Tay & Partners

Carriage of cargo by air and liabilities of carriers

LegalTAPS Sep 2024

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Carriage of cargo by air and liabilities of carriers

Introduction

As shown in Malaysia’s transportation statistics, the country’s airports handled 656,150 metric tonnes of international cargo in 2023. Despite a 13.3% decrease compared to 2022, this volume falls within the average range observed since 2014, typically between 750,000 and just over 1,000,000 metric tonnes, with an average around 950,000 metric tonnes. No doubt, the carriage of cargo by air continues to play a vital role in maintaining Malaysia’s connectivity with global markets.

In this article, the authors intend to discuss the legal regime which governs the carriage of cargo by air and the liabilities of carriers in Malaysia.

The legislation and the international conventions

The Carriage by Air Act 1974 accorded, among others, the Warsaw Convention as amended at the Hague 1955 (“Warsaw Convention”) and the Montreal Convention signed on 28 May 1999 (“Montreal Convention”) with the force of law in Malaysia in relation to international carriage by air.

The Warsaw Convention and the Montreal Convention apply to all international carriage of persons, baggage, or cargo performed by aircraft for reward and gratuitous carriage by aircraft performed by an air transport undertaking.

The phrase “international carriage” was defined to mean any carriage in which the place of departure and the place of destination are situated either:

  • within the territories of two High Contracting Parties/State Parties; or

  • within the territory of a single High Contracting Party/State Party if there is an agreed stopping place within the territory of another State, even if that State is not a High Contracting Party/State Party.

The definition of “international carriage” expressly excluded any carriage between two points within the territory of a single High Contracting Party/State Party without an agreed stopping place within the territory of another State which is not a High Contracting Party/State Party.

Liabilities of carriers

Both conventions stipulate that a carrier is liable for damage sustained in the event of the destruction or loss of or damage to any cargo if the occurrence which caused the damage took place during the carriage by air.

The phrase “carriage by air” means the period during which the cargo is in charge of the carrier. It does not extend to any carriage by land, by sea or by river performed outside an aerodrome or airport. However, if the carriage was for the performance of a contract for carriage by air, any damage is presumed to have been the result of an event which took place during the carriage by air, unless the contrary is proven.

Further, the carrier is also liable for damage towards the cargo occasioned by delay.

Possible defences

Both the Warsaw and Montreal Conventions recognise the defence of contributory negligence where the carrier may be exonerated either wholly or partly from his liability if the carrier is able to prove that the damage was caused by or contributed to by the negligence of the claimant.

The Warsaw Convention provided that the carrier is not liable if he proves that he and his servants or agents have taken all necessary measures to avoid the damage or that it was impossible for him or them to take such measures. However, it did not elaborate on the extent of measures required by the carrier.

In contrast, Montreal Convention outlined the circumstances where the carrier is not liable if he proves that the destruction, loss of or damage to the cargo resulted from:

  • inherent defect, quality or vice of that cargo;

  • defective packing of that cargo performed by a person other than the carrier or its servants or agents;

  • an act of war or an armed conflict;

  • an act of public authority carried out in connection with the entry, exit or transit of the cargo.

Limitation of liability

The Warsaw Convention fixed a limit towards the liability of the carrier to a sum of 250 francs per kilogramme in the carriage of cargo. The Carriage by Air (Ringgit Equivalents) Order 1978 provided the ringgit equivalent of 250 francs to be RM48. In other words, the limit of carrier’s liability for carriage of cargo is RM48 per kilogramme.

The aforesaid limit may be increased if the consignor has made, at the time the package was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum. In such a case, the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that the sum is greater than the consignor’s actual interest in delivery at destination.

The limits of liability will not apply if it is proved that the damage resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result.

Similarly, the Montreal Convention limited the liability of the carrier to a sum of 17 Special Drawing Rights per kilogramme, unless the consignor has made, at the time the package was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum. The International Civil Aviation Organisation increased the limit to 19 Special Drawing Rights in 2009 and subsequently to 22 Special Drawing Rights in 2019.

The value of Special Drawing Rights in terms of Malaysian Ringgit shall depends on the value of it as provided by the International Monetary Fund at the date of the judgment.

Unlike the Warsaw Convention, the Montreal Convention provides no exceptions to the carrier’s liability limit for cargo carriage, even in cases where the carrier, their servants, or agents act with intent to cause damage or recklessly, with knowledge that damage would likely result.

In both conventions, it was provided that any contractual clause that attempts to relieve the carrier’s liability or to fix a lower limit shall be null and void.

The timeline

In the case of damage, the recipient must complain to the carrier within 14 days from the date of receipt of the cargo. The complaint must be made in writing upon the document of carriage or by separate notice in writing despatched within the 14-day period.

In the case of delay, the recipient must complain to the carrier within 21 days from the date on which the cargo has been placed at his disposal. Similarly, the complaint must be made in writing upon the document of carriage or by separate notice in writing despatched within the 21-day period.

If there is any failure to complain within the stipulated periods, no action shall lie against the carrier.

Any action must be brought within 2 years from the date of arrival at the destination, or from the date on which the aircraft ought to have arrived, or from the date on which the carriage stopped.

Conclusion

While the rights and remedies of consignors against carriers have been set out in the Warsaw Convention and Montreal Convention, it is not uncommon for these rights to go unenforced or overlooked or lapse due to the time limits imposed by the conventions. Hence, it is advisable to seek legal advice as soon as possible upon becoming aware of any damage or delay.

The information in this article is intended only to provide general infor­mation and does not constitute any legal opinion or professional ad­vice. For further information and advice on this article and/or on any areas of Coporate and Coomercial Dispute Resolution, please contact Cheah Soo Chuan at soochuan.cheah@taypartners.com.my


Cheah Soo Chuan
Partner
T: +603 2050 1987
soochuan.cheah@taypartners.com.my

Khor Wei Wen
Associate
weiwen.khor@taypartners.com.my