Air Carriers' liability and insurance

Australia's carriers" liability and insurance arrangements are outlined in the Civil Aviation (Carriers" Liability) Act 1959 (the CACL Act).

The Act gives the force of law to a number of passenger liability frameworks, including those arising under the ‘Warsaw System’, the Montreal Convention, and a separate system of liability for domestic travel.

The liability framework for domestic passenger travel is created under Part IV of the Act, and is complemented by state government legislation to create a national uniform scheme.

Arrangements for compulsory passenger insurance are outlined in Part IVA of the Act.

Liability arrangements for third party (surface) victims are outlined in the Damage by Aircraft Act 1999 (the DBA Act).

Montreal Convention

The 1999 Montreal Convention came into effect for Australia on 24 January 2009.

The Montreal Convention is an international agreement which updates laws relating to carriers" liability. It is designed to replace the complicated and outdated ‘Warsaw System’ of carriers" liability.

The Montreal Convention was implemented in Australia by the Civil Aviation Legislation Amendment (1999 Montreal Convention and Other Measures) Act 2008. This legislation followed extensive consultation with interested industries.

Updates to the Montreal Convention's liability limits have been proposed by the International Civil Aviation Organization (ICAO). ICAO has proposed a 13.9% increase to the Montreal Convention's liability limits following completion of a recent review.

The increase is based on the accumulated rate of inflation since the previous revision in 2008. The limits were reviewed with reference to an inflation factor which is determined by the weighted average of the annual change in the Consumer Price Indices of the United States, Japan, China, the European Union and the United Kingdom.

The current limits of liability are proposed to be adjusted as follows:

Montreal Convention 1999 Current Limit*
Revised limit
Injury / death 113,100 128,821
Delay 4,694 5,346
Baggage 1,131 1,288
Cargo 19 22

* as of 30 December 2009

The revised liability limits will take effect from 28 December 2019 unless a majority of the States party to the Convention notify their disapproval to ICAO prior to 30 September 2019.

Airlines should review their current liability and insurance arrangements in anticipation of the revised liability limits coming into effect.

Warsaw Convention

The Warsaw Convention was signed in 1929 and deals with the rules of liability governing international carriage of persons, baggage and cargo by aircraft. The Convention has been amended on a piecemeal basis over succeeding years by a number of protocols and conventions.

The Warsaw Conventions and the various amending instruments to which Australia is a party are given the force of law in Australia by the Civil Aviation (Carriers" Liability) Act 1959.