Decision No. 328-C-A-2007

June 26, 2007

File No. M4120-3/06-08727

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COMPLAINT

[1] On October 11, 2005, Vasudevan Balakrishnan filed with the Complaints Investigation Division (hereinafter CID) the complaint set out in the title.

[2] Mr. Balakrishnan advised the Canadian Transportation Agency (hereinafter the Agency) in a letter received on February 26, 2007 that he wished to pursue the matter formally before the Agency, given that the parties had been unable to reach a satisfactory agreement despite the intervention of CID.

[3] By letter dated March 9, 2007, Agency staff requested that Aeroflot - Russian Airlines (hereinafter Aeroflot) address the complaint within the context of subsection 110(4) and section 113.1 of the Air Transportation Regulations, SOR/88-58, as amended (hereinafter the ATR), and asked the parties whether they would agree to have the comments on file with CID be used as pleadings before the Agency.

[4] On March 16, 2007, Mr. Balakrishnan consented to his comments being used as pleadings in this matter. On March 22, 2007, Aeroflot filed its answer to the complaint. Mr. Balakrishnan did not file a reply.

ISSUES

[5] The issues to be addressed are whether the Montreal Convention or the Warsaw Convention apply in this matter, and whether Aeroflot has properly applied the terms and conditions relating to the limitations of liability for checked baggage specified in the International Passenger Rules and Fares Tariff No. IPG-1, NTA(A) No. 324 (hereinafter the Tariff), in which Aeroflot is a participant, as required by subsection 110(4) of the ATR.

FACTS

[6] Mr. Balakrishnan, his wife and his son travelled from Toronto, Ontario, Canada to Mumbai, India, via Moscow, Russia, departing from Toronto on July 29, 2005. Upon their arrival in India, they discovered that their checked baggage was missing. Mr. Balakrishnan was advised by Aeroflot on August 2, 2005 that their baggage had arrived and was available for pick-up at the airport. After filing a claim for compensation, Mr. Balakrishnan received a letter dated November 15, 2005 in which Aeroflot offered CAD$51.96 (1998.50 Indian rupees) in compensation.

POSITIONS OF THE PARTIES

[7] Mr. Balakrishnan states that he was unable to speak with the Aeroflot representative upon the family's arrival in India, but was later able to speak with a representative over the telephone. He submits that the representative agreed to reimburse the family for the purchase of basic necessities caused by the delay in the delivery of their baggage. Mr. Balakrishnan states that he submitted his claim covering the purchase of toiletries and clothing items in the amount of 5458 Indian rupees on August 12, 2005, and claims that he was promised reimbursement within 21 days.

[8] Aeroflot submits that it is prepared to provide full compensation to the Balakrishnans for the cost of transportation to the airport to retrieve their baggage and the cost of all toiletries. With respect to the clothing items purchased by the Balakrishnan family prior to August 2, 2005, Aeroflot states that it is only willing to provide compensation in the amount representing 50 percent of the value of these clothing items, as they will be kept by the family and used in the future. Aeroflot adds that it will not provide any reimbursement for non-toiletry items purchased on August 2, 2005 as they were purchased on the date the complainant was informed about the availability of the delayed baggage.

[9] Mr. Balakrishnan is seeking compensation for the full amount of 5458 Indian rupees as he states that the items purchased on August 2, 2005 were acquired prior to the carrier advising them that their baggage had arrived in Mumbai and was available for pick-up, and that the garments purchased were of such quality that repeated use would not be possible.

[10] Aeroflot is of the opinion that as it is a carrier of the Russian Federation and as the Russian Federation has not signed the Montreal Convention, the Warsaw Convention applies in this case. Aeroflot notes that Article 34 of the Vienna Convention on the Law of Treaties (hereinafter the Vienna Convention) states that "[a] treaty does not create either obligations or rights for a third State without its consent." Aeroflot adds that both the Montreal Convention and the Warsaw Convention do not obligate an international air carrier to absorb a passenger's interim purchases as claimed and to offer the maximum compensation.

APPLICABLE LEGISLATIVE AND REGULATORY PROVISIONS

[11] The Agency's jurisdiction in this matter is set out in subsections 110(4) and 111(1), and sections 113 and 113.1 of the ATR, which provide:

110.(4) Where a tariff is filed containing the date of publication and the effective date and is consistent with these Regulations and any orders of the Agency, the tolls and terms and conditions of carriage in the tariff shall, unless they are rejected, disallowed or suspended by the Agency or unless they are replaced by a new tariff, take effect on the date stated in the tariff, and the air carrier shall on and after that date charge the tolls and apply the terms and conditions of carriage specified in the tariff.

111.(1) All tolls and terms and conditions of carriage, including free and reduced rate transportation, that are established by an air carrier shall be just and reasonable and shall, under substantially similar circumstances and conditions and with respect to all traffic of the same description, be applied equally to all that traffic.

113. The Agency may

(a) suspend any tariff or portion of a tariff that appears not to conform with subsections110(3) to (5) or section 111 or 112, or disallow any tariff or portion of a tariff that does not conform with any of those provisions; and

(b) establish and substitute another tariff or portion thereof for any tariff or portion thereof disallowed under paragraph (a).

113.1 Where a licensee fails to apply the fares, rates, charges, terms or conditions of carriage applicable to the international service it offers that were set out in its tariffs, the Agency may

(a) direct the licensee to take corrective measures that the Agency considers appropriate; and

(b) direct the licensee to pay compensation for any expense incurred by a person adversely affected by the licensee's failure to apply the fares, rates, charges, terms or conditions of carriage applicable to the international service it offers that were set out in its tariffs.

Montreal Convention

[12] The provisions of the Montreal Convention that are relevant to this matter, Articles 1(2), 19, 22(2) and 26, provide:

Article 1 - Scope of Application

2. For the purposes of this Convention, the expression international carriage means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two States Parties, or within the territory of a single State Party if there is an agreed stopping place within the territory of another State, even if that State is not a State Party. Carriage between two points within the territory of a single State Party without an agreed stopping place within the territory of another State is not international carriage for the purposes of this Convention.

Article 19 - Delay

The carrier is liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo. Nevertheless, the carrier shall not be liable for damage occasioned by delay if it proves that it and its servants and agents took all measures that could reasonably be required to avoid the damage or that it was impossible for it or them to take such measures.

Article 22 - Limits of Liability in Relation to Delay, Baggage and Cargo

2. In the carriage of baggage, the liability of the carrier in the case of destruction, loss, damage or delay is limited to 1 000 Special Drawing Rights for each passenger unless the passenger has made, at the time when the checked baggage was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless it proves that the sum is greater than the passenger's actual interest in delivery at destination.

Article 26 - Invalidity of Contractual Provisions

Any provision tending to relieve the carrier of liability or to fix a lower limit than that which is laid down in this Convention shall be null and void, but the nullity of any such provision does not involve the nullity of the whole contract, which shall remain subject to the provisions of this Convention.

APPLICABLE TARIFF PROVISION

[13] Rule 55(D)(7) of the Tariff provides:

Any liability of carrier is limited to 250 French Gold Francs, USD 20.00, CAD 20.00, per kilogram in the case of checked baggage, and 5,000 French Gold Francs, USD 400.00, CAD 400.00, per passenger in the case of unchecked baggage or other property, unless a higher value is declared in advance and additional charges are paid pursuant to carrier's tariff. In that event, the liability of carrier shall be limited to such higher declared value. In no case shall the carrier's liability exceed the actual loss suffered by the passenger. All claims are subject to proof of amount of loss.

ANALYSIS AND FINDINGS

[14] In making its findings, the Agency has carefully considered all of the evidence submitted by the parties during the pleadings. The Agency has also examined Aeroflot's tariff, as well as the Montreal Convention, which has the force of law in Canada by virtue of the Carriage by Air Act, R.S.C., 1985, c. C-26.

1) Applicability of the Montreal Convention or the Warsaw Convention

[15] Aeroflot has stated that as the Russian Federation is not a signatory to the Montreal Convention, and as Aeroflot is a Russian carrier, it is subject only to the provisions of the Warsaw Convention, to which the Russian Federation is a signatory, and that its exclusion from the Montreal Convention is guaranteed by the Vienna Convention.

[16] With respect to the matter of the Vienna Convention, the Agency is of the opinion that such Convention applies solely to treaties between States, and does not apply to commercial air carriers. The Agency is of the further opinion that the Vienna Convention is not at issue as it is the Montreal Convention that must be applied in circumstances where international carriage is performed as defined by Article 1 of the Montreal Convention.

[17] Article 1(2) of the Montreal Convention provides:

2. For the purposes of this Convention, the expression international carriage means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break in the carriage or a transhipment, are situated either within the territories of two States Parties, or within the territory of a single State Party if there is an agreed stopping place within the territory of another State, even if that State is not a State Party. Carriage between two points within the territory of a single State Party without an agreed stopping place within the territory of another State is not international carriage for the purposes of this Convention. (Emphasis added)

[18] The Agency notes that no reference is made to the nationality of the carrier in determining whether the Convention applies.

[19] The Agency has reviewed the Balakrishnans' tickets, and notes that both the place of departure and the place of destination for the Balakrishnans' travel is Canada, a signatory to the Montreal Convention. Therefore, on the basis of Article 1(2) of the Montreal Convention, such Convention applies to this travel.

2) The Tariff on liability and the Montreal Convention

[20] Rule 55(D)(7) of the Tariff provides, in part, that any liability of carrier is limited to 250 French Gold Francs, USD 20.00, CAD 20.00, per kilogram in the case of checked baggage or other property. The Agency is of the opinion that for international carriage governed by the Montreal Convention, this part of the Tariff is contrary to Article 22(2) of that Convention, which provides for compensation in the case of baggage lost, damaged or delayed on a per passenger basis, up to a maximum of 1,000 Special Drawing Rights. Pursuant to Article 26 of the Montreal Convention, any provision tending to relieve the carrier of liability or to fix a lower limit than that which is laid down in this Convention is null and void. Therefore, the Agency finds this part of Rule 55(D)(7), as it relates to international carriage governed by the Montreal Convention, to be null and void as it is contrary to that Convention.

[21] Furthermore, because this part of the tariff is null and void as it contravenes the Carriage by Air Act for round trip travel originating in Canada or for one way travel to or from Canada to states which have signed the Montreal Convention, the Agency finds it to be unjust and unreasonable, contrary to subsection 111(1) of the ATR.

[22] Pursuant to section 26 of the Montreal Convention, the nullity of a provision tending to relieve the carrier of liability or to fix a lower limit than that which is laid down in the Convention does not involve the nullity of the whole contract.

3) The Tariff on compensation

[23] If read without the part of the Tariff found to be null and void pursuant to section 26 of the Montreal Convention, the rest of Rule 55(D)(7) of the Tariff provides, in part, as follows:

In no case shall the carrier's liability exceed the actual loss suffered by the passenger. All claims are subject to proof of amount of loss.

[24] Aeroflot offered the Balakrishnans CAD$51.96, an amount representing 100 percent of the value of all toiletries purchased and taxi transportation to retrieve their baggage and 50 percent of the value of the garments purchased prior to August 2, 2005. Aeroflot stated that it was not prepared to provide compensation for non-toiletry items purchased on the day the baggage arrived in Mumbai.

[25] Mr. Balakrishnan submitted that the items purchased on August 2, 2005 were bought before Aeroflot advised that their baggage had arrived. Aeroflot did not provide any evidence to dispute Mr. Balakrishnan's claim; however, Aeroflot, in contrast to non-toiletry items, was prepared to provide compensation for toiletries purchased on August 2, 2005.

[26] The Agency has considered this particular matter and is of the opinion that in the absence of evidence indicating that the purchases by the Balakrishnans on August 2, 2005 were made subsequent to them being advised by Aeroflot that the Balakrishnans' baggage had been found, all purchases on August 2, 2005 are eligible for compensation.

[27] Mr. Balakrishnan's submitted receipts totalling 5453 Indian rupees (not 5458 Indian rupees as initially claimed) to substantiate his claim, and Aeroflot acknowledged receipt of these documents. Aeroflot asserted that it is not liable to provide full compensation for the non-toiletry items and garments purchased.

[28] The Agency is of the opinion that Articles 19, 22(2) and 26 of the Montreal Convention do not support Aeroflot's position. These Articles provide that the carrier is liable for the damage incurred in the delay of baggage up to 1,000 Special Drawing Rights for each passenger, and that the carrier cannot diminish the liability set out in the Montreal Convention. The Agency is therefore of the opinion that according to the Montreal Convention, Aeroflot is fully liable for damage incurred by the Balakrishnan family, and cannot offer any form of discount to reduce this liability.

[29] In light of the foregoing, the Agency finds that in refusing to fully compensate Mr. Balakrishnan for the actual loss sustained, Aeroflot has failed to apply terms and conditions of carriage for international travel set out in the Tariff, contrary to subsection 110(4) of the ATR.

4) Compensation to be paid

[30] Given the supporting evidence filed by Mr. Balakrishnan, the Agency is satisfied that the value of the items purchased represent the losses sustained.

[31] The Agency finds that the amount of compensation to be paid to Mr. Balakrishnan by Aeroflot is 5453 Indian rupees.

CONCLUSION

[32] Based on the foregoing, the Agency concludes that:

1. the part of Rule 55(D)(7) of the Tariff that reads: "Any liability of carrier is limited to 250 French Gold Francs, USD 20.00, CAD 20.00, per kilogram in the case of checked baggage, and 5,000 French Gold Francs, USD 400.00, CAD 400.00, per passenger in the case of unchecked baggage or other property" is contrary to the Montreal Convention as incorporated into the Carriage by Air Act and is, therefore, for round trip travel originating in Canada or for one way travel to or from Canada to states which have signed the Montreal Convention, unjust and unreasonable, contrary to subsection 111(1) of the ATR; and
2. Aeroflot has failed to apply terms and conditions of carriage set out in the Tariff, contrary to subsection 110(4) of the ATR.

[33] The Agency hereby orders Aeroflot to pay Mr. Balakrishnan, pursuant to paragraph 113.1(b) of the ATR, within thirty (30) days from the date of this Decision, the sum of CAD$143.41 (5,453 Indian rupees converted on the issuance day of this Decision).

[34] The Agency, pursuant to paragraph 113(a) of the ATR, hereby disallows the above quoted provision of Rule 55(D)(7) of the Tariff, as it pertains to round trip travel originating in Canada or for one way travel to or from Canada to states which have signed the Montreal Convention, and orders Aeroflot, within thirty (30) days from the date of this Decision, to file an amendment to its tariff provisions setting out Aeroflot's limitation of liability with respect to baggage as required by the ATR, and in accordance with the provisions for international carriage of the Montreal Convention.

Members

• Raymon J. Kaduck
• Beaton Tulk