TT Talk - Judge rules on air waybill notice
At the moment, the rules governing air carriers' liabilities are complex, with five possible
- The unamended Warsaw convention of 1929
- The 1929 convention as amended by the Hague protocol of 1955 ("Warsaw-Hague")
- The conventions as amended by the Montreal additional protocol No. 4 of 1975 ("MAP4")
- The Montreal convention of 1999 ("MC 1999")
- None of the above (if carriage is to or from a state which has not acceded to any of the
The first three conventions have rules requiring the carrier to have a notice on the air waybill warning the client that carriage may be subject to the convention and that liability will "in most cases" be limited. If carriage is subject to either the 1929 or 1955 conventions, the omission of this notice means that the carrier will not be able to limit liability in the event of loss, damage or delay. If the carriage is subject to MAP4, the effect of the omission is minimal, while MC 1999 contains no specific provisions about warnings on liability limitations.
In September 2001, Bax Global undertook the carriage of 2178 kg hard disk drives worth USD 320,000, from Manila to Glasgow, a contract subject to the conditions of Warsaw-Hague. It issued an air waybill to the sender, Fujitsu, which bore on its face the words:
"It is agreed that the goods herein are accepted in good order and condition (except as noted SUBJECT TO THE CONDITIONS OF CONTRACT ON THE REVERSE HEREOF. THE SHIPPER'S ATTENTION IS DRAWN TO THE NOTICE CONCERNING CARRIER'S LIMITATION OF LIABILITY. Shipper may increase such limitation of liability by declaring a higher value for carriage and paying a supplemental charge if required"
This text, or something very similar, appears on the IATA recommended form of air waybill, and on most other air waybills issued by carriers around the world. However, while most air waybills also carry on the reverse a clear "NOTICE CONCERNING CARRIER'S LIMITATION OF LIABILITY" which goes on to repeat the words required by the convention, the Bax AWB did not. Instead it contained a number of contractual conditions which made reference to the conventions but not in the clear words of the convention. The"notice" mentioned in the statement on the front did not appear.
The consignment was lost in transit, and Fujitsu made a claim in the English commercial court for its value against Bax. At the end of last year, Mr Justice Christopher Clarke was asked to decide, on a preliminary point, whether the AWB complied with the requirements of Warsaw-Hague. If it did, Bax might be able to limit their liability (subject to other points being decided in their favour); if it did not, they could be fully liable for the loss. This point had not previously been contested in the English courts.
Having considered the history of the conventions and reviewed decisions in other English and US courts, the judge held that, while the wording on the face of the AWB promised a "notice" on the reverse (and that notice should have repeated the words set out in the convention), there was, in fact, no such notice and the document was therefore not in compliance with the requirements of the conventions.
Although 69 countries have now adopted MC99, there are still very many who have not. Because it is very difficult to determine quickly which regime applies to any particular movement, the contractual conditions printed on the air waybill must be a kind of "one size fits all" solution, but both the IATA and FIATA standard format air waybills meet the requirements.
The Club recommends that all air waybill forms clearly bear both the warning on the face, and the notice on the reverse, as shown above. As Mr Justice Clarke commented, if the notice does not apply, no harm is done; if it is missing however, the carrier may face an expensive bill if something happens to the cargo during the journey.
The form of AWB normally used by Bax does in fact conform to the legal requirements and it is not clear why a non-conforming version was used by their office in Manila. Members should make sure that they do not fall into the same trap: they must check that all their offices only use air waybill forms which are either in the IATA standard format (or, for FIATA members, the FIATA format) or have been specifically approved by the Club. Any non-compliant air waybill forms should be withdrawn from circulation and scrapped immediately.
The text of the judgment can be read on:http://www.bailii.org/ew/cases/EWHC/Comm/2005/2289.html
The list of states that now apply MC99 is available on the ICAO website at:http://www.icao.int/about-icao/Pages/member-states.aspx
You may also be interested in:
TT Club promotes important supply chain security information to help the transport and and logistics industry protect itself from cargo theft.
TT Club calls for intrusive inspections of import and export freight to counter the risk of invasive pests.
The logistics world is fraught with potential risks, and claims are perhaps inevitable. The exposure to such claims can be minimised, however, by maintaining a robust risk mitigation policy. Risk mitigation extends not only to the physical steps taken to improve operational safety and security, but also to ensuring, from the outset, that adequate contractual protections are in place.