§ 12.37 p.m.
§ Baroness Hayman rose to move, That the draft order laid before the House on 26th January be approved [21st Report from the Joint Committee].
§ The noble Baroness said: My Lords, this proposed Statutory Instrument is an application of provisions order amending the unit of currency defining the limits of liability applicable to air carriers under the terms of the Warsaw Convention. It has been prepared as a consequence of the recent coming into force of a protocol to the convention which the UK and other countries have ratified.
§ Noble Lords will be aware that the Warsaw Convention is a long-standing international agreement setting out certain rules relating to air carriage including the liability of air carriers in respect of passengers, baggage and cargo. It has been amended on a number of occasions since its inception in 1929, notably at the Hague in 1955 and at Guadalajara in 1961. These amendments have been ratified and have come into force. In an amendment concluded in Montreal in 1975, references to French gold francs for the various limits of liability were changed to an equivalent amount in an internationally recognised unit of account known as the special drawing right (SDR). Although the UK signed and in 1984 ratified this amendment, it could not come into force until at least 30 states had ratified it. During the course of 1997 officials in my department were 429 notified that sufficient ratifications had been received to bring the changes into effect. The draft order before the House is the necessary response to reflect in UK law the coming into force of the Montreal amendment, even though it is 22 years since it was agreed.
§ This order amends the Carriage by Air Acts (Application of Provisions) Order 1967. The latter applies the provisions of the Carriage by Air Act 1961 and the Carriage by Air (Supplementary Provisions) Act 1962, with modifications set out in that order, to carriage to which those Acts would otherwise not apply. The principal amendment provides for the introduction of an additional schedule (Schedule 3) to have effect in respect of certain international carriage between states who are parties to Additional Protocol No. 1 of Montreal 1975, introducing the new unit of account—the SDR.
§ The structure of the legislation and the reason affirmative resolution is necessary is that it follows the pattern of Schedule 2 of the 1967 order by detailing in Part A the changes required to the amended convention (as set out in the 1961 Act) and then, for ease of reference, presenting the complete text in Part B.
§ The proposal is a technical one providing merely for an SDR equivalent for French gold franc liability limits in the case of certain international air carriage between the UK and some other countries; namely, those who also have ratified Montreal Protocol No. 1. It does not alter limits. It is made so as to provide for implementation into UK domestic law of international obligations which we in fact accepted in 1984. I commend it to your Lordships.
§ Moved, That the draft order laid before the House on 26th January be approved [21st Report from the Joint Committee].—(Baroness Hayman.)
§ Lord Brabazon of Tara
My Lords, I thank the Minister for her introduction of the order. It must be something of an historic order, going back, as the noble Baroness said, 22 years since it was originally drafted. At least the noble Baroness cannot blame the previous government for anything in it because I believe that she was sitting on the Government Front Benches in the House of Commons at that time.
I have one considerable criticism to make of the order. In my opinion the Explanatory Note is indecipherable. When considering such orders, one starts with the Explanatory Note. This note does not give a great deal of assistance. The following regulation with which we shall deal has a good, clear and helpful Explanatory Note. On the other hand it is helpful to have Part B of the order. As the noble Baroness said, it gives the text of the order as it will stand after the amendments have been made.
Perhaps I might draw attention to Article 22 on page 10 of the order which deals with the liability aspect. As the noble Baroness said, it inserts the sum of 8,300 special drawing rights as the liability for each passenger. Eight thousand three hundred special drawing rights is equivalent approximately to £6,900, or just over 11,000 dollars. I am not sure whether that amount was appropriate even in 1975 or 1976. It certainly is very much on the low side now. I suggest 430 that the aviation industry, insurers—and here I should declare an interest as a member of Lloyd's—courts and others would be thinking in terms of a figure probably 50 to 100 times that amount, in particular in the United States.
Paragraph (4) of Article 22 has the equivalent amount for those states which are not members of the International Monetary Fund. That amount is fixed at a sum of 125,000 monetary units per passenger. A monetary unit is 65.5 milligrammes of gold. According to my calculations—I am willing to be proved wrong—that amounts to 286.5 ounces of gold. The noble Baroness will be aware—I hope that she has not suffered personally from it—that gold has been a disastrous area over the past few years. It is now trading at approximately 294 dollars an ounce. Therefore the compensation in that section would he the equivalent of about 84,000 dollars. Presumably when this paragraph was first written both sums were meant to be the same. But the sum is now approximately 84,000 dollars. About 15 to 20 years ago, gold reached 850 dollars an ounce. It would have been worth 243,000 dollars as opposed to 11,000 dollars, so there would have been a considerable difference in the amounts.
I suspect that the article was written on the old basis when gold was fixed by the United States Government at 35 dollars an ounce. If one uses that figure, the sum comes out at about 10,000 dollars, which is not far different from the 11,000 dollars special drawing rights. However, what is curious is that I believe the United States went off that standard of 35 dollars an ounce in 1971. That is five years before the article was written. I cannot think what was going on at that time.
However, I do not ask the noble Baroness to be able to answer my questions at this time, nor even to write to me. I have made my points. One does not want to go through another 22-year gap. However, if there is another opportunity to look again at the convention, I hope that something might be done to make the liability figures somewhat more realistic in the modern world. From this side of the House, perhaps I may say that if the noble Baroness has an opportunity in legislation to transfer this type of order from the affirmative to negative resolution, I would support her fully in that.
§ Lord Alderdice
My Lords, on the technical matter to which the Minister referred, we have nothing further to add. However, the instrument also restates provisions on baggage checks. I wonder whether it is possible to ask a couple of questions of the Minister in that regard.
Five years ago the department introduced statutory requirements on airlines to improve baggage screening and handling by two new automated technologies: the baggage reconciliation system (BRS) and the hold baggage system (HBS). The purpose of the first system is largely to ensure that passengers and baggage meet with each other in the same part of the world at the end of the trip. We all have enough experience of travel to be familiar with the old adage, breakfast in London, dinner in Los Angeles, baggage in Lagos. There has been an attempt to try to rectify that by the introduction of the new baggage reconciliation system.
431 The second system, the hold baggage system, relates to an even more serious problem—the problem of baggage containing items which are a threat to security. HBS was to be introduced to provide 100 per cent. automated baggage screening up to level 3 security, at which point more intensive screening would be necessary. The target was that some 95 per cent. of bags would be screened automatically in that way. The remaining 5 per cent. would be automatically shunted to a new area to have more intensive screening.
It appears that progress on the introduction of BRS and HBS has been rather slow, not least at London Heathrow, where something approaching 60 million passengers a year pass through. While any delays in introducing the baggage reconciliation system are an inconvenience to passengers, the HBS delay prevents higher levels of security being attained. I understand that the DETR has issued a directive to the effect that HBS, dealing with security, should be up and running by the end of May this year. Can the Minister indicate whether she is happy with the progress on both of those systems, in particular the security system? Is the noble Baroness confident that HBS will be in place at Heathrow by the deadline of the end of May? Are her colleagues taking any action with Heathrow Airport or any other airport authorities which do not act as quickly as they might in implementing these matters? Are they ensuring that other security deadlines are also achieved at the time we wish to see them achieved? I shall be grateful if the noble Baroness will answer, in writing if it is not possible to give an answer today.
§ Viscount Simon
My Lords, in raising points on paragraph (4) of Article 22, the noble Lord, Lord Brabazon of Tara, has inadvertently answered some questions that I wanted to ask. I am somewhat pleased. He has clarified my mind. I should be grateful if the Minister could clarify "in round figures" in paragraph (4). How many noughts does that represent in sterling terms?
§ Baroness Hayman
My Lords, I shall attempt to reply to the points raised. The noble Lord, Lord Alderdice, raises important issues about security and baggage handling. If he will accept it, I prefer to write to him about that. They are important points and I do not have the details at my fingertips with which I wish to reply.
I sympathise with the noble Lord, Lord Brabazon of Tara, about the structure of the Explanatory Note. I understand that it follows well established guidelines laid down for the drafting of explanatory notes. However, it has already been said in your Lordships' House that that is a dangerous phrase for Ministers to use. The note is not as clear as perhaps it might have been and does not elaborate all the points. However, I am assured that the substance is there.
On the point about the order being subject to affirmative resolution, that goes back again to the form of the Warsaw Convention and the way in which it was brought into British law. I am assured that there was no opportunity to do it other than by affirmative resolution.
432 I turn to the issue of liability limits. I can perhaps help the noble Lord. The draft order implementing Montreal Protocol No. 1 is an amendment to the 1929 Warsaw Convention. It relates only to the unit of account; it does not change the limits of liability. So those limits are indeed, as the noble Lord pointed out, within this text as set in the convention. However, there have separately been several subsequent amendments to the convention which have themselves increased the passenger liability limit. For all airlines registered in the United Kingdom the applicable limit of liability is now 100,000 SDRs per passenger, which is approximately £82,000. From October this year, under the terms of Council Regulation 2027/97 there will be no upper limit for passenger liability for all community airlines. So the sums involved have been uprated separately from this issue of changing the unit of account in which they are to be calculated.
That leads me to the other point made; namely, that references to monetary units in paragraph 4 are not in fact relevant to the UK or to any other state being a member of the IMF. That also answers the point made by my noble friend Lord Simon. The references to round figures do not apply to the United Kingdom since it is a member of the International Monetary Fund. The applicable limits of liability are those that I described previously. They would in this country be converted into the sterling equivalent according to the published rate of exchange against the SDR on the day in question. So the issue of rounding up would not apply in country.
I hope that that covers some of the technical issues raised. With the caveat that I will write to the noble Lord, Lord Alderdice, I commend the order to the House.
On Question, Motion agreed to.