International Trading Conventions

The Need for Regulations
The 2000 BIFA Conditions
The Hague-Visby Rules
CMR Conventions
Warsaw Convention

THE WARSAW CONVENTION

The original Warsaw Convention dates back to the infancy of air freight in 1929. A protocol was agreed to amend the Convention at The Hague in 1955 and is generally in force, though by no means universally so. A supplementary Convention which currently binds the UK and several dozen other states was agreed at Guadalajara in 1961. Further protocols have been agreed but are not yet in force. All references in the text are to the Warsaw Convention as modified by The Hague and Guadalajara amendments. In practice, the air liability regime is extremely complex as it is necessary to examine the precise itinerary the cargo is to take in order to establish whether the original, or some modification of the original Convention, governs the transit. The law as it affects the UK is largely to be found in the Carriage by Air Act 1961, available from HMSO, but probably of greater benefit is the very useful booklet published by IATA entitled "Principal Instruments of the Warsaw System" which enables a shipper or forwarder to identify the status of the variants of the Warsaw Convention against lists of states which have ratified. This latter booklet is an essential source, and is available from IATA in Geneva.

The Convention applies to international carriage of goods by aircraft for hire and reward when according to the agreement the place of departure and place of destination (whether or not there is intermediate transhipment) are both situated in the territory of states which are parties to the Convention. However, the Convention does not apply to mail or postal packages. The carriage by air only extends to the period while goods are in the charge of the carrier in an airport or on board an aircraft and the Convention, unlike the CMR, does not apply to any part-carriage by land, sea or river. However, where loading, delivery or transhipment takes place by such other modes in the performance of the contract, it will be presumed, unless the contrary is proven by the carrier, that any loss or damage took place during the air carriage governed by the Convention.

Documentary requirements: the air waybill

The Convention states that the exporter must make out an air waybill (even if in practice this is often done by the carrier or a forwarder). However, as with the CMR, the absence, irregularity or loss of the air waybill will not prevent the Convention provisions from being applied.

The Convention states that the air waybill must be made out in three original copies. The first, signed by the exporter, is for the carrier, the second, signed by exporter and carrier is for the consignee and will travel with the goods, while the third, signed by the carrier, is retained by the exporter. Copies should ideally be kept for at least two years as evidence of the contract.

The air waybill is prima facie evidence of the contract, weight dimensions, packing and number of packages, but evidence as to the quantity, volume and condition of goods only if the particulars have been checked by the carrier and this is stated in the air waybill, or there is merely a statement of the apparent condition of goods.

Responsibilities of the exporter/importer

The exporter will be responsible for:

1. The correctness of the particulars and statements relating to the goods in the air waybill. There is an indemnity to the carrier in the case of inaccuracies.
2. Making available any documents required by Customs. There is an indemnity to the carrier if he fails to do so.
3. So much of any loss or damage as has been contributed to by his own negligence.
4. Making claims within set time-limits. In the case of damage to cargo or potential loss, notice in writing must be given immediately the damage or loss is discovered and in any case within 14 days from the date of receipt. There is no statutory time-limit within which total loss must be notified. So it is necessary to check whether one appears in the carrier's own trading conditions. In the case of delay, notice in writing must be given within 21 days. There is a time bar of two years for a legal claim.

Liabilities of the air carrier under the Warsaw Convention

The carrier is liable for loss, damage or delay to the goods while they are in his charge in an airport or on board an aircraft. The carrier has one basic defence, that he and his agents took all necessary measures to avoid the damage or that it was impossible for him or them to take such measures. This comes very close to strict liability. It is, however, permissible for the carrier to make special liability provisions where loss or damage results from inherent defect, quality or vice of the goods, and most do so in a manner unfavourable to the exporter or importer.

Compensation payable under the Warsaw Convention

Compensation is limited to 250 gold francs of 651 milligrammes of gold of millesimal fineness 900. Pending the introduction of an SDR basis for calculation, this gold franc has caused immense problems in foreign jurisdictions where it has been variously interpreted. In the UK its value is fixed by a statutory instrument from time to time in the form of the Carriage by Air (Sterling Equivalent) Orders. These currently give a value of £15.89 per kilo. The Convention makes no reference to values and it must be presumed that all losses, including freight costs and customs duties, may be recovered, subject to the aggregate limit of £15.89 per kilo. In addition, a claimant's legal costs may be ordered if the claim is dealt with through the courts.

The compensation limit may be increased if the exporter makes a declaration of a special interest in delivery against a surcharge in the freight rate. The carrier cannot rely on the limits if it is proved that loss or damage resulted from an act or omission of the carrier, his servants, or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result.

Aspects of the Warsaw Convention of particular concern to freight forwarders

A freight forwarder who acts as an air consolidator offering his own rates but subcontracting air carriage to an airline is almost certain to be regarded as a contracting carrier under the Guadalajara Convention amendments to the Warsaw Convention. This puts him in much the same position as a first carrier under the CMR, i.e. he takes on all the responsibilities of an air carrier under the Convention and may be sued by the exporter or importer even though the actual airline may have been responsible for the loss.

Many freight forwarders issue their own house air waybills to clients whose traffic they consolidate under an airline master air waybill. It is vitally important that a forwarder's house bill should contain the information set out under "documentary requirements" above and contain a prominent statement that carriage is or may be subject to the Convention. If these precautions are not taken, the forwarder may find himself unable to rely on any of the compensation limits in the Convention. IATA has introduced new rules on the conditions of contract and notices which had to be included in air waybills after October 1995.

In relation to claims, a notice of loss given to the forwarder as principal is deemed to be effective but so is a notice to the actual carrier. The forwarder should, therefore, make proper arrangements for the rapid exchange of information between himself and the actual carrier. Unlike the CMR, which precisely defines the responsibilities of successive carriers to one another, this is left vague under the Guadalajara Convention, and it is vitally important that the forwarder protects his interests vis-à-vis the airline by obtaining adequate indemnities from the air carrier. If this is not possible, as will usually be the case, deficiency must be covered by insurance.

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