US Department of Transportation Issues Consumer-Friendly Interpretation of Montreal Convention Liability Limitation in Respect of Baggage
Rod Margo
Air carriers frequently seek to limit their exposure to liability for loss of, or damage to, cargo and baggage by including in their tariffs and conditions of carriage a provision to the effect that the carriage of certain items such as jewellery, electronics, and other high-value or fragile items is prohibited.
Rod Margo
Some carriers have gone further and have sought to specify in their conditions of carriage that the carrier shall not be liable in respect of loss or damage to items included in a passenger’s baggage such as jewellery, electronics, or other fragile or high-value items.
In a recent order issued by the US Department of Transportation, it was held that although carriers may wish to have tariff terms or conditions of carriage that prohibit passengers from including certain items in their checked baggage, once a carrier accepts such checked baggage, regardless of what is contained in the checked baggage, be it a high-value or fragile item, the passenger is entitled to recover for loss or damage up to the limits of liability contained in article 22(2) of the Montreal Convention of 1999. The DOT held that although the Montreal Convention allows for some liability limitations and permits carriers to require a Special Declaration of Interest if the value of the checked items exceeds the liability limitations spelled out in the Convention, a blanket exclusion from liability in respect of any particular kind of baggage item is not permitted.
In the case in question, the carrier involved included a clause in its general conditions of carriage, which provided that the carrier was:
“not responsible for valuable, fragile or perishable items such as money, currencies, jewellery, works of art, precious metals, silverware, securities or other valuables, expensive clothes, optical or photographic appliances, computers, electronic and/or telecommunications equipment or appliances.”
The purported non-responsibility for loss of or damage to such items was also included on the carrier’s website and in the terms appearing on the ticket jacket issued to passengers.
When passengers made claims against the carrier in respect of such items that were included in their checked baggage, the carrier would respond denying liability on the grounds set forth in its conditions of carriage.
In its order, the DOT referred to article 17(2) of the Montreal Convention, which provides that carriers are liable, up to the monetary limits in the Convention, for loss of or damage to baggage “upon condition only that the event which caused the destruction, loss or damage took place on board the aircraft or during any period within which the checked baggage was in the charge of the carrier.” The DOT stated that the Montreal Convention did not make an exception for any class or category of baggage, such as jewellery, electronics, or other high-value items. It also indicated that although the Montreal Convention allows carriers to require a Special Declaration of Interest if the value of the checked items exceeds those liability limitations, blanket exclusions from liability in respect of items contained in checked baggage are not permitted. Thus, article 17 of the Montreal Convention in effect mandates that once a carrier accepts checked baggage from a passenger, whether or not it contains any fragile or high-value items in it, the carrier may not exclude its liability for damages in respect of loss of or damage to such items. Rather, in accordance with article 17 of the Montreal Convention, the carrier may only limit its liability for any of the contents of a passenger’s checked baggage to the limits of liability set forth in the Convention, which currently is 1,131 Special Drawing Rights, which is equivalent to approximately US$1,750.
In light of the contents of the provision contained in the carrier’s general conditions of carriage which sought to exclude all liability for valuable, fragile or perishable items, the DOT found the carrier to be in violation of article 17 of the Montreal Convention as well as the statutory provision against unfair and deceptive trade practices contained in Title 49 U.S.C. section 41712.
For purposes of mitigation, the carrier was able to demonstrate that, notwithstanding the contents of its conditions of carriage, it had settled numerous cases for baggage loss in accordance with the terms of the Montreal Convention. Accordingly, the DOT issued a consent order which specified the terms agreed upon by the DOT and the carrier for purposes of resolving the issue in question.
One of the lessons to be learned in this matter is that while carriers may legally seek to prevent shippers and passengers from placing high-value or fragile items on board their aircraft, unless the carrier is willing to undertake the inconvenience and cost of ensuring that no such items are indeed included in any cargo or baggage, the carrier will not be able to exclude liability altogether in respect of any damage to or loss of such items.
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The DOT’s decision may seem somewhat unfair to the carrier, having regard for the fact that it attempted to make it clear in its conditions of carriage that passengers were not permitted to carry high-value or perishable items on board its aircraft. Notwithstanding this, carriers should be aware that, while they may seek to prohibit passengers from boarding their aircraft with high-value or perishable items in their baggage, if passengers elect not to abide by the prohibition, the carrier will still be liable for loss or damage to said items, at least up to the limits of liability specified under article 22(2) of the Montreal Convention.