Question. The airlines of Europe and Japan maintain excellent safety records, yet those countries do not have tort systems like ours. Did you find any evidence to suggest that reforming the Warsaw system to provide adequate compensation to passengers would have negative effect on safety? Answer Testimonial evidence on the part of the opponents of Protocol No. 3 suggests that it would adversely affect airline safety by eliminating the civil litigation of fault. This evidence is not supported by empirical data or studies. We could not find any factual evidence that ratification of the Montreal protocols would have neg ative impacts on airline safety. On the contrary, the available evidence, including the 1988 Rand study and the 1989 Clemson study, supports the conclusion that the civil litigation of fault has not provided incentives to aviation safety. Question. There are those who suggest that we do not need treaties of international aviation. Yet, the AMOCO Cadiz disaster (an oilspill) is still in litigation after 10 years, and one of the reasons cited for the delay is the lack of treaties governing maritime disasters. If the protocols are not ratified, would not the same problems exist for international air transportation as the result of jurisdictional and choice of law problems? Answer. In the absence of any international treaty, it would be much more difficult in some cases for U.S. plaintiffs to get full compensation in as expeditious a manner as would be available if the senate ratified the Montreal protocols. Jurisdictional problems in the absence of the convention would probably not be any more severe than they would be if the United States ratified the Montreal protocol. This is because in most cases foreign airlines maintain ticket offices in the United States which form the basis for establishing "minimum contacts" for jurisdictional purposes. Choice of law problems, however, would be much worse if the Warsaw Convention were not in place. Instead of applying the rules of the Warsaw Convention, choice of law rules would govern which country's law would be applied. This could possibly lead to the application of laws other than those of the United states, depending upon the circumstances of a given case. Section 145 of the Restatement (second) of Conflict of Laws (1969) outlines the general principles that would be applied: -The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in section 6. -Contacts to be taken into account in applying the principles of section 6 to de termine the law applicable to an issue include: Place where the injury occurred. Place where the conduct causing the injury occurred. The domicile, residence, nationality, place of incorporation and place of business of the parties. The place where the relationship, if any, between the parties is centered. In actions involving wrongful death, the law of the place of injury will govern unless another forum has a more significant relationship with the suit. This can lead, and has led, to the application of foreign law by U.S. courts. Tramontana V. S.A. Empresa De Viacao Aerea Rio Grandense, 350 F.2d 468 (D.C. Cir. 1965) (Brazilian wrongful death statute applied); Borkanic v. China, II Av. Cas. 17,523 (1988) (Chinese wrongful death statute applied); and Harris v. Polskie Linie Lotnicze, 820 F.2d 1000 (9th Cir. 1987) (Polish law applied; also stated that federal common law required that choice of law analysis mirror that set out in the Second Restatement). Even if the United States denounced the Warsaw Convention there would be no guarantee that its liability limitation would not be applied to Americans. The convention would be the applicable law if the flight involved had a point of origin and a point of destination in Warsaw Convention countries. The complications of litigating a case where difficult choice of law issues arise, and where no international convention governs, can be seen in the AMOCO Cadiz case. Without the Warsaw Convention standards on jurisdiction, liability, and other issues, a similar situation could occur in the case of airline accidents. The AMOCO Cadiz case involved an oilspill off the coast of France by a Spanish-made, U.S. owned tanker where French plaintiffs brought suit in U.S. courts. The complicated jurisdiction, choice of law, and evidentiary questions have dragged the litigation process out for 10 years, still without final resolution. Question. Weighing all of its elements, would you say that the adoption of this package-Montreal Protocol No. 3 and the revised supplemental compensation plan-would be beneficial to the American consumer? Answer. The protocol and the supplemental compensation plan would be beneficial to Americans seeking compensation for damages in international air transpor tation because these individuals would be able to secure full compensation for provable economic and noneconomic damages without having to prove the fault of an airline. American claimants would be able to receive full compensation for their damages in a less expensive and more expeditious manner. Claimants might obtain substantial savings in litigation costs, which in some cases include contingency fees of about 33 percent. If the protocols are ratified, the United States should seek to increase the airline liability limits for passenger, baggage, and cargo losses through the International Civil Aviation organization. Because these limits were set in 1975, their value has been eroded by inflation. The United States should seek to increase the airline liability limit for passenger death and injury not only because of inflation but also because airlines should pay a larger share of passenger compensation. If the protocols are ratified, it would be advisable that the Secretary of Transportation submit the supplemental compensation plan, before approving it, to an independent panel of experts to make certain that the final version of the plan does the following: -Covers all Americans in international air transportation, whether or not they are subject to the Protocol No. 3 regime. (see June 15, 1990, letter to the chairman of the Senate Committee on Foreign Relations by DOT's Assistant Secretary for Policy and International Affairs.) -Provides for an adequate total amount of money per aircraft per accident to compensate claimants. -Does not have any legal or technical shortcomings that could affect its implementation. Question. If Montreal Protocol No. 3 and the supplemental compensation plan, as currently proposed, had been in place back in 1983, what would have been the disposition of the cases brought by the families of the victims of KAL Flight 007 and PanAm Flight 103? Please give your best estimation in terms of the time involved and the compensation awarded. Would the cases involving KAL Flight 007 still be pending? Answer. In both cases, it is possible that most cases would have been settled within 9 months or less given that American claimants would only have to prove damages. American claimants would have received compensation for economic and noneconomic damages without incurring the delays and legal costs associated with the litigation of fault. The airlines would have had incentives to settle cases within 6 months of receiving claims for damages. Given that most death settlements would be above the airline liability limit established by the protocol, airlines would probably have settled cases soon after receiving claims. By settling cases within 6 months, airlines would have avoided the additional legal costs that a court could have imposed on them. In both cases, the plan would have settled most cases within 3 months of whichever of the following occur later: the plan receiving a claim or the airline making a payment equal to its limit of liability. By settling cases within 3 months, the plan would have avoided the additional legal costs that a court could have imposed on them. Thus, under the protocol and the plan, it is unlikely that most KAL Flight 007 cases would still be pending. The compensation awarded would have fully compensated American claimants for provable economic and noneconomic damages. It is expected that compensation under the protocol and the plan would have been at least as high as that obtained under the U.S. tort system. On average, current death settlements under the U.S. tort system are about $800,000. The Rand study concluded that aviation settlements under the U.S. tort system tend to be less than actual losses to survivors because the risks of a jury trial encourage families of victims to settle for less than their actual losses. Since these risks would be less under the supplemental compensation plan, death settlements under the plan might be higher. The CHAIRMAN. I have no further questions at this time. Thank you very much, gentlemen. I appreciate your testimony. Mr. MEAD. Thank you. The CHAIRMAN. We wish you well. The hearing is adjourned. [Whereupon, at 11:35 a.m., the committee adjourned.] 2d Session SENATE 101-22 CONSIDERATION OF GILBERTO GUARDIA FABREGA TO BE ADMINISTRATOR OF THE PANAMA CANAL COMMISSION JUNE 28, 1990.-Ordered to be printed Mr. NUNN, from the Committee on Armed Services, REPORT The Committee on Armed Services, having had under consideration the nomination of Mr. Gilberto Guardia Fabrega to be Administrator of the Panama Canal Commission, reports favorably thereon and recommends the nomination be confirmed by the Senate. COMMITTEE ACTION On May 10, 1990, the Senate received from President Bush the nomination of Mr. Gilberto Guardia Fabrega to be Administrator of the Panama Canal Commission. The Committee held a public hearing with Mr. Guardia on June 21 to consider his historic nomination in that this is the first time a foreign national has been considered for confirmation by the U.S. Senate. On June 28, the Committee voted unanimously to report the nomination favorably with the recommendation that the nomination be confirmed by the Senate. SCOPE OF THE COMMITTEE'S REVIEW OF MR. GUARDIA'S NOMINATION 1. COMMITTEE PROCEDURES During the 100th Congress, the Committee initiated new procedures for consideration of nominations for civilian appointed positions in the Executive Branch that are subject to the Committee's jurisdiction. In addition, the Committee adopted standards to guide its consideration of the qualification of nominees. The Committee applied these procedures and standards during consideration of Mr. Guardia's nomination. 2. REVIEW OF REQUIRED SUBMISSIONS BY THE NOMINEE AND THE EXECUTIVE BRANCH a. Committee questionnaire The Committee requires each nominee to complete a questionnaire relating to the nominee's qualifications and potential conflicts of interest. Mr. Guardia's response to the Committee's questionnaire provided basic biographical and financial information and served as the starting point for the Committee's inquiry into Mr. Guardia's qualifications and suitability for the position of Administrator of the Panama Canal Commission. Pursuant to its normal practice, the Committee Chairman submitted several advance questions to the nominee on May 16, 1990. Mr. Guardia provided his response to the Chairman on June 11, 1990. They have entered into the hearing record and are included as appendix A to this report. A biographical sketch of Mr. Guardia is presented as appendix B of this report. b. Financial disclosure and background materials As part of the confirmation process, the Committee received the letters on conflict of interest and related matters required of the nominee, the Office of Government Ethics, and the General Counsel of the Panama Canal Commission. Based upon this information, the Committee concludes that the nominee is in compliance with all applicable laws and regulations governing conflict of interest. c. FBI summary memorandum on the background investigation of Mr. Guardia The White House provided the Committee with the summary memorandum on the background investigation of the nominee by the Federal Bureau of Investigation (FBI). This document was reviewed by the Chairman and Ranking Minority Member. The Committee also received the required letter from the Counsel to the President outlining the nature and scope of the FBI background investigation. The Committee concludes that there is nothing in Mr. Guardia's background, as reflected in the FBI investigation, that would render him unfit to serve as Administrator of the Panama Canal Commission. 3. COMMITTEE PROCEEDINGS On May 10, 1990, President Bush formally submitted to the Senate the nomination of Mr. Guardia to be Administrator of the Panama Canal Commission, which was referred to the Committee on that date. The Committee met in public session on June 21 to receive testimony from Mr. Guardia on the Panama Canal Commission. On June 28, the Committee completed its deliberations on the nomination. QUALIFICATIONS OF MR. GUARDIA 1. ROLES OF THE ADMINISTRATOR OF THE PANAMA CANAL COMMISSION The Administrator of the Panama Canal Commission is an extremely important position. The Administrator is the Chief Execu |