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BTW3201 International Trade Law

International transport:
Carriage by air

Accredited by: Advanced Signatory:

The Warsaw System

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Scope of this topic
• The contract for carriage by air, namely, the air waybill (AWB)
• The international conventions on carriage of goods by air:
- The Warsaw Convention 1929
- The Montreal Convention 1999
• The domestic law: The Carriage by Air Act 1974
• Carrier liability

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The air waybill (AWB)
• An air waybill (AWB) is the contract of carriage for the transportation of
goods by air.
• Unlike the bill of lading, the AWB is non-negotiable. This also means that it
is not a document of title. [Article 15(3) of the amended version of the
Warsaw Convention provides for the possibility of a negotiable AWB. But
this is hardly taken up.]
• There is no practical advantage in issuing a negotiable AWB because the
duration of air carriage is significantly shorter than carriage by sea. During
this short period, the likelihood of selling the goods during transit is
presumably very low.
• Further, a consignor who wants the goods to be delivered to another
assignee can instruct the carrier to do so.
• The AWB is also issued in a set of originals: for the carrier, the shipper/
consignor, and the consignee
• Whereas a bill of lading is issued after the vessel has sailed, the AWB is
always available before flight departure. MONASH
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• In reality, AWB is often electronic (google IATA e-AWB system).
The air waybill (AWB)

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The Warsaw Convention 1929
• The laws relating to the international carriage by air of cargo can be
found in the Warsaw Convention 1929 and its network of legal
instruments (the Warsaw system), and the Montreal Convention
1999.
• The Warsaw Convention 1929 and the Montreal Convention 1999
also lay down rules pertaining to passengers – this area is beyond
the scope of the syllabus.
• The Warsaw system consists of the following legal instruments:
- Warsaw Convention 1929
- Warsaw Convention as amended by the Hague Protocol 1955
- Guadalajara Convention 1961
- Warsaw Convention as amended at The Hague and by the
Guatemala Protocol 1971
- Montreal Additional Protocol No. 1 1975 MONASH
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The Warsaw Convention 1929
- Montreal Additional Protocol No. 2 1975
- Montreal Additional Protocol No. 3 1975
- Montreal Additional Protocol No. 4 1975

What is an ‘international carriage’?

• Article 1(2) defines ‘international carriage’. Put simply, carriage of
goods constitutes an international carriage where goods are carried
from a place of departure in State A to a place of destination in State
B, where both States are signatories to the Warsaw Convention.
• What if the carrier’s route from State A to State B includes a transit in
State X, which is not a signatory state? The carriage would still
constitute international carriage.

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The Warsaw Convention 1929
Carrier liability under the Warsaw system
• Before we begin, take note that, depending on the version of the
Warsaw Convention you read (original or amended), the wordings of
the relevant Articles are slightly different. To avoid confusion, the
effect of the Articles will be discussed, but not the wordings.
• Article 18 of the Warsaw Convention imposes strict liability on an air
carrier in respect of the damage/loss of the goods.
• Where ‘strict liability’ is imposed, it means a party is legally
responsible for the consequences flowing from an activity regardless
of whether he is at fault.
• Thus, the starting point is that, where it can be established that the
goods that an AWB pertain to are damaged, the air carrier will be
liable.

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Carrier liability under the Warsaw system
• A carrier is also liable for damage to cargo caused by delay (Article
19).
• The carrier will be liable where the damage/loss to the goods occur
during the carriage by air or during the period that the goods are
under the care or control of the carrier, e.g. while the goods are in an
aerodrome or on board an aircraft, or where landing is made outside
an aerodrome – at the place of landing.
• There is an exception to Article 18 and Article 19. Where a carrier
can show that he or his agents have taken “all necessary measures
to avoid the damage, or that it was impossible for him or them to
take such measures”, the carrier would not be liable (Article 20).
• The words “all necessary measures’ do seem highly stringent and
impossible to meet. In practice, it suffices that a carrier shows that
he has taken ‘all reasonable measures’ to prevent the damage
(Goldman v Thai Airways International Ltd [1983] 1 All ER 693). MONASH
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Carrier liability under the Warsaw system
• A carrier has the defence of contributory negligence (Article 21). Thus,
where the damage was partly caused by the consignor’s negligence,
the carrier’s liability is reduced accordingly (Rustenberg Platinum
Mines v South African Airways [1977] 1 Lloyd’s Rep 564).
• Example of a consignor’s negligence: inadequate packing, and failure to
follow the carrier’s recommendation regarding care of cargo prior to
loading (AG World Exports v Arrow Air Inc 22 Avi Cas 18).
• Article 18(3) further provides that a carrier will not be liable in the
following circumstances:
- inherent defect, quality or vice of that cargo
- defective packing of that cargo performed by a person other
than the carrier, his servants or agents
- an act of war or an armed conflict
- an act of public authority carried out in connection with the entry,
exit or transit of the cargo. MONASH
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[Note: Article 18(3) does not provide for the exception of ‘act of God’.]
Carrier liability under the Warsaw system
• Article 22 specifies the limitation of liability. A carrier’s liability is limited to 250
francs per kg (now 17 SDR per kg) unless the consignor has:
- made a special declaration of the value of the goods at
delivery; and
- paid a supplementary sum (if required).
• This limitation of liability can be raised by the carrier’s servants or agents
provided that they act within the scope of their employment.
• Where only part of the goods is damaged (as opposed to the entire
consignment), determining the weight of the goods for the purpose of
compensation can be problematic, as seen in the following case.

Applied Implant Technology Ltd v Lufthansa Cargo AG [2000] 2 Lloyd’s Rep

46.
Facts: The cargo was an ion implantation system that consisted of various parts.
One of the parts (a beamline module) was damaged beyond repair. Without this
part, the entire system could not function. The weight of the damaged part was MONASH
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3,590 kg. The combined weight of all the parts was 11,675kg.
Carrier liability under the Warsaw system
Decision: The compensation should be calculated by reference to the weight
of the damaged beamline module and not by reference to the weight of the
larger combined package.

• Note that a carrier’s liability may exceed 17 SDR per kg where the damage
resulted from an action or omission of the carrier (his servants or agents)
done with intent to cause damage or recklessly and with knowledge that
damage would probably result (Article 25).
• In Goldman v Thai Airways, the English Court of Appeal stated that the
word ‘recklessly’ in Article 25 should not be construed in isolation but in its
context. It should be noted that ‘recklessly’ is qualified by the phrase ‘with
knowledge that danger would probably result’. This means that it must be
established that the carrier was aware that damage would probably result
from his act or omissions, but he did so regardless of that probability. The
test is subjective.
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Carrier liability under the Warsaw system
Goldman v Thai Airways International Ltd [1983] 1 WLR 1186
Facts: The plaintiff was a passenger on Thai Airways’ aircraft
travelling from London to Bangkok. Prior to departure, the pilot was
given a weather chart forecasting 2 areas of moderate clear air
turbulence (CAT) on the aircraft’s flight path. Thai Airways’ flights
operation manual required the pilot to illuminate the seat belt sign
during all flying in turbulent air and when turbulence could be
expected. The pilot failed to do so, and when severe turbulence was
encountered in that area, the plaintiff (whose seat belt was not
fastened) was thrown from his seat and struck the ceiling. As a
result, he sustained a serious injury to his lower spine. The plaintiff
was not the only person who suffered injury. About 13 passengers
and crew members struck the ceiling. A stewardess was
unconscious and a passenger had a broken arm.
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Carrier liability under the Warsaw system
Decision: Article 25 should be read as a whole. The word ‘recklessly’
should not be given an isolated meaning. The plaintiff should prove that
the pilot was aware that his omission (failure to illuminate the seat belt
sign) would probably cause injuries to passengers, but he was indifferent
to that probability. According to expert evidence, the peculiar feature of
CAT is that it is not detectable before it is encountered. By contrast,
thunderstorm turbulence can be seen. While it is possible to warn a pilot
that he may encounter CAT in a particular area, a forecast of CAT in an
area does not mean that an encounter with turbulence is inevitable.
For the pilot’s omission to amount to recklessness, it was necessary to
establish he knew that prudent flying required him to illuminate the seat
belt sign before entering the CAT area i.e. it was wrong to wait for warning
ripples. Although the flights operation manual required a pilot to illuminate
the seat belt sign in such circumstances, the relevant wordings seemed to
suggest that pilots could exercise discretion. It was not sufficient to show
that the pilot deliberately broke a regulation (even one which was designed
for safety), unless it was also shown that he had knowledge that injury MONASH
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would probably result.
Carrier liability under the Warsaw system
• In short, a subjective test (as opposed to the objective ‘reasonable man’
test) has to be applied in respect of ‘recklessness’ in Article 25. The
same approach was later adopted in Nugent and Killick v Michael
Goss Aviation Ltd [2002] 2 Lloyd’s Rep 222.
• Article 23 prohibits a carrier from contracting out from the provisions in
the Convention. In other words, a carrier is prohibited from limiting or
excluding his liability in a manner that is inconsistent with the
Convention.
• The period of limitation is 2 years from the date of arrival at the
destination, or the date on which the aircraft ought to have arrived, or
the date on which the carriage stopped (Article 29).

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The Montreal Convention 1999

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Carrier liability under the Montreal Convention
• There are many similarities between the Warsaw system and the
Montreal Convention 1999. More attention will be focused on the
provisions that differ.

Liability for damage to cargo

• Article 18 of the Montreal Convention provides that a carrier is liable in
respect of the damage/loss to goods sustained during the carriage by
air or during which the cargo was in the charge of the carrier save for
limited exceptions:
- contributory negligence (Article 20)
- the list of exceptions as stated in Article 18(2)
• A carrier’s liability does not extend to carriage by land, sea or inland
waterway, unless done for the purpose of loading, delivery and so on.
However, where the carrier substitutes air carriage with another mode of
carriage without the consent of the consignor, the entire carriage would MONASH
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be treated as within the period of air carriage (Article 18(4)).
Carrier liability under the Montreal Convention
Damage caused by delay
• Under Article 19, a carrier is liable for damage to cargo caused by
delay.
• However, a carrier is not liable for damage occasioned if it is
established that it (and its servants and agents) took all measures
that could reasonably be required to avoid the damage or that it was
impossible for it or them to take such measures.

Limitation of liability
• Article 22(3) sets the limit of liability in respect of damage/loss to
cargo. The limit was originally 17 SDR per kg (the same as the limit
set under the Warsaw system), unless the value of the cargo was
declared and a supplementary sum paid if the case so required.
• However, Article 24 provides for periodic review of the liability limits. MONASH
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• The current limit is 22 SDR per kg (revised in 2019).
Carrier liability under the Montreal Convention
Losing the protection of the liability limits
• A carrier could not rely on the limitation of liability where the damage
was caused by an act or omission of the carrier (its servants or
agents), done with intent to cause damage or recklessly and with
knowledge that damage would probably result (Article 22(5)).
• This is similar to the position under the Warsaw system.

Limitation period
• The limitation period is also two years from the date of arrival or from
the date when aircraft should have arrived (Article 35).

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Malaysia: The Carriage by Air Act 1974
• Malaysia is a signatory to both the Warsaw Convention 1929 and the
Montreal Convention 1999.
• The Carriage by Air Act 1974 (CAA 1974) incorporated the Warsaw
Convention to become part of our domestic law.
• In 2009, the CAA 1974 was amended in order to incorporate the
Montreal Convention as well.
• Which Convention should one apply in respect of carriage by
air involving a Malaysian party?
• To begin with, it must be remembered that an international
convention only applies to a party whose country has signed the
convention concerned and ratified it to become part of its domestic
law.
• Thus, in a dispute involving a party whose place of business is in
Malaysia, it is necessary to determine whether the country of the
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other party is a signatory state to either convention (or both). BUSINESS
States Warsaw Convention Montreal Convention Governing law

Party A Yes Yes Montreal Convention

Party B Yes Yes

Party A Yes Yes Warsaw Convention

Party B Yes No

Party A Yes No Warsaw Convention

Party B Yes Yes

Party A No Yes Montreal Convention

Party B Yes Yes

Party A Yes Yes Montreal Convention

Party B No Yes

Party A No No Domestic law of MONASH

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Party B No No either state