As the volume of air cargo increases every year, airlines, forwarders and other air cargo logistics providers have become increasingly involved in the carriage of high value, sensitive or precious cargo. Often this cargo is carried to nearby regional destinations but more and more cargo is being carried to increasingly distant destinations with differing laws, regulations and business practices. International law has developed and continues to develop to deal with carriage of ever increasing amounts of air cargo carried internationally.

International travel and trade has gown exponentially in the last 60 years and advances in technology, including longer range aircraft with greater payload capacity, have contributed to this growth and are likely to continue to do so in the future. Since the early days of aviation and long before air cargo became such a critical factor in international commerce and in the business of airlines, forwarders and other air cargo logistics providers, governments and aviation pioneers recognised that for this young industry to develop, it would need some stability and security, particularly once people and cargo began to fly internationally in significant numbers.

The rapid development of modern technology allows today for almost immediate communication between almost any two points in the world but this is only a recent phenomenon. For most of the twentieth century, international communication was limited, slow and often unreliable. This was in contrast to the speed with which people and cargo could now be flown from one destination to another.

Although air transport remained relatively expensive until the arrival of jet aircraft in the 1960s, it was also a more risky means of transporting cargo than shipping goods by sea.

The other major difficulty in persuading companies and people to fly or to send their goods by air was the lack of any system for dealing with problems either whilst the passengers or goods were in transit or once they arrived at their destination. To encourage development of air transport, a group of governments decided in the late 1920s to create an internationally accepted and standard system for dealing with such issues. The intention was to create a system which was identical in as many countries as possible to provide some certainty to the air transport industry.

The result was the Warsaw Convention (WC), which came into force in a number of countries in 1929. Although the WC mirrored development of an international treaty for the carriage of goods by sea, introduction of this convention for the infant air transport industry was revolutionary. For cargo, the WC set out universal procedures for dealing with claims for loss, damage and delay. This was to enable airlines and shippers to understand how such claims would be dealt with at airports in other countries, where they would not be able to deal with these claims themselves.

When the WC came into force, cargo insurance, both for shippers and carriers, was relatively new and did not play the major role it plays today. Shippers and consignees would need to rely primarily on carriers to compensate them for cargo claims.

To deal with this, the WC also introduced limits of liability based on the weight of the cargo and calculated by reference to a then universally accepted French Franc and its gold value. The intention was to enable carriers to calculate their maximum liability by reference to the total weight of the cargo carried.

In return, carriers had to accept liability without the need to show fault on their part and that there would be almost no defences to claims for loss or damage.

Today there are 3 key international conventions which govern the international carriage of cargo. These are:

• Warsaw Convention of 1929 (“WC”);

• Warsaw Convention as amended by the Hague Protocol (also known as the Amended Convention) of 1955 (“AWC”);

• Montreal Convention of 1999 (“MC99”). Countries and territories are parties to these conventions and not airlines or forwarders. The nationality of an airline or forwarder, the registration of the aircraft carrying the cargo and the number and location of any intermediate transit stops have no bearing on whether a convention will apply. The routing of the cargo is the critical factor. This is typically noted on the master air waybill (MAWB). Determining which convention will apply is based on the country or territory in which the airports of departure and destination are located. Both countries will need to be parties to the same convention for it to apply. International carriage of cargo between most airports in the Asia-Pacific region is subject to one of the three above Conventions. However, Taiwan and Thailand are not parties to any of these Conventions and carriage of cargo to or from Taiwan or Thailand will be subject to the carrier’s conditions of carriage and the local law of the place in which a claim is pursued.The following are illustrative examples:

• Carriage of a consignment from Los Angeles to Shanghai will be subject to MC99 because both the PRC and the US are parties to MC99.

• Carriage of cargo from Kuala Lumpur to Dubai will be subject to the AWC. Although the UAE is a party to both the AWC and MC99, Malaysia is only a party to the AWC.

• A shipment from Jakarta to Tokyo will be subject to the WC because Indonesia has not become a party to the AWC or MC99. Japan is a party to all 3 Conventions.

• A shipment from Mumbai to Bangkok will not be subject to any of these 3 conventions because even though India is a party to the WC and AWC, as Thailand is not a party to any of these conventions, they will not apply.

Alan Polivnick is a UK and Australian admitted solicitor in the Singapore office of Clyde & Co, Beaumont & Son Aviation. Alan specialises in aviation law across the Asia- Pacific, advising airlines, forwarders and their insurers. This article is intended to provide general information on issues which may be of interest. It is not intended to provide specific legal advice. Further advice should be taken before relying on the contents of this summary. Under Singapore law no comment on Singapore law is permitted and nothing in this article should be construed as any comment on Singapore law. No part of this summary may be used, reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photo-copying, reading or otherwise without the permission of Clyde & Co. Regulated by the Law Society© Clyde & Co 2007