Conventions Relating to International Air Traffic: Department briefing

TRANSPORT PORTFOLIO COMMITTEE
7 June 2006
CONVENTIONS RELATING TO INTERNATIONAL AIR TRAFFIC: DEPARTMENT BRIEFING

Chairperson: Mr J Cronin (ANC)

Documents handed out:
The Convention on International Interests in Mobile Equipment, 2001 and Protocol thereto on Matters specific to Aircraft Equipment
Explanatory Memorandum on the Ratification and or Accession to the Convention for the Unification of Certain Rules for International Carriage by Air
Convention for the Unification of Certain Rules for International Carriage by Air: presentation

SUMMARY
The Department briefed the Committee on the Convention on International Interests in Mobile Equipment, 2001, and Protocol thereto on Matters Specific to Aircraft Equipment, and on the Convention for the Unification of Certain Rules for International Carriage by Air.

The Montreal Convention, 1999, offered better protection to victims of international accidents, as adequate compensation was provided. Previously the Warsaw Convention had set a very low compensation level for victims.

The aim of the Convention on International Interests in Mobile Equipment, 2001, and Protocol thereto on Matters Specific to Aircraft Equipment was to ensure that the funders of equipment would be covered should the client default on any payments.

MINUTES

Convention for the Unification of Certain Rules for International Carriage by Air
Mr J Beurman, Senior Manager for the Department, gave Members a brief summary of the Convention.

The Carriage by Air Act, No. 17 of 1946, was promulgated to give effect to the Convention for the Unification of Certain Rules for International Carriage by Air, which was signed at Warsaw during October 1929. The high mobility of passengers and the globalization of the air transport industry had resulted in a high level of complexity, and the fragmentation of the Warsaw System. The Montreal Convention of 1999 had been modernized, consolidating a seventy year-old system of international instruments of private international law into one legal instrument that provided an adequate level of compensation for those involved in international air accidents.

The Montreal Convention, 1999, offered better protection to victims of international accidents, as adequate compensation was provided. Previously the Warsaw Convention had set a very low compensation level for victims. In case of death or injury to passengers, the Montreal Convention introduced a two-tier system for compensation. The first tier included strict liability of up to 100 000 Special Drawing Rights (SDRs), irrespective of a carrier’s fault. The second tier was based on the presumption of fault and had no limit of liability. Air carriers needed to submit proof of insurance, which would ensure the availability of financial resources in cases of automatic payments or litigation. Legal action for damage resulting from death or injury to a passenger could be filed at the permanent place of residence of the passenger. This, however, would be subject to certain conditions.

The Office of the State Law Advisor told the Department that the provisions of the Montreal Convention 1999 were not in conflict with the domestic law of the Republic of South Africa

Discussion

Mr B Mashile (ANC) asked if there was a prescribed system of lodging claims. He asked if the claims were lodged directly with the airline that caused the loss. He also asked if the compensation would be given in the currency of the country where the claimant stayed.

Mr J Beurman replied that the claim would be against the insurer of the airline. The Special Drawing Rights were not bound by a particular currency. The compensation from the airline would be converted into the claimant’s choice of currency.

Adv J Makopayho (Department official) told Members that claims could be lodged in three ways. It was better, however, to lodge a claim in the country where one was staying as this could make the process easier.

Mr M Swathe (DA) asked whether South Africa was part of the first Warsaw Convention.

Adv J Makopayho replied that South Africa was part of the Warsaw Convention.

Mr B Mashile (ANC) wanted to know what the convention’s intervention was for countries where it was more difficult to lodge a claim.

The Chairperson commented that the convention set international standards, which meant that no airline could escape paying compensation.

Convention on International interests in Mobile Equipment, 2001, and Protocol thereto on Matters Specific to Aircraft Equipment
Mr J Beurman gave Members a brief summary of the convention and protocol.

The purpose of the convention and protocol was to establish an international legal regime for the creation, enforcement, registration, and priority of security interests held by creditors, conditional sellers and lessors. And also to reduce the cost of capital companies purchasing or leasing aircraft equipment through private international law rules relating to the creation of priority and enforcement of security, title retention and leasing interests in aircraft equipment. This would bring significant economic benefits to countries by bringing within their reach commercial finance for mobile equipment that may previously have been unavailable or available only at relatively high costs.

Extensive consultation took place before the signing of the convention and protocol in Cape Town on 16 November 2001. The draft Bill was distributed to the South African Civil Aviation Authority, the Airports Company of South Africa, the Air Traffic Navigation Services Company, the Airlines Association of South Africa, and the Commercial Aviation Association of South Africa.

The Chief State Law Advisor found that the convention and protocol were compliant with international law practice and confirmed that the convention and protocol did not contain any self-executing provisions and would have no financial implications for the state.

Discussion

The Chairperson commented that if equipment was frequently moved around internationally, it would be advisable to have it catalogued. However, one would not want to have every item catalogued.

Mr B Mashile (ANC) wanted to know how the registers would be financed.

Mr J Beurman replied that this would be done at the cost of the party involved. The registers were already up and running.

Mr M Moss (ANC) wanted to know if the convention and protocol needed to be ratified.

Mr J Beurman replied that there were two documents, namely the convention and the protocol. The convention was less stringent than the protocol which needed ten ratifications.

Mr M Swathe (DA) wanted to know if only the equipment bought would be taken back by the bank should the person default on payments, or if other assets that the person owned would also be taken back.

Adv J Makopayho replied that the bank would only take back the equipment bought, but that should they not recover their costs other assets could also be seized.

Ms N Khunou (ANC) wanted to know if the convention helped the funder get money back when a client defaulted on payments.

The Chairperson replied that this was the aim of the convention.

Ms N Khunou (ANC) wanted to know if all countries had ratified the convention.

Mr B Mashile (ANC) wanted to know what the implications were for a country that did not ratify the convention.

Mr J Beurman replied that certain limitations would be imposed on the states that did not ratify the convention.

The Members approved both the conventions.

The meeting was adjourned.