Thailand's inclusion to the Montreal Convention 1999 (MC99) comes into effect today, bringing significant changes to the way air service providers handle, address and resolve claims.
The overwhelming majority of carriage to and from Thailand will, for the first time, be subject to a global treaty and to internationally defined and accepted standards, providing transparency, certainty and clarity to liability in carriage by air.
The most significant changes to Thailand's International Air Transport Act and the International Air Transport Amendment are the introduction of a minimum liability limit for passenger death and injury claims of SDR113,100 (5.33 million baht or US$159,825) as well as the allowance for advance payments. The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves.
Litigation in Thailand arising from all forms of death and injury claims are significantly lower than the minimum levels in MC99, says a leading international law firm.
In many cases, a court-supervised pre-hearing mediation resolves the claims before the evidence is formally considered, says Alan Polivnick, partner at Watson Farley & Williams Thailand.
The Act introduces a liability limit of 53,345 baht per passenger for baggage loss, damage or delay claims and a liability limit of 896 baht per kilogramme for cargo loss, damage or delay claims.
On liability for delay, the Act follows counterpart provisions in MC99, which remain largely untested in Thai courts as international carriers tend to apply their existing procedures for delayed or cancelled flights, including in relation to compensation.
PASSENGER DEATH & INJURY
There are few reported cases setting out damages awards on the basis of the calculation of these awards by the court.
Thai courts are not bound by the decisions of other courts, and judgements of other Thai courts, primarily the Supreme Court, are influential or persuasive at best.
Thai personal injury claims routinely include compensation for future medical expenses.
But the new Thai Act does not directly address this issue, other than to stipulate that claims must fall within its scope, regardless of the basis for such claims.
It is likely that the Thai courts will continue to award such compensation for claims subject to the Act, Mr Polivnick says.
But it remains to be seen whether strict liability up to 5.33 million baht will create upward pressure on compensation claims and demands, particularly if this makes claim litigation on behalf of Thai passengers more attractive to international plaintiff attorneys.
Carriers should assert that strict liability is only for proven damages up to this limit in accordance with the requirements of proof of loss under Thai law.
Mr Polivnick says this is likely to be a matter for each court to decide as it sees fit and carriers should anticipate varying outcomes depending on the court and claims before it.
Carriers should also anticipate demands for advance payments and ensure that they are prepared to respond to such demands, particularly where these are made publicly, especially through social media.
IMPLICATIONS ON ICAO'S RED FLAG
Thailand's accession to MC99 gained impetus after a seven-year reluctant process and appears to be part of a bid to persuade the International Civil Aviation Organisation (ICAO) to remove the punitive red flag imposed on Thailand in 2015 for aviation safety shortcomings.
The UN's aviation watchdog team wrapped up its field audit on the Civil Aviation Authority of Thailand in Bangkok last Wednesday.
The audit is pending further evaluation at ICAO's Montreal head office before the official announcement whether the red flag would be removed by mid-October.
Thai-registered airlines have taken the brunt of the red flag penalty, which restricts them from expanding international flight routes.
BAGGAGE LOSS LIABILITIES
The liability limit for baggage loss is a positive step for carriers, as it appears to remove the uncertainty over the extent of their liability.
Prior to the Act, there was no statutory limit to liabilities and carriers had to rely on their contractual liability limits and accommodate uncertainty over compliance with requirements for the express agreement of the passenger to contractual limits of liability.
Provided the Thai courts accept that the Act overrides Article 639 of the Civil and Commercial Code (CCC), the courts should enforce the liability limit.
An increasing number of disputed baggage claims are dealt with by the Office of the Consumer Protection Board (CPB).
The simplified, consumer-friendly case-handling procedures impose lower burdens of proof on claimants than through litigation before the Thai courts.
To what extent the CPB will accept that it is now bound by the Act is unclear, particularly where these limits may be seen as unfair to passengers and to what extent the CPB will refer claims to the Thai courts in accordance with the provisions of the Act on jurisdiction.
For claims pursued in the Thai courts or through the CPB, and where notice was given outside the stipulated periods, a critical issue will be the extent to which such claims are dismissed.
Thai courts are typically reluctant to order summary judgement and will often require the entire case to be heard and then rule on an application to dismiss because notice was given outside the permitted time period.
This may prove to be a bigger issue for carriers than the imposition of a liability limit, particularly as the claimants are individuals and consumers.
FLIGHT DELAYS
On liability for delays, the MC99 provisions remain largely untested in the Thai courts as international carriers tend to apply their existing procedures for delayed or cancelled flights, including in relation to compensation.
Statutory regimes, notably Regulation (EC) 261/2004, have also created defined procedures for dealing with claims for delay.
The Act does not address how damages for delay are to be assessed.
Thai courts are likely to look to other legislation, primarily the CCC, in assessing damages. This may result in a contractual claim for damages resulting from a breach of carriage contract and/or a tortious wrongful act claim.
The latter has been used in delay claims against road carriers such as intercity bus companies.
As most of the claims are resolved prior to judgement, the extent to which these are successful and the levels of damages awarded remain unclear.
Typically, Thai courts award compensation where the court accepts that the actual damages, primarily expenses resulting from delay or cancellation, result directly from the delay or cancellation.
This is likely to raise issues of interpretation of terms and conditions of carriage, particularly those in relation to scheduled operating times and the location of delayed or cancelled flights.
International carriers should also ensure that their codeshare agreements with Thai operations contain provisions that ensure that liabilities for delayed or cancelled flights rest with the appropriate parties.
Issues as to liability for compensation have arisen where a delayed or cancelled domestic flight results in a missed international connecting flight and vice versa.