Montreal Convention

The Montreal Convention (the Convention for the Unification of Certain Rules for International Carriage by Air, done at Montreal on 28 May 1999) sets the liability of air carriers to passengers and shippers on international carriage between states that are party to it. It entered into force in November 2003; the United States ratified it in 2003 and India acceded in 2009. Between states party to both, it prevails over the older Warsaw Convention instruments (Art. 55).

What the carrier is liable for

Under Article 18 the carrier is liable for the destruction, loss of or damage to cargo during carriage by air. It escapes liability only to the extent it proves the damage resulted from an inherent defect, quality or vice of the cargo; defective packing by someone other than the carrier; an act of war or armed conflict; or an act of public authority in connection with the cargo's entry, exit or transit. Under Article 19 it is also liable for delay, unless it proves it took all measures that could reasonably be required to avoid the damage.

The limit: 26 SDRs per kilogram

Article 22(3) caps the carrier's liability for cargo at a number of Special Drawing Rights (SDRs), the International Monetary Fund's unit of account, per kilogram. ICAO reviews the limits under Article 24: the original 17 SDRs rose to 22 SDRs on 28 December 2019 and to 26 SDRs per kilogram on 28 December 2024. The cap does not apply if the shipper made a special declaration of interest in delivery when handing the cargo to the carrier and paid any supplementary sum. For partial loss or damage, only the weight of the packages concerned counts, plus other packages on the same air waybill whose value is affected (Art. 22(4)).

Notice and suit deadlines

• Damage: a written complaint to the carrier forthwith after discovery, and at the latest within 14 days from the date of receipt (Art. 31(2))
• Delay: a written complaint within 21 days from the date the cargo was placed at the consignee's disposal (Art. 31(2))
• Lawsuit: within two years from arrival at destination, or from the date the aircraft ought to have arrived or the carriage stopped (Art. 35)

Taking delivery without complaint is prima facie evidence that the cargo was delivered in good condition (Art. 31(1)), so note any visible damage on the delivery receipt before signing.

Forwarders and house air waybills

Article 39 separates the contracting carrier, which makes the contract of carriage with the shipper, from the actual carrier, which performs it. A forwarder that issues its own house air waybill as principal can be the contracting carrier, with the airline as the actual carrier.

Montreal Convention vs COGSA

Ocean shipments to and from US ports fall under the Carriage of Goods by Sea Act (COGSA) instead: $500 per package or customary freight unit unless a higher value is declared on the bill of lading, notice within three days of delivery for damage that is not apparent, and suit within one year of delivery. The air limit is set by weight, the ocean limit by package, and neither has anything to do with what the goods are worth.

What it means for shippers

High-value, light cargo such as electronics, pharmaceuticals or samples is worth far more per kilogram than the Convention pays. Declaring a higher value on the air waybill costs a supplementary charge; a cargo policy on Institute Cargo Clauses terms pays on the insured value instead. See cargo insurance.