory insurance for civil liability of the operator for damage caused to third parties on the surface as a result of impact or collision in flight.

Article 21 introduces the requirement for insurance coverage and requires that the insurance contract must be concluded in compliance with Regulation (EC) No. 785/2004, and it foresees the extension of insurance coverage to damage caused by gross negligence. It also provides for the obligation of the insurer to directly indemnify the injured third party, within the limit of the maximum coverage. However, this does not preclude the possibility of recourse by the insurer against the insured, to the extent and circumstances provided for in the contract.

On 15 June 2021, the Senate started a legislative process to reform Presidential Decree No. 133/2010 through draft law No. 2053 of 2021. The amendments will include two innovations: (1) the option for advanced sport flight aircraft to carry out take-off, landing and storage operations on the runways of ENAC-certified airports in Italy; and (2) the qualifying conditions for foreign sport flight aircraft to be able to fly in Italian airspace and take off or land in the designated areas.

ENAC has issued the Passenger's Charter, which contains the rights conferred on passengers pursuant to Regulation (EC) No. 261/2004.

The Passenger's Charter is a practical guide in which ENAC has summarised useful information for people travelling by air. It was drawn up for the first time in 2001 and distributed in all Italian airports. A new version (the fifth) was introduced in 2005, together with new rules governing delay and cancellation of flights, with the aim of reporting, in particular, the increase in the amount of compensation payable by carriers in the event of denied boarding owing to overbooking, introduction of forms of compensation and assistance in the event of flight cancellations or long delays, as well as the extension of protection of this kind to passengers on charter flights.

In November 2009, ENAC issued the sixth edition of the Passenger's Charter, including information on the provisions issued by the European Union on the rights of persons with disabilities or reduced mobility, the rules on airport security checks and the surveillance of foreign operators. In this edition of the Charter, ENAC has also incorporated the principles established in the judgment of the European Court of Justice dated November 2009 regarding passengers' compensation in the event of a long delay. The judgment upheld the rights of passengers to be compensated in the event of reaching their destinations over three hours later than the scheduled time of arrival.

In addition, the Italian legislature introduced into the INC certain provisions aimed at ensuring special protection for passenger rights. Special mention should be made of Article 943, which imposes a specific obligation to provide information. If transport is to be carried out by an air carrier other than the carrier indicated on the ticket, the passenger must be adequately informed of this prior to the issuance of the ticket and, in the case of ticket reservations, the information must be given at the time of booking. In the absence of such information, a passenger may request the termination of the contract, reimbursement of the ticket fare and payment of damages. Article 943 also establishes that carriers cannot operate from the Italian territory if they do not fulfil their obligations to provide the information referred to in Article 6 of Regulation (EC) No. 2027/1997.¹⁰ In addition, Article 948 introduced rules for passengers' waiting lists. Carriers are obliged to communicate to passengers their respective waiting list numbers when putting up a waiting list for a certain flight. Moreover, the list must be posted in a location accessible and visible to the public. Passengers whose names have been entered on the waiting list have the right to access transport according to the assigned waiting list number.

Article 783 of the INC requires air carriers to carry out an annual check on the quality of services offered to passengers, according to indications given by ENAC, which checks compliance with promised quality and, in the event of non-compliance, enforces measures laid down in its rules, including ultimately the option to withdraw the operator's licence.¹¹

With the issuance of Legislative Decree No. 53/2018, the Italian legislature implemented the EU Passenger Name Record Directive on the use of passenger name record data for the prevention,¹² detection, investigation and prosecution of terrorist offences and serious crime. According to this Directive, airlines must transfer the data collected to the competent authority (i.e., passenger information unit) in the relevant Member State.

Moreover, in judgment No. 1584 of 23 January 2018, the Supreme Court clearly stated that in the case of flight cancellation or delayed arrival, the burden of proof lies with the air carrier. Therefore, in a claim for compensation under Regulation (EC) No. 261/2004, passengers have only to prove their title (i.e., the flight title) while the air carriers must provide evidence of the proper fulfilment of the flight obligation.

Finally, on account of the covid-19 outbreak, ENAC press release No. 12/2020 of 29 February 2020 informed passengers whose flights were cancelled and passengers who were subject to restrictions imposed by third countries that they had the right to reimbursement of their ticket price but did not have the right to compensation provided for in Article 5(3) of Regulation No. 261/2004, because, in these circumstances, the cancellation of a flight, or the impossibility of flying, was considered to depend upon the carrier. Subsequently, Article 88 bis, Paragraphs 11 and 12 of Law No. 27 of 24 April 2020 established that instead of reimbursement of the ticket price air carriers could offer a voucher, to be valid for one year from the date of issuance. Hence, the issuance of the voucher fulfilled the reimbursement obligation and did not require any form of acceptance by the passenger. In this regard, ENAC in a press release issued on 18 June 2020 established that, because the covid-19 restrictions had been lifted, cancellations made after 3 June 2020 were not attributable to the pandemic except in specific cases. Hence, air carriers must reimburse the ticket price to passengers whose flights have been cancelled.

The European Commission has addressed the matter too and on 18 March 2020 it issued interpretative guidelines aimed at clarifying how certain provisions of the EU passenger rights legislation apply in the context of the covid-19 outbreak.¹³ The Commission Guidelines established that the measures taken to contain covid-19 should be regarded as 'extraordinary circumstances' precluding the right of passengers to claim compensation pursuant to Article 5(3) of Regulation 261/2004. Subsequently, in March 2021, the European Court of Auditors published a document referring to the EU measures adopted in relation to air passenger rights,¹⁴ to give air passengers a more comprehensive review of the rules governing their rights and to help them in facing claims that have occurred since the beginning of the covid-19 crisis. In December 2021, 16 leading EU airlines committed to improving the compensation rights for those passengers whose flights were cancelled because of the pandemic and to adopt several measures:¹⁵

1. for passengers who had yet to receive any refund, the airlines committed to settling the remaining claims within seven days, as required by EU legislation;
2. airlines will inform passengers of their rights in the event of flight cancellation, in a clearer, more intuitive and more direct way, by including the information on their corporate websites, in corporate emails and in other communications to passengers;
3. airlines will communicate to passengers all the options at their disposal in the event of flight cancellation, including rerouting, cash reimbursement or reimbursement by means of a voucher (only if offered by the airline);
4. airlines will not give priority to one solution over the others, nor can the other options be omitted;
5. above all, passengers cannot be pressured to accept one of the above-mentioned solutions rather than others and shall always be free to express their preference, and should receive vouchers instead of reimbursement of the flight price only if they expressly choose that solution; and
6. most airlines have agreed to refund in cash all unused vouchers that passengers had to accept in the absence of the option of a refund during the peak of the pandemic.

Airlines have also undertaken to distinguish and to communicate clearly to passengers not only the rights provided for in Regulation (EU) No. 261/2004 but also all contractual rights deriving from the terms and conditions of carriage. In 2022, the Consumer Protection Cooperation network will monitor whether the airlines' commitments have been implemented and it will also investigate the airlines' intermediaries to assess whether they are informing passengers properly about conditions and fares for air services.