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Aviation Legislation Amendment (Liability and Insurance) Bill 2020

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2019-2020

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

 

AVIATION LEGISLATION AMENDMENT (LIABILITY AND INSURANCE) BILL 2020

 

 

 

 

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Infrastructure, Transport and Regional Development, the Hon Michael McCormack MP)

 

 



 

AVIATION LEGISLATION AMENDMENT (LIABILITY AND INSURANCE) BILL 2020

 

OUTLINE

 

The purpose of this Bill is to enhance the operation of Australia’s civil aviation carriers’ liability and insurance framework.

Dedicated aviation liability arrangements are implemented in most countries in recognition of the unique risks associated with civil aviation and the complex task of awarding damages to passengers under civil liability frameworks.

In Part IV of the Civil Aviation (Carriers’ Liability) Act 1959 (CACL Act), Australia has implemented a strict liability system for domestic travel that imposes liability on the carrier regardless of any fault, negligence or intention; while providing a cap on the maximum amount the carrier will be liable for. 

The liability system in Part IV of the CACL Act also applies to the small number of international flights that are not covered by an international agreement on airline liability, such as the 1999 Montreal Convention.  In addition, the Air Accidents (Commonwealth Government Liability) Act 1963 (AA Act) extends the Part IV liability limits so they are applicable to the Commonwealth and certain Commonwealth employees in various circumstances.

Part IVA of the CACL Act establishes a system of mandatory insurance, specifying an amount of insurance per passenger that carriers are required to obtain. 

These liability limits and associated insurance requirements do not update automatically and reduce in real terms over time.  The Bill will update the liability limits and associated insurance requirements to reflect inflation.    

 

Civil Aviation (Carriers’ Liability) Act 1959 (CACL Act)

 

Increasing liability and insurance

 

Section 31(1) of the CACL Act sets the Part IV domestic liability cap to $725,000 for death or injury to passengers, which was increased to $925,000 in accordance with the Civil Aviation (Carriers’ Liability) Regulations 2019 (the regulations) which came into effect on                             1 October 2019. 

The Bill will update the CACL Act so that the liability limit of $925,000 as set out in the regulations is reflected in the CACL Act.  The $725,000 liability cap was implemented in 2012.  

 

Section 31(2) and 31(3) of the CACL Act sets the liability limit for the destruction or loss of registered baggage and non-registered baggage.  The $900 limit for registered baggage and $90 limit for non-registered baggage was increased to $3,000 and $300 respectfully in accordance with the regulations which came into effect on 1 October 2019.  The Bill will ensure the higher limits are reflected in the CACL Act.  Before the amendments in 2019, the baggage liability limits had not been increased since 1994. 

 

Part IV of the CACL Act also applies to international flights not covered by an international convention as implemented elsewhere in the CACL Act. 

The liability limit for these flights for the injury or death of a passenger was increased from 260,000 special drawing rights (SDR) to 480,000 SDR in accordance with the regulations, which came into effect on 1 October 2019.  The Bill will ensure the higher limits are reflected in the CACL Act.

 

To complement the increases in the Part IV liability limits for death or injury to passengers, this Bill will commensurately increase the amount of insurance carriers are required to purchase in accordance with Part IVA of the Act.

 

The minimum amount of insurance for domestic travel will be increased from $725,000 to $925,000 and the amount of insurance for international flights will be increased from 260,000 SDR to 480,000 SDR.

 

The CACL Act does not currently enable the minimum amount of insurance for domestic travel to be increased by regulation. 

 

The Bill includes expanded regulation making powers allowing the Commonwealth Government to more easily increase both liability caps and minimum insurance amounts through regulation.  The regulation making power includes the ability to implement regulations incorporating an automatic indexation mechanism, although further consultation with industry would be necessary to settle such a scheme.

 

War risk insurance

 

An important feature of the Part IVA mandatory insurance scheme is that the insurance is non-voidable.  Section 41D of the Act indicates that an insurer’s liability under a contract of insurance to indemnify a carrier is not affected by any warranty or exclusion in the contract of insurance.  Exceptions can be prescribed in the regulations.

 

The regulations refer to a range of permitted exclusion clauses, some of which relate to so called “war risks”.  This effectively means carriers are not required to obtain insurance against these risks.

 

The Bill will expand the regulation making power so that the Secretary can make determinations about acceptable insurance exclusions.  This will enable the regulations to be revised to make war risk insurance mandatory, by ensuring the framework could promptly respond to any volatility in the war risk insurance market and accommodate changes to the types of insurance that is commercially available.  Further consultation with industry will be undertaken before proceeding with such a scheme.

 

Coverage for servants and agents of the air carrier 

 

Stakeholders have raised concerns that servants and agents of the air carrier (e.g. cabin crew) could be sued independently from the air carrier, and that servants and agents could potentially be held liable for a broader scope of injuries than the air carrier.

 

The Bill includes an amendment to remove ambiguity and clarify that servants and agents of the carrier can avail themselves of the same “conditions” of liability in addition to the “limits” of liability which are applicable to air carriers. 

 

 

 

Air Accidents (Commonwealth Government Liability) Act 1963 (AA Act)

 

The AA Act creates a separate liability framework for air accidents associated with Commonwealth aircraft and/or Commonwealth employees.  In broad terms, the AA Act is intended to address some of the shortcomings of the Warsaw Convention, which establishes a relatively low compensation cap for death or injury caused by an air accident, by extending a damages cap comparable to the framework for domestic flights under Part IV of the CACL Act to victims of air accidents in some circumstances.

 

The current drafting of the AA Act only incorporates increases to the liability caps under Part IV of the CACL Act when the increases are implemented by regulations made under the CACL Act. 

 

The Bill updates the AA Act to ensure it incorporates future increases to the liability caps under Part IV of the CACL Act whether implemented in the principle Act or via regulation.

 

The Warsaw Convention is a liability framework applicable to a limited number of international flights, having been largely overtaken by the 1999 Montreal Convention. 

 

Financial impact statement

 

There are no financial impacts as a result of the implementation of this Bill.  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

AVIATION LEGISLATION AMENDMENT (LIABILITY AND INSURANCE) BILL 2020

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Bill

The purpose of this Bill is to enhance the operation of Australia’s civil aviation carriers’ liability and insurance framework.

Dedicated aviation liability arrangements are implemented in most countries in recognition of the unique risks associated with civil aviation and the complex task of awarding damages to passengers under civil liability frameworks.

In Part IV of the Civil Aviation (Carriers’ Liability) Act 1959 (CACL Act), Australia has implemented a strict liability system for domestic travel that imposes liability on the carrier regardless of any fault, negligence or intention; while providing a cap on the maximum amount the carrier will be liable for. 

The liability system in Part IV of the CACL Act also applies to the small number of international flights that are not covered by an international agreement on airline liability, such as the 1999 Montreal Convention.  In addition, the Air Accidents (Commonwealth Government Liability) Act 1963 extends the Part IV liability limits so they are applicable to the Commonwealth and certain Commonwealth employees in various circumstances.

Part IVA of the CACL Act establishes a system of mandatory insurance, specifying an amount of insurance per passenger that carriers are required to obtain. 

These liability limits and associated insurance requirements do not update automatically and reduce in real terms over time. 

The Bill will update the liability limits and associated insurance requirements to reflect inflation.    

The Bill also includes expanded regulation making powers to enable the quantum of mandatory insurance to be increased by regulation, and to establish a mechanism to expand the type of risks that carriers’ are required to insure to potentially include so called ‘war risks’. 

The Bill also includes a technical amendment to clarify that carriers, and servants and agents of the carrier, share the same scope of liability.   

Human rights implications

This Bill does not engage any of the applicable rights or freedoms.

Conclusion

This Bill is compatible with human rights as it does not raise any human rights issues.

 

Minister for Infrastructure, Transport and Regional Development, the Hon Michael McCormack MP

NOTES ON CLAUSES

 

Clause 1: Short Title

 

1.       This clause is a formal provision specifying the short title of the Bill.

 

Clause 2: Commencement

 

2.       This clause sets out the commencement dates of the Bill.  The entirety of this Bill and the changes to the Act would commence on a single day to be fixed by Proclamation.  If the provisions do not commence within the period of 6 months beginning on the day this Act receives the Royal Assent, they commence on the day after the end of that period. 

 

Clause 3: Schedules

 

3.       This clause provides that legislation is amended as set out in the applicable items in the Schedules to the Bill.    

 

SCHEDULE 1 -

 

Part 1 - Liability Limits

Air Accidents (Commonwealth Government Liability) Act 1963

Item 1 -

 

4.       This item repeals paragraphs 8(1)(a) and (b) relating to the liability limit applicable to a passenger death or injury resulting from an air accident where the aircraft is operated by the Commonwealth or a Commonwealth authority.  The substituted paragraphs ensures the liability limit is the higher of the amount specified in the Civil Aviation (Carriers’ Liability) Act 1959 or any regulations made under that Act.

Item 2 -

 

5.       This item repeals paragraphs 14(1)(a) and (b) to relating to the liability limit applicable for death or injury resulting from an air accident for various types of passengers including categories of Commonwealth employees.  The substituted paragraphs ensures the liability limit is the higher of the amount specified in the Civil Aviation (Carriers’ Liability) Act 1959 or any regulations made under that Act.

 

Civil Aviation (Carriers’ Liability) Act 1959

 

Item 3 -

 

6.       This item repeals paragraph 31(1)(a) which stipulated the old liability limit of $725,000 for passenger death or injury applicable to domestic carriers, and substitutes a new paragraph which provides the liability limit is the amount applicable under new subsection 31(1AA), (see Item 7), unless a higher amount is applicable in accordance with the provisions of paragraphs (b), (c) or (d).

 

 

Item 4 -

 

7.       This item amends paragraph 31(1)(b) to provide the liability limit is the amount prescribed by regulation if that amount is higher than the amount applicable under new subsection 31(1AA).

 

Item 5 -

 

8.       This item amends paragraph 31(1)(c) to provide the liability limit is the amount specified in the passenger’s contract of carriage if that amount is greater than the amount applicable under new subsection 31(1AA) and no regulation is in force prescribing an amount greater than the amount applicable under new subsection 31(1AA).

 

Item 6 -

 

9.       This item substitutes a new paragraph 31(1)(d) to provide the liability limit is the amount specified in the passenger’s contract of carriage if that amount is greater than the amount applicable under a regulation that prescribes an amount greater than the amount applicable under new subsection 31(1AA).

 

Item 7 -

 

10.   This item inserts new subsection 31(1AA) which provides the liability limit for passenger death or injury for domestic carriers is $925,000 or an indexed amount prescribed in the regulations.    

 

Item 8 -

 

11.   This item repeals paragraph 31(1A)(a) which stipulated the old liability limit of 260,000 SDR for passenger death or injury applicable to international flights not covered by certain international conventions, and substitutes a new paragraph which provides the liability limit is the amount applicable under new subsection 31(1B) (see Item 12), unless a higher amount is applicable in accordance with the provisions of paragraphs (b), (c) or (d).

 

Item 9 -

 

12.   This item amends paragraph 31(1A)(b) to provide the liability limit is the amount prescribed by regulation if that amount is higher than the amount applicable under new subsection 31(1B).

 

Item 10 -

 

13.   This item amends paragraph 31(1A)(c) to provide the liability limit is the amount specified in the passenger’s contract of carriage if that amount is greater than the amount applicable under new subsection 31(1B) and no regulation is in force prescribing an amount greater than the amount applicable under new subsection 31(1B).



 

Item 11 -

 

14.   This item amends paragraph 31(1A)(d) to provide the liability limit is the amount specified in the passenger’s contract of carriage if that amount is greater than the amount applicable under a regulation that prescribes an amount greater than the amount applicable under new subsection 31(1B).

 

Item 12 -

 

15.   This item inserts new subsection 31(1B) which provides the liability limit for passenger death or injury applicable to international flights not covered by certain international conventions is 480,000 SDR or an indexed amount prescribed in the regulations.   

 

Item 13 -

 

16.   This item repeals paragraph 31(2)(a) which stipulated the old liability limit of $900 for registered baggage applicable to domestic carriers and international flights not covered by certain international agreements. 

 

17.   The item substitutes a new paragraph which provides the liability limit is the amount applicable under new subsection 31(2A), (see Item 17), unless a higher amount is applicable in accordance with the provisions of paragraphs (b) or (c).

 

Item 14 -

 

18.   This item amends paragraph 31(2)(b) to provide the liability limit is the amount prescribed by regulation if that amount is higher than the amount applicable under new subsection 31(2A).

 

Item 15 -

 

19.   This item amends paragraph 31(2)(c)(i) to provide the liability limit is the amount specified in the passenger’s contract of carriage if that amount is greater than the amount applicable under new subsection 31(2A).

 

Item 16 -

 

20.   This item amends paragraph 31(2)(c)(ii) to provide the liability limit is the amount specified in the passenger’s contract of carriage, if that amount is greater than the amount applicable under a regulation that prescribes an amount greater than the amount applicable under new subsection 31(2A).

 

Item 17 -

 

21.   This item inserts new subsection 31(2A) which provides the liability limit for registered baggage applicable to domestic carriers and international flights not covered by certain international agreements is $3,000 or an indexed amount prescribed in the regulations. 

 

Item 18 -

 

22.   This item repeals paragraph 31(3)(a) which stipulated the old liability limit of $90 for unregistered baggage applicable to domestic carriers and international flights not covered by certain international agreements. 

 

23.   The item substitutes a new paragraph which provides the liability limit is the amount applicable under new subsection 31(4), (see Item 22), unless a higher amount is applicable in accordance with the provisions of paragraphs (b) or (c).

 

Item 19 -

 

24.   This item amends paragraph 31(3)(b) to provide the liability limit is the amount prescribed by regulation if that amount is higher than the amount applicable under new subsection 31(4).

 

Item 20 -

 

25.   This item amends paragraph 31(3)(c)(i) to provide the liability limit is the amount specified in the passenger’s contract of carriage if that amount is greater than the amount applicable under new subsection 31(4).

 

Item 21 -

 

26.   This item amends paragraph 31(3)(c)(ii) to provide the liability limit is the amount specified in the passenger’s contract of carriage, if that amount is greater than the amount applicable under a regulation that prescribes an amount greater than the amount applicable under new subsection 31(4).

 

Item 22 -

 

27.   This item inserts new subsection 31(4) which provides the liability limit for unregistered baggage applicable to domestic carriers and international flights not covered by certain international agreements is $300 or an indexed amount prescribed in the regulations. 

 

Item 23 -

 

28.   This item repeals paragraphs 41C(3)(aa), (a) and (b), which stipulated the minimum insurance amounts required for domestic carriage, international carriage pursuant to the 1999 Montreal Convention, and other international carriage. 

 

29.   The new paragraphs provide that the minimum insurance amounts are the amounts provided for in new subsections 41C(3A) and 41C(3B) (see item 24) unless the regulations prescribe a higher amount.

 

Item 24 -

 

30.   This item inserts new subsections 41C(3A) and 41C(3B) which provides the minimum insurance amount required is $925,000 per passenger for domestic carriage and 480,000 SDR per passenger for international carriage pursuant to the 1999 Montreal Convention and other international carriage, or an indexed amount prescribed in the regulations. 

Item 25 -

 

31.   This item outlines the application provisions for Items 3 to 22.

 

32.   The amendments to the Air Accidents (Commonwealth Government Liability) Act 1963 and the Civil Aviation (Carriers’ Liability) Act 1959 relating to changes to the liability limits for passenger death or injury apply to accidents occurring on or after commencement. 

 

33.   The amendments to the Civil Aviation (Carriers’ Liability) Act 1959 relating to changes to the baggage liability limits apply to the destruction, loss, or injury to baggage occurring on or after commencement. 

 

34.   The amendments to the Civil Aviation (Carriers’ Liability) Act 1959 relating to changes to the insurance requirements apply to passenger carrying operations engaged in or proposed to be engaged in on or after commencement.   

 

Part 2 - Insurance Exclusions

Civil Aviation (Carriers’ Liability) Act 1959

 

Item 26 -

 

35.   This item makes an editorial amendment to section 41D to provide for subsections.     

 

Item 27 -

 

36.   This item inserts new subsections in section 41D which expand the regulation making power relating to the scope of mandatory insurance that airlines must obtain, so that the regulations may provide for the Secretary to make determinations about permitted exclusions of liability, and for the Secretary to delegate that power to SES employees in the Department.     

 

Part 3 - Servants and Agents

Civil Aviation (Carriers’ Liability) Act 1959

 

Item 28 -

 

37.   This item clarifies that a carrier, and servants and agents of a carrier, share the same scope of liability by providing that servants and agents of the carrier can avail themselves of the same “conditions” of liability in addition to the “limits” of liability which are applicable to air carriers. 

 

38.   Section 28 (Liability of the carrier for death or injury); subsections 29(1) (Liability of the carrier in respect of baggage) and 35(2) (Liability in respect of death); and section 36 (Liability in respect of injury) are examples of provisions dealing with conditions of liability.  Section 31 (Limitation of liability) deals with limits of liability.



 

Item 29 -

 

39.   This item is an editorial amendment consistent with modern drafting practice. 

 

Item 30 -

 

40.   This item is an editorial amendment consistent with modern drafting practice.  

 

Item 31 -

 

41.   This item outlines the application provisions for Items 28 to 30, and provides that the amendments apply to actions brought on or after commencement.