Carriage by Air

Domestic Air Carriage

The domestic carriage of goods by air is not extensively governed by legislation. The Carriage by Air Act does not apply to domestic carriage. The only legislation governing the form and content of domestic air carriage contracts is the Air Transportation Regulations passed pursuant to the provisions of the Canada Transportation Act. These regulations merely require air carriers to file tariffs with the Canadian Transportation Agency and to specify in those tariffs the terms and conditions of their contracts of carriage. The regulations do not attempt to impose upon carriers any particular terms and conditions. Therefore, the domestic carriage of goods by air is governed by the general common law. This has two important implications.

First, the common law imposes strict liability on the carrier subject to certain limited exceptions. It is sometimes said that the carrier is an insurer of the goods. To establish a prima facie case against the air carrier all that the plaintiff needs to do is to prove receipt by the carrier of the cargo in good condition and failure to deliver or delivery by the carrier in a damaged condition. The carrier is then liable for damages unless it establishes one of the common law defences available to it. The common law defences are that the loss or damage was caused by:

Act of God;
Inherent Vice;
Act of Queens Enemies; or
Fault or fraud on the part of the shipper or owner of the goods

The parties to a domestic contract of carriage are free to negotiate and to include whatever terms they wish in the contract of carriage. Contracts for the carriage of goods by air generally include many defences in addition to the common law defenses and also, most importantly, include provisions excluding and limiting the liability of the carrier. In some cases (particularly in the case of courier companies) these contractual provisions can comprise many pages.

The general
law of contract does impose some constraints and limits on the ability of carriers to completely avoid the consequences of their breach of contract or negligence. For example, the general law of contract requires that onerous terms or conditions be properly and sufficiently brought to the attention of the other party to the contract before or at the time the contract is entered into. There have been many decided cases in which exclusion or limitation clauses were held not to form part of the contract of carriage because they were not properly brought to the attention of the shipper prior to shipment. Additionally, when interpreting exclusion or limitation clauses the courts will usually require that any such term be expressed in clear and unambiguous language and will strictly construe such terms against the interest of the carrier and in favour of the shipper. Again, there have been many decided cases in which exclusion or limitation clauses have been held not to be applicable because of imprecise or inadequate wording. Finally, any terms or conditions that are considered to be “unconscionable” by the courts will not be enforced.

International Air Carriage

What Convention/Protocol Applies?

Canada is a party to the major international conventions governing the international carriage of goods by air. The Carriage by Air Act implements four separate regimes governing the international carriage of goods by air:

Warsaw Convention – Section 2(1) of the Act implements the Convention for the Unification of Certain Rules Relating to International Carriage by Air (commonly referred to as the Warsaw Convention) which is contained in Schedule I to the Carriage by Air Act;
Hague Protocol – Section 2(2) enacts the Hague Protocol to the Warsaw Convention which is contained in Schedule III to the Carriage by Air Act. The Hague Protocol was originally signed in 1955 and came into force in 1963. There are currently 136 state parties to the Hague Protocol. (Given the amount of air traffic between Canada and the United States, it is noteworthy that the United States did not sign the Hague Protocol.);
Montreal Protocol -Section 2(2) also enacts the Montreal Protocol No. 4 to the Warsaw Convention which is contained in Schedule IV to the Carriage by Air Act. The Montreal Protocol was signed in 1975 and entered into force in 1998. There are currently 53 state parties to the Montreal Protocol
Montreal Convention – Section 2.1 of the Carriage by Air Act enacts the Convention for the Unification of Certain Rules Relating to International Carriage by Air Done At Montreal on 28 May 1999. This is commonly referred to as the Montreal Convention and is contained in Schedule VI to the Carriage by Air Act. The Montreal Convention came into force internationally on 4 November 2003 and was proclaimed into force in Canada on the same day 14 .

Determining which of the conventions/protocols applies to a particular contract for the carriage of goods by air is not easy. The convention/protocol that will applies will depend on the countries of departure and destination. (This follows from the prescribed definitions of "international carriage" in the different protocols/conventions.) The convention/protocol that will apply will be the one that the country of departure and the country of destination are both parties to. Therefore it is necessary to ascertain which instruments the country of departure and country of destination have ratified in order to determine which Convention/Protocol will govern. This information can be obtained from the International Civil Aviation Organization. It is also important to note that domestic carriage could be international carriage where there is an “agreed stopping place” in the territory of another state. Thus, for example, carriage from Vancouver to Montreal with a stop at Chicago that is disclosed in the air waybill would be international air carriage. However, if the stop was unscheduled or not disclosed in the air waybill the carriage would probably be considered domestic carriage.

Liability

Under the various conventions, the air carrier is prima facie liable for loss of or damage to cargo during the carriage by air and for delay in delivery of cargo. There are, however, some subtle differences between the various conventions/protocols. The air carrier is prohibited from contracting out of the the convention provisions but does have prescribed defences, which differ depending on the convention/protocol. (See the overviews below for details.)

Limitation of Liability – Cargo Damage

The air carrier is entitled to limit liability unless the consignor has made a special declaration of value. Under the Warsaw convention and the Hague Protocol the limitation amount is 250 francs (16.58 SDRs) per kilogram. Under the Montreal Protocol the limitation amount is 17 SDRs per kilogram. Under the Montreal Convention the limitation amount was originally 17 SDRS per kilogram but was increased to 19 SDRs per kilogram in 2009 under the periodic review provisions in art. 24.

There is a profound difference between the Warsaw Convention and the Hague Protocol, on the one hand, and the Montreal Protocol and Montreal Convention, on the other hand, in relation to the loss of the right to limit. Under the Warsaw Convention the carrier can lose the right to limit if the damage is caused by wilful misconduct of the carrier or of his agents acting within the scope of their employment. Under the Hague Protocol the carrier loses the right to limit if it is proved that the damage resulted from an act or omission of the carrier, or his servants or agents acting within the course of their employment, done with intent to cause damage or recklessly and with knowledge that damage would probably result. In contrast, under the Montreal Protocol and Montreal Convention the right to limit liability in respect of claims for damge to cargo is absolute and cannot be lost.

Limitation Period

The prescription period for bringing proceedings against the carrier is the same in all Conventions/Protocols and is two years.

Additional Information

For a more detailed overview of the law of Carriage of Goods by Air, see the following papers.