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
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.
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.
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.
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.
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.
-
- Damage by Aircraft Bill 1999, Explanatory Memorandum. p. 3.
- Ibid.
- Ibid.
- Ibid
- Ibid., p.6.
- Ibid, p.7
- Ibid., p.7.
- Ibid., p. 8.
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.
Back to top