to Brazil under the Chicago Convention, the United StatesBrazil Air Transport Agreement, or under United States law.

Dept. of State File No. P75 0017-0848.

The results of the U.S.-Brazil civil aviation negotiations held at Rio de Janeiro Feb.-Mar. 1968 were embodied in an agreement effected by exchange of notes at Rio de Janeiro Dec. 10, 1968 (TIAS 6672; 20 UST 658; entered into force Dec. 10, 1968), amending the route schedule of the 1946 agreement, as amended.

The Chicago Convention referred to in the Dept. of State's note of Jan. 23, 1975, is the Convention on International Civil Aviation, done at Chicago Dec. 7, 1944 (TIAS 1591; 61 Stat. 1180; 3 Bevans 944; entered into force for the United States Apr. 4, 1947). Art. 7 of that Convention provides in part:

Each contracting state shall have the right to refuse permission to the aircraft of other contracting states to take on in its territory passengers, mail and cargo carried for remuneration or hire and destined for another point within its territory.

...

Sec. 1108(b) of the Federal Aviation Act of 1958 (P.L. 85-726; 72 Stat. 798; 49 U.S.C. 1508(b)), approved Aug. 23, 1958, precludes any cabotage operation in the United States. It reads in part:

Foreign civil aircraft permitted to navigate in the United States under this subsection may be authorized by the Board to engage in air commerce within the United States except that they shall not take on at any point within the United States, persons, property, or mail carried for compensation or hire and destined for another point within the United States.

U.S.-Panama

...

By an exchange of notes on December 23, 1974, and March 6, 1975, the United States and Panama concluded an agreement (TIAS 8036; 26 UST 307; entered into force March 6, 1975), granting to Panama a new air route from the Republic of Panama via Mexico City to Los Angeles, without traffic rights between Mexico City and Los Angeles. The new agreement amends Schedule Two of the Annex to the 1949 U.S.-Panama Aviation Agreement (TIAS 1932; 63 Stat. 2450; 10 Bevans 857; entered into force April 14, 1949), under which Panama already had route authority to Miami and New York.

An accompanying Memorandum of Consultations concerning the U.S.-Panama civil air transport discussions held at Washington December 16-18, 1974, concerns the restriction on the exercise by Panama of the Mexico City-Los Angeles traffic rights. It states that at such time as the Government of the United States obtains the necessary rights from the Government of Mexico which would permit a United States designated airline or airlines to operate services to Central and South America which includes a point or points in California and Mexico City, "the Government of the

United States would be disposed to consider favorably in further consultations" the removal of the traffic rights restriction between Mexico City and Los Angeles on the new Panama route 3. The memorandum also contains a statement of United States views concerning the ownership and control of designated airlines, drawing attention to Article VI of the Aviation Agreement which provides that each party may withhold or revoke the exercise of the rights specified in the Annex by an airline designated by the other party in the event that it is not satisfied that substantial ownership and effective control of such airline are vested in nationals of the other party.

The Government of Panama had initiated consultations pursuant to Art. X of the U.S.-Panama Aviation Agreement of 1949. By note dated Mar. 18, 1975, the Embassy of Panama informed the Dept. of State that it had designated Air Panama Internacional, S.A. to operate the new route. On June 6, 1975, the CAB announced that President Ford had approved its decision to issue a foreign air carrier permit to the Panamanian carrier for the new route. The authorization was for two years or until the effective date of the Board's decision in Air Panama's pending permit renewal case. Press Release CAB 75-98, June 6, 1975.

U.S.-Netherlands

On May 6, 1975, the Department of State announced that it had sought unsuccessfully to obtain an agreement with the Netherlands Government for a reduction in KLM's capacity to a level which might bring its operations into conformity with the provisions of the U.S.-Netherlands Air Transport Agreement of 1957 (TIAS 4782; 12 UST 837; entered into force definitively May 31, 1957). The United States had taken the view that the capacity mounted by KLM deprived U.S. airlines of a fair and equal opportunity to compete for traffic between the United States and the Netherlands because it was designed to carry an excessive proportion of so-called sixth freedom or third country traffic and that, therefore, KLM was operating inconsistently with the U.S.Netherlands Agreement. The United States had taken a similar view with respect to the capacity of several other foreign airlines operating in the North Atlantic, and capacity reductions had been effected voluntarily in some of those situations. The Department announcement, while recognizing the vital importance which the Netherlands Government attached to KLM, emphasized the importance for the United States of protecting its own legitimate aviation interests and returning North Atlantic air transport to viability, particularly in light of the severe strains and financial burdens which several U.S. and foreign airlines faced.

The Netherlands Government simultaneously stated its view

that KLM's capacity on the North Atlantic was consistent with the capacity provisions of the bilateral Agreement, in particular that the carriage of transit traffic via the Netherlands (the sixth freedom traffic) was fully consistent with the capacity clauses of the Agreement, and that U.S. air carriers had a fair and equal opportunity to operate services to and via the Netherlands. The Netherlands Government expressed appreciation for the U.S. decision not to act unilaterally against KLM, and stated that it had asked KLM to reduce its Boeing 747 frequencies on the Amsterdam-New York route by three frequencies per week after a planned increase of capacity by Pan American World Airways was put into effect.

Dept. of State Press Release No. 236, May 6, 1975. Art. 10 of the U.S.Netherlands Air Transport Agreement reads as follows:

The air services made available to the public by the airlines operating under this Agreement shall bear a close relationship to the requirements of the public for such services.

It is the understanding of both contracting parties that services provided by a designated airline under the present Agreement shall retain as their primary objective the provision of capacity adequate to the traffic demands between the country of which such airline is a national and the countries of ultimate destination of the traffic. The right to embark or disembark on such services international traffic destined for and coming from third countries at a point or points on the routes specified in this Agreement shall be applied in accordance with the general principles of orderly development to which both contracting parties subscribe and shall be subject to the general principle that capacity should be related:

(a) to traffic requirements between the country of origin and the countries of ultimate destination of the traffic;

(b) to the requirements of through airline operation; and,

(c) to the traffic requirements of the area through which the airline passes after taking account of local and regional services.

Understandings between the U.S. and Netherlands Governments regarding Art. 10 were set forth in an exchange of notes dated Nov. 25, 1969, in connection with an amendment to the Schedule attached to the Agreement. See TIAS 6797; 20 UST 4070.

U.S.-Canada

Charter Agreements

The Department of State informed the Canadian Embassy at Washington in a note dated March 19, 1975, that the United States was terminating its reservation to the 1974 U.S.-Canada Nonscheduled Air Service Agreement (TIAS 7826; 25 UST 787; entered into force May 8, 1974). The reservation, which had been embodied in an exchange of notes accompanying the 1974 agreement, required multiple stops on Canadian-originated inclusive tour charters, despite the fact that the agreement recognizes that the rules of the country of origin should apply. The action of the

U.S. Government in terminating the reservation had the effect of terminating a Canadian counter-reservation, effective March 19, 1975, as confirmed by the Embassy of Canada in a note to the Department of State dated May 2, 1975.

For the text of the exchange of notes of Mar. 19, 20, and May 2, 1975, see TIAS 8060; 26 UST 567.

For a discussion concerning the refusal of a French court to accede to a U.S. request for extradition of two fugitives indicted in the United States on aircraft hijacking charges, see ante, Chapter 3, § 5, pp. 169-175.

84

Private Air Law

Warsaw Convention

Liability of Carrier

In Day v. Trans World Airlines, Inc., 393 F. Supp. 217 (1975), affirmed C.A. 2d Circuit, December 22, 1975, the United States District Court for the Southern District of New York held, on March 31, 1975, that passengers had "embarked" within the meaning of the 1929 Warsaw Convention (49 Stat. 3000; TS 876; entered into force for the United States, subject to a reservation, October 29, 1934) even though they had not yet boarded the plane but were going through some of the 11 acts required by the airline before they could board.

International passengers had sued the airline for personal injuries sustained during a terrorist attack in the transit lounge at an Athens airport, asserting liability without fault under the Warsaw Convention. On motions for summary judgment as to liability, the District Court held that where international passengers could not board the aircraft unless they sequentially went through 11 steps, including passing through passport and currency control and submitting to search for explosives and weapons, and where they were attacked by terrorists while standing in line in the transit lounge after completing five of those steps, such passengers were "in the course of... embarking" within the meaning of the Warsaw Convention. It accordingly found the airline subject to liability without fault for their injuries.

The Court said it looked to the diplomatic and legislative history

4

of the treaty, as well as the plain meaning of the terms used, to determine the correct interpretation. Article 17 provides:

The carrier shall be liable for damage sustained in the event of the death or wounding of a passenger or any other bodily injury suffered by a passenger, if the accident which caused the damage so sustained took place on board the aircraft or in the course of any of the operations of embarking or disembarking. Although noting that Article 17 was drafted to reflect a more limited approach to protection of passengers than to protection of baggage, the Court found it was reasonable for the negotiators to have provided by Article 17 that carrier liability extended to accidents which take "place on board the aircraft or in the course of any of the operations of embarking or debarking." Sullivan, Codification of Air Carrier Liability by International Convention, 7 J. of Air Law 1, 18-22 (1936). In addition, the Court referred to common law principles of tort liability applicable to common carriers. The latter, it said, are required to exercise "reasonable care to prevent danger from vicious practices of third parties, of which the carrier has knowledge or a reasonable opportunity for knowledge if reasonable care is taken." 7 New York Jurisprudence, Carriers § 333 at 291.

While granting plaintiffs' motion for summary judgment on the liability issue, the Court noted that the issue was one of first impression and that an immediate appeal from the order to be entered might advance materially the ultimate termination of this and other cases arising from the same accident. It considered that an interlocutory appeal would be appropriate.

The U.S. District Court for the Western District of Pennsylvania, on June 12, 1975, reached a contrary result in Evangelinos v. Trans World Airlines, Inc., 396 F. Supp. 95 (1975), a case arising from the same terrorist attack as in Day v. Trans World Airlines, Inc. In Evangelinos the Court held that when plaintiffs were waiting in line to proceed to the last gate of the terminal, they were not within the "operations of embarkation," and as a matter of law the injuries they sustained in the terrorist attack were thus not incurred as the result of an accident actionable under the Warsaw Convention as supplemented by the Montreal Agreement.

As in the Day case, the Court examined the legislative history of the Warsaw Convention, particularly Article 17, but it concluded that geographical limits were intended, rather than an activity, by use of the words "any operations of embarkation" in Article 17. It criticized the decision in Day as extending the liability of the air carriers signatory to the Montreal Agreement under the Warsaw