Bills Digest No. 147  1998-99 Damage by Aircraft Bill 1999


Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer and Copyright Details

Passage History

Damage by Aircraft Bill 1999

Date Introduced: 24 March 1999

House: House of Representatives

Portfolio: Transport and Regional Services

Commencement: On a day to be fixed by Proclamation, provided that the day does not fall before the day that Australia's denunciation of the Rome Convention takes effect.

Purpose

To improve compensation arrangements for third parties on the ground who suffer death, personal injury, or property damage from aircraft that come within the Commonwealth's jurisdiction.

Background

The Problem

Air accidents can result in extensive damage and injury not only to passengers of the aircraft, but also to members of the public on the ground. Whilst air accidents are rare, the damage and injury caused to third parties on the ground (especially when such accidents occur in built-up areas) is considerable. For example, during a recent air accident in Australia, six houses were damaged and a resident was injured.(1) In another accident five members of the public were killed.(2) In Amsterdam in 1989, an El Al Boeing 747 crashed into two apartment blocks, effectively destroying them, and killing 43 members of the public.(3)

The difficulty in air accidents involving third parties on the ground, arises from the differing regimes relating to compensation which vary depending on the jurisdiction and nature of the aircraft involved in the accident. The amount of compensation available is of most concern. This differs according to whether the operator of the aircraft is engaged in domestic or international operations, and in the case of international operators, whether the aircraft's country of registration is a signatory to the Rome Convention. The Rome Convention limits the amount of compensation payable to a level which is capable of being inadequate in serious accidents.

The Rome Convention

The Rome Convention (1952) is given force of law in Australia by the Civil Aviation (Damage by Aircraft) Act 1958. The Convention was developed in an attempt to achieve international harmony in compensation arrangements for damage caused by international aircraft to parties on the ground. The Convention does not achieve harmony, as only 38 countries are parties to it. In addition, only seven of the signatory countries have been licensed to operate in Australia at any one time. Countries which operate over Australia, and are not a signatory to the Convention include: the United States of America, Japan, China, Thailand, Malaysia, Indonesia, and the United Kingdom. Most international carriers operating in Australia are not subject to the convention.

The aim of the Convention was to improve the access to compensation for injured third parties using strict and limited liability. Strict liability means the plaintiff need not prove the defendant was at fault, and limited liability means there is a limit on the amount of possible compensation. The limitation on liability was the result of arguments during the 1950's relating to the survival of the infant industry. This argument no longer holds, with airline travel now an established industry.

Differing compensation regimes

The different levels of compensation available, depending on the aircraft and jurisdiction involved, result in differing and possibly inadequate compensation. For example, if an accident involving third parties on the ground occurs, and the airline involved is an international aircraft, registered in a 'non-Convention country' (those listed above), the airline is subject to strict, and unlimited liability. This means that the airline is subject to liability without the plaintiff proving fault and compensation to the parties at an adequate level. If however, the aircraft is registered in a 'Convention country', the airline is subject to the same strict liability, yet the compensation is limited to a prescribed level. This limit is set by a formula based on gold prices, and the most upper limit for a Boeing 747 would be about $A36 million.(4) This could easily be an inadequate level of compensation considering that in the Amsterdam accident a Boeing 747 effectively destroyed two apartment blocks and killed 43 people. If an Australian airline is involved in an accident whilst on an international flight, as a signatory to the Rome Convention, the compensation to injured third parties on the ground would be subject to the limitation described above. If however, the airline were to be from a 'non-convention country', there would be no such limit. To add to this disparity in levels of compensation, if the airline is an Australian domestic operator, the compensation regime differs between jurisdictions. If the accident occurs in New South Wales, Victoria, Western Australia, and Tasmania, the airline is subject to strict and unlimited liability by legislation. If it occurs in a Territory or South Australia and Queensland, the airline is subject to common law liability (that is the plaintiff must prove negligence or fault in court). There is currently no legislative requirement in Australia for owner/operators to carry insurance for their liability to third parties on the ground.

Whilst most litigation is both time consuming and expensive, the absence of legislation dealing specifically with liability aggravates this. Comprehensive and specific legislation regarding liability allow the courts to settle disputes quickly and to an adequate level. Claims arising from the El Al crash in Amsterdam in 1989 are still unsettled. It has been argued that this is mainly due to the fact that the Netherlands does not have specific liability legislation.(5)

The effect of the Bill

If enacted, this Bill will impose strict and unlimited liability on all aircraft coming within the jurisdiction of Australia. This will involve the repealing of the Civil Aviation (Damage by Aircraft) Act 1958. Australia's participation in the Convention will be formally denounced before the new Act comes into force. Such a denunciation would not be without precedent. Canada denounced it in 1976, citing similar problems. The Department of Foreign Affairs and Trade supports the withdrawal, and the Attorney-General's Department advises that this would not be contrary to Australia's international obligations.(6) The Government considered several ways of remedying the problem. This included unilaterally raising the limit through Australian legislation or repealing legislation and leaving compensation to the common law. In the end however, it was considered that the best option available was to repeal the current Act, denounce the Convention, and institute a regime of strict and unlimited liability by legislation.

Those affected by the new legislation would be the non-flying public (as possible third parties on the ground), the aviation insurance industry in Australia and overseas, the aviation industry in Australia, and private owner/operators of aircraft. According to aviation insurance sources and the two major domestic and international airlines, the impact on business will be minimal or non-existent. Aviation insurance sources advise that the majority of owner/operators, commercial or private, already carry adequate insurance to cover third party on the ground liability. Australia's largest aviation insurance pool has advised that such insurance is the smallest of cost components in aviation insurance.(7) In the case of international operations, Lloyd's of London have advised that no significant insurance cost increases would result from the proposed amendments.(8) It should be noted that strict and unlimited liability is currently imposed on the majority of international airlines servicing Australia, and apply to intrastate operators in most States.

Main Provisions

Definitions

Clause 4 contains the definitions. These definitions include:

  • Aircraft has the same meaning as in the Civil Aviation Act 1988, except model aircraft are excluded.
  • Australian territory has the same meaning as in the Air Navigation Act 1920, which includes Australia's territorial waters.
  • In flight is defined in clause 5 as depending on the type of craft:
  • If lighter than air (eg a balloon or airship), the aircraft is 'in flight' from the moment it becomes detached from the earth's surface, until the moment it becomes attached again.
  • If heavier than air, and power-driven (eg propeller or jet driven), the aircraft will be taken to be 'in flight' from the moment when power is applied for the purpose of take-off until the moment when its landing run ends.
  • If heavier than air but not power driven (eg a glider), the aircraft will be 'in flight' from the moment it becomes airborne (whether or not attached to another machine or aircraft) until the moment its landing run ends.

The Explanatory Memorandum of the Bill explains that in the case of aircraft that are heavier than air, the reference to 'landing run' is not intended to include the taxiing of aircraft, but rather to include crash landings and landings where the aircraft may have landed normally but has caused damage in the process of landing.

The meaning of 'operator' is defined in Clause 6 as being the person using the aircraft, except where the use and control of the aircraft are not exercised by the same person. In such a case the 'operator' will be taken to be the person supplying the aircraft and crew.

Use of aircraft by employees

Clause 7 imposes vicarious liability against employers. This means that if an employee uses the aircraft in the course of their employment, whether authorised or not, for the purpose of the Act the employer will be treated as being the one using the aircraft.

The Act binds the Crown

Clause 8 provides that the Act binds the Crown.

Application of the Act

Clause 9 provides that the Act applies to the full extent of Commonwealth powers under The Constitution. It applies to Commonwealth aircraft (except Defence Force aircraft), aircraft owned by foreign corporations or corporations formed within Australia, which are engaged in both international and interstate flights, and flights within, to, and from the Territories.

Parties subject to liability

Under subclause 10(1), liability for any injury or damage will exist, where it is the result of impact with an aircraft in flight or in flight immediately before impact, or from contact with an object which has fallen from the aircraft in flight or on impact (including part of the aircraft). This extends to damage which results from the impact, such as fire etc.. Subclause 10(2) provides that the operator and owner of the aircraft are jointly and severally liable (ie they are liable as both individuals and as a group). Two additional parties are potentially liable, on a joint and several basis:

  • Where an authorised operator did not have the exclusive right to use the aircraft for more than 14 consecutive days, then the person who authorised the use is also liable.
  • Where an operator was using the aircraft without the authority of the controller of its navigation, (eg when an aircraft is stolen or hijacked), the person who controls its navigation will also be liable, except where they have taken all reasonable steps to prevent the unauthorised use of the aircraft [under subclause 10(4)].

Where the damage or injury is the result of a collision or interference of two or more aircraft, or where two or more aircraft jointly cause damage, subclause 10(4) provides that each aircraft is considered liable.

Strict Liability

Clause 11 imposes strict liability on parties subject to liability. This means those who suffer from an accident detailed in clause 10, do not need to prove negligence or fault in order to recover for loss.

Regulations

Clause 12 provides that regulations may be made to give effect to the Act.

Repeal of the Civil Aviation (Damage by Aircraft) Act 1958

Schedule 1 repeals the Civil Aviation (Damage by Aircraft) Act 1958.

Concluding Comments

This Bill aims to harmonise the access to compensation for third parties on the ground who suffer injury or loss due to aircraft accidents. The legislative imposition of strict and unlimited liability would bring the minority of foreign carriers servicing the Australian market into line with the majority, who are not parties to the Rome Convention. The imposition of unlimited liability would ensure that if there were to be a large scale or serious accident involving third party on the ground members of the public, such parties would not be prevented from seeking adequate compensation. The evidence put forward by the Government supplied to it by both advice and consultation, suggests the impact of such legislation on insurance costs and service would be minimal. It appears that providing statutory strict and unlimited liability would reduce the time and cost of litigation resulting from such accidents.

Endnotes

  1. Damage by Aircraft Bill 1999, Explanatory Memorandum. p. 3.

  2. Ibid.

  3. Ibid.

  4. Ibid

  5. Ibid., p.6.

  6. Ibid, p.7

  7. Ibid., p.7.

  8. Ibid., p. 8.

Contact Officer and Copyright Details

Phillip Bailey
30 March 1999
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1999

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1999.

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