84

Private Air Law

Liability of Carrier

Warsaw Convention

On December 13, 1973, the United States District Court for the District of New Mexico, in the case of Burnett v. Trans World Airlines, Inc., 368 F.Supp. 1152 (1973), held that the 1929 Warsaw Convention (49 Stat. 3000; TS 876; entered into force for the United States Oct. 29, 1934, subject to a reservation) provisions covering the death or wounding of a passenger or any other bodily injury suffered by a passenger in the event of accident on board the aircraft or in the course of embarking or disembarking, did impose liability for mental anguish suffered as a result of physical injuries, but imposed no liability for mental anguish alone.

The District Court said that the meaning of the Warsaw Convention is a matter of Federal law, as the Convention is a treaty, as such is the supreme law of the land, and preempts local law in the areas where it applies. In interpreting the Convention, the French legal meaning must govern, said the Court, as French was the sole official language of the Convention.

The French text of Article 17 of the Convention provides:

Le transporteur est responsable du dommage survenu en cas de mort, de blessure ou de toute autre lésion corporelle subie par un voyageur lorsque l'accident qui a causé le dommage s'est produit à bord de l'aéronef ou au cours de toutes opérations d'embarquement et de débarquement.

The Court, viewing the question of the interpretation of Article 17 as a question of foreign law, and thus under rule 44.1 of the Federal Rules of Civil Procedure as a question of law, reviewed the legislative history and writings on the subject, concluding that the phrase "lésion corporelle" cannot include mere mental anguish. The Court did hold, however, that the plaintiffs could recover for mental anguish that resulted from a bodily injury. It was found that the drafters of the Warsaw Convention "apparently chose to follow this well recognized principle of law allowing recovery for mental anguish resulting from the occurrence of a bodily injury, the emotional distress being directly precipitated by the bodily injury being considered as a part of the bodily injury itself." (at p. 1158.)

Rule 44.1 of the Federal Rules of Civil Procedure provides:

A party who intends to raise an issue concerning the law of a foreign country shall give notice in his pleadings or other reasonable written notice. The court, in determining foreign law, may consider any relevant material or source, in

cluding testimony, whether or not submitted by a party or admissible under Rule 43. The court's determination shall be treated as a ruling on a question of law.

Liability Limitations

The Civil Aeronautics Board, on January 3, 1974, ordered named carriers to revise all liability limitations applicable to "international transportation" or "international carriage" as defined in the 1929 Warsaw Convention (49 Stat. 3000; TS 876; entered into force for the United States Oct. 29, 1934, subject to a reservation) or the 1955 Hague Protocol, to which the United States is not a party. The carriers were required by the Board to revise the liability limitations which were inconsistent with the dollar amounts set forth in the Board's order so as to conform with such amounts.

The Board noted, in its order of January 3, that U.S. and foreign air carriers which avail themselves of the liability limits provided in the Warsaw Convention are required to include in their tariffs a statement as to the amount of the liability limits stated in dollars. Such limits are set forth in the Convention in terms of gold francs so that as long as the value of the dollar in terms of gold remained constant, no change was required in the dollar amount liability limits contained in the tariffs. However, by order 72-6-7 of June 2, 1972, the Board directed the carriers to revise their tariffs to reflect the devaluation of the dollar in terms of gold from $35 per ounce to approximately $38 which took place May 8, 1972. The revisions were made. On September 21, 1973, P.L. 93-110 was enacted, further devaluating the dollar to approximately $42.22 per ounce of gold. See the 1973 Digest, Ch. 10, § 1, pp. 345-347. Thus a further revision of the tariffs was necessary to reflect accurately the liability limits of the Convention in dollars. The Board set forth in both actual and rounded figures the new dollar amounts as follows:

For the full text of the Board's order, see the Fed. Reg., Vol. 39, No. 7, Jan. 10, 1974, pp. 1526-1529. The Board noted that its order would affect only a small proportion of U.S. and foreign air carriers. Most carriers engaged in international aviation involving journeys to or from the United States adhere to the Montreal Agreement (Agreement CAB 18900, approved by order E-23680, May 13, 1966, Fed. Reg., Vol. 31, No. 97, May 19, 1966, p. 7302) pursuant to which they have filed tariffs providing for a $75,000 limit of liability for death or injury to passengers. This limit is stated only in terms of U.S. dollars, and is thus unaffected by the change in the gold value of the dollar. The 1955 Hague Protocol doubles the Warsaw liability limit for passengers. For the text, see 478 UNTS 371.

со

5

Domestic Law and Regulation

General

On October 2, 1974, President Ford approved a seven point plan of action in order to help improve the competitive climate of the international U.S. flag airline system. Secretary of Transportation Claude Brinegar, in a summary statement of the plan, listed the near-term action steps as follows:

1. Fares More in Line with Costs. Fare structures that more closely reflect today's costs should be soon approved by the appropriate organizations. This includes fares of the scheduled carriers and the charter carriers, including those available to the military. Although no one wants to see travel fares go higher, realistically we must recognize that as costs go up-and foreign fuel prices have tripled in the past year-the carriers must recover these costs in higher ticket prices.

2. Excess Capacity. Without question the many air carriers, including U.S. flag carriers, that have rights to fly international routes to and from the U.S., are flying excessive passenger capacity relative to today's demands. Recent agreements between U.S. carriers and the Italian and British carriers for winter capacity reductions are an encouraging step, and we are looking for further progress in prompt agreements with the airlines of France and West Germany. In addition, the State Department has an intensive review underway, working with us and the CAB, to determine which of the foreign carriers are flying capacity to the U.S. that exceeds the rights provided by their bilateral agreements. I have been assured that there will be prompt action to correct the excesses.

3. Tariff Integrity. Together with the CAB and Department of Justice, we are pushing ahead on a program to eliminate, or at least reduce, illegal ticket discounting. As part of this program we are also investigating the roles of the travel agents and tour operators to determine if some form of Federal licensing is needed.

4. Fly U.S. Flag. While U.S. citizens constitute over 60% of those flying overseas to and from the U.S., our flag carriers carry a far smaller share. An equitable balancing of these ratios would add some $200 million a year in new revenues to U.S. flag carriers. Together with the Department of Commerce, and, hopefully, with the co

operation of the Nation's travel agents, we will push a "fly U.S. flag" program to encourage U.S. citizens to increase their use of U.S. flag airlines when they travel and ship abroad.

5. Mail Rate Increases. We are encouraging the CAB to accelerate their actions to adjust international mail rates to reflect today's higher costs.

6. Overseas Discrimination. There appear to be instances where U.S. flag carriers are being discriminated against overseas in terms of excessive landing and other fees. Together with the State Department and the CAB, we are in the process of documenting the flagrant cases. We will seek immediate corrective action.

7. Route Restructuring and Service Suspensions on Loss Operations. We are strongly urging the carriers themselves to consider agreements on overseas route rearrangements, and possibly even mergers, as well as unilateral actions to suspend service to points. that have inadequate traffic potential to cover costs.

Dept. of State File EB/OA/AVP. For a detailed analysis of the action items and their impact on Pan American World Airways, see U.S. Dept. of Transportation, The Federal Action Plan for Improved Profitability in International Air Carrier Operations, Oct. 2, 1974.

Discriminatory Practices

The International Air Transportation Fair Competitive Practices Act of 1974 (P.L. 93-623; 88 Stat. 2102; approved January 3, 1975) deals with several of the major problems that U.S. air carriers operating in foreign air transportation encounter in their competition with foreign air carriers.

Sections 2 and 3 of the Act provide relief from discriminatory and unfair competitive practices. Section 2 of the Act provides:

Sec. 2 (a) United States air carriers operating in foreign air transportation perform services of vital importance to the foreign commerce of the United States including its balance of payments, to the Postal Service, and to the national defense. Such carriers have become subject to a variety of discriminatory and unfair competitive practices in their competition with foreign air carriers. The Department of State, the Department of the Treasury, the Department of Transportation, the Civil Aeronautics Board, and other departments or agencies, therefore, each shall keep under review, to the extent of their respective functions, all forms of discrimination or unfair competitive practices to which United States air carriers are subject in providing foreign air transportation services and each shall take all appropriate actions within its jurisdiction to eliminate such forms of discrimination or unfair competitive practices found to exist.

(b) Each of these departments and agencies of Government shall request from Congress such additional legislation as may be deemed necessary at any time it is determined there is inadequate legal authority for dealing with any form of discrimination or unfair competitive practice found to exist.

(c) The Civil Aeronautics Board shall report annually to Congress on the actions that have been taken under subsection (a) and on the continuing program to eliminate discriminations and unfair competitive practices faced by United States carriers in foreign air transportation. The Secretaries of State, Treasury, and Transportation shall furnish to the Civil Aeronautics Board such information as may be necessary to prepare the report required by this subsection.

The House Report on the legislation stated that "discriminatory and unfair competitive practices are prevalent in many of the 85 countries in which our air carriers operate. These practices include the uneven application of national taxes, delays and considerable paperwork requirements imposed on U.S. carriers in currency conversions, preferences for the local carrier in accessibility to airport facilities and services, and denial to U.S. carriers of domestic connecting space within the foreign country."

Section 3 of the Act, on international user charges, is as follows:

Sec. 3. The International Aviation Facilities Act (49 U.S.C. 1151-1160) is amended by redesignating sections 11 and 12 as sections 12 and 13, respectively, and by inserting immediately after section 10 the following new section:

"Sec. 11. The Secretary of Transportation shall survey the charges made to air carriers by foreign governments or other foreign entities for the use of airport property or airway property in foreign air transportation. If the Secretary of Transportation determines at any time that such charges unreasonably exceed comparable charges for furnishing such airport property or airway property in the United States or are otherwise discriminatory, he shall submit a report on such cases promptly to the Secretary of State and the Civil Aeronautics Board, and the Secretary of State, in collaboration with the Civil Aeronautics Board, shall promptly undertake negotiations with the foreign country involved to reduce such charges or eliminate such discriminations. If within a reasonable period such charges are not reduced or such discriminations eliminated through negotiations, the Secretary of State shall promptly report such instances to the Secretary of Transportation who shall determine compensating charges equal to such excessive or discriminatory charges. Such compensating charges shall, with the approval of the Secretary of State, be imposed on the foreign air