1. WALA Conference, Ciudad Real, 18/19 May 2009 Damages to third parties on the surface Update of Rome Convention Heinz Dillmann Vice President Special Legal Assignments Fraport AG

2. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 2 When did the revision of the Rome Convention start? ICAO started in 2000 to revise the Rome Convention of 1952. 9/11 accelerated the considerations. A special group of the ICAO Council elaborated a concept for two new conventions.

3. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 3 How did the ICAO Legal Committee in early 2008 handle the concept? It drafted a convention on compensation for damage to third parties resulting from acts of unlawful interference involving aircraft (unlawful interference convention) after very controversial discussions a convention on compensation for damage caused by aircraft to third parties (general risks convention) after nearly no discussion

4. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 4 Unlawful Interference Convention as drafted by ICAO Legal Committee What is the scope of the convention? Who is the addressee of the claims of the victims on the surface? Where can those claims be made? Is there limited or unlimited liability of the airline? How to handle big damages going beyond the financial capability of an airline? Do victims always get full compensation? Are those who have to pay entitled to take recourse, for example against an airport?

5. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 5 What is the Scope of the convention? Applicable if on an international flight damage occurs in the territory of a state party. If the damage occurs in the territory of a non-state party, the convention applies if the airline comes from a state which is a state party. Domestic flights are only covered if a state party opts in.

6. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 6 Who is the addressee of the claims of the victims on the surface? Exclusive remedy: The victims can only address the airline the aircraft of which was grounded by terrorists

7. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 7 Where can those claims be made? No forum shopping Claims only before the courts of the state where the damage occured provided that this state is party to the convention. If aircraft is grounded above the high seas claims are to be made at the courts of the state where the aircraft is registered.

8. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 8 Is there limited or unlimited liability of the airline? Airline is to take over strict liability. Liability is limited up to a maximum of 700 million special drawing rights, called SDR (784 million Euro) depending on the maximum mass of the aircraft (first layer).

9. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 9 How to handle big damages going beyond the financial capability of an airline? International fund to be established by the state parties. Fund will pay additional compensation up to 3 billion SDR (3.36 billion Euro) as a second layer. Fund will not be feeded by the states, but by contributions from passengers and freight forwarders.

10. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 10 Do victims always get full compensation? Only in case the senior management of the airline has contributed by an act or omission done at least recklessly and with knowledge that damage would probably result it has to compensate damage beyond 3.7 billion SDR (third layer). Senior management will be presumed not to have been reckless if it proves that it complied with applicable regulatory requirements. If a servant or agent has contributed to the event the airline does not have to pay the third layer if senior management properly selected the servant or agent.

11. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 11 Are those who have to pay entitled to take recourse, for example against an airport? Airline can take recourse even if only an airport employee has acted or omitted with negligence when providing security measures Recourse is limited to the amount which could reasonably have been covered by insurance. Recourse by the fund only against the airline under narrow conditions. No recourse by the fund against airports.

12. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 12 General Risks Convention as drafted by ICAO Legal Committee Convention applies to international flights. Opt-in for domestic flights. Airline enjoys a liability limitation up to 700 million SDR. Condition: Airline proves that damage did not result from its negligence or that of its servants or agents. Exclusive remedy: Victims on the surface may only bring action for compensation against the airline or its servants or agents Claims only at the courts of the state party where the damage occurred. Unlimited right of recourse against airports if they contributed to the event at least with negligence

13. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 13 What happened to the drafts elaborated by the ICAO Legal Committee? ICAO Council on 23 June, 2008, decided to submit them to a diplomatic conference in Montreal from 20 April to 2 May 2009.

14. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 14 Did the aviation industry including ACI propose amendments? Aviation industry presented position paper before the diplomatic conference.

15. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 15 What were the key elements of the position paper? Domestic flights should be included Compensation for mental injury should be excluded Transit and transfer passengers should not contribute twice to the fund Cap on strict liability of the airline should also apply, i. e. third layer of compensation should not be triggered if not the senior management but an employee or agent has contributed to the disaster More precise definition of reasonable insurance required

16. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 16 Did the diplomatic conference pick up these proposals? Only a few proposals were picked up transit and transfer passengers shall not contribute twice to the fund recourse basically limited to what could have been covered by insurance available on a commercially reasonable basis

17. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 17 What are the other most important amendments made by the conference? Contributions to the fund shall reach a volume of 3 billion SDR within four years State parties have to ensure that airlines collect and remit the contributions to the fund

18. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 18 Are there even more amendments? Airline has to pay compensation beyond 3.7 billion SDR (third layer) even if an employee of the airline has contributed to the disaster at least recklessly and with knowledge that damage would probably result However, airline is not liable for such an act of its employee if it proves that an appropriate system for selection and monitoring of its employees has been established The senior management of the airline shall be presumed not to have been reckless if it proves that it has established and implemented a system to comply with ICAO Annex 17 (security)

19. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 19 Last but not least? Also the fund shall have a right of recourse against an airport if it acted or omitted at least with negligence. Any recourse of the airline and/or the fund against an airport is basically limited to the amount which could have been covered by insurance available on a commercially reasonable basis. However, in case of a recourse of the fund this cap is broken if the airport has contributed to the event by an act or omission done at least recklessly and with knowledge that damage would probably result.

20. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 20 When do the conventions enter into force? The unlawful interference convention enters into force 180 days after deposit of the 35th instrument of ratification provided that the total number of passengers departing in the previous year from the ratifying states is at least 750 million. The general risks convention enters into force 60 days following the deposition of the 35th instrument of ratification.

21. H. Dillmann, WALA Conference Ciudad Real, 18/19 May 2009 Page 21 Can airports be happy with the result? Final answer can only be given after deep analysis by the aviation industry. As regards recourse by the fund the conference allowed airlines but not airports to prove that their senior management did not act recklessly or that they properly selected a reckless employee. Providing security is a core state obligation. Nevertheless, the states hand over more and more responsibility to airlines and airports even if they have private shareholders. The revision of the Rome Convention shows that this has consequences when it comes to liability for damages.