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note. The amended version triggers the unavailability of the limitation provisions only where the goods are loaded with the carrier’s consent without the air waybill. In most cases, the moment of loading will be later than the moment of acceptance. Moreover, under the amended version, the carrier loses only the benefit provided by Art 22(2) and does not lose any exclusions that he may be allowed under the convention.

As for the effect of statements regarding weight, condition of the goods, and so on, the position is the same as under the amended convention.

Montreal4

The Montreal4 makes a few changes to the Hague Protocol on documentation requirements for the carriage of cargo to reflect modern practices of preserving records of the carriage to be performed.

As for the contents of the air waybill, the first two requirements in respect of air waybills listed in the amended version are retained. The third requirement in Art 8 of the amended version is replaced with the requirement to indicate the weight of the consignment. Unlike the unamended and the amended versions, Montreal4 does not penalise the carrier if he loads or accepts the goods without an air waybill. The limitation provisions will, therefore, be available to the carrier even where he does not comply with document requirements imposed by Arts 5–8 of Montreal4.45

Air waybill and negotiability

Unlike a bill of lading,46 an air waybill is not a document of title. However, according to Art 15(3) of the amended version, an air waybill may be negotiable (that is, transferable).There is no practice of issuing a negotiable air waybill in Britain, but, were it to become a custom in the trade, it would be recognised under English law.47 The advantages of a negotiable air waybill are difficult to see. Negotiable bills of lading evolved because of the need to sell goods during long periods when they were on the high seas. Air transport, by nature, is speedy. Moreover, if the consignor wishes the goods to be delivered to another consignee, he has the right to instruct the carrier to do so under Art 12(1). In these circumstances, the purposes served by a negotiable air waybill are unclear. Article 15(3) may have been included to reflect established custom in some countries. It is also possible that banks involved in a letter of credit transaction might prefer the transport document to be in a negotiable format.

Electronic data interchange (EDI) and the Warsaw regime

Given the ever increasing use of electronic data interchange and the discussion about electronic bills of lading,48 an important issue is the applicability of the Warsaw regime to electronic equivalents of air consignment notes/air waybills. As for the unamended version, Art 6 requires that the consignor and carrier sign the air waybill. The signature of the carrier may be stamped and that of the consignor stamped or printed. If the convention had not listed the forms of acceptable signature, it would have been possible to argue that electronic signatures could have come within the

45Article III amending Art 9. See also Arts 5 and 9 of the Montreal Convention.

46See Chapter 6, bill of lading as a document of title.

47Lickbarrow v Mason (1793) 102 ER 1191.

48See Chapter 6, Electronic data Interchange (EDI) and the Carriage of Goods by Sea Act 1992; Chapter 4.

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ambit of the convention without further amendments. The situation in the amended version is no different. Montreal4 introduces changes to documentation relating to cargo, and Art 5 states that any other means that would preserve a record of the carriage to be performed may be substituted with the consent of the consignor.The use of the phrase ‘any other means’ in Art 5(1) is sufficiently wide to accommodate electronic documentation. However, Art 6(3) still requires the signature to be printed or stamped, which suggests that the air waybill must be in a tangible form unless the attachment of a digital signature could be construed as stamping. It seems, therefore, that the convention is perhaps not that flexible to allow the use of electronic documentation and suitable amendments are worthy of consideration.

Carrier liability

Both under the unamended and amended versions of the Warsaw Convention, the carrier is prima facie liable for loss or damage to cargo (Art 18(1)) or damage occasioned by delay (Art 19),49 unless he can show that he and his servants or his agents took ‘all necessary measures to avoid the damage, or that it was impossible for him or them to take such measures’ (Art 20). ‘All necessary measures’, if construed literally, does not provide the carrier with a defence, for, if the carrier had taken all necessary measures, there would have been no damage or loss. Case law, both in England and in other jurisdictions, has established that ‘all necessary measures’ should be construed as ‘all reasonable measures’ or ‘all measures necessary in the eyes of the reasonable man’.50 As for the word ‘impossible’, it has been said that it should not be construed as ‘not reasonably possible’ but as ‘damage which was inevitable, or which no human precaution or foresight would have prevented’.51

Unlike the Hague and Hague-Visby Rules,52 the Warsaw Convention does not provide a list of circumstances, such as ‘act of God’ and ‘act of war’, which would exclude the carrier’s liability. Presumably, these will be raised during the course of litigation to show that the carrier could not avoid the damage.

The carrier can also raise, under Art 21 of both versions of the Warsaw Convention, the defence of contributory negligence.53 This has been successfully raised in respect of inadequate packaging, as well as failing to follow the carrier’s recommendation regarding care of cargo prior to loading.54 Where successful, the carrier may be exonerated wholly or partly from his liability. The proof for establishing contributory negligence is on the defendant.55

The unamended version in Art 20(2) provides the carrier with one further defence – namely, the defence of negligent pilotage or negligence in the handling of the aircraft.This defence is similar to the one allowed in Art IV(2)(a) of the Hague-Visby Rules, much criticised by the drafters of the Hamburg Rules.56 It is surprising that this defence is included in a convention that revolves round a presumed fault liability framework. A possible explanation for including this defence could have been to protect the carrier from the as yet unknown effects of a relatively new technology. It is interesting that this defence was not included in the amended version.

49See Panalpina International Transport v Densil Underwear [1981] 1 Lloyd’s Rep 187.

50Goldman v Thai Airways International Ltd [1983] 1 All ER 693. This interpretation is also applied in other jurisdictions – see United International Stable Ltd v Pacific Western Airlines Ltd (1969) 5 DLR (3d) 67 BCSC.

51Swiss Bank Corp v Brink’s Mat [1986] 2 Lloyd’s Rep 79, at p 96.

52Article IV(2). See Chapter 8, carrier’s immunities.

53Rustenburg Platinum Mines v South African Airways [1977] 1 Lloyd’s Rep 564.

54AG World Exports v Arrow Air Inc 22 Avi Cas 18, at p 221.

55Rustenburg Platinum Mines v South African Airways [1977] 1 Lloyd’s Rep 564.

56See Chapter 9.

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Note, however, that Montreal4 amends the liability of the carrier extensively. First, the carrier is made strictly liable for loss or damage to cargo and the carrier cannot escape liability by showing that he took all necessary measures to avoid the loss or damage (Art IV amending Art 18). However, other than the defence of contributory negligence (Art VI amending Art 21), it lists the circumstances in which the carrier can escape liability for loss or damage to cargo in Art 18(3). These are:

•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; and

•an act of public authority carried out in connection with the entry, exit or transit of the cargo.

It is interesting that the list does not include the exception of act of God allowed to carriers under English common law.57

As regards damage due to delay, the carrier, under Montreal4, can still raise the defence of all necessary measures (Art V amending Art 20).58

Period of responsibility

Under both the amended and unamended versions of the Warsaw Convention, the carrier is liable for loss of cargo or damage to cargo if the event causing the loss or damage to the cargo took place during carriage by air (Art 18(1)). Carriage by air:

... comprises the period during which the baggage or cargo is in the charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of a landing outside an aerodrome, in any place whatsoever [Art 18(2)].

The precise moment when the carrier takes charge and relinquishes charge of the cargo will presumably depend on the terms of the contract. In Swiss Bank Corp v Brink’s Mat,59 of the three consignments of bank notes stolen, only two had been weighed and checked in by the handling agents of KLM. It was held that the airline was liable for only two consignments since formalities in relation to the third had not taken place. Had KLM’s handling agents collected the goods from the consignor’s premises, they would have been liable for all three since the goods would be in their charge. The question of deciding whether the carrier is in charge of the goods will depend on the circumstances of each case.

Liability limits

Under Art 22(2) of the Warsaw Convention, the limit of liability for loss, damage or delay is 17 SDRs per kilogram.60 Where part of the cargo is lost, damaged or delayed, the weight of the part determines the amount of liability according to Art 22(2)(b) of the amended Warsaw Convention.

57See Chapters 5 and 7. See also Arts 18 and 20, Montreal Convention 1999.

58See Art 19, Montreal Convention 1999.

59[1986] 2 Lloyd’s Rep 79. See also Rolls Royce Plc and Another v Heavylift Volga Dnepr Ltd and Another [2000] 1 Lloyd’s Rep 653.

60The move to SDRs is as a result of the various Montreal Protocols coming into force – namely Montreal Protocols 1, 2 and 4. The liability limits for loss, damage or delay was previously expressed as 250 gold francs per kilogram.

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However, where the part lost, damaged or delayed affects the total value of the other packages, then the total weight will be taken into account in calculating the liability amount.

Article 22(2)(b) was examined fairly recently in Applied Implant Technology Ltd and Others v Lufthansa Cargo AG and Others; Nippon Express UK Ltd v Lufthansa Cargo AG.61 The cargo consisted of a number of crates containing an ion implantation system which were carried from England to Japan via Germany. One of the parts (a beamline module) was damaged beyond repair. The absence of this part meant that the remainder of the parts could not function. The weight of the damaged part was 3,590 kg and the combined weight of all the parts was 11,675 kg. The issue before the court was whether liability was to be calculated in terms of the combined weight or the damaged part’s weight. The defendant, in response to the claimant’s argument that the remainder of the parts were affected by the damage to the beamline module, said the impact on the remaining parts was not permanent since a replacement had been obtained swiftly. The court came to the conclusion that the limit of liability had to be assessed by ‘reference to the state of affairs at the end of the carriage by air in which the damage was sustained’. Of course, the claimant may have obtained a part subsequently that eliminates their loss. In which event, according to David Steel J, ‘it will be significant from the point of view of quantum but not limitation’ (at p 49).62

It is inevitable that ‘package’ in Art 22(2)(b) raises questions about its meaning. Are separately packed items within a cardboard box packages or is the cardboard box a package for the purposes of Art 22(2)(b)? In Electronic Discount Centre Ltd v Emirates Skycargo (A Body Incorporated in Accordance with the Laws of the United Arab Emirates),63 the county court was asked to decide on the meaning of package in the first sentence of Art 22(2)(b).64 The claimant lost a number of mobile phones, out of a total of 600 mobile phones, from three of the four cartons consigned to it by the defendant. Was liability limits to be calculated by reference to weight of the items lost or the weight of the cartons? The solution turned on the meaning of ‘package or packages’ in Art 22(2)(b). Did the phrase refer to the cartons or the items in the cartons? Judge Kenny, after taking on board the dictionary meaning of package along with authorities dealing with the question in the context of sea carriage,65 concluded that the relevant time for determining the number of packages was at the time the parties concluded the contract. There was nothing in the air waybill to indicate that there were 600 separately packed items in the cartons. The cartons were, therefore, the packages for the purposes for calculating liability limits. Of course, as the judge pointed out, if the parties wished each item to be treated as a package, they could have entered 600 packages on the air waybill at the time of entering the contract.66

The unamended version does not contain Art 22(2)(b). However, in Data Card Corp v Air Express International,67 the court held that, where part of the cargo was lost or damaged, the liability amount should be calculated by reference to the weight of the part lost. The issue of liability limits where the value of the other parts are affected as the result of the damaged or lost part is unclear.

61[2000] 2 Lloyd’s Rep 46.

62See also Vibra v Alitalia and Lufthansa (1991) XVI Air Law 299. See also references to academic opinions cited in the case.

638 April 2002, unreported, but available on Westlaw under reference 2002 WL 498959 (CC).

64It reads:

In the case of loss, damage or delay of part of registered baggage or cargo, or of any object contained therein, the weight to be taken into consideration in determining the amount to which the carrier’s liability is limited shall be only the total weight of the package or packages concerned.

65The River Gurara [1997] 4 All E R 498; see also Chapter 8, calculation of liability.

66See paras 35, 37 and 38 of Kenny J’s judgment.

67[1984] 1 WLR 198. This case was decided under the unamended version.

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Payment of interest

An interesting question that arises in relation to liability limits is whether interest payments are included within limits set by the Warsaw Convention or whether interest can be awarded over the limits set by the convention. The question was considered in Swiss Bank v Brink’s MAT Ltd, and Bingham J concluded that, on the wording of Art 22(4),68 interest payments were included within the compensation limits set by the convention.

According to Bingham J:

It seems ... a matter of construction that the inclusion of that clause in Art 22 indicates that the awarding of costs or legal fees on top of the sum limited would not have been permissible under the convention but for that express provision. It is of course noticeable that there is no reference to interest either in Art 22(4) or elsewhere in that Article or in any other Article. It would seem to me that had those who framed the convention intended interest to be awarded in addition to the monetary limits and to be treated in the same way as court costs or legal expenses, it would have been the subject of special mention [at p 101].

Loss of limits of liability

Amended version

Under the Warsaw Convention as amended by the Hague Protocol, the carrier loses the liability limits set by Art 2269 where it is ‘proved that 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; provided that, in the case of such act or omission of a servant or agent, it is also proved that he was acting within the scope of his employment’, according to Art 25.70

Article 25 was considered by the English courts in Goldman v Thai Airways International Ltd.71 The pilot, despite being made aware of two areas of air turbulence on his route and the flight manual instructions, did not tell the passengers to fasten their seat belts. The aircraft hit an area of turbulence and the plaintiff was injured as a result of being thrown against the roof of the aeroplane. At first instance, the judge, applying the meaning attributed to the word ‘reckless’ in English criminal law,72 concluded that the carrier was liable for injuries caused to the passenger. The Court of Appeal, however, applied a subjective test, and not the objective one applied in English criminal law cases in respect of recklessness. As Eveleigh LJ noted in Goldman, the doing of the act or omission is qualified not only by the word ‘recklessly’ but also by the phrase ‘with knowledge that damage would probably result’. In these circumstances, he found it difficult to see how one could attribute to him knowledge that he should have possessed or another pilot should have possessed. The question, therefore, is whether the pilot’s act is reckless and with knowledge that injury was likely.

68 Art 22(4) reads:

The limits prescribed in this Article shall not prevent the court from awarding, in accordance with its own law, in addition the whole or part of the court costs and of the other expenses of the litigation incurred by the plaintiff . . .

69See Antwerp United Diamond BVBA and Another v Air Europe [1996] QB 317, where the court held that the limits imposed by Art 22 were subject to Art 25. So, a claimant could recover a sum in excess of the declaration of interest in the event of wilful misconduct.

70Note the different wording of Art 25 in the unamended version, below.

71[1983] 3 All ER 673.

72The leading cases on the meaning of ‘reckless’ in English criminal law are Metropolitan Police Commissioner v Caldwell [1981] All ER 961, at p 966; R v Lawrence [1981] 1 All ER 974, at p 981.

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There have been a few cases subsequent to Goldman where Art 25 has been considered.73 Notable among these is Nugent and Killick v Michael Goss Aviation Ltd and Others.74 The issue that the Court of Appeal had to consider was whether knowledge in Art 25 included imputed knowledge. The court had no hesitation in concluding on the basis of decided cases and the travaux préparatoires that actual knowledge was required and it was insufficient to show that a pilot by reason of his training ought to have knowledge that damage would probably result. According to Dyson J:

I do not believe that those who drafted Art 25 intended that anything less than actual conscious knowledge would suffi ce. That is a mental state that is clear and simple to understand. Once one moves away from actual conscious knowledge, uncertainty is introduced, and diffi culties of classifi cation will arise. To use a metaphor, in common currency, a fact may be just below the surface of a person’s mind, it may be deeply or not so deeply buried in its recesses. It may be just below the surface of his mind because he is distracted, or tired, or because he has forgotten it temporarily ... There will be circumstances in which a person has so completely forgotten a fact that it cannot sensibly be said that he has actual knowledge of it at all, although he may well have imputed knowledge of it. If knowledge means more than actual conscious knowledge, then there will be argument as to where on the gradient between actual conscious knowledge and imputed knowledge a particular case comes. I do not believe that it was intended that it would be necessary to embark on subtle and diffi cult questions of this kind in order to determine whether a claimant could rely on Art 25. There in nothing in the language of Art 2 or the travaux préparatoires to indicate that it was intended to include some, and not all, categories of knowledge not present to the mind at the time of the act or the omission. Why should knowledge that has been temporarily forgotten be excluded? If a person fails to apply his mind to a fact because he has temporarily forgotten it, he has no more and no less actual knowledge of that fact at the time of his act or omission than a person who fails to apply his mind to it because he has been temporarily distracted [at pp 232–33].75

The subjective test also seems to be applied in other jurisdictions.76 Of course, the consequence of a subjective test is that it would prove extremely difficult to break the liability limits.

Unamended version

According to Art 25 of the unamended version, the carrier cannot avail himself of the provisions that exclude or limit his liability, ‘if the damage is caused by his wilful misconduct or by such default on his part as, in accordance with the law of the court seised of the case, is considered to be equivalent to wilful misconduct’. ‘Wilful misconduct’, in other contexts, has been construed subjectively77 by the English courts so that the state of the mind of the person in question is taken into account. This interpretation was applied in relation to Art 25 by the English courts. In Horabin v BOAC,78 wilful misconduct was construed as ‘conduct to which the mind is a party, and it is wholly different in kind from negligence or carelessness however gross that negligence or carelessness may be, the will must be a party to the misconduct and not merely to the conduct of which the

73See, eg, Gurtner v Beaton [1993] 2 Lloyd’s Rep 369; Rolls Royce plc and Another v Heavylift-Volga Dnepr Ltd and Another [2000] 1 Lloyd’s Rep 653.

74[2002] 2 Lloyd’s Rep 222.

75Also see judgment of Auld LJ at pp 229–33 and Pill LJ at p 231.

76See, for example, Newell v Canadian Pacific Airlines Ltd (1976) 74 DLR (3d) 574; Tondriau v Air India (1976) 11 Eur Tr L 907.

77See Forder v Great Western Rly [1905] 2 KB 532.

78[1952] 2 All ER 1016.

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complaint is made’ (at p 1019).79 Barry J illustrated the difference between negligence and wilful misconduct thus:

You may think that that what was actually done matters less than the intention or state of mind of the person who did it. The same act may amount on one occasion to mere negligence and on another to wilful misconduct. Two men driving motor cars may both pass traffi c lights after they have changed from yellow to red. In both cases, there are the same act, the same traffic lights, the same crossroads and the same motor cars. In the first case, the man may have been driving a little too fast. He may not have been keeping a proper look out, and he may not have seen the lights (although he ought to have seen them) until he was too close and was unable to stop, and therefore crossed the roads when the lights were against him. He was not intending to do anything wrong . . . to endanger the lives of anyone using the road, but he was careless . . . as a result, without intending to do anything wrong, he committed an act which was clearly an act of misconduct. The second driver is in a hurry. He knows all about lights, and he sees in plenty of time that they changing from yellow to red but he says to himself: ‘Hardly any traffic comes out of this side road which I am about to cross. I will go on. I am not going to bother to stop’. He does not expect an accident to happen, but he knows that he is doing something wrong. He knows that he should stop, and he is able to stop, but he does not, and he commits exactly the same act as the other driver. But, in that frame of mind, no jury would have very much difficulty in coming to the conclusion that he had committed an act of wilful misconduct. Of course, he did not intend to kill anyone or to injure anyone coming out of the side road. He thought that in all probability nobody would be coming out of the side road. Nonetheless, he took a risk which he knew he ought not to take, and in those circumstances, he could be rightly found to have committed an act of wilful misconduct [at p 1020].

However, the approach to Art 25 is not uniform, and different jurisdictions tend to construe the phrase differently. For instance, the French courts apply the objective test.80 Similarly, in the US, the carrier’s state of mind is inferred from objective facts.81 The intention related confusion in respect of Art 25 could be, as commentators suggest, the result of an inexact translation of the French word ‘dol’.82

Montreal4

Montreal4 makes an important change to Art 25 of the amended version. It deletes the word ‘cargo’ from Art 25, meaning it will not be possible to break the liability limits as far as cargo is concerned. Since the carrier is strictly liable apart from the limited defences allowed by Art 18(3) under Montreal4, it was perhaps prudent to give him the protection of the liability limits set by the regime, at least as far as cargo carriage is concerned. It is always possible for the consignors/consignees to take out adequate insurance for eventualities, such as recklessness on the part of the carrier. Passengers, as consumers, of course, fall into a different category altogether.

79 In Rustenburg Platinum Mines Ltd v South African Airways [1977] 1 Lloyd’s Rep 564, Ackner J explained it thus:

. . . wilful misconduct goes far beyond negligence, even gross or culpable negligence, and involves a person doing or omitting to do that which is not only negligent but which he knows and appreciates is wrong, and is done or committed regardless of the consequences, not caring what the result of that carelessness may be [at p 569].

80For an excellent review of the different approaches, see Cheng, ‘Wilful misconduct: from Warsaw to The Hague and Brussels to Paris’ (1977) 12 Annals Air and Space Law 55; McGilchrist, ‘Wilful misconduct and the Warsaw Convention’ [1977] LMCLQ 539.

81Reiner v Alitalia Airlines 9 Avi Cas 18,228 (SCNY 1966).

82See Shawcross and Beaumont, Air Law, loose leaf, 1977. Butterworths; Palmer, On Bailment, 1991 Sweet & Maxwell.

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Availability of limitation to parties other than carrier

Liability limits specified in Art 22 in respect of loss or damage to the goods is available to the carrier’s servants or agents under Art 25A(1) of the amended version provided they act within the scope of their employment. No reference is made to independent contractors, and it is difficult to see how they can be accommodated within this provision since they do not have an employment contract with the carrier. To include them, the phrase ‘scope of employment’ would need to be construed as ‘scope of the contract’.83

The servant or agent loses the benefit of Art 25A(1) if it is established that the ‘damage resulted from an act or omission of the servant or damage done with intent to cause damage or recklessly and with knowledge that damage would probably result’ (Art 25A(3)). Note, however, that Montreal4 amends Art 25A(3) and specifies its application to carriage of passengers and baggage.

Consignor’s responsibilities and rights

The consignor is responsible for ensuring that the details entered on the waybill are correct under Art 10(1) of both versions of the convention. Where the carrier suffers damage as a result of the incorrect, irregular or incomplete particulars and statements, the consignor must indemnify the carrier under Art 10(2). There is no specific requirement in the Warsaw Convention that the consignor inform the carrier of dangerous goods. Article 10 seems wide enough to accommodate damage suffered as a result of carrying dangerous cargo.

However, under common law, the consignor impliedly warrants that the goods are fit to be carried. So, where the carrier suffers damage as a result of the nature of the goods, he can recover his losses from the consignor.84

The consignor is also required by Art 16(1) to ‘furnish and attach to the air waybill such documents as are necessary to meet the formalities of customs, octroi or police before the cargo can be delivered to the consignee’. Where the carrier suffers damage as a result of absence of documents or insufficient or irregular documents or information, the consignor is liable. Where the consignor establishes that the damage was due to the fault of the carrier or his servants or agents, the consignor escapes liability. Presumably, the kind of situations contemplated by Art 16(1) is where the carrier loses the documents through carelessness and the carrier has to warehouse the cargo – in this event, the consignor will not be liable.

The Warsaw Convention gives the consignor a number of rights of control over the goods. According to Art 12(1), the consignor has the right to:

•withdraw the goods at the point of departure as well as at the destination;

•stop the goods in transit;85

•order the goods to be delivered at a stopping place;

•deliver the goods to someone other than the consignee named on the air waybill; and

•have the goods returned.

83Note that the use of a Himalaya clause will be effective in imparting the benefits to independent contractors. See Chapter 8, liability in contract and in tort and availability of limitation, on Himalaya clauses and also the impact of the Contracts (Right of Third Parties) Act 1999.

84 Bamfield v Goole and Sheffield Transport Co [1910] 2 KB 94; Great Northern Rly v LEP Transport [1922] 2 KB 742.

85Right of stoppage in transit in English law is not unknown but this is available only where the seller is unpaid and the buyer is insolvent (ss 44–46 of the Sale of Goods Act 1979).