12th Liability Seminar - European Air Law Association Munich June 28, 2019 Ravi NATH

European Air Law Association
 12th Liability Seminar
   Munich June 28, 2019

               Ravi NATH
                     India
    Partner, RNClegal/Rajinder Narain & Co.

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Boeing 737
•   Best seller - 737 series constitute 33% of Boeing
    Commercial Aircraft production and 50% of its profits
•   Went into service - 1967
•   Competition Airbus 320 series

       Boeing 737                      Airbus A320
                                                        2

Boeing 737 Max 8 and Airbus
           320 Neo
• Airbus 320 Neo
   • 2012: First produced
   • 2016: Commercial Operations
   • 2019: So far delivered 641

• Boeing 737 Max 8
   • 2014: First produced
   • 2017: Commercial Operations
   • 2019: So far delivered 387

• Both fuel efficient - ±15%
                                   3

Max 8 Crashes/Groundings
•   October 29, 2018 Lion Air 189 killed
•   March 10, 2019 Ethiopian Airline 157 killed
•   Grounded in 60 countries. China first to do
    so. US last
•   Southwest’s fleet of 34 parked in the Mojave
    desert. Others in Renton and other places,
    incurring costs

                                                   4

All grounded?
•   Yes, Ferry flights to base permitted
    On Condition (as imposed by EASA) -
     o No crew or passengers on board
     o Captain aircraft must be qualified as TRI with LIFUS
       and FSTD
     o First Officer must have 300 hours experience in 737
       NG and 200 hours in 737 MAX

•   June 11, 2019 German ATC refused entry of a Norwegian
    Max 8 on a ferry flight. It lands in Paris.

                                                         5

Similarities between two crashes: Lion
           Air and Ethiopian
 •   Both crashed shortly after takeoff
 •   Both faced difficulty in maintaining
     stable climb
 •   Each was first flight of the day

                                            6

Via
https://www.youtube.com/watch?v=H2tuKiiznsY
Credits : Vox

                                              7

Dennis Muilenburg
                       CEO, Boeing

Said at Paris Air Show mid June 2019:
• Boeing made a mistake in implementing faulty cockpit
  warning system
• Boeing failed to communicate the customers swiftly, but
  defended broad engineering and design of nose down
  control software
• Max 8 will return to service this year
• Boeing is supporting government inquiries and providing
  information

                                                            8

Liability of Carrier

                  Montreal Convention, 1999
•   “The carrier is liable for damage sustained in the case of bodily injury
    of a passenger upon condition only that the accident which caused the
    death or injury took place on board the aircraft or in the course of any
    of the operations of embarking or disembarking.” (Article 17)

•   Strict Liability see Article 22 & 23
        •      Death/ injury:       113,100 SDR*
                                    (US$156,000 approx)
        •      Lost Baggage:        19 SDR* per kg.
                                    (US$ 70 approx per kg)

*Special Drawing Rights
                                                                           9

Manufacturers’ Liability

Product liability “a manufacturer's or seller's tort liability
for any damages or injuries suffered by a buyer, user, or
bystander as a result of a defective product. Products liability
can be based on a theory of negligence, strict liability, or
breach of warranty.” (Black’s Law Dictionary, 1328, 9th
ed.2009)

                                                              10

Contd.

 Products Liability Actions - Three types
• Lemon Product
• Defective Design
• Defective Warning

                                            11

Insurer’s Liability

•   Insurers will face large claims arising out of two
    crashes
•   Airline’s Insurers will pay initially, but will try to
    recover from Boeing’s Insurers if it is proved that
    Aircraft was faulty
•   Insurers typically form a consortium to share risk
    of large claims

                                                        12

Insurer’s Liability Contd.
•   Ethiopian Airline
    • Broker: Willis Towers Watsons;
    • Lead insurer: Chubb
•   Lion Airline
    • Broker: Marsh;
    • Lead insurer: Britain’s Global Aerospace
•   Boeing
    • Broker: Marsh;
    • Lead insurer: Britain’s Global Aerospace
                                                 13

Insurer’s Liability Contd.
•   Boeing usually self insures the initial layer of coverage
    before its insurance coverage kicks in
•   Ethiopian crash could break all records for non-war
    reinsurance claims
•   Crash Victims families bound by Montreal Conventions
    but the claims could be higher if pursued in US Courts
•   Insurance claims may be dictated by how long did the
    victims knew that they were plunging to their deaths.
    Families can claim for grief, sorrow, loss of
    companionship and pay cheques

                                                           14

Claims in US Courts
•   40 cases in Federal Court in Chicago. Boeing plans to seek
    order to move cases to Indonesia. However, most questions
    are technical and experts on both sides will be US based
•   Risk of unpredictably large Jury awards related to the
    length of time that victims were in fear before the crash, as
    permitted under Illinois law
•   Investors may sue Boeing for artificially inflating stock
    value by withholding knowledge of safety problem
•   Bottom line: Boeing’s exposure is much more than any
    other case
•   Eight US citizens killed in Ethiopia crash. This increases
    likelihood of claims of all victims being heard by US
    Courts
                                                              15

Q&A

                   Ravi NATH
                      India
   Partner, RNClegal/Rajinder Narain & Co.
International Commercial & Corporate Lawyers
              T: + 91.11.4122 5000
              M: + 91.98110 27193
              F: + 91.11.4122 5001
         email: ravi.nath@rnclegal.com

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