§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boscawen.]
6.21 am§ Mr. Charles R. Morris (Manchester, Openshaw)It has been a very long, hard day's night. I am appreciative of the fact that the Minister is in his place to deal with what he and I believe is an important subject. The hon. Gentleman had a professional interest in the aviation industry before he entered the House and he will know at first hand of the conditions about which I am concerned. He will accept that few, if any, of the thousands of charter flight holidaymakers, or any other air travellers, when responding to the announcement that the aircraft is ready for boarding, will give a second thought to the provisions of the Warsaw convention and the associated protocols which impose an arbitrary limit on the level of compensation which is available to dependants if some terrible tragedy befalls the aircraft.
That is understandable. The international aviation industry, and particularly British airlines, have an impressive and proud safety record. Precisely because the public are unaware that an arbitrary limit is imposed on the level of compensation to the dependants of those who lose their lives in aircraft crashes, I believe that Parliament should be ever vigilant to ensure that the dependants of people who lose their lives should receive adequate financial recompense. My contention is 743 that under the provisions of the Warsaw convention and the associated protocols the limit of liability and levels of compensation available are a shambles and reduce the question of compensation to a lottery.
It is wholly unjust that, for example, the dependants of a 30-year-old professional man earning £10,000 a year and with a wife and three children could expect to recover damages of about £100,000 if he were killed as a passenger on a bus, whereas if he lost his life in an air crash they would receive a maximum of only £9,600 under the provisions of the Warsaw-Hague limits and of £25,000 under the special contract arrangements for British airlines flying to destinations overseas. If he were travelling to and from the United States, the limit would be £34,000. Facts such as these demonstrate that a dependant of an air crash vicitim is likely to receive a mere fraction of the compensation of the dependant of a road accident victim.
To illustrate the complexities that result from the variations in the liability regimes, I shall quote from chapter 19, paragraph 1117, on page 236 of the Pearson report on civil liability. For the purposes of illustration, the commission assumed an air disaster at Heathrow on a Paris to London flight. It records:
Liability in respect of a passenger on a British Airways flight from Paris to London might be up to £25,000 under that airline's special contract if the aircraft crashed on landing at Heathrow. Liability to another passenger in respect of a similar journey by an airline operating without a special contract and therefore governed by the Hague Protocol might be limited to £10,700. On another similar journey, liability to a further passenger who was booked through to New York could be up to £34,000 under the Montreal Agreement. If the aircraft had been flying from Ankara to London passengers ticketed only for that journey would not be covered by the Warsaw Convention and therefore liability might be up to £37,450 under the Carriage by Air Acts (Application of Provisions) Order 1967.It is situations such as that which demonstrate the variations in the liability regime.My interest in the extent of liability accepted by individual airlines originated because two of my constituents were killed in the Dan-Air Boeing 727 air tragedy at Tenerife in April. If I may digress, I find it indefensible and sad that some of the relatives of those who lost their lives in that crash are likely to receive only 744 £1,250, because a high proportion of the passengers were elderly couples. The only claim that their relatives can make is for what is termed the loss of "life expectancy."
To justify the assertion that the Warsaw-Hague arrangements are a shambles, I need only record the details of the Warsaw convention and the associated protocols. The 1929 Warsaw convention introduced a liability limit of £5,350. The Hague protocol lifted that limit to £10,700. The International Air Transport Association in Montreal in 1966 introduced a limit of £34,000 for flights to and from the United States. The Guatemala protocol of 1971 introduced a limit of £64,200, but it is unlikely that that protocol will be ratified and it was superseded by the Montreal No. 3 protocol of 1975, which imposes a new effective limit of £56,000.
As I have indicated, all British airlines travelling to destinations overseas have special contract arrangements for flights to and from those destinations which effectively fix a compensation limit of £25,000. In fairness, I should also point out that the United Kingdom Government have legislated for further amendment to the Warsaw-Hague limits in the Carriage by Air and Road Act 1979, which enables Britain to ratify the Montreal No. 3 protocol, which provides the new limit of £56,000.
The point that I make in regard to the new limit of £56,000 is that the improvement is not likely to become effective until 1 April 1981, by which time the figure of £56,000, which was originally suggested in 1975, when the Montreal No. 3 protocol was introduced, will have been seriously eroded by inflation. It has been suggested to me that £56,000 in 1975 terms should be something approaching £100,000 in 1980 terms.
Another difficulty has been drawn to my attention. I am led to understand that the Montreal No. 3 protocol has not been ratified by a sufficient number of countries to make it effective, and rumour has it that the United States Government are not likely to ratify it either. I should like the Minister to comment on that point.
It is not surprising that the United States Government are not likely to ratify that protocol, because, although the 745 United States signed the Warsaw convention in 1929, the courts in the United States have awarded compensation substantially higher than any of the figures so far contemplated.
I need remind the Minister only of the DC10 crash on the Paris to London route and the resultant legal action taken by the dependants of those who lost their lives in that tragedy. They took action in the American courts and £30 million compensation was paid to them. I am conscious that there are those who will argue that air passengers have the right, and in some cases the obligation, to increase the level of insurance and compensation that they might receive and that they should do it on their own account.
The Minister said almost the very same thing in a letter that he wrote to my hon. Friend the Member for Manchester, Gorton (Mr. Marks) on 31 July. In the penultimate paragraph he said:
if a prospective airline passenger feels that his dependants will not be adequately compensated in the event of his death or serious injury in an airline accident it is always open to him to take out extra personal insurance cover which is readily available through brokers and other outlets, and at airport terminals. Such extra cover is not expensive.That is not an unreasonable view to take, until we put ourselves in the position of the charter flight air traveller or the air passenger generally. The charter flight traveller is encouraged by the travel agency to believe that the £3 or £4, in addition to the cost of the ticket, which he pays to cover the insurance for sickness and added death cover gives him additional substantial cover. In most cases it covers him only to the extent of a further £2,000 or £3,000 at the most.Insurance cover is not the first thing about which an air passenger thinks. When he responds to the call "The aircraft is now ready for boarding", he does not think about that, although the business man might think about it. Having discussed this subject with a number of friends, I find that the business man has read the small print on the air ticket, which explains that liability and compensation are subject to the arbitrary limits laid down in the Warsaw-Hague-Montreal conventions and associated protocols. That is the reality.
Frankly, I subscribe to the view that either the Warsaw-Hague-Montreal system 746 of imposing arbitrary limits on liability and compensation—with its outdated limits of compensation—must be abolished, with a return to the ordinary law of negligence, or we must seek to build a wholly new Warsaw arrangement which establishes realistic levels of compensation. I believe that Britain owes that much, at least, to the dependants of those who have lost their lives in air crashes. I am bound to inform the Minister that it is my intention to persist in seeking justice for those who, I believe, have received so little so far.
§ The Under-Secretary of State for Trade (Mr. Norman Tebbit)I wish to express my thanks to the right hon. Member for Manchester, Openshaw (Mr. Morris) for providing the House with an opportunity—although too short and at a not especially convenient moment—to consider the complex subject of payment of compensation to the dependants of victims of aircraft accidents. I am grateful to him also for the tribute that he paid to the safety record of British airlines.
There is general agreement that there should be adequate and speedy compensation following air accidents—and I emphasise "speedy". The emphasis and the interest are always heightened when accidents occur. I am aware of the tragic loss which came to the constituents of the right hon. Member in a recent accident.
None the less, I want to show that the Government are making some strenuous efforts, both nationally and internationally, to improve the present position, which is not in all respects quite as the right hon. Gentleman understood it. We are doing our best to improve matters on the international scene, but as ever, reaching international agreement is at times a tortuous and lengthy business.
The Warsaw-Hague provisions have been the subject of a good deal of criticism, much of which centres upon the level of compensation, but I think that there are advantages in having a system of uniformity of law under which the system of law to be applied in a given case is not in doubt, even if, as I readily concede, the limits of liability may vary according to the circumstances. The right 747 hon. Gentleman has made that point well enough.
The alternative in a field of activity involving foreign factors would involve the application of different legal systems in each case, and questions would arise then as to, in each case, which system would apply. Those questions would be answered by the very complex rules of private international law, and the application of those would be both time-consuming and costly.
It is worth making the point here that although the right hon. Gentleman referred to the awards of very heavy damages in the Californian courts arising out of a DC10 accident, I should emphasise that those were the product of actions against the manufacturers of the aircraft and would not be affected in any way by the Warsaw-Hague limits, since those awards arose from product liability law as opposed to airline liability.
The Warsaw convention, which puts the onus of disproving negligence on the carrier, established a regime under which in practice a person can recover damages, subject to proof of loss, up to a fixed limit. The system has the advantage that negligence does not need to be established by the passenger and carriers know with some certainty what the limit of their financial exposure is. That is important for the carriers when they take out third party liability insurance.
Therefore, although there are shortcomings, I do not think that we should lose sight of the benefits of the system. I know that it may be attractive to some lawyers to have the thought of frequent and contentious litigation, and I understand that in some cases recently in the United States the lawyers have been taking as much as 35 per cent. of the awards of the court for their expenses, but I do not think that necessarily that is in the best interest of the victims' dependants.
The United Kingdom is not in a position in any case to go it alone in this area. We are, of course, members of the European Community, but, even before that, for many years we have kept in close discussion with other European countries, particularly in order to reach areas of agreement from which we can all benefit.
748 It has been suggested that the advantage of not having to sue a foreign airline in a foreign court, which is a benefit conferred by the Warsaw convention, is not all that valuable since it is not difficult to bring an action in the United Kingdom courts against a foreign airline, provided that the airline has assets, even temporarily, in the United Kingdom. But I think that that is too simple a view of the problem, since issues of legal policy will arise as to which of a number of competing jurisdictions should hear a particular case. The Government's belief is that the Warsaw-Hague rules bring benefits which we ought not to surrender. We should not throw the baby out with the bathwater in trying to remedy the deficiencies which exist.
The main problem is the level of compensation which is payable. Here the Government are making every effort, both nationally and internationally, to raise the current levels to more realistic levels. Indeed, it was due to a United Kingdom initiative in 1974 that action was taken by means of the special contract limit to increase the amount applied by the airlines of more than 20 countries to the present limit in respect of international carriage to not less than £25,000.
The Montreal additional protocol No. 3 of 1975 proposes that the Warsaw-Hague limit should be increased to 100,000 special drawing rights—about £57,000—and the United Kingdom has already taken steps to ratify it.
I realise that progress generally is unlikely until the United States ratifies. Although we, too, have heard rumours that there are difficulties about this in the United States, we have no positive information that that is so. As the right hon. Gentleman said, the United States is not habitually quick to ratify these conventions.
There is not a great deal more that we on our own can do to bring that protocol into force. But, as we realise that the current limit of £25,000, or $58,000, required of United Kingdom airlines by standard condition H in air transport licences has been eroded by inflation and the decline in the value of the United States dollar since it came into force in April 1978, on 28 May this year the Civil Aviation Authority published a proposal to revise the limit to 100,000 special 749 drawing rights—about £57,000. The intention is that any new limit should come into effect from 1 April 1981, which gives the airlines time to make their arrangements. The change to special drawing rights is intended to prevent fluctuations in value which have resulted from the use of both the dollar and the pound sterling.
The limit of liability in respect of domestic as opposed to international flights is already fixed at 58,000 special drawing rights—about £33,000—by means of the Carriage by Air Act (Application of Provisions) Order 1967, as amended in 1969. Our intention is that this should be brought into line with the international limit at the same time as the new limit for international carriage.
The right hon. Gentleman referred to the Pearson Commission. At the end of the day that Commission did not reject the principles of Warsaw-Hague and thought that limitation of liability might be regarded as a fair price to pay for the relative ease of recovery against airlines provided that the limit of liability was high enough. The Commission favoured a system of strict liability but thought that this should be achieved by international agreement, despite the practical difficulties. It concluded generally that air transport accidents were different if only because of international considerations. First-party insurance is by far the most efficient method of providing compensation to victims of accidents, for the obviuus reason that issues of liability which are expensive to resolve do not have to be considered.
Travelling on international air flights is not the same as travelling on trains, buses and coaches at home, and I think that it is sensible for people to take advantage of the inexpensive extra cover. I take the right hon. Gentleman's point about the awareness of the passenger of this cover. I have recently asked ABTA travel agents particularly to bring this 750 to the notice of their customers at the time a customer is buying his package holiday, and to remind him that it is possible to purchase extra cover, which would be in the interests of his dependants if there were to be an accident. The £1,250 payment for loss of expectancy of life, which seems brutally little when put in those terms, is the usual amount awarded by the United Kingdom courts in all cases and is not confined to air accidents. Therefore, it is in no way affected by the Warsaw-Hague conventions.
I should like to emphasise the value of these conventions with one other example that has come to my mind recently—the recent case of an aircraft that disappeared on a flight over the sea. Some wreckage of it has been found, but there is little prospect that the cause of the accident will ever be established. Therefore, the prospect would be of lengthy litigation to decide at whose door the responsibility for the accident could be laid. It is in a case of that sort particularly that the Warsaw Hague conventions can be of such great benefit to the dependants of those who have lost their lives.
Of course, money can never recompense for the emotional losses that follow in the wake of an aircraft crash with injury and death, but adequate and prompt compensation—again I emphasise "prompt"—can enable one to cope better with the practical problems that are an inescapable part of such tragic events. I assure the right hon. Gentleman that it is the Government's intention to take whatever steps are practicable to see that compensation reflects so far as is possible the needs of the travelling public. I shall not resent at all any pressure that comes from him to see that that is done.
§ Question put and agreed to.
§ Adjourned accordingly at ten minutes to Seven o'clock a.m.