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Dept. of State File No. P75 0012-2081. Concerning a protest by the Libyan Arab Republic in 1973 of entry by a U.S. military aircraft into what it characterized as a "restricted area," and the U.S. response thereto, see the 1973 Digest, Ch. 8, § 1, p. 302.

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The Brazilian Embassy at Washington, in a note dated September 13, 1974, informed the Department of State that, pursuant to the 1946 U.S.-Brazil air transport services agreement (TIAS 1900; 61 Stat. 4121; 5 Bevans 1022; entered into force October 6, 1946), the Brazilian Government had designated "Serviços Aereos Cruzeiro do Sul” to start operating on the B-2 Brazilian route terminating in San Juan, Puerto Rico, of the schedule of routes agreed upon at the Fifth Aeronautic Consultation. The Embassy stated that the airline should specify intermediary stops in South America and the Caribbean when it submitted its request for a permit to operate in the United States.

In a reply note dated January 23, 1975, the Department of State informed the Brazilian Embassy that service between Brazil and Puerto Rico was not authorized in the absence of specific mention of Puerto Rico in the route description contained in the air transport services agreement. The Department noted that Route B_2 had been amended at the U.S.-Brazil civil aviation negotiations held at Rio de Janeiro February March 1968 to read: “. Brazil via intermediate points in South America and the Caribbean, to Miami and Chicago." The Department's note added:

... It is established international practice to list individually all points in the territory of the other party, in describing a route for one party. Puerto Rico, which is United States territory, does not appear in the description of Route B-2 and therefore traffic rights between Brazil and Puerto Rico are not authorized under this route description. The geographic descrip tion, "Caribbean", cannot be interpreted in this context to encompass Puerto Rico because the latter is United States territory. Accordingly, service between Brazil and Puerto Rico is not authorized in the absence of specific mention of Puerto Rico in the route description.

It may also be noted that if Brazil had traffic rights for Puerto Rico, Brazil would also be able to exercise similar rights between Puerto Rico and Miami, and between Puerto Rico and Chicago. However, such rights constitute cabotage and are not available 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

fected 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.

Charter Agreements

U.S.-Canada

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.

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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.

§ 4

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

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