England and Wales High Court (Administrative Court) Decisions

1. MR MICHAEL BELOFF QC, MR R GARDINER, PROFESSOR C GREENWOOD and MR T KERR (instructed by Messrs Beaumont & Son) appeared on behalf of

2. DR R PLENDER QC and MR P SHEPHERD (instructed by the Treasury

3. Solicitor) appeared on behalf of THE RESPONDENT

4. MR JUSTICE JOWITT: This is an application for judicial review pursuant to leave granted by Laws J whereby the International Air Transport Association (IATA) seeks to challenge the validity of the Air Carrier Liability Order 1998 (the Order) made on 21 July 1998 which came into force on 17 October 1998.

5. IATA was incorporated by a special Act of the Canadian Parliament in 1945. It represents the interests of more than 260 airlines from approximately 150 countries. Its members carry approximately 98% of scheduled international air passengers. It is common ground and is obviously correct that IATA has the requisite standing to mount this challenge.

6. The purpose of the Order was to ensure the implementation of Council Regulation (EC) Number 2027/97 of 9 October 1997 (the Regulation) which also came into force on 17 October 1998 and takes its validity from section 2(2) of the European Communities Act 1972 which provides:

7. The challenge to the Order mounted by Mr Beloff, QC for IATA and resisted by Dr Plender, QC for the Respondent, who bears ministerial responsibility in the field of air transport, is dependent on a challenge to the validity of the Regulation. It is well established and common ground that while a national court of a Member State of the European Community may make a determination that an EC regulation is valid it may not make a determination that it is invalid. Such a decision can only be made by the European Court of Justice (the ECJ): Foto-Frost The Huptzollampt Lübeck-Ost [1987] ECR 4149. Once, therefore, the validity of the Regulation is called into question then unless I am completely confident it is valid I am required to refer the question, if the answer is relevant to my decision, to the ECJ pursuant to Article 177 of the Treaty of Rome for its decision on the point.

8. I have well in mind the words of Sir Thomas Bingham, MR, in R v Stock Exchange ex parte Else [1993] QB 534 at page 545D, to which Mr Beloff has drawn my attention:

9. Mr Beloff submits that I cannot be completely confident and that indeed the invalidity of the Regulation is well demonstrated by his submissions and that I should in consequence make a reference. He submits also that a reference to the ECJ would enable the Commission of the Community and other Member States to make their submissions to that court and that its decision would resolve the matter definitively within the Community so that even if I were able to feel confident that the Regulation is valid there would nonetheless be merit in making a reference.

10. The UK was a signatory with many other Sovereign States to the Warsaw Convention 1929 and, along with most but not all of those States, to The Hague Protocol which, together with the 1929 Treaty, produced the Convention. Those of the Convention’s provisions which are relevant for present purposes have to be construed by me rather than the ECJ: Criminal Proceedings against Jean-Claude Levy [1993]ECR 1-4287 at page 4307. The Convention has been incorporated into our domestic law by section 1(1) of the Carriage by Air Act 1961 so that what I have to construe is in fact part of an English statute, albeit I must do so according to the canons of construction by which international treaties are construed.

11. The Convention is expressed by its title to be a Convention for the unification of certain rules relating to international carriage by air. Part of the preamble reads, “Having recognised the advantage of regulating in a uniform manner the conditions of international transportation by air in respect of the documents used for such transportation and the liability of the carrier”, and goes on to recite that the authorised plenipotentiaries have concluded and signed the Warsaw Convention (1929) on behalf of the parties to it.

12. The Convention sets financial limits to the liability of international carriers in respect of the death of or injury to passengers and makes other provisions concerning that liability. I shall return in more detail to some of these provisions.

13. Over the four decades since 1955 the effect of inflation has been substantially to erode the real value of the maximum sum which could be awarded by way of damages under those contracts for international air carriage to which the limiting provision applied. Not surprisingly many airlines have exercised their right under the Convention to enter into special contracts, some of which provide for an increased limit to the damages and some of which accept that the amount payable will be that which is fixed by the court. It should be pointed out that IATA has given a significant lead in persuading many of its members to adopt the latter course. Changes have also been made to the Convention by the Guatemala City Protocol (1971) and the Montreal Protocol (1975) but by no means all the parties to the Convention are parties to these protocols.

14. Articles 17 to 26 of the Convention deal with the carriers liabilities to passengers and in respect of their baggage. I do not find it necessary to set out or summarise all these provisions. What I propose to do is to summarise some of them so as to contrast them with the corresponding provisions of the Regulation.

15. Article 1(1) provides that the Convention is to apply to all international carriage of persons by air for reward.

16. Article 1 applies the Regulation to the liability of Community air carriers in respect of the death of or personal injury to a passenger if the accident which caused it took place on board an aircraft or in the course of the operations of embarking or disembarking. This follows substantially the wording of Article 17(1) of the Convention but the Regulation applies whether the air carriage is domestic or international.

17. Article 22 limits the liability of the carrier to each passenger to 16,600 Special Drawing Rights with the caveat that the carrier and the passenger may by special contract agree to a higher limit. Article 25A(1) allows a servant or agent of the carrier acting within the scope of his employment to avail himself of these limits. Companies conducting ground operations at an airport and their staff come within the scope of this provision.

18. Article 17(1) restricts the carrier’s liability in respect of the death of or personal injury to a passenger to those cases in which the event which caused the death or injury took place on board the aircraft or in the course of the operations of embarking or disembarking and Article 24 provides that in cases covered by Article 17, however the cause of action in damages is formulated, the conditions and limits set out in the Convention apply.

19. Article 3(1)(a) provides there shall be no financial limit on the liability of a Community carrier in respect of the death of or personal injury to a passenger. It follows that a servant or agent of the carrier cannot rely on Article 25A(1) of the Convention to limit his liability.

20. Article 20 allows the carrier to avoid liability in all cases if he proves that he and his agents took all necessary measures to avoid the damage or that it was not possible for such measures to be taken.

21. Article 3(2) removes this defence in respect of any damages up to 100,000 Special Drawing Rights while preserving by Article 3(3) the right of the Community carrier to rely upon contributory negligence in accordance with applicable law, which is to be found in Article 21 of the Convention.

22. It is common ground that the Regulation imposes on Community carriers a regime which can be seen to be different in significant respects from what is provided for by the Convention in the case of international carriers. The Convention provides for its amendment but as yet there has been no amendment introducing provisions similar to those contained in the Regulation. It is therefore unnecessary for me to consider the mechanism for amending the Convention.

23. It is common ground that the Community cannot act in breach of its own public international law obligations. Nor can it require Member States to act in breach of their own obligations owed under public international law to non-Member States or act in a way which impedes the performance of those obligations. Thus it was said by the ECJ in Anklagemyndigheden v Poulsen and Diva Navigation Corporation [1992] I-ECR 6019 at page 6052, paragraph 9, that the Community must respect international law in the exercise of its powers. In International Fruit Company v Produktschap voor Groeten en Fruit [1972] ECR II-1219 at page 1226, paragraphs 4 - 6, the ECJ confirmed its jurisdiction to examine whether the validity of the acts of the Community Institutions may be affected by reason of being contrary to a rule of international law. In Racke GmbH and Company v Hauptzollamt v Minz [1998] 3 CMLR 219 at page 254, paragraphs 24 - 7, and at page 257, paragraphs 45 - 46 and 49 - 51, the ECJ said that the rules of customary international law and the principle of pacta sunt servanda are part of the Community legal order. The pacta sunt servanda principle is enshrined in Article 26 of the Vienna Convention on the Law of Treaties:

24. The Vienna Convention came into force on 27 January 1980 and strictly applies only to treaties which were concluded after that date. It is regarded, though, as having codified existing public international law in relation to treaties: see for example the citation from a judgment of the International Court of Justice cited with approval in paragraph 24 of Racke. Acceptance by the Community of the principles set out at the beginning of this paragraph is also implicit in the first paragraph of Article 234 of the Treaty of Rome, to which I shall refer later.

25. Mr Beloff submits that an international treaty such as the Convention which deals with the obligations and rights of individuals, whether natural persons or corporate bodies, rather than a sovereign state is nonetheless enforceable in the international forum by any state which is a party to the treaty on behalf of those of its subjects, whether natural persons or corporate bodies, whose rights have been adversely affected by the action of another party to the treaty.

26. Dr Plender accepts this proposition and authority for it is to be found in the judgment, to which he referred me, of the Permanent Court of International Justice in Mavrommatis Palestine Concessions Case, Greece v UK (1924) PCIJ Reports, Series A, No.2, 12, at page 302.

27. The parties differ on the proper construction of the Convention. Dr Plender contends that with the exception of Article 6 the Regulation places no obligations on carriers of non Member states and that it does not affect either the rights or, save possibly by Article 6(3), the obligations of carriers of non Member states under the Convention. Mr Beloff’s contention is to the contrary. Both accept that the Convention creates mutual rights and obligations but they differ in their submissions, having regard to what they argue is the proper construction of the Convention in accordance with the principles set out in the Vienna Convention, as to what they are. The rival contentions can be expressed in the following way, the words in square brackets and those in round brackets showing the points at which Mr Beloff and Dr Plender respectively differ:

28. The mutuality is that each party to the Convention agrees to accord to every other party’s air carriers and nationals who are carried on international flights the Convention standards [and] (but) undertakes [the] (no) obligation to apply them to its own.

29. Dr Plender rightly places reliance on section 3 of the Vienna Convention, which deals with the interpretation of treaties.

30. Article 31 provides, so far as is material, as follows:

31. Dr Plender reminds me of the rule of public international law that for a State to enforce a treaty it must be able to rely upon a right clearly vested in it by that treaty. In my view, following Mavrommatis Palestine Concessions , whatever right is conferred on a state’s air carrier or national who is carried on an international flight is to be treated as vested in that state. Dr Plender relies on that case for the proposition that, in the absence of express provision to the contrary, a state can protect only its own nationals. I accept this. This, however, does not answer the all important question: what are the rights which can be protected ?

32. Reliance is placed by Dr Plender additionally on Article 31(3)(b). He contends that the practice of airlines and states does not support Mr Beloff’s contention. So far as airlines are concerned, however, the Convention permits the practices of increasing and waiving financial limits. Nor, in my judgment, has any practice in the application of the Convention been brought to my attention which establishes the agreement between the parties to it regarding its interpretation. It is important to observe that practice alone is not sufficient. It has to be such as to establish the agreement of the parties and this is consistent with paragraph 2 of Article 31.

33. It seems to me that the question is whether, on its proper construction, an air carrier of one party to the Convention has in relation to international flights any rights concerning the way in which another party treats its air carriers and nationals who are carried on international flights. This question has in my judgment to be answered by looking at the Convention in the light of section 3 of the Vienna Convention to discern what is its purpose and scope. Dr Plender accepts that in the field of international law rights can be implied but less readily so than in our own domestic law. I readily accept that. However, to ask what is the purpose and scope of the Convention is not in my view to embark on the exercise of implying terms or rights.

34. If I were having to consider the construction of the relevant provisions of the Convention without the aid of authority but with the assistance of section 3 of the Vienna Convention I would unhesitatingly hold that the construction for which Mr Beloff contends is the correct one. Article 32 of the Vienna Convention permits recourse to the preparatory work of a treaty in order to confirm the meaning resulting from the application of Article 31 or to determine its meaning if an interpretation according to Article 31 would lead to a manifestly absurd or unreasonable result. Recognising the caution expressed in Fothergill v Monarch Airlines [1981] AC251 and by Lord Hope in Sidhu v British Airways [1997] AC430 at page 442E concerning the use of travaux preparatoires, I would place reliance upon the statements made by Sir Alfred Dennis on behalf of the British delegation at the 1929 Warsaw Conference which concluded the Warsaw Convention. At page 35 of the minutes he said,

35. Again, at page 85 in response to a proposal made by France Sir Alfred said,

36. Other contributions to the discussion made by other delegates demonstrate strongly the view that what was being considered was a uniform regime, subject to permitted variation, which all parties would impose upon their own air carriers and expect other parties to do likewise.

37. Common-sense suggests that if after the Convention had been entered into one party had expressed the view that in respect of its own air carriers it could break ranks and impose whatever regime it wished this would have been regarded as a frustration of the purpose of the Convention.

38. Happily, the problem is not free from authority which gives far greater weight to its solution than anything which I might say.

39. In his speech, with which the other members of their lordships’ House agreed, Lord Hope said at page 444D:

40. The phrase “Unification of Certain Rules” tells us two things. The first, the aim of the Convention is to unify the rules to which it applies. If this aim is to be achieved exceptions to these rules should not be permitted, except where the Convention itself provides for them. Second, the Convention is concerned with certain rules only, not with all the rules relating to international carriage by air. It does not purport to provide a code which is comprehensive of all the issues that may arise. It is a partial harmonisation, directed to the particular issues with which it deals.”

41. There are a number of other passages in Lord Hope’s speech from which I derive assistance. It is sufficient for me to refer to three of them.

42. At page 450A he said:

43. Finally at page 454A Lord Hope said:

44. The effect of these passages is in my judgment to demonstrate the correctness of Mr Beloff’s submission that there is conflict between the Convention and the Regulation and to refute Dr Plender’s contrary submission that the Convention does nothing to tie the hands of the parties to it in relation to their own air carriers and nationals.

45. Mr Beloff’s submission also finds support in a decision of the United States Court of Appeals, District of Columbia circuit In re Korean Airlines Disaster of September 1 1983 (1983) 932F 2nd 1475 and in the decision of the Supreme Court of the United States in ElAl Israel Airlines v Tsui Yuan Tseng , 12 January 1999 unreported. The decision was by a majority of 8 to 1 and at page 11 the opinion reads:

46. The Supreme Court cited with approval the decision in Sidhu v British Airways. The opinion adds at page 18.

47. Having regard to this weight of authority and also to my own views I have no hesitation in holding that on its proper construction the Convention imposes mutual obligations on air carriers in the areas with which it deals and that there is imposed on each party to the Convention an obligation not to require its own air carriers to depart from its provisions and confers a right in international law on all parties to require that other parties do not require their own air carriers to do so. It follows from this that the Regulation is in conflict with the Convention and impedes the performance by Member States of their obligations owed under the Convention to non-Member States who are parties to it, unless the first paragraph of Article 234 of the Treaty of Rome comes into play.

48. In these circumstances I do not find it necessary to resolve the minor issue as to whether or not Article 6(3) of the Regulation is similarly in conflict with the Convention.

49. Vis à vis the Member States the Community has supremacy in the areas accorded to it by the Treaty of Rome but as I have said already, it has to act in accordance with its own legal order. So, in the field of public international law, it is subject to the two fetters of which I have spoken: it must not act in breach of its own public international law obligations and, it may not require a Member State to act in breach of that Member State’s obligations or impede the performance of them by that Member State.

50. For present purposes obligations owed under public international law can be divided into 2 categories: those owed by virtue of what Dr. Plender has referred to as the common law of public international law by all sovereign bodies and those owed under treaty, which are owed only by the parties to the particular treaty. The Community is not a party to the Convention. The obligations of the Community fall in this case, therefore, into the first category. All the Member States are parties to the Convention and so their obligations fall into the second category. The relevant obligation of the Community in this case is therefore the one identified in the second fetter referred to above. Mr Beloff rightly accepted my suggestion that the question I have to consider is whether by the Regulation the Community has required Member States to act in breach of the obligations owed by them under the Convention to non-Member States.

51. It is not suggested that the Regulation is ultra vires the enabling power provided by Article 84 of the Treaty of Rome which deals with transport. Any basis for invalidity has to be found elsewhere. The focus, in my view, has to be on the question which Mr Beloff concedes I have to consider.

52. In the applicant’s grounds set out in Form 86A and in Mr Beloff’s submissions the challenge to the validity of the Regulation is based on what is said to be a breach of the obligation imposed by the second fetter and paragraph 1 of Article 234 of the Treaty of Rome was prayed in aid as reflecting that obligation though not as providing the essential basis for the challenge. Both Mr Beloff and Professor Greenwood who, in his leader’s absence, replied on behalf of the applicant to Dr Plender’s submissions submit that the challenge is a free standing one and does not need to invoke Article 234. That article does not come into play unless the Regulation is a valid one and it is not therefore necessary to address paragraph 2 of the Article. I readily accept that Article 234 can have no relevance if the Regulation is invalid but in my judgment paragraph 2 of the Article cannot be ignored when one considers the question of validity.

53. The preamble to the Regulation shows that it was made in the context of a limit on the liability of air carriers to passengers set by the Convention which is seen by the Council as being too low. The Council’s view is that a full review and revision of the Convention is long overdue and that efforts to increase the Convention limit should continue through negotiation at multi-lateral level. The preamble records that a review of the Convention was being undertaken by the International Civil Aviation Organisation (the ICAO) and that pending its outcome actions on an interim basis by the Community would enhance the protection of passengers and could serve as a guideline for improved passenger protection on a world-wide basis. The preamble clearly recognises the incompatibility between provisions to be imposed on Community air carriers by the Regulation and certain provisions of the Convention.

54. Mr Beloff and Professor Greenwood make the following points. It is apparent from the preamble that the Council wants to see the Convention continue, though in a suitably revised form. The negotiations to achieve this will take time. However, the interim actions taken by the Community pursuant to the Regulation without waiting for this or for the conclusion of the review by the ICAO are in breach of the Community’s own public international law obligations in relation to those of the Member States to which I have referred already. Since the Community’s own legal order precludes it from acting in breach of its obligations under public international law the Regulation which, were it valid, would have this effect must therefore be invalid.

55. Dr Plender responds to this by reliance upon the first paragraph of Article 234.

56. The obligation of Member States under the Convention antedate their joining of the Community and are therefore not affected by the Treaty of Rome. The suspensory effect of the first paragraph of Article 234 means that the Regulation does not put the Community or Member States in collision with their public international law obligations. The basis for the applicant’s challenge falls away, therefore, and leaves the validity of the Regulation unscathed. I should add that it is common ground that Article 234 applies in the case of Community legislation coming into force both before and after a Member State, the performance of whose public international law obligations are affected by it, joined the Community.

57. Mr Beloff and Professor Greenwood seek to deal with this argument by pointing out that all the Member States had become parties to the Convention before they joined the Community and that Dr Plender’s reliance upon the first paragraph of Article 234 has the result, on the hypothesis that the Regulation is valid, of suspending its application in the case of each and every Member State, thus depriving it of any effect. This, it is argued, would rob the Regulation of the characteristics which are conferred on all regulations by Article 189, that they shall be binding in their entirety and directly applicable in all Member States and, by Article 192 (this being a Regulation made by the Council) that they shall enter into force on the date specified in them. It is submitted that an instrument robbed of these characteristics cannot be regarded in Community law as a regulation at all and so cannot have any validity.

58. In my judgment this argument advanced on behalf of the applicant must be rejected. Mr Beloff accepts that it could not be relied upon if the Regulation were in conflict with the antecedent obligations of only one or a few Member States. (This must be right for otherwise the first paragraph of Article 234 would never have any effect.) I asked what would have been the position had there been one of the Member States which was not a party to the Convention. Both Mr Beloff and Professor Greenwood said that was a matter of uncertainty. Mr Beloff felt unable to say what number of Member States which were also parties to the Convention would have been sufficient to rob the Regulation of its validity. This difficulty, it was submitted, served to demonstrate that a judge sitting in the national court could not say with complete confidence that the Regulation is valid and must, therefore, refer the point to the ECJ.

59. It seems to me though, on the applicant’s argument, that if just one Member State were involved the Regulation would cease to be directly applicable in all Member States and would therefore be invalid. This would deprive Article 234 of any effect. This is plainly not so and in my judgment the challenge to the validity of the Regulation fails at this point.

60. In fact Articles 189 and 192 have to be read in the context of Article 234. Just as those responsible for drafting and agreeing upon the wording of Article 234 must have been aware of the possibility of conflict between a Member State’s obligations to non-Member States arising before it joined the Community and made provision for it in Article 234, so there must have been an awareness that this conflict might arise in a case in which all Member States had incurred obligations to non-Member States before joining the Community. For example, they were all parties to the United Nations Charter, to the General Agreement on Tariffs and Trade (GATT) and to the European Convention on Human Rights as well as to the Convention. Article 234 was plainly intended to deal with all such cases and it is not without significance that the reference is to “one or more Member States”.

61. It is also necessary at this point to make reference to the second paragraph of Article 234.

62. A consideration of this paragraph shows it is in fact incorrect to say that because all Member States have antecedent incompatible obligations to non-Member States the Regulation is invalid. It matters not whether the terms of a regulation are such that only one, some or all the Member States can invoke the first paragraph of Article 234. Even though the Member States involved are not affected by a regulation in the sense of having to comply with it while the antecedent and incompatible obligations remain in force the regulation would still apply in the Member State or States involved by virtue of the requirement in paragraph 2 of Article 234 to take all appropriate steps to eliminate the incompatibilities. This duty in my judgment applies whether only one, some or all the Member States are involved. It is only the fact that, despite incompatibility, a regulation still applies in a Member State (though held in suspense by virtue of the first paragraph) which can require it to take action under paragraph 2.

63. Mr Beloff accepted that if the Regulation had recited in its preamble that the Council of Ministers had taken the view that the Convention was now a dead letter and had the Regulation required all Member States to denounce the Convention (6 months’ notice being required) and gone on to provide that after the denunciations became effective a new regime should be applied its validity could not be called into question. It is said, though, that is a different case from the one which is before me and a consideration of it can afford me no assistance. It seems to me strange, however, that if a regulation in this form would be valid the Regulation I have to consider can be said to be invalid despite its less draconian effect.

64. I conclude by referring again to the International Fruit case and to two further decisions of the ECJ.

65. Valuable assistance is to be gained from the opinion of Mr Advocate General Mayras in the International Fruit case. The second of two questions referred by the national court asked whether Community regulations would be invalid if they were contrary to Article II of GATT to which all Member States were parties. The ECJ ruled that the regulations were not in conflict with the Article and so did not consider what would have been the position if they had been. However, the Advocate General did consider the point in his opinion at page 1236.

66. It is clear from that passage that the Advocate General did not consider that had there been conflict the fact that all the Member States were parties to GATT would have provided a basis for saying the regulations were invalid. On the contrary, he regarded the first and second paragraphs of Article 234 as providing the solution to the problem which would have been caused had there been a conflict.

67. I find strong support in what the Advocate General said in his opinion for my conclusion that the Regulation is valid.

68. The other cases are R v Secretary of State for the Home Department ex parte Evans Medical Limited [1995]ELR-I-563 and R v HM Treasury and Bank of England ex parte Centro-Com Srl [1997] ELR-I-81. In both cases a question was asked as to the effect of an obligation of a Member State under a treaty if that should be incompatible with that Member State’s obligation under a Community instrument. In each case the treaty was one to which all Member States were parties. Following earlier authority the ECJ held in both cases that it is for the national court to determine what are the Member State’s treaty obligations so as to determine whether they thwart the application of the Community law in question. It is clear that in each case the ECJ took the view that in the event that incompatibility had been established the problem would have been one to be resolved by the application of Article 234. It was not suggested that the fact that all Member States were party to the treaty in question could in the event of incompatibility provide a ground for holding that the Community instruments in question were invalid.

69. These cases illustrate the impossibility on a reference from a single national court of placing before the ECJ the findings which would be required from the national courts of all, or at least most, of the Member States in order for it to be possible to mount the challenge to the validity of the Regulation which Mr Beloff and Professor Greenwood say the applicant should be allowed to argue on a reference. In my view what the ECJ did not say in these two cases about invalidity as well as the procedural difficulty which I have identified strongly confirm that Article 234 provides a complete answer to the applicant’s challenge to the validity of the Regulation.

70. Moreover, even if despite its own jurisprudence, the ECJ were prepared to construe the Convention with the aid of the Vienna Convention it would still not be able to say without assistance from their national courts whether and to what extent Member States might have adopted changes which, whether or not in breach of their Convention obligations, would not be justiciable in their own courts and so would not lead those courts to hold there was an incompatibility between the Regulation and Convention obligations.

71. For these reasons I do feel the complete confidence which enables me to hold that the Regulation is valid and that the challenge to it fails. I decline, therefore, to refer the question of its validity to the ECJ. This application for judicial review is dismissed.