Revista Brasileira de Direito Aeroespacial

Evaluation of Aviation Cases
in Central and South America:
A South American Perspective*

The seminar’s Organizing Committee 1 has entrusted me the responsibility of presenting the elements that should be taken into account when assessing an aviation case, from a South American attorney’s viewpoint.

Given the limitations referring in general terms to concrete casuistic situations, I shall attempt to clarify what is going on in the countries from our region regarding the most important four aspects when assessing a case, namely:

n Difficult coexistence between International Conventions and local legislation;

n The air carriers’ liability limits and the ways of breaking said limits;

n Damages that may be sued and amounts awarded in recent judgements; and,

n Courts having jurisdiction and organizations involved in aeronautical accidents.

Considering these aspects, I intend to provide simple elements, which I hope can help to understand the way in which litigious situations resulting from air accidents are handled by our law systems.

I) The difficult coexistence of International Treaties and domestic law

The history of the international conferences of 1925 in Paris and 1929 in Warsaw make it clear that, even at this early date, it was already foreseen that aviation would unite territories with different languages, habits and legal systems. Hence, it was considered necessary to establish uniformity in some matters of substantive law. The procedure for reaching such harmonization was structured on the basis of a Parent Treaty (the ‘Warsaw Convention’) and a posterior series of Amending Protocols that, once ratified, were implemented in the legal systems of the Member States.

None of these Treaties ever pretended to establish a single normative body in matters of Aviation Law in the Member States; on the contrary, starting with the first article of the Warsaw Convention – which is the point of departure of all following Protocols – it is carefully pointed out that the area of its application is limited to the ‘international carriage of persons, luggage or merchandise’, taking into account, as the Treaty itself specifies, ‘stipulations made by the parties’.

This is why it became necessary for each Member State to regulate the very same issues as mentioned in the Treaty here under consideration, as far as the domestic area is concerned, thereby giving rise to what was called the ‘difficult coexistence’ between the Warsaw-The Hague System and the domestic laws of the Member States.

Latin America has not been an exception to this rule. Hence, the determination of the applicable substantive law is the first question to be resolved by any person called upon to intervene in a concrete case, before any litigation concerning the responsibility of an air carrier can take place. This is not an easy question since the resolution of one and the same problem may differ dramatically from one country to another. Nor is there sufficient case law to permit the establishment of clear criteria in these most conflictive matters.

In an arbitration that took place in Chile concerning the accident of a Boeing 737 owned by the Peruvian airline Faucett, which accident had occurred in Arequipa, Peru, on 29 February 1996, some of the claimants argued the applicability of Peruvian law, such based on the fact that the crashed plane was making a domestic flight between the Peruvian cities of Lima and Tacna, with a stopover in Arequipa, when the loss occurred that cost lives of all passengers and members of the crew.

The defense of the airline argued that the great majority of the cases had to be resolved on the basis of the provisions of the Warsaw and The Hague Conventions –of which both Peru and Chile are members– based on the fact that the airline tickets had been contracted in the general agency of mentioned airline in Santiago de Chile.

The arbitrator who was appointed to settle this case declared the place of contract of carriage irrelevant, and sentenced according to the provisions of domestic Peruvian law, taking into consideration the domestic character of the flight 2.

Decisions of Argentine courts seem to take a similar course, based on the Argentinean Aviation Act that is valid within the territory, airspace and jurisdictional waters of said country, in order to establish that its sphere of influence extends to the operations of air transport taking place between two points within the territory. The Republic of Argentina is a member of the Warsaw Convention and joined the amending Hague Protocol as well as the Additional Protocols 1, 2 and 4, signed in Montreal on 25 September 1975.

In Uruguay, there apparently have not been major conflicts, since the Aviation Act dates from 1974, whereas the Warsaw Convention was approved after this date, so that in the case of possible discrepancies between both texts, provisions of the Treaty prevail.

Brazil ratified the Warsaw Convention, the Hague Protocol, and the Additional Protocols 1, 2 and 4 of Montreal 1975, all of which are considered valid. National carriage, however, is governed by the Brazilian Aviation Act, promulgated in 1986.

Nonetheless, the 1991 enactment of a Consumer Defense Act has changed the case law, and the tendency of Brazilian Courts has been to privilege its application over earlier existing norms, both in national and international carriage, even though the superior courts in the country have yet to declare themselves on the issue.

In Peru, the Warsaw Convention, the Hague Protocol and the Additional Protocols 1 and 2 of Montreal coexist with the new Civil Aviation Act, published on 10 May 2000, which will become valid once its regulations have been published. This set of rules recognizes the full validity of the international conventions to which Peru is a member, but it is still premature to determine the form in which its courts will apply the new provisions.

In Chile, the situation in this respect has been particularly confusing. In fact, the promulgation and implementation of the Warsaw-The Hague System in 1979 was followed by the enactment in 1990 of the Aviation Act of the Republic of Chile, which not only failed to clarify what was to happen from that moment on with the international conventions, but also established in one of its articles that ‘the airplanes, whether national or international, that are within the territory or Chilean airspace, as well as the persons and objects that are carried on board are submitted to the laws and the jurisdiction of Chilean courts and authorities’ 3.

The implicit derogation of rules concerning the area of application of the Warsaw Convention by this posterior law caused many decisions to henceforth be based on the Chilean Aviation Act, to the complete exclusion of the provisions of mentioned Treaty, which in some aspects differ substantially. A court considered that, even in the case of cargo that had been lost during international transportation, domestic law was applicable 4.

In another decision concerning loss of cargo embarked in Toronto, Canada with destination Santiago de Chile, ‘the rules of Chilean Aviation Act, as well as of Warsaw Convention’ were taken into consideration, so as to sentence the air carrier to the payment of the total claimed sum, without granting it the right to appeal to the liability limits established by any of said bodies of norms 5.

It remains to be seen how the provisions of Additional Protocols 1 and 2 of Montreal 1975 will be interpreted in Chile, where they were recently promulgated in December 1997 and which, for that reason, derogate some of the provisions of the Aviation Act already mentioned.

The issue of the applicable law in every concrete case constitutes a primordial question that must every time be analyzed on the basis of the case law and legislation of the country where the judgment takes place.

II) The carrier’s loss of right to invoke a limitation of liability

The Warsaw Convention includes a system of limited liability whose establishment was precisely one of its objectives. It was believed that the only way to stimulate the investment of capital needed for the development of commercial aviation was to limit its exposure to liability.

The previous does not impede the possible loss of this right, in case the air carrier is guilty of any of the conducts sanctioned by Article 25 of the Treaty approved in 1929, later modified by Article XII of the Amending Hague Protocol of 1955.

The great majority of Latin American countries have ratified and implemented both the 1929 Warsaw Convention and the 1955 Amending Hague Protocol, with the only exception of Uruguay which only recognizes the former, and Bolivia and Panama that have not joined the system of the Warsaw Convention. On the other hand, almost half of these countries have signed and ratified the Additional Protocols 1 and 2 of Montreal 1975, which international treaties are basically meant to standardize the limits of liability in SDR. At the same time, six of these countries (Argentina, Brazil, Colombia, Guatemala, Honduras and Venezuela) have deposited the instruments of ratification and have promulgated Protocol 4, which radically transforms the traditional system of subjective liability (i.e. liability based on negligence) of the Warsaw Convention into a system of strict liability nature with specific causes of exemption, except for the case of delay where the criterion of subjective liability is maintained.

The previous development has resulted in confusions with respect to the applicable liability limits, due to the coexistence of various international treaties and local legislation which often contain contradictory norms. If we add to this the scarce development of case law, we find ourselves in a confused area as to what regulation, what liability limits, and which unit of account (Franco Poincaré, SDR or local units such as the ‘Unidad de Fomento’ in Chile) should be applicable in each concrete case.

On the other hand, the situation is equally unclear with respect to the possibility of breaking the liability limits.

In this respect, Chile is the country that has presented most uncertainties since, to this date, its courts have adopted the thesis of the preeminence of the Aviation Act over the Warsaw–The Hague Treaties. Hence, they have applied Article 172 of the domestic Aviation Act in cases of international transport, which permits exceeding the limits of liability in case of ‘dol or negligence’, without requiring that this negligence be either gross or similar to dol, i.e. wilful misconduct, as is the case in Article 25 of the Warsaw Convention. This thesis being in vigor in Chile, we must conclude that any negligent conduct of the air carrier or its dependents, however slight, will cause the loss of the right to limited liability due to the presence of negligence. For example, a Chilean court recently determined that the destruction and damaging of transported cargo constituted a breach of contract and therefore a presumption of negligence of the carrier, thus motivating its sentence –based on the Aviation Act – to the total payment of the claimed damages, without granting the carrier the right to invoke any limitation of liability whatsoever 6.

But Chile is not the only country that confronts uncertainties; in Brazil, the new tendency of courts to apply the Consumer Defense Act of 1991 has had the immediate consequence of granting damages for much higher sums than foreseen by international conventions, thus exceeding their limitations.

On the other hand, although the new Peruvian Aviation Act aims to stay close in these matters to the international conventions which the country has joined, it is difficult to foresee how courts will apply the new norms. Fortunately, among the new provisions none is considered that is equivalent to Article 125 of the previous law, which impeded the carrier to appeal to the legal limits if, at the moment of the accident, there existed insurance for superior amounts. It was precisely this norm that the arbitrator invoked in the Faucett case, as one of the arguments to sentence the airline to payment of sums much higher than the limits established by the very same law 7.

In Uruguay, courts have been particularly strict in determining if the carrier has the right to invoke limitations. In numerous cases of loss of cargo, it has been argued that the fact that the airline does not have a reasonable explanation for the loss (which, obviously, never exists in practice) it is considered a fault equivalent to gross negligence and therefore equivalent to dol or willful misconduct, giving rise to sentences for sums exceeding the limits of either the Warsaw Convention or the Aviation Act, depending on the case 8.

The Argentinean legislation of Aviation permits the annulment of the limitation of damages ‘in case the loss is caused by dol of the air carrier’ 9. This criterion has been considered by its courts, which have given the intention to damage a considerably broader conceptual reach. Hence, cases of gross negligence have been assimilated to dol, in order to avoid the application of those limits 10. Court decisions concerning the Warsaw Convention have taken the same direction.

In short, the Latin American situation with respect to the application of limited damages continues to be absolutely uncertain, due to the disparity of the international treaties valid in each country, the differences and contradictions between the treaties and domestic laws, and the clear resistance of local courts to recognize the legal right of the carrier to invoke limitations, favoring instead those who contract with them.

III) Damages that may possibly be claimed and amounts that were recently awarded

The legal systems of most Latin American countries are structured on the basis of the ‘Civil Law’ system and especially by the Napoleonic Civil Code. In these systems, damages are classified according to two major categories: I) pecuniary damages and II) non-pecuniary damages. The former includes actual damages and loss of profits; the latter consists only of ‘moral damages’ or pain and suffering.

Actual damages

Actual damages are defined as the ‘actual loss suffered by the creditor’ –in this case the immediate victim– and amounts to a real and concrete loss of assets.

Loss of future income or ‘loss of profits’

Loss of income or loss of profit, however, is constituted by what has not been gained or received due to the occurred fact. In this case, one tries to determine, with a reasonable degree of certainty, the amount of expected gains that a person will fail to obtain during his active life as a generator of financial resources. As a result, and generally speaking, a loss of future income must have the following characteristics:

- The loss of income must be certain: The case law in most of the Latin American countries seem to agree that damages for loss of income can only be awarded if financially quantifiable at the moment of the accident, and not merely possible or hypothetical, as would, for instance, be the case when based on the person’s potentiality, considering his level of studies, social position, and other factors.

- The losses must be real: The costs that the victim would have made had the accident not occurred must be calculated and subtracted. This is but the logical consequence of the principles that underlie this legal institution, as well as the legal system of Latin American countries.

- Double indemnity is not allowed: Insurance benefits, pensions and all other benefits that the claimants could receive because of the same fact. Under this category, no damages can be claimed for a loss that has been repaired, irrespective of whether the repair has been provided by the person who caused the damage or by a third party.

Based on the previous, the following general rules for calculating the loss of income or profits in these legal systems can be determined, whose application may vary according to the particularities of each case.

- Monthly Income: Equivalent to the income out of personal labor, excluding those benefits out of investments or capital goods which the heirs, or the victim himself depending on the case, will continue to receive after the accident.

- Deductions: Taxes and provisional contributions. These are amounts that have never constituted income for the immediate victim.

- Disablement or Widows’ or Widowers’ Pension: Equivalent to the income that substitutes the resources produced by the victim.

- Average Monthly Expenses of the Immediate Victim: The victim necessarily reserved part of his income for personal expenses. To determine their amount, public statistics or studies or private organizations may be used.

- Damages or Benefits from Insurance or Other Sources: For instance, in the case of a life insurance that the victim may have contracted for the benefit of his legal heirs in case of death.

- Temporal Extrapolation of the ‘Net Monthly Loss’:The Monthly Income, minus the Deductions determine the ‘Net Monthly Loss’ that must be extrapolated in time, taking the following factors into account:

- Working Life: Equivalent to the age of legal retirement, which in the majority of Latin American countries means the age of 65 for men and 60 for women. Hence, the temporal limitation of the Net Monthly Loss is equivalent to the difference between 65 or 60 years, respectively, and the age of the victim at the moment of his or her death or disablement.

- Beneficiaries: This constitutes a second element to consider: In case of the partner, the temporal limitation will be the one previously indicated, being equivalent to the age at which the immediate victim would have retired and would have received an old-age pension, now replaced by a widows’ or widowers’ pension. In the case of children or other beneficiaries, the temporal limitation is determined by the period during which these persons would have depended for their livelihood upon the income of the victim, for instance, in the case of children (in Chile):

n Until the age of 18;

n Until the age of 24 in case they study.

Without time limit, in case they suffer some disablement because of which they are unable to support themselves.

- Form of Payment of Damages: Finally, and because the theoretical income is determined on a monthly basis throughout the active life of the victim, one should not make the mistake to multiply the Net Monthly Loss by the applicable number of months in order to establish the amount of damages, since such would result in the in advance collecting of capital that is susceptible of generating additional income out of interest. A certain amount must therefore be discounted, based on the current rate of interest for middle and long-term operations. The outcome of these calculations will be the amount of damages for loss of income.

Moral damages

These damages, however, concern the non-pecuniary sphere, which makes their economic evaluation very complicated. They include all those extremely personal aspects that come with the experience of pain and suffering. For this reason, the conclusion has been reached that this category should be left to the subjective evaluation of the judge, who should -theoretically– determine the amount based on the ranges established by the judicial decisions in each country, as the only way to avoid unequal or discriminatory treatment.

In any event, it should be made clear that the primary concept of moral damages in our legal systems do not have a punitive foundation; on the contrary, in the continental legal system, moral damages are of a strictly compensatory nature, as are all other damages in this system. The decision of the already mentioned Faucett case is rather clarifying in this respect, when it argues that ‘the main criterion that must be taken into account in this matter certainly has to be the importance and gravity of the suffered loss. This is the standard for damages, since such is the purpose for which the action is meant. Hence, it cannot be used for preventive or punitive purposes, for which there exist legal means other than damages’ 11.

Still, as far as the amounts of these damages are concerned, cases law in all Latin American countries oscillate between various parameters of evaluation.

In Chile, the tendency to grant relatively modest damages for pain and suffering has experienced a change, starting with a series of judgments related to violations of human rights by State organs, among which the highest indemnification was awarded to a young woman named Carmen Gloria Quintana, arrested in 1986 by a military squad of the Chilean Army, and later hurt by a fire bomb. She was awarded US$ 578,313 for the moral damages caused by the permanent injuries in her face and on other parts of her body 12.

In matters of Aviation Law, the Faucett case again merits attention for having sentenced the airline to a payment of US$ 193,925 per parent, for moral damages caused by the loss of a child.

The tendency in Uruguay has been to fix damages at around US$ 50,000 for moral damages caused by the loss of a relative. In Argentina, however, these amounts tend to be substantially higher, whereas in Brazil they are absolutely unpredictable, easily amounting to more than a million dollars.

In Peru, the few judicial decisions that are known have awarded rather modest amounts of damages, fluctuating between US$ 30,000 and US$ 100,000. Nevertheless, they also tend to increase, as can be appreciated in the obligatory conciliation hearings that are part of the ordinary proceedings.

When trying to summarize, one would have to conclude that all formal rigidity surrounding the non-pecuniary damages in the legal system of Latin American nations can easily be ‘compensated’ by the decision maker who uses his discretionary power to determine non-pecuniary damages. There seem to be two ways of establishing an equilibrium: (a) Arbitration by persons of known prestige and integrity; or, rather, (b) Using all procedural means to obtain a revision of the decision in first instance by superior courts, if there exists a reasonable certainty about their prudence and equity, such as can only be known after studying their decisions.

IV) Competent courts and organs intervening in flight accidents

A flight accident may establish three kinds of liabilities:

a) Administrative, having to do with the normal powers of the aviation authorities in each country to punish violations of rules by persons working on board of the planes, or assisting air operations on the ground.

b) Criminal, corresponding to the sanctions of those who commit aviation crimes, such as, for example, flying under the effect of alcohol or drugs, or performing any aviation activity without the required licenses or permits.

c) Civil, related to the damages that may be claimed by any third person, on board or on the ground, who has been affected by a flight accident.

The threefold character of aviation liability results in the intervention of various public organs in the case of a flight accident. The problem is not so much caused by the function itself that these organs must fulfill, but rather by the consequences their actions may have in the judicial proceedings resulting from the investigated accident.

In fact, we refer to state entities invested with ample powers to investigate flight accidents and make declarations about their causes, often without the necessary impartiality and without offering any mechanisms to overrule their findings. At the same time, since many of their actions are not governed by procedural rules, it turns out practically impossible to guarantee any of the parties involved the opportunity to join the proceedings, be heard, file briefs or formulate appeals of any kind to correct irregularities or mistakes.

Although this situation exists –in various degrees– in all Latin American countries, we refer to the case of Chile which we happen to know best.

In this country, the investigation for administrative purposes is assigned to the ‘General Board of Civil Aviation’, an agency depending on the Armed Forces of Chile whose tasks, in the case of flight accidents, are to determine their causes, adopt measures to avoid their repetition and enforce administrative liabilities for violations of the aviation legislation and rules.

Still, it is this very same entity that administers within Chile the public airports, controls the air traffic, issues certificates of airworthiness of airplanes, issues licenses and permits to the flight personnel, and installs and operates telecommunications services and radio assistance, among many other tasks. Considering all this, the question rises whether this organ is sufficiently independent to establish its own responsibility, if necessary, for an airplane accident that was caused by a mistake of the flight controller or by the deficient condition of an instrument under its control.

However, any flight accident, regardless its seriousness or nature, which results in the injury or death of persons, is brought on a parallel proceedings before a Judge of Aviation, also an official of the Chilean Armed Forces, whose actions are governed by the procedures established by the Chilean Code of Military Justice. This special court proceeds with the investigation, parallel to the ‘General Board of Civil Aviation’, though focusing on the existence of aviation crimes which may receive criminal punishment.

The independence of this Judge of Aviation is also a priori questionable for the already mentioned reasons, even though his decision can be revised by a Martial Court –a court of five judges, two civilians and three army officials– and, finally, by the Supreme Court of the Republic of Chile.

At last, the determination of possible civil liability is tried before the Ordinary Courts of Justice which, through judicial proceedings that basically take place in writing, have the power to award the appropriate damages. Unfortunately, these are non-specialized judges who resolve all kinds of problems, and who therefore lack the technical expertise to consider or question the conclusions of the official investigation. Hence, they tend to follow this in all respects. Their decision, in any case, is entitled to appellate review by courts composed of more than one judge (Courts of Appeal and the Supreme Court) which have the power to review both the facts and the law on which the decision in first instance was based, even if, in practice, they tend not to exercise this right, for the reasons already mentioned.

In short, the procedure suffers from structural deficiencies which originate in a lack of impartiality and the unavailability of procedures and controls within the state organs that are in charge of determining the causes of the accident.

In Chile, the solution for these particularly serious cases has been to bring the case to arbitration, a procedure apparently better suited to solve these deficiencies. In the rest of Latin American countries, however, the great majority of important proceedings are tried before Ordinary Courts of Justice.

Even though the Latin American countries are provided with similar juridical systems and organizations, there are important differences between them as to how they apply the Aviation Law. Notwithstanding the above, the general framework is similar and the tendencies are the same ones.

What is quite notable is to verify the lightning speed of the jurisprudence in the last 10 years, particularly the issues referred to the amounts condemned due to extra-patrimonial damages. However, we believe that such situation will not be out of control as regards the amounts given the compensatory nature of the indemnities in all systems related to the Civil Law.

In general terms, we believe we were able to briefly identify the most important aspects that should be taken into account. The other aspects shall depend upon the merits and elements involved in any single case. n

References:

* The author acknowledges invaluable assistance by Dr. Jorge Velarde Rodrigo, Elías & Medrano, Dr. Joaquín Reyes, Estúdio Reyes Rius, Dr. Eduardo Cosentino, Langbehn & Cosentino, Mr. José Gabriel Assis de Almeida, Assis de Almeida Advogados, Dr. Emilio Sahurie, Mrs. Loreto Moraga, Dr. Javier Yañe., Dr. Radoslav Depolo, Estúdio Carvallo.      Back

** Attorney, Estúdio Carvallo, Chile.       Back

1 Text presented at the Seminar on Aviation Issues in the New Millenium, organized by the International Bar Association, in Washington, in October 2000.     Back

2 Sentence by Arbitrator Mr. Juan Achurra, dictated in Santiago de Chile on 30 January 1998, declaring, under Consideration 18th, the following: ‘No controversy exists concerning the fact that the transport contract had to be complied with in Peru, nor is there any doubt, in the opinion of the Arbitrator, that the applicable substantive law to resolve the fundamental issues in question is Peruvian law.’      Back

3 Literal citation of the first clause of Article 2nd of the Chilean Aviation Act, promulgated on 19 January 1990.     Back

4 Consideration 10th of the decision pronounced on 26 July 1996, by Judge Don Mario Carozza of the 6th Civih Court District of Santiago, declaring, literally: ‘Even though it is true that the contract of air transport valid between the parties mentions the Warsaw Convention, which could be applied in the execution of this contract, such does not exclude the applicability of the Aviation Act of our country, even more so if taking into consideration that the national legislation, being posterior to said Treaty, increases the exceptions concerning the carrier’s limitation of liability that are normally established in laws regulating air transport with an eye to the viability of this economic activity.’     Back

5 Consideration 15th of the decision pronounced on 5 November 1996 by Judge Ms Patricia Gómez of the 14th Civil Court District of Santiago makes indiscriminate reference to provisions of both the Chilean Aviation Act and the Warsaw and The Hague Conventions, without indicating their internal hierarchy.     Back

6 The relevant part of Consideration 26th of the decision pronounced on 21 July 2000 by Judge Ms. Jessica González of the 12th Civil Court District of Santiago, determines the following: ‘The carrier will be responsible for the total value of the merchandise only in case of its "culpa" or dolus (article 150 of the Aviation Act); since the defendant’s failure to comply has been proved in this case, his guilt is presumed. Since the defendant has not provided prove of alleged unforeseen circumstances or Act of God, nor of having fulfilled all necessary care, the loss of the merchandise can be imputed to his negligence.’     Back

7 Consideration 49th of the judgment by Arbitrator Mr. Juan Achurra determines: ‘The insurance policy undertaken by Faucett includes its entire fleet of airplanes and offers coverage of the fuselage of the planes, spare parts and civil liability resulting from their operation. With respect to the crashed plane, a Boeing 737 license plate OB-1451 containing 122 passenger seats, coverage was contracted with a combined limit for any loss for an amount of US$ 200,000,000.- Such would therefore be the maximum loss to be paid in case of civil liability.’     Back

8 Issue 4th of Consideration II of the sentence dictated on 21 December 1995, by Judge Dr. John Pérez of the 21st Civil Court District of Montevideo, determines: ‘The fact that a carrier has absolutely no indication of what happened to a cargo entrusted to its care shows lack of control, administrative disorder, and the incompetence and negligence of its administrative staff, constituting gross negligence.’     Back

9 Literal citation of part of Article 147 of the Argentinean Aviation Act.     Back

10 Such was established by the decision in ‘Regis de Cabrera and Others v. Aeroclub Argentino’ (‘La Ley’ Magazine, 110-151).     Back

11 Literal citation of part of Consideration 60th of the decision by Arbitrator Mr. Juan Achurra in the Faucett Case.     Back

12 Quintana v. Chilean State, 28th Civil Court District of Santiago, Roll n° 1418-90. The decision in first instance was announced on 25 July 1997. Consideration 26th determines that the claimant is unable to perform any normal activities, that her physical appearance had completely changed, and that the injuries cause her permanent anguish and pain that will not disappear over time.     Back

(Volta ao Sumário)

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