Respondents Brief — Trans World Airlines, Inc. v. Franklin Mint Corp.
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Nes. SE-2888, 82-1465
IN THE
Supreme Court of the United States
Ceres ER TERM, 1983
~~ ———
TRANS WORLD AIRLINES, INC.,
Petitioner,
—<dvainst—
FRANKLIN MINT CORPORATION,
FRANKLIN MINT LIMITED, and
McGREGOR, SWIRE AIR SERVICES LIMITED,
Respondents.
FRANKLIN MINT CORPORATION,
FRANKLIN MINT LIMITED, and
McGREGOR, SWIRE AIR SERVICES LIMITED,
Petitioners,
—against—
TRANS WORLD AIRLINES, INC.,
Respondent.
On WRITS OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE SECOND CIRCUIT
BRIEF OF FRANKLIN MINT CORPORATION,
FRANKLIN MINT LIMITED, AND McGREGOR,
SWIRE AIR SERVICES LIMITED
Respondents in No. 82-1186 and
Petitioners i in No. 82-1465
JouNn R. FOSTER
Counsel of Record
120 Broadway, Suite 1825
New York, New York 10271-
0156
(212) 227-3550
Counsel for
Of Counsel: Franklin Mint Corporation
WAESCHE, SHEINBAUM & Franklin Mint Limited
O'REGAN, P.C. McGregor, Swire Air Services
October 12, 1983 Limited
~
i
Questions Presented
1. What is the proper conversion factor, if any, for the gold
franc provision in the Warsaw Convention in view of the Con-
gressional decision to eliminate an official price for gold?
2. Whether a treaty provision should be enforced notwith-
standing a subsequent Act of Congress which abandoned the
premise upon which the treaty provision had been based?
seat id a aa
it
_TABLE OF CONTENTS
PAGE
QUESTIONS PRESENTED .........0cceeecevccecvecs i
5 PRELIMINARY STATEMENT .........00 ce eeevceeeves 1
STATEMENT OF THE CASE .........00csceeeeeeeees 2
A. The End of the Official Price of Gold ........ 2
B. The Development of the Airline Industry ...... 8
C. From the Warsaw Convention to the Montreal
ease ch cee bobeeces cee tb aon’ 12
SUMMARY OF ARGUMENT .........0ccccceeccevees 16
| Tihs coke bbws 6 6-49 %00 00006 b0006000% 17
i, Pomst I—If enforceable, the Article 22 limit should be
oe converted into dollars using the free-market price
, Nd g Skates an 'bc bl 6 asceeete ven ct 17
é Pot I—Alternatively, Article 22 of the Convention
should be held to be unenforceable .............. 37
Point III—Article 22 should be held unenforceable as of
Ess or oceesavesbecb vue ie ceeccen ts 40
Bacardi Corp. v. Domenech, 311 U.S. 150 (1940) .... 27
ae Baker v. Carr, 369 U.S. 186 (1962) ccoccssesoccoses OO
iv
Balkan Bulgarian Airlines v. Tammaro (Court of Milan,
PE Ne, Sele MOPED bic cccvcecnhossscedevmers 26
Benjamins v. British European Airways, 572 F.2d 913
(2d Cir. 1978), cert. denied, 439 U.S. 1114 (1979).. 27
Block v. Compagnie Nationale Air France, 386 F.2d 323
(Sth Cir. 1967), cert. denied, 392 U.S. 905 (1968) 19
Boehringer Mannheim Diagnostics, Inc. v. Pan American
World Airways, Inc., 531 F. Supp. 344 (S.D. Tex.
1981), appeal docketed, No. 81-2519 (Sth Cir. De-
Sees 30, IFSL) | oc vcvcvecscvedvcsbotvesn tube 25
Bowsher v. Merck & Co., 453 U.S. 111 (1983) ....... 18
Chevron Oil Co. v. Huson, 404 U.S. 97 (1971). . 41, 42, 43, 44
Cipriano y. City of Houma, 395 U.S. 701 (1969) .... 41
The Cherokee Tobacco, 78 U.S. (11 Wall.) 616 (1870)... 39
Cosida S.p.a. di Assicurazioni e Riassicurazioni v. B.E.A.,
No. 2796/77 (Milan Court of Appeal, Italy, Judgment
No. 861 June 9, 1981) .......ccececeeccceees
Dalton v. Delta Airlines, Inc., 510 F.2d 1244 (Sth Cir.
BUEN Gis cow ber ccdscuctsvenrttectianene 27
Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S.
BPG ROOD. < vinnc 0nawdepwtosscodddedetaine 18
Day v. Trans World Airlines, Inc., 528 F.2d 31 (2d Cir.
1975), cert. denied, 429 U.S. 890 (1976).... 26, 37, 38
Deere & Co. v. Deutsche Lufthansa A.G., No. 81 C 4726
(N.D. Ill. December 30, 1982) ........-+eeee0-+ 3S
Deutsche Lufthansa Aktiengesellschaft v. Civil Aero-
nautics Board, 479 F.2d 912 (D.C. Cir. 1973) .... 33
Edye v. Robertson (The Head Money Cases), 112 US.
580 (1884) CEE EEE HEE HEHE!
a ks ene,
Vv
Electronic Memories & Magnetic Corp. v. The Flying
Tiger Line, Inc., No. 784512 (Cal. Super. Ct., San
Francisco August 25, 1982) ......cseeceeevenes 35
Factor v. Laubenheimer, 290 U.S. 276 (1933) ........ 27
Federal Maritime Commission v. Seatrain Lines, Inc., 411
tS CUED “Che dcc cbc ebbbE OecanSbuese bor 35
Florencia, Cia. Argentina de Seguros S.A. v. Varig S.A.
(Federal Civil & Cormmercial Court, Buenos Aires,
Argentina August 27, 1976), original text reprinted in
1977 Uniform L. Rev. 198 ......cceeeeeeeees 20, 26
Foster v. Neilson, 27 U.S. (2 Pet.) 253 (1829) ...... 39
Franklin Mint Corp. v. Trans World Airlines, Inc., 525
F. Supp. 1288 (S.D.N.Y. 1981), aff'd, 690 F.2d 303
TY MGUY > 2 iid duive ccd ead ee one Wehee ube passim
Herd & Co. v. Kratwill Machinery Corp., 359 U.S. 297
EE. s éoch nb 6 Galnne-cb 0d ps0 Ceeaeet he dob 27
In re Air Crash Disaster at Warsaw, Poland on March 14,
1980, 535 F. Supp. 833 (E.D.N.Y. 1982) affd, 705
F.2d 85 (2d Cir. 1983), petition for cert. docketed,
No. 83-5 (July 11, 1983) .........+... 28, 29, 32, 33
In re Aircrash in Bali Indonesia on April 22, 1974, 684 F.
2d 1301 (9th Cir. 1982) 20... cece cceeeeceeeees 27
In re Aircrash at Kimpo International Airport, Korea on
November 18, 1980, 558 F. Supp. 72 (C.D. Cal.
1983), interlocutory review denied, No. 83-8051 (9th
Cir. May 10, 1983) ......cceeeeesvcceeese 35, 42, 43
Kislinger v. Austrian Airtransport, No. 1 R 145/83 (Com-
mercial Court of Appeals of Vienna, Austria June
BE, SPOS) is iSive nev ccvcodvescevesweeveses SH
Kuwait Airways Corp. v. Sanghi, Regular Appeal No.
54/77 (Court of the Principal Civil Judge, Civil Station
Bangalore, India August 11, 1978 eee eeeeeeeee 25, 26
vi
Maschinenfabrik Kern, A.G. v. Northwest Airlines, Inc.,
562 F. Supp. 233 (N.D. Ill. 1983) .......0ee vues 35
Maximov v. United States, 373 U.S. 49 (1963) ....... 19
Michigan v. Payne, 412 U.S. 47 (1973) .......00 ees 41
Moser v. United States, 341 U.S. 41 (1951) ......... 39
National Wildlife Federation v. Snow, 561 F.2d 227 (D.C.
OE. eal cede ch dw diwrvecvcbeoucsvsbeues 33
Northern Pipeline Construction Co. v. Marathon Pipe Line
Ce, See ee SOO CESOS) accccccvevecvce 41, 42, 44
The Paquete Habana, 175 U.S. 677 (1900) ......... 40
Rendezvous-Boutique-Parfumerie Friedrich and Albine
Breitinger GmbH vy. Austrian Airlines, No. 14 R 11/83
(Court of Appeals of Linz, Austria June 17, 1983).. 37
Rocca v. Thompson, 223 U.S. 317 (1912) .......... 20
Ross v. Pan American Airways, 299 N.Y. 88, 85 N.E.2d
880 (1949), cert. denied sub nom., Froman v. Pan
American Airways, 349 U.S. 947 (1955) ........ 13
Serbian Loans Case, 11 Hudson, World Court Reports 344
4. | SREP ESOP TEE ET POL POP bo eee Pre 20
Society for the Propagation of the Gospel in Foreign Parts
v. New Haven, 21 U.S. (8 Wheat.) 464 (1823) ... 39
State of the Netherlands v. Giants Shipping Corp., Recht-
spraak van de Week 321 (May 30), 1981) (Supreme
Court of the Netherlands May 1, 1981) .......... 37
Sullivan v. Kidd, 254 U.S. 433 (1921) .......0e0eee 39
Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S. 176
SEED 0 00nene) Cintaalesocdueedteewouseas 18, 19
Cie. 1978) nncccvccccccecccsdecess cccscccese Se
vii
United States v. Donnelly, 397 U.S. 286 (1970) ...... 44
Valentine v. United States ex rel. Neidecker, 299 U.S. 5
DTCC Cobo ee stews ckedoncceceéavesecnes 39
Wainwright vy. Stone, 414 U.S. 21 (1973) ........... 41
Whitney v. Robertson, 124 U.S. 190 (1888) ........ 39
Zakoupolos v. Olympic Airways Corp., No. 256/74
(Court of Appeal, 3d Dep’t. Athens, Greece Jan. 10,
CE LOGS nos 54.5500) 00 o0'es eels 0b 090 > 26, 42
Constitution, Statutes, Treaties and Rules:
Pn 80k Wrest cccedcceeeeceeetoune 6
PM ML OS cpacdececcscvccecesendessse 31
Airline Deregulation Act of 1978, Pub. L. No. 95-504,
CRETE D. so cob censcoesbdadcccere 11
Bretton Woods Agreements Act of 1945, Pub. L. No.
79-171, SD Stat. S12 (1945) ......ccvvcecccvess 4
Bretton Woods Agreement Act of 1976, Pub. L. No.
94-564, 90 Stat. 2660 (1976) ........ee cues 7, 18, 24
Can., Currency and Exchange Act: Carriage by Air Act
Gold Franc Conversion Regulations, Jan. 13, 1983,
117 Can. Gaz., pt. II, No. 2, at 431 (Jan. 26, 1983) 15
Civil Aeronautics Board Order No. E-23,680, 31 Fed. Reg.
FOE CEPMOD cece ded ceeccscovccccveseseseoes 14
Civil Aeronautics Board Order No. 72-6-7, 59 C.A.B.
Rep. 953 (1972) ...ccccccesccccccccccsevenes 24
Civil Aeronautics Board Order No. 74-1-16, 39 Fed. Reg.
DED canes sdacesessséeous 24, 28, 33, 34, 35
viii
Civil Aeronautics Board Order No. 81-3-143 (March 24,
ED 96h 06 dp nae cidd rade sete 33, 35
Convention for the Unification of Certain Rules Relating
to International Transportation by Air, opened for sig-
nature Oct. 12, 1929, 49 Stat. 3000, T.S. No. 876,
137 L.N.T.S. 11, reprinted in 49 U.S.C. §1502 note
SD leh a boon > be n.e Clue en ean wed canes passim
Convention Relating to the Limitation of the Liability of
Owners of Sea-Going Ships, done Oct. 10, 1957, re-
printed in 6 Benedict on Admiralty 5-11 (7th ed.
SE V\S So's ode B46 8 06 65.0% bi 0 695d e 6e Ua est 37
Gold Reserve Act of 1934, 48 Stat. 337 (1934) ...... 3, 18
Gold Standard Act of 1900, Ch. 41, §1, 31, Stat. 45
DU” <i ala-e's » eo 6.6000 b.066oem eee ta onan 3
Guatemala City Protocol, done Mar. 8, 1971, reprinted
in A. Lowenfeld, Aviation Law 975 (2d ed. Doc. Supp.
DOD. {Soke (c desde vudiassvessechbenebuedees 14
Hague Protocol, done Sept. 28, 1955, 478 U.N.T.S. 371,
reprinted in A. Lowenfeld, Aviation Law 955 (2d ed.
Bed. Bap. WSL). . cwvarvescdesvsasvacgusseasve 24
Italy, Law No. 84 of March 26, 1983, 90 Gazetta Ufficiale
della Republica Italiana (Apr. 1, 1983) .......... 15
Montreal Protocols Nos. 3 & 4, done September 25, 1975,
reprinted in A. Lowenfeld, Aviation Law 985 (2d ed.
Dee, Gam. 1961). oc coccccecisveccccsesoce 14, 28
Par Value Modification Act of 1972, Pub. L. No. 92-268,
86 Stat. 116, amended by Par Value Modification Act
of 1973, Pub. L. No. 93-110, 87 Stat. 352, 31 U.S.C.
§ 449 (1976), repealed by Bretton Woods
Act of 1976, Pub. L. No. 94-564, § 6, 90 Stat. 2660. . 6, A2
Presidential Proclamation No. 2072 of January 31, 1934,
48 Stat. 1730 (1934) 2... ccc ccccccceeecccees 3, 18
ix
S. Afr., Carriage by Air Act, No. 17 of 1946, §3(7), as
amended by No. 5 of 1964 and No. 81 of 1979, Stat.
S. Afr. (Issue No. 13) 15, implemented by Dep't of
Transport Notice R2031 (Sept. 14, 1979) ....... 16
Swed., Carrier by Air Act (1957: 297), ch. 9, §22 (as
ee Be, PED oun veaceeccteessueras 16
U.K., Carriage by Air (Sterling Equivalents) (No. 2)
Order 1980, Statutory Instrument 1980 No. 281 ... 16
Legislative Materials:
Sy GEN BEGW CAOTI) cecccectospecnesasets 15
Senate Comm. On Foreign Relations, Bretton Woods
Agreements Act, S. Rep. No. 94-1148, 94th Cong., 2d
Sess. (1976), reprinted in 1976 U.S. Code Cong. &
PEND SHEE 6s de ncscvccce veces ete ovevesors 2
Senate Comm. on Foreign Relations, Montreal Aviation
Protocols Nos. 3 and 4, S. Exec. Rep. No. 98-1, 98th
i. a COPD 0's eubeneawnedureds 30, 31
Senate Exec. Sess., Montreal Aviation Protocols Nos. 3
and 4, 129 Cong. Rec. $2270 (daily ed. Mar. 8,
SEN le bp a's 6.000 bl Rwrine od adhd 0 wlethelabe Galen ak 15, 31
Books:
H. Drion, Limitations of Liabilities in International Air
eee as, oe 06 oéwees nbaee CUAs ees ae 29
R. Horner & D. Legrez, Second International Conference
on Private Aeronautical Law, Minutes, Warsaw, Oc-
tober 4-12, 1929 (1975) 2... ccccccccces 9, 13, 19, 38
A. Lowenfeld, Aviation Law (2d ed. 1981) .... 8, 10, 11, 12
R. Mankiewicz, The Liability Regime of the International
SE ec nctdstenecetsanebie duh 26, 27
L. Yeager, International Monetary Relations: Theory, His-
tory, and Policy (2d ed. 1976) «1... 6. ccceceneees 2
Articles:
T. Asser, “Golden Limitations of Liability in International
Transport Conventions and the Currency Crisis,” 5 J.
en eee GU, GUD CROPS) oc covececcvcsvecense 2
J. Clare, “Evaluation of Proposals to Increase the Warsaw
Convention Limit of Passenger Liability,” 16 J. Air L.
EE MUEUUED sede cndcdvccagncesetes 22, 23, 32
R. Craft, “Factors Influencing Settlement of Personal In-
jury and Death Claims in Aircraft Accident Litiga-
tion,” 46 J. Air L. & Com. 895 (1981) .......... 42
C. Dubuc and L. Doctor, “Legislative Developments Af-
fecting the Aviation Industry,” 48 J. Air L. & Com.
ES. ating. she « #04\5 0-0 6.0.0'¥ $0,0-4.9:6:9\0 9’ 15
G. FitzGerald, “The Four Montreal Protocols to Amend
the Warsaw Convention Regime Governing Interna-
tional Carriage by Air,” 42 J. Air L. & Com. 273
TL Sie Ce ee tek dyin 6a sede 6 oe 66040 eu 14, 35, 36
P. Heller, “The Value of the Gold Franc-A Different Point
of View,” 6 J. Mar. L. & Com. 73 (1974)... 2, 12, 21, 25
P. Heller, “Converting the Goldfranc-A Reply from an Un-
converted,” 5 Air L. 33 (1980) ...........ee00. 26
A. Lowenfeld and A. Mendelsohn, “The United States and
the Warsaw Convention,” 80 Harv. L. Rev. 497
Dn Lbidhis ones Paes Gh nue somes b epameee< ot 9, 13
R. Mankiewicz, “The 1971 Protocol of Guatemala City to
Further Amend the 1929 Warsaw Convention,” 38 J.
ee ee EE PAD ocaccccescoescaasedes 14
P. Martin, “The Price of Gold and the Warsaw Conven-
tion (III),” 6 Air L. 246 (1981) ........-0005. 36, 40
A. Mendelsohn, “The Value of the Poincare Gold Franc
in Limitation of Liability Conventions,” 5 J. Mar. L.
& Com. 125 (1973-74) 2.2... cece c ec eeee ee 21, 26
xi
New York Times, “Air Liability Treaty Rejected by Sen-
ote,” Diese: 9, 1963 pet DE; Col. S 2. cccvccivns
G. Orr, “The Rio Revision of the Warsaw Convention—
Part II,” 21 J. Air L. & Com. 174 (1954) .......
J. Parker, “The Adequacy of the Passenger Liability Limits
of the Warsaw Convention of 1929,” 14 J. Air L. &
Se ae OEE ota py cKGEs Moc beenhWidekon ves
C. Rhyne, “International Law and Air Transportation,”
yp SR 6) eer rere Pree re ere
D. Sheinfeld, “From Warsaw to Tenerife: A Chronological
Analysis of the Liability Limitations Imposed Pursuant
to the Warsaw Convention,” 45 J. Air L. & Com.
SSE "vc aa oh cele bdass ubaenne st khinaveue
A. Tobolewski, “The Special Drawing Right in Liability
Conventions: An Acceptable Solution?”, Lloyd’s Mar.
& Com. L. Q. 169 (1979 Part Two) .......... 15,
G. Tompkins, “Limitation of Liability by Treaty and Stat-
ute,” 36 J. Air L. & Com. 421 (1970) ...........
Aeronautics Committee of the Association of the Bar of
the City of New York, Report on the Rio Proposals
To Amend the Warsaw Convention As They Affect
Passengers’ Personal Injuries and Death Claims, 22 J.
oe ee EG A) Peer errr re
Other Materials:
M. Cohen, Letter, Chairman, Civil Aeronautics Board
Sh TOD db s<0gb ccs ccacknsacneee lanes
J. Golden, “Warsaw Convention Liability Limits”, Mem-
orandum, Director, Bureau of Compliance and Con-
31
24
23
13
14
xii
P. Kennedy, Memorandum, Policy, Development Division,
Bureau of Consumer Protection, Civil Aeronautics
ee Gn Oe, BOND: -a:d-i:0 win wso'cn sidicmane oe 2, 8, 32
D. Kirstein, Letter, General Counsel, Civil Aeronautics
eee Coe? 2G, FOES .000ssdesencecenevas 34
Legal Committee of International Civil Aviation Organiza-
tion, Resolution Concerning the Conversion of Poin-
care Francs to National Currencies in the Warsaw and
Rome Conventions, 21st Sess., Minutes 84, ICAO Doc.
eye Pepe: S Bs) Ney Pre eee wets ce 35
Report of Secretary of State Cordell Hull, Mar. 31, 1934,
foo gtk ee i Pre erere rate ree 9, 10
Restatement, Second, of the Foreign Relations Law of the
Se CID CRUE AD vs hes ov aipave-c0'ss cewek 19, 40
U.S. Dep’t of State Press Release No. 268, 53 Dep’t Stat.
Bs Be CEOS oe dec bc ces oewnacceas septa 14
U.S. Dep’t of State Press Release Nos. 110-11, 54 Dep't
nee TRU. Dae CEO) sis iccccivecvcqusepadess 14
In THE
Supreme Court of the United States
OCTOBER TERM, 1983
Nos. 82-1186, 82-1465
-
=
TRANS WORLD AIRLINES, INC.,
Petitioner,
—against—
FRANKLIN MINT CORPORATION,
FRANKLIN MINT LIMITED, and
McGREGorR, SWIRE AIR SERVICES LIMITED,
Respondents.
FRANKLIN MINT CORPORATION,
FRANKLIN MINT LIMITED, and
McGrReEGor, SWIRE AIR SERVICES LIMITED,
Petitioners,
—against—
TRANS WoRLD AIRLINES, INC.,
Respondent.
On WRITS OF CERTIORARI TO THE UNITED STATES
CourRT OF APPEALS FOR THE SECOND CIRCUIT
BRIEF OF FRANKLIN MINT CORPORATION
FRANKLIN MINT LIMITED, AND McGREGOR,
SWIRE AIR SERVICES LIMITED
in No. 82-1186 and
Petitioners in No. 82-1465
Preliminary Statement
Franklin Mint Corporation, Franklin Mint Limited, and
McGregor, Swire Air Services Limited (collectively “Franklin
7m +
2
Mint”)’, respondents in No. 82-1186 and petitioners in No.
82-1465, respectfully submit this brief on the merits in these
consolidated cases.
Statement of the Case
This action arises out of the loss by Trans World Airlines,
Inc. (“TWA”) of four packages of numismatic materials with
a value of $250,000. Before the district court TWA conceded
its liability under the Warsaw Convention? for the loss of this
property (JA15).* Consequently, the only matter in dispute in
this action is the extent to which TWA can limit its liability
under Article 22* of the Convention. In considering this ques-
tion, the Court must take into account the historical changes
that have occurred in three areas since the Warsaw Convention
was opened for signature in October 1929.
A. The End of the Official Price of Gold*®
Following the cataclysm of World War I, the major currencies
‘Franklin Mint’s u..nended designation of corporate relationships pur-
suant to Rule 28.1 is stated in the Appendix to this brief at page A3.
“Formally known as the Convention for the Unification of Certain
Rules Relating to International Transportation by Air, opened for signa-
ture October 12, 1929, 49 Stat. 3000, T.S. No. 876 (1934), 137 L.N.T\S.
11, reprinted in 49 U.S.C. §1502 note (1970).
*References in the form “JA " are to the Joint Appendix.
*Article 22 is reprinted in full at page Al of the Appendix to this
Brief.
5For brief descriptions of the economic history relevant to this ac-
tion, see P. Heller, “The Value of the Gold Franc-A Different Point of
View,” 6 J. Mar. L. & Com. 73, 79-91 (1974); T. Asser, “Golden Limi-
tations of Liability in International Transport Conventions and the Cur-
rency Crisis,” 5 J. Mar. L. & Com. 645, 650-52 (1973-74); P. Ken-
nedy, Memorandum, Policy Development Division, Bureau of Consumer
Protection, Civil Aeronautics Board (Mar. 18, 1980) (“Kennedy Mem-
orandum”) (JA42); Senate Comm. on Foreign Relations, Bretton Woods
Agreements Act, S. Rep. No. 94-1148, 94th Cong., 2d Sess. (1976),
reprinted in 1976 U.S. Code Cong. & Ad. News 5935. See also L. Yeager,
International Monetary Relations: Theory, History, and Policy (2d ed.
1976).
3
of the West (with the exception of the Spanish peseta) at-
tempted, with varying degrees of success, to cope with the post-
War inflation by a return to the international monetary system
prevalent before 1919. This system, often called the gold
standard, meant that a particular currency was, at least in theory,
freely convertible into an established quantity of gold. The ra-
tionale for the gold standard is that it is a means of control-
ling inflation by linking the money supply to an independent
standard of value. In France, for example, the fiscally conser-
vative Raymond Poincare was elected as Premier in 1926; and
in June 1928 he stabilized the franc by returning France to the
gold standard.
The United States had never gone off the gold standard, how-
ever, and the gold content of the dollar was set by statute at
25.8 grains of gold. Gold Standard Act of 1900, ch. 41,
§1, 31 Stat. 45 (1900). This provision was still in effect at the
time of the final negotiations of the Convention in 1929, and
hence the official price of gold then was $20.67 per troy
ounce.
Following the Great Depression, many nations went off the
gold standard and allowed their currencies to float. England
did so in 1931, for example, and France followed suit in 1936.
Although the United States remained on the gold standard, cer-
tain changes were made. For example, private ownership of
gold was prohibited; and the redemption of dollars into gold was
restricted to dollars held by foreign central banks and licensed
private users.
More importantly, however, on 31 January 1934 the USS.
Gold Reserve Act devalued the dollar about 60% by reducing
the legal equivalent of each dollar to 155/21 grains of gold.
Presidential Proclamation No. 2072 of January 31, 1934, 48
Stat. 1730 (1934), pursuant to the U.S. Gold Reserve Act
of 1934, 48 Stat. 337 (1934). In other words, the price of gold
was increased from $20.67 to $35.00 per troy ounce.
4
During the 1930’s the existing monetary system was recog-
nized as clearly inadequate and as a major causal factor of the
international depression. Furthermore, the damage to the vari-
ous national economies (except that of the United States) caused
by World War II helped create a consensus that the free world’s
monetary system had to be different in the post-War world.
The outcome of this consensus was the conference at Bret-
ton Woods, New Hampshire, in July 1944. One result of this
conference was the creation of the organization known as the
International Monetary Fund (“IMF”). In order to restore cur-
rency-exchange stability, and thereby restore world trade, the
Bretton Woods Conference also made the decision to change
the international monetary system into a “gold exchange”
standard.
Under Article IV of the Articles of Agreement, each member
was required to nominate a par value for its currency in terms
of either gold or the U.S. Dollar that was in effect on 1 July
1944. The member was also required to maintain its rate with-
in 1% of this par value. The Articles of Agreement also guar-
anteed the conversion into gold of major currencies and required
members to purchase its currency from other members in gold
or in the other nation’s currency. The IMF was also provided
with credit facilities to stabilize the currencies of countries hav-
ing balance of trade difficulties.
The participation of the United States in the IMF was for-
malized with the enactment of enabling legislation. Bretton
Woods Agreements Act of 1945, Pub. L. No. 79-171, 59 Stat.
512 (1945). The par value of the U.S. Dollar was set at one
thirty-fifth of a fine troy ounce of gold, i.e., $35.00 per troy
ounce.
As a result, under the gold exchange standard the currencies
of the free world were in practice linked to the dollar, while
the dollar was based on gold. This role of the dollar as the linch-
pin of the system was a simple recognition of the facts that the
5
United States was the predominant economic force in the world
and, in addition, possessed as reserves most of the world’s gold
supply.
During the 1960's this monetary system came under increas-
ing pressure. For one thing, the huge superiority and strength
of the United States relative to the rest of the world declined
following the reconstruction of Europe and Japan. Inflation
generated by the expenditures of the Vietnam War further ac-
celerated the flow of dollars abroad. In addition, the need of
the international system for dollars had grown to the point where
the United States simply could not supply the dollars without
weakening its own internal economy. As a consequence, the
U.S. commitment to redeem dollars for gold became a physical
impossibility.
As part of an attempt to remove the dollar from the center
of the monetary system, the IMF adopted in August 1969
the use of an artificial unit of account called the Special Draw-
ing Right (“SDR”). This accounting tool, originally defined as
-888671 grams of fine gold, was established as a new form of
reserve asset to be used by member nations among themselves
as a supplement to the use of gold and dollars.
In 1966 France pulled out of the so-called Gold Pool, an
arrangement created in 1961 by the central banks of various
nations to maintain the official price of gold within certain mar-
gins. As a result of France’s action and the continuing deteriora-
tion of the U.S. economic position, the central bankers could
no longer maintain the official price of gold at $35/oz. The
consequence was that in March 1968 a “two-tier” system arose.
The various national governments would use among themselves
one price of gold, the official price of $35, while private banks
and individuals would buy and sell gold on the free market.
The change to a two-tier system was inadequate to stay the
pressure on the dollar, however; and in August 1971 President
6
Nixon cut the link between gold and the dollar. While there
was still an official price of gold, dollars could not be presented
by foreign governments to the U.S. Treasury for conversion into
gold. This elimination of the link between gold and the dollar
in effect destroyed the monetary structure established at Bret-
ton Woods.
Later that year, in December 1971, as part of the Smith-
sonian Agreement, the United States agreed to devalue the dol-
lar. The official price of gold was consequently increased from
$35 to $38 per ounce. The Agreement also provided for a sys-
tem of central rates of exchange which would be more flexible
(a margin of 2% % on both sides of the central rate) than the
system of par values established under the original Articles of
Agreement of the IMF.
Devaluation of the dollar was formally accomplished by pas-
sage of the Par Value Modification Act, Pub. L. No. 92-268,
86 Stat. 116 (1972),® on 31 March 1972.
This Congressional action was necessary because the Bretton
Woods Agreements Act of 1945 prohibited any change in the
par value of the dollar without prior Congressional approval.
See 22 U.S.C.A. § 286c.
With continuing balance of payments deficits, however, the
1971 devaluation of the dollar proved to be only a temporary
palliative. In 1973 the dollar was again devalued, this time by
10%. The official price of gold rose from $38 to $42.22 per
ounce. This devaluation was accomplished by Congress amend-
ing the Par Value Modification Act. Act of September 21, 1973,
Pub. L. No. 93-110, 87 Stat. 352 (1973).
Nevertheless, the 1973 devaluation of the dollar was also
unable to save matters. By March 1973 all of the major trad-
*The text of the pertinent portion of the Act, as amended, is included
in the Appendix to this Brief at page A2.
-
ing nations, with few exceptions, were already floating their
currencies and allowing world exchange markets to set currency
values. This de facto floating of currencies clearly violated the
Bretton Woods Agreement. Realizing that the system of fixed
exchange rates was no longer being complied with by its mem-
bers, the IMF began efforts to shape a new monetary system.
In the Jamaica Accords of 1975, it was agreed by the mem-
ber nations of the IMF to eliminate gold as the basis of the
international monetary system. In the IMF this change was re-
flected in the Second Amendment to the Articles of Agreement.
Effective 1 April 1978 the SDR was to be the sole reserve asset
to be used by the member nations of the IMF in their official
dealings with each other. Because the currencies of the member
nations would float against one another in accordance with mar-
ket forces, the maintenance of a par value of each currency in
terms of gold was unnecessary and was, in fact, prohibited by
amendment to the IMF’s Articles of Agreement.
In the United States the change was made by the Bretton
Woods Agreement Act of 1976, Pub. L. No. 94-564, 90 Stat.
2660 (1976). The result of this statute was to completely elimi-
nate the definition of the dollar in terms of gold as of 1 April
1978. In short, as of that date, there is no longer in the United
States an “official” price of gold. Since April 1978 the curren-
cies of the free world, including the U.S. dollar, have floated
against one another to achieve a price set by the market. The
value of gold has likewise floated against the currencies of the
world in accordance with market forces.
From the proclamation of the Warsaw Convention by Presi-
dent Roosevelt in 1934 until 1 April 1978, Article 22 posed
no difficulty in the United States. As there was always a price
of gold set by statute during this period, the gold unit in Ar-
ticle 22 was easily converted into dollars. This official price of
gold no longer exists, although there is still a price of gold
which can be used by the Court, the free-market price.
8
B. The Development of the Airline Industry
The second area of historical change which is important to
the present dispute is the development of the airline industry.
What was a new industry at the time of the Warsaw Conven-
tion negotiations has since developed into a mature sector of the
international economy.
In 1929 international air transportation was still largely the
province of adventurers. Lindbergh crossed the Atlantic in 1927,
and Earhart did so in 1928. As stated in an internal CAB mem-
orandum, “Furthermore, the delegates [to the Warsaw Confer-
ence} had little sympathy for anyone foolish enough to board an
airplane without enough personal insurance to provide for his
widow (or her widower) and children should the plane crash.”
(Kennedy Memorandum, supra at note 5; JA49-50; footnote
omitted. )
Professor Lowenfeld has described the period in the follow-
ing terms:
The larger airliners could carry 15 to 20 passengers at
cruising speeds of about 100 miles per hour and over stages
of about 500 miles. The most advanced and popular United
States aircraft, the Lockheed Vega, which carried six pas-
sengers and a pilot, had a cruising speed of about 120 miles
per hour and a range of about 550 miles. Though the air-
plane had been invented at roughly the same time as the
automobile, its coming of age as a common means of trans-
portation lagged at least a generation or more behind. (A.
Lowenfeld, Aviation Law §2.1 at 7-26 (2d ed. 1981).)
(“Lowenfeld” )*
™The Convention was concluded in 1929—a time when commercial
air transport was relatively primitive, and international commercial avia-
tion even more so.” Aeronautics Committee of the Association of the
Bar of the City of New York, Report on the Rio Proposals To Amend
the Warsaw Convention As They Affect Passengers’ Personal Injuries
and Death Claims, 22 J. Air L. & Com. 358, 359 (1955).
9
The Reporter to the Warsaw Convention, Henri de Vos,
pointed out in his introductory remarks that in Belgium “on one
single aerodrome in the summer season, there are up to 36 de-
partures of regular lines by day.” R. Horner and D. Legrez,
Second International Conference on Private Aeronautical Law,
Minutes, Warsaw, October 4-12, 1929, 23 (1975) (“Minutes”).
As the result of developments, there was “the possibility that
tomorrow, in all countries, facilities will be set up for both day
and night flights!” /d. The conclusion to be drawn was that
“What the engineers are doing for machines, we, lawyers, must
do the same for the law.” /d.
The tenuous position of the airline industry was reflected in
the drafting of the Warsaw Convention. Low liability limits
were intentionally specified as an inducement to the growth of
the new industry.
But it was expected that such a [liability] limit [of 125,000
gold francs], applied uniformly on international flights—
and, it was hoped, internally as well through correspond-
ing legislation in the member countries—would enable air-
lines to attract capital that might otherwise be scared away
by the fear of a single catastrophic accident. (A. Lowen-
feld and A.*Mendelsohn, “The United States and the War-
saw Convention,” 80 Harv. L. Rev. 497, 499 (1967);
foctnote omitted.)
This policy was also recognized when the Convention was
submitted in 1934 to the U.S. Senate for ratification. As Sec-
retary of State Hull said in his report to the Senate:
It is believed that the principle of limitation of liability
will not only be beneficial to passengers and shippers as
affording a more definite basis of recovery and as tending
to lessen litigation, but that it will prove to be an aid in
the development of international air transportation, as such
limitation will afford the carrier a more definite and equi-
10
table basis on which to obtain insurance rates, with the
probable result that there would eventually be a reduction
of operating expenses for the carrier and advantages to
travellers and shippers in the way of reduced transporta-
tion charges. (Report of Secretary of State Cordell Hull,
March 31, 1934, [1934] U.S. Av. Rep. 239, 242.)
In 1983, however, the situation is quite a different matter.
As stated in the amicus brief of the International Air Transport
Association, “The International Air Transport Association
(LATA) is an organization of 123 international air carriers,
many of whom either represent or are more than 50% owned
by foreign sovereign nations that are parties to the Warsaw Con-
vention.” (IATA Brief on the merits at 2.) Even for those air-
lines not owned by a foreign government, the situation has
changed radically since 1929:
By the late 1950's, the argument originally stressed by the
supporters of Warsaw—that the Convention was needed to
attract capital to an infant industry—looked very much
out of place. Though the profitability of the aviation in-
dustry had varied from year to year and country to coun-
try, its growth by any measure—capital, number of em-
ployees, gross revenue, equipment, passengers carried,
shareholders—had been spectacular, especially since World
War II. On the other hand, the accident rate was low and
getting lower. Airlines were able to insure against liabil-
ity to passengers, and while the rates varied, the cost of
insurance in terms of overall costs was not a crushing bur-
den. No potential investor or banker, it would seem, would
make his investment or loan decisions turn on the limit of
liability for accidents to passengers in international flight.
The proof, if proof were needed, was that aviation had
grown fastest in the United States, without benefit of a lia-
bility limit in three quarters of the states. The argument,
accordingly, shifted toward protection of plaintiffs. (Low-
enfeld, supra, § 4.31 at 7-105; footnotes omitted.)
11
Furthermore, according to Professor Lowenfeld, the shifts
in tort law and in choice of law rules have made the claimed
benefits of the Convention to plaintiffs no longer what they once
were in the early 1930's. Lowenfeld, supra, at §§4.32, 4.33.
This point was made in 1970 by a noted aviation defense lawyer:
The advantages of the liability system created by the com-
bined effects of Articles 17 and 20 were undoubtedly sig-
nificant in the 1930's and even in the 1940's. However,
circumstances have changed. Investigation of the causes
of accidents has reached a very advanced stage and it is
rare today that the probable cause of an accident cannot
be determined as a result of the combined efforts of the
governments concerned, the air carrier and the manu-
facturer. Additionally, there has developed in the 1950's
and 1960's in the United States a very formidable array
of attorneys who have acquired unparalleled ability in dig-
ging into the facts of an accident with a view to deter-
miaing the cause for civil litigation purposes.
Finally, the doctrine of res ipsa loquitor is now applica-
ble generally throughout the United States to aviation acci-
dent litigation. (G. Tompkins, “Limitation of Liability by
Treaty and Statute,” 36 J. Air L. & Com. 421, 431 (1970);
footnote omitted. )
As a consequence of the changed position of the international
airline industry, Franklin Mint contends that one of the original
policies of the Warsaw Convention is no longer applicable,
namely, the desire to give protection to an infant industry. This
view was adopted in the Airline Deregulation Act of 1978,
Pub. L. No. 95-504, 92 Stat. 1705 (1978) in which the Civil
Aeronautics Board was required as a policy guideline to con-
sider as a factor for interstate and overseas air transportation,
“[tJhe placement of maximum reliance on competitive market
forces and on actual and potential competition”.
In the context of the Warsaw Convention, this change in the
.
oe
12
basic nature of the industry was emphasized in the opening state-
ment by the U.S, delegation to the Montreal Conference of
1966:
But the overriding issue in the Warsaw Convention, as we
see it, is that it was entered into in the late 1920's, when
international aviation was hardly over the experimental
stage and when the primary need was a means to prevent
the growth of international aviatio': from being choked
off by one or more catastrophic accidents. Today, in con-
trast, international aviation is big business. We are over the
experimental stage. We are over the infant industry stage.
Equally important, the techniques, equipment, and ex-
perience of our current international air transportation are
such that the hazards of flying have been very much re-
duced and are actuarially predictable.
For these reasons the United States believes that there is
no longer justification for a Convention which tips the
balance heavily in favor of the industry and against the
consumer. (Quoted in Lowenfeld, supra, § 5.31 at 7-131.)
This statement is still true, and the Court should consequently
give predominance to a Convention policy that is still valid: the
granting of equitable awards based on a unit of account reflect-
ing real value. See, ¢e.g., P. Heller, “The Value of the Gold
Franc-A Different Point of View,” 6 J. Mar. L. & Com. 73,
94-95 (1974).
C. From the Warsaw Convention to the Montreal Protocols
The final area of significant change consists of the various
amendments to the Warsaw Convention since it was first pro-
mulgated in 1929.
The Convention was seen as the beginning of an on-going
process to codify international air law. As a vice-president of
the Warsaw Conference stated
13
Therefore, we should consider that in air navigation, it is
necessary to berin by laying down the primary general
rules of the problem; we make a first effort and we must
be happy to du so, If there are improvements to be brought
forth, life does not end today, we can do them later on.
(Minutes, supra, at 32.)
As mentioned above, the Warsaw Convention provided low
limits of recovery as an aid to a new infant industry. Follow-
ing World War II, this situation no longer seemed proper to
many, and criticism of the limits in the Convention was ex-
pressed. See, ¢.g., C. Rhyne, “International Law and Air Trans-
portation,” 47 Mich L. Rev, 41, 54-61 (1948). As a result,
there were conferences concerned with revision of the Warsaw
Convention in 1946 (Cairo), 1948 (Lisbon), 1949 (Montreal),
1952 (Paris), and 1953 (Rio de Janeiro).
Popular dissatisfaction with the limits, particularly as to per-
sonal injuries, was heightened as a result of the publicity sur-
rounding entertainer Jane Froman, who was seriously injured in
a plane crash in 1943, In her suit against Pan Am, her re-
covery was limited to $8,291.87. Ross v. Pan American Air-
ways, 299 N.Y. 88, 85 N.E. 2d 880 (1949), cert. denied sub
nom., Froman v. Pan American Airways, 349 U.S. 947 (1955).
The outcome of this dissatisfaction was the Hague Conference
of 1955, in which the United States took the lead." The re-
sultant Hague Protocol of 1955 doubled the limits for liability
in case of personal injury to $16,600. Although the United
States signed this protocol, it was never ratified by the Senate.
In November 1965 the United States stated its intention to
withdraw from the Convention at the end of six months pur-
suant to Art. 39 of the Convention. The reason given for this
action was the low level of liability for personal injury. U.S.
"The leading article on the revisions to the Convention up to the
Montreal Agreement of 1966 is A. Lowenfeld and A. Mendelsohn, “The
United States and the Warsaw Convention,” 80 Harv. L. Rev. 49
(1967). \
14
Dep't. of State, Press Release No, 268, 53 Dep't. of State Bull.
923 (1965),
A hurried conference resulted, which produced the Montreal
Agreement of 1966. This Agreement is not a treaty, but is in-
stead a private agreement’ subscribed to by the world’s major
airlines. In the Agreement the airlines agreed to (1) raise the
limit for personal injury to $75,000.00, and (2) waive certain
defenses under the Warsaw Convention. The United States with-
drew its denunciation and thereby remained a party to the Con-
vention. U.S, Dep't. of State, Press Releases Nos. 110-11, 54
Dep't. State Bull, 955 (1966).
In 1971 another meeting was held to consider revisions to the
Warsaw Convention,’® The resulting Guatemala City Protocol"
raised the limit for personal injury liability from the 125,000
gold francs in the Convention to 1.5 million gold francs. The
United States signed this protocol, although the Senate has
never ratified it.
The last amendment of note is the set of protocols signed at
the Diplomatic Conference on Air Law in Montreal in Sep-
tember 1975,'* The relevant change for present purposes is that
*Antitrust immunity was given in C.A.B, Order No, E-23,680, 31 Fed.
Reg. 7302 (1966).
10The background and proceedings of this conference are described
in R, Mankiewicz, “The 1971 Protocol of Guatemala City to Further
Amend the 1929 Warsaw Convention,” 38 J. Air L. & Com, 519 (1972).
‘Guatemala City Protocol, done Mar. 8, 1971, reprinted in Lowen-
feld, supra, Documents Supplement at 975,
'#Montreal Protocols Nos. 3 & 4, done September 25, 1975, reprinted
in Lowenjeld, supra, Documents Supplement at 985. These protocols are
discussed in G. FitzGerald, “The Four Montreal Protocols to Amend
the Warsaw Convention Regime Governing International Carriage by
Air,” 42 J. Air L. & Com. 273 (1976). See also D. Sheinfeld, “From
Warsaw to Tenerife: A Chronological Analysis of the Liability Limita-
tions linposed Pursuant to the Warsaw Convention,” 45 J. Air L. & Com.
653 (1980).
15
the SDR was substituted for the gold franc as the unit used in
expressing limits of liability in the Warsaw Convention and its
progeny. According to one participant at the conference, how-
ever, the measure was adopted without an “in-depth discussion
of the implications... ."""
The Montreal Protocols were signed by the United States, and
President Ford sent them to the Senate in January 1977, 123
Cong. Rec, 1148 (1977), On 8 March 1983 the Protocols
came up for a vote and were soundly rejected by the Senate.
129 Cong. Rec. $2279 (daily ed. March 8, 1983). Although
the Protocols still remain on the Senate calendar because of
Senator Baker's request for reconsideration, it has been sug-
gested that “the current thinking is that renegotiation of the
limitation will probably precede any such vote.” C, Dubuc and
L. Doctor, “Legislative Developments Affecting the Aviation In-
dustry,” 48 J, Air L, & Com, 263, 264 (1983)."*
The above brief history is relevant for two reasons. First of
all, the various amendments concerning liability limits have not
been uniformly adopted by the different nations. Thus, for ex-
ample, Great Britain adheres to the Hague Protocol, but the
United States does not. In addition, some countries have in-
ternal legislation affecting the calculation c’ the Warsaw Con-
vention limits.’® The result is that an international uniform limit
of liability is impossible in the present world because not all
nations are following the same text.
4A. Tobolewski, “The Special Drawing Right in Liability Conven-
tions: An Acceptable Solution?", Lloyd's Mar. & Com. L.Q. 169, 173
(1979 Part Two).
Mr, Dubuc is former counsel of record for amicus IATA.
See, e.g. Italian Law No, 84 of March 26, 1983, 90 Gazetta Ufficiale
della Republica Italiana (April 1, 1983) (reprinted in TWA's Brief on
the Merits at BA37); Canadian Currency and Exchange Act: Carriage
by Air Act Gold Franc Conversion Regulations, January 13, 1983, 117
(Footnote continued on following page)
16
Secondly, as this history shows, since the end of World
War II there has been a concern with the low level of liability
stated in the Warsaw Convention of 1929, It has been the con-
sistent policy of the United States Government in this period to
seck to raise these limits to more realistic levels. Although the
focus of the various conferences has been on personal injuries,
similar considerations are applicable to cargo as well. Conse-
quently, in furtherance of this policy, the Court should seek to
expand the rights of those who suffer damages because of the
fault of international air carriers.
Summary of Argument
The carrier's limit of liability under the Warsaw Convention
is expressed in gold francs, It is clear from the text of the treaty,
the minutes of the drafting conference, the practice of this coun-
try for almost fifty years, several foreign legal decisions, and
commentaries, that the gold franc must be converted into dol-
lars using a gold value. The only existing price of gold, and
hence the only one that can rationally be used for Article 22,
is that set by the open market. Use of either of the proposals sug-
gested by TWA means changing Article 22 from a gold clause
to a currency clause. The so-called “last” official price of gold
has not existed since 1978 and is therefore nothing more than
a fiction. Use of the SDR means by-passing the Senate and
amending the Convention on an issue presently before that body.
Alternatively, the Court can determine that Article 22, as
presently written, is unenforceable. Article 22 of the 1929 Con-
(Footnote continued from previous page)
Can, Gaz., pt. Il, No. 2, at 431 (Jan, 26, 1983) (reprinted in TWA’s
Brief on the Merits at BA36); United Kingdom's Statutory Instrument
1980 No, 281 (JA70); South African Carriage by Air Act, No. 17 of
1946, §3(7), as amended by No. 5 of 1964 and No, 81 of 1979, Stat.
S. Afr. (Issue No, 13) 15, implemented by Dep't. of Transpor: Notice
R 2031 (Sept. 14, 1979) (reprinted in TWA's Brief on the Merits at
BA39); Sweden's Carrier by Air Act (1957:297), ch. 9, §22 (as
amended Mar. 30, 1978) (JA67).
17
vention was premised on the existence of a gold-dollar ratio set
by government fiat. The international community abandoned
this assumption in the Jamaica Accords of 1975, and domestic-
ally the Congress eliminated an official gold price by the repeal
of the Par Value Modification Act. Although the Congress aban-
doned the assumption upon which Article 22 had been based,
the legislature has failed to provide a new standard of recovery,
such as the SDRs used in the Montreal Protocols of 1975. The
conclusion that the Congress modified the Warsaw Convention
by its repeal of the Par Value Modification Act is supported by
established principles of domestic constitutional law.
If the Court determines that Article 22 is unenforceable, the
Court should make this holding effective as of 1 April 1978, the
date when Congress cut the official link between gold and the
dollar. Giving retrospective effect to such a ruling comports with
the Court's normal procedure and is further justified by the facts
that (1) the airlines have known since the mid-1970's of the
uncertainty surrounding Article 22, (2) retroactive effect is in
furtherance of the rationale of the ruling, and (2) substantial
inequity would result to Franklin Mint and similar claimants
by a contrary decision.
ARGUMENT
POINT I
If enforceable, the Article 22 limit should be converted
into dollars using the free-market price of gold.
Articl2 22'* of the Warsaw Convention states in pertinent
part:
(2) In the transportation of checked baggage and of
goods, the liability of the carrier shall be limited to a sum
of 250 francs per kilogram, .. .
1*Article 22 of the Convention is reprinted in full at page Al of the
Appendix to this Brief.
18
(4) The sums ment aed above shall be deemed to refer
to the French franc consisting of 654 milligrams of gold
at the standard of fineness of nine hundred thousandths.
These sums may be converted into any national currency
in round figures.
From 1934, when the United States adhered to the Conven-
tion, until 1978, the above treaty language posed no problem.
In the United States during this period there was always a rela-
tionship between gold and the dollar which was fixed by law.
Thus, for example, in 1934 the value of gold was set at $35.00
per troy ounce pursuant to statute. U.S. Gold Reserve Act of
1934, 48 Stat. 337 (1934); and Presidential Proclamation No.
2072 of January 31, 1934, 48 Stat. 1730 (1934).
The problem arose in 1978 when the United States cut the
statutory link between gold and the dollar. As mentioned above,
this break was made in the United States as part of the interna-
tional economic agreement called the Jamaica Accords of 1975.
Pursuant to the Bretton Woods Agreements Act of 1976, Pub.
L. No, 94-564, 90 Stat. 2660 (1976), the definition of the
dollar in terms of gold was eliminated. As a result, since the
effective date of the statute, April 1, 1978, there is no longer
in the United States an “official” price of gold.
Because of this change in the statutory role of gold, the ques-
tion has arisen as to the proper means of converting into dol-
lars the gold franc specified in Article 22 of the Warsaw Con-
vention, Franklin Mint submits that (1) if the Convention is
interpreted as written and as intended, the reference value must
be based on gold, and (2) the only gold price that can be used
is that price currently in existence, the free-market price.
The starting point in the interpretation of a statute is
the text. Bowsher v. Merck & Co., 453 U.S. 111 (1983);
Dawson Chemical Co. v. Rohm & Haas Co., 448 U.S. 176,
187 (1980). The same rule is applicable to treaties. Sumitomo
19
Shoji America, Inc. v. Avagliano, 457 U.S. 176 (1982); Max-
imov v. United States, 373 U.S. 49 (1963); Restatement, Sec-
ond, of the Foreign Relations Law of the United States § 147
(1)(a), (2) (1962). In the present matter the Convention
states’? “65% milligrams of gold at the standard of fineness of
nine hundred thousandths.” The reference to gold is unambi-
guous.
The Warsaw Convention was the result of a conference held
in Poland in October 1929. In the draft version initially sub-
mitted, the limit of liability was expressed in French gold francs.
See Minutes, supra, at 265. After debate the drafters specifically
rejected a French proposal to change the text to refer to an
undefined French franc.
The relevant minutes of the conference are reprinted in the
Joint Appendix beginning at page JA158.
Of particular importance is the view of the Swiss delegate,
whose views on this issue were adopted:
Naturally, one can say “French franc” but the French
franc, it’s your national law which determines it, and one
need have only a modification of the national law to over-
turn the essence of this provision. We must base ourselves
on an international value, and we have taken the dollar.
Let one take the gold French franc, it’s all the same to me,
but let's take a gold value. (Minutes, supra, at JA162; em-
phasis added.
The conclusion that the framers of the Convention intended
a gold value is supported by earlier events of that year. In July
1929 the Permanent Court of International Justice decided The
1TThe sole official language of the Convention is French, Article 36, and
it is this language that controls. Block v. Compagnie Nationale Air France,
386 F.2d 323 (Sth Cir. 1967), cert. denied, 392 U.S. 905 (1968). There
has been no disagreement between the parties as to the English transla-
tion of Article 22 which is printed at 49 U.S.C. §1502 note (1970).
29
Serbian Loans Case, If Hudson, World Court Reports 344
(1935), discussed in V Hackworth, Digest of International Law
630 (1943). That decision involved the interpretation of vari-
ous international loan agreements in which the payment was
based on a gold franc.'* As the gold franc decreased in gold
content between World War I and 1929, the issue was as to the
meaning of a gold franc.
The World Court said that “It is manifest that the Parties,
in providing for gold payments, were referring, not to payment
in gold coins, but to gold as standard of value.” /d. Further-
more, the World Court also found that “To safeguard the re-
payment of the loans, they provided for payment in gold value
having reference to a recognized standard, as above stated.” /d.
Consequently, a few months later at the aeronautical conference
in Poland, there was outstanding an important, recent decision
by the World Court holding that the gold franc is a reference
to a standard of value.
In interpreting a treaty the court is to give effect to the in-
tentions of the contracting parties. Rocca v. Thompson, 223
U.S. 317, 331-32 (1912). The framers of the Warsaw Conven-
tion made in Article 22 (4) a specific decision to base the lia-
bility limit on a gold value, and this decision can best be hon-
ored by the Court by interpreting Article 22 by reference to the
juarket price of gold.
This intent of the Convention’s drafters was emphasized by
the Argentinean court in Florencia, Cia. Argentina de Seguros
S.A. v. Vaig S.A. (Federal Civil & Commercial Court, Buenos
Aires, Argentina, August 27, 1976), original text reprinted in
1977 Uniform L. Rev. 198 (JA169):
The Warsaw Convention does not expressly define the
point; it appears to us proper to interpret it in the manner
'SThe franc used was the “germinal” franc, which had a different
gold content than the Poincare franc.
21
that the limit of liability established seeks to approximate
as accurately as possible the true value of gold (see P.P.
Heller, “The Warsaw Convention and the Two Tier Gold
Market,” cited by A. I. Mendelsohn.) This manner of
looking at the problem appears particularly suitable if it
is borne in mind that the international legislature desired
to have reference to an ideal currency which is defined
only by its metallic content, which, in view of its intrinsic
character—gold—permanently retains its value. (JA 172.)
The commentator cited by the Argentinean court, Paul P.
Heller, has discussed the use of the gold franc in various in-
ternational conventions and has reached the following con-
clusion:
From all these statements the following conclusions can
be drawn:
The states parties to the several international air and
maritime law conventions adopted gold francs as the mone-
tary system for establishing limits of carriers’ liability in
order to provide limits
(i) which would be uniformly applicable, independent
of currency fluctuations, within their jurisdiction, and
(ii) which would protect against inflation by linking the
limits to the real value of gold. (P. Heller, “The Value
of the Gold Franc-A Different Point of View,” 6 J. Mar.
L. & Com. 73, 94-95 (1974).)
See also, A. Mendelsohn, “The Value of the Poincare Gold
Franc in Limitation of Liability Conventions,” 5 J. Mar. L. &
Com. 125, 127 (1973-74).
Another factor supporting Franklin Mint’s position that a
flexible gold value must be used is the practice followed in this
country.
During the period between the promulgation of the Conven-
tion and the United States’ adherence to it, the price of gold
22
rose about 60% from $20.67 to $35.00 per troy ounce. The
resulting increase in the liability limit was accepted by all as a
matter of course, and there was never a suggestion that the lia-
bility limit was frozen at the 1929 level. When the official gold
price rose twice during the 1970's, no one contended that the
Convention prohibited an adjustment of the carrier’s liability
limit. The system had the capacity to change with the times.
In fact, this readjustment of the limit because of a change
in the price of gold has been used by the airline industry as an
argument against changing the Convention limit. For example,
following World War II Mr. John Clare, the then-insurance
manager of Pan American World Airways, opined that:
. . . [PJowerful basic economic forces continuously, effec-
tively and automatically are correcting the Warsaw Conven-
tion limit of passenger liability for changes in the gold value
of the national currencies of the various adherent nations.
This is a tribute to the farsightedness and excellent judgment
of the original framers of this convention. (Clare, “Evalua-
tion of Proposals to Increase the Warsaw Convention Limit
of Passenger Liability,” 16 J. Air L. & Com. 53 (1949).)
Mr. Clare traces the history of the Warsaw limits in Brazil,
Mexico and France to illustrate, in the context of the floating-
exchange rate system that existed in all countries (except the
United States) prior to Bretton Woods, the automatic increases
in the limits caused by the gold standard of the Warsaw limits.
Mr. Clare concludes his comments on that history with the fol-
lowing observation:
The recent increase of 42% in the limit of liability in
terms of Mexican Pesos and the increase of 80% in the
limit in terms of French Francs, which have been cited
above, came about because of the fact that the limit of lia-
bility now contained in *he Warsaw Convention is stated
in terms of a commodity, namely, gold.
23
The automatic way in which the Warsaw Convention
limit of passenger liability, expressed in current monetary
units, is corrected for changes in the value of money can
more easily be understood if the limit of liability is con-
sidered as being the value of 236.9 troy ounces of fine gold.
In this connection, it should be pointed out that in 1929,
when the official U.S.A. gold price was $20.67 per fine
ounce, the Warsaw Convention limit of passenger liabil-
ity was $4,898 U.S. Currency. When the price of gold
in the U.S.A. was raised to $35.00 per fine ounce in 1934,
the Warsaw Convention limit of passenger liability auto-
matically was increased to $8,292, U.S. Currency. Table I
shows the increases which automatically have occurred in
terms of various other currencies since 1929.
It would be a serious mistake to define the limits of lia-
bility in terms of anything other than some unit of gold
currency of a specified weight and fineness. If the present
limit had been stated in 1929 as 125,000 current or paper
Francs, the dollar equivalent today would be only $584
U.S. Currency at the current official rate of exchange. One
could not ask for a better illustration of the great protec-
tion given to the public by defining the limit of passenger
liability in terms of a gold currency unit. (/d. at 57.)
See also J. Parker, “The Adequacy of the Passenger Liability
Limits of the Warsaw Convention of 1929,” 14 J. Air L. &
Com. 37, 39 (1947).
A few years later this same point was made by the director
of claims for United States Aviation Underwriters, Inc.:
In suggesting that the Warsaw limit should be increased,
most people believe that there has been no increase »:nce
the Convention was signed in 1929. This is definitely un-
true. The iimitation has actually been materially increased.
This is because the limit on damages is based on the gold
standard and all nations, including the United States, have
24
devalued their currency with respect to gold. For instance,
the value of gold has gone up more in the United States
than the cost of living, according to the U.S. Air Coordi-
nating Committee’s own Economic Division. Generally
speaking, the local equivalent in currency of the limit pro-
vided by the Warsaw Convention will buy more in the
U.S.A. and most other nations, according to information
filed with the U.S. Air Coordinating Committee in 1953
than when the limit was originally fixed in Warsaw in
1929. (G. Orr, “The Rio Revision of the Warsaw Conven-
tion—Part II,” 21 J. Air L. & Com. 174, 176 (1954);
footnote omitted.)
In the Hague Protocol of 1955, the Poincare franc wa
as the unit of account for the limitation. The definitionAvas ex-
panded, however, to make it clear that 2 gold value as in-
tended: “Conversion of the sums into national currencies other
than gold shall, in case of judicial proceedings, be made ac-
cording to the gold value of such currencies at the date of the
judgment.” The Hague Protocol of 1955, Art. XI, done Septem-
ber 28, 1955, 478 U.N.T.S. 371, reprinted in Lowenfeld, supra,
at Doc. Supp. 955.
During the 1970's the official price of gold changed twice.
In December 1971 the price went from $35 to $38, and in
September 1973 the price rose to $42.22 per troy ounce. Fol-
lowing each change, the Civil Aeronautics Board required the
air carriers to change their tariffs to reflect this change in the
price of gold. C.A.B. Order No. 72-6-7, 59 C.A.B. Rep. 953
(1972); C.A.B. Order 74-1-16, 39 Fed. Reg. 1526 (1974).
Because of the Bretton Woods Agreements Act of 1976, Pub.
L. No. 94-564, 90 Stat. 2660 (1976), there is no longer a
price of gold set by statute. There is, however, a price that is
readily and easily available, the market price. Use of the free-
market price of gold is supported by the text of the treaty, the
practice in this country to use a gold value, and the intention
25
of the Convention's drafters to “protect against inflation by link-
ing the limits to the real value of gold.” (P. Heller, “The Value
of the Gold Franc-A Different Point of View”, 6 J. Mar. L. &
Com. 73, 94 (1974).)
Other than the judges of the Second Circuit, the only circuit
judge to express a view on the present problem is Judge Walter
Ely, a Senior Judge of the Ninth Circuit. In Boehringer Mann-
heim Diagnostics, Inc. vy. Pan American World Airways, Inc.,
531 F. Supp. 344 (S.D. Tex. 1981), appeal docketed, No.
81-2519 (Sth Cir. Dec. 30, 1981)** he decided this issue by
holding that the free-market price of gold should be used:
Allowing defendant to limit its liability under the Con-
vention based on the now-abolished “official” gold price of
$42.22 an ounce would perpetrate a legal fiction of the
purest kind. The Court finds no justification in the lan-
guage or history of the Warsaw Convention to justify such
a holding in this case. (531 F. Supp. at 352; footnote
omitted. )
. as .
In light of the historical analysis discussed above, the
Court finds nothing in these considerations upon which to
conclude that it should employ the fiction of an official U.S.
price of gold in converting the limitation sums expressed
ia the Convention. The only proper basis for determining
defendant's liability limitation, at least since 1978, is with
reference to the freemarket price of gold. (531 F. Supp.
at 353; footnote omitted.)
Many of the foreign decisions also support the conclusion that
the free-market price of gold should be used. Cosida S.p.A. di
Assicurazioni e Riassicurazioni v. B.E.A., Milan Ct. of App.,
No. 2796/77 (June 9, 1981; Judgment No. 861); Kuwait Air-
1°Foliowing oral argument, the Fifth Circuit advised counsel that it
will await the Supreme Court's decision in this case. Letters of 4 March
and 20 June 1983 to counsel of Chief Deputy Clerk, Fifth Circuit.
26
ways Corporation v. Sanghi, Regular Appeal No. 54/77 (Court
of the Principal Civil Judge, Civil Station Bangalore, India Au-
gust 11, 1978); Balkan Bulgarian Airlines v. Tammaro, (Court
of Milan, Italy October 25, 1976); Florencia, Cia. Argentina
de Seguros, S.A. v. Varig, S.A., (Federal Civil & Commercial
Court, Buenos Aires, Argentina, August 27, 1976), original text
reprinted in 1977 Uniform L. Rev. 198; Zakoupolos v. Olym-
pic Airways Corp., No. 256/74, (Court of Appeal, 3d Dep't,
Athens, Greece, January 10, 1974).
In a 1980 article on the subject, Paul Heller®® reached the fol-
lowing conclusion:
Under these circumstances, if limitation of liability is to
remain part of the legal framework applying to interna-
tional carriage, I wonder whether the carrier and their
insurers could not live and thrive with limitation expressed
in terms of gold, to be converted into national currencies
at the market value. (P. Heller, “Converting The Gold
franc-A Reply from an Unconverted,” 5 Air L. 33, 34
(1980).
See also A. Mendelsohn, “The Value of the Poincare Gold
Franc in Limitation of Liability Conventions,” 5 J. Mar. L. &
Com. 125 (1973-74).
In a treatise published in 1981 on the Warsaw system, Dr.
Rene H. Mankiewicz, who has had long experience in the Legal
Bureau of the International Civil Aviation Organisation, reached
the conclusion that “As the purpose of expressing the limits in
gold francs was to maintain the purchasing power of the
amounts in question, it is submitted that the conversion into na-
tional currency should be made at the exchange rate for gold
2°As mentioned above, Mr. Heller has been cited by the Argentinean
court in Florencia, Cia Argentina de Seguros, S.A., supra. He has also
been cited by the Second Circuit concerning the Warsaw Convention.
See Day v. Trans World Airlines, Inc., 528 F.2d 31, 37 n.17 (2d Cir.
1975), cert. denied, 429 U.S. 890 (1976).
27
on the open market; (citing authorities).” R. Mankiewicz, The
Liability Regime of the International Air Carrier 114 (1981).
If there is any doubt as to the interpretation of Article 22,
those doubts should be resolved in favor of Franklin Mint. Lim-
itations of liability sought to be enforced by common carriers,
whether based on law or contract, are in derogation of the com-
mon law, and thus must be strictly construed. Herd & Co. v.
Kratwill Machinery Corp., 359 U.S. 297, 304-305 (1959).
Not only does the Warsaw Convention preempt inconsistent
provisions of local law, see Jn re Aircrash at Bali, Indonesia on
April 22, 1974, 684 F.2d 1301, 1308 (9th Cir. 1982), but the
Convention also creates Franklin Mint’s cause of action. See
Benjamins v. British European Airways, 572 F.2d 913 (2d Cir.
1978), cert. denied, 439 U.S. 1114 (1979). Consequently, the
principle stated by the Court in Bacardi Corp. v. Domenech,
311 U.S. 150, 163 (1940) should be applied:
Even where a provision of a treaty fairly admits of two
constructions, one restricting, the other enlarging, rights
which may be claimed under it, the more liberal interpre-
tation is to be preferred.
See also Factor v. Laubenheimer, 290 U.S. 276 (1933).
This principle has been utilized in a Warsaw Convention cargo
case. Dalton v. Delta Airlines, Inc., 570 F.2d 1244, 1246 (Sth
Cir. 1978).
As alternatives to the free-market price of gold, TWA argues
for the use of either the last official price of gold or SDR’s of
the IMF.” The court should reject both methods.
First of all, TWA’s suggestions violate the text of the treaty.
As written, Article 22 refers to a gold value. Using either of
21TWA has abandoned a third proposal that was argued in the lower
courts, viz., use of the current French franc.
28
TWA’s methods means changing Article 22(4) from a gold
clause to a currency clause. With the last official gold price, the
refere. se to a gold value would be eliminated because the limit
essentially then becomes a specified, fixed dollar amount. Ar-
ticle 22(2) would, in effect, be
(2) In the transportation of checked baggage and of
goods, the liability of the carrier shall be limited to a sum
of $20.00 per kilogram, .. .*
Article 22(4) would be eliminated from the Convention as
superfluous.
Using SDR’s would also mean amending Article 22 to elim:-
nate the gold provisions. Article 22(2) would become
(2) In the transportation of checked baggage and of
goods, the liability of the carrier shall be limited to a sum
of 17 Special Drawing Rights per kilogram, .. .*
As the district court pointed out in Jn re Air Crash Disaster
at Warsaw, Poland, on March 14 1980, 535 F. Supp. 833
(E.D.N.Y. 1982), aff'd on other grounds, 705 F.2d 85 (2d
Cir. 1983), petition for cert. docketed, No. 83-5 (July 11,
1983) (the “Polish Case”):
Nevertheless, it would be a mistake to conclude from the
fact that gold no longer plays a role in the international
monetary system that all references to gold in the Conven-
22According to C.A.B. Order 74-1-16, use of the official price of
§42.22, which was the last official price in the United States, results in
a figure of $20.00 per kilogram (JAS7).
28Seventeen SDR's per kilogram is the figure proposed by TWA in its
calculations at page 35 n. 42 of its Brief. This is the same figure as used
in Montreal Protec)! No. 4, Art. VII, done Sept. 25, 1975, reprinted in
Lowenfeld, supra, at Doc. Supp. 991.
29
tion may be ignored in calculating the liability limitation
and a new measure substituted, whether the current French
franc or the SDR. The Warsaw Convention’s damage
clauses are, in fact, drafted in terms of gold, and they have
not as yet been amended to strike that reference. Both the
drafting and redrafting of treaties is the business of
branches of this government other than the judiciary. Un-
less and until the damage clauses are redrafted—no matter
how logical it may seem to base the calculations upon the
French franc, the SDR or any other currency or unit of
account—the judiciary does not have the authority to, as
plaintiffs correctly state, “read Article 22(4) out of the
Convention and substitute an alternative method of cal-
culating the damage limit.” (535 F. Supp. at 843; foot-
note omitted; emphasis in the original. )
Adopting either of TWA’s proposals would effectively amend
Article 22 to substitute a currency clause for the present gold
provision.
Franklin Mint submits that such a radical alteration of the
essence of Article 22 also violates the intentions of the Conven-
tion’s drafters. The legislative history of the Convention shows
that the framers rejected a proposal to replace the gold franc
by an undefined French franc. The purpose of the gold clause
was, in the words of one commentator on the Convention, “to
avoid, as far as the limits are concerned, the effects of devalua-
tions which would result from having the limits expressed in any
local currency”. H. Drion, Limitations of Liabilities in Inter-
national Air Law 183 (1954).
Using the last official gold price of $42.22 means using a dol-
lar figure that is forever fixed. Consequently, the value of the
Article 22 limit will change not because of any alteration in the
value of gold, but because of changes in the worth of the dollar.
It is precisely this linking of a claimant’s recovery to the fortunes
of a currency that the Convention’s drafters wished to avoid.
30
The SDR is no better in this regard, because the SDR is cur-
rently nothing more than the weighted average of five curren-
cies.** If the framers rejected the use of one currency, why should
adding another four make a difference?
Contrary to [WA's description of the SDR as a “Rosetta
stone” (TWA Brief, p. 35), the fact is that use of the SDR rep-
resents a fundamental change in Article 22. This point is shown
by the Montreal Protocols of 1975, which specifically amend
the Warsaw Convention on this issue. In Montreal Protocol No.
4, which pertains to cargo, the reference to gold in Article 22
is replaced by a reference to SDRs. This change is only for those
signatories belonging to the IMF. Nations adhering to the Con-
vention, but not members of the IMF, such as Switzerland or
Poland, could, if tney wished, continue as before.”
President Ford submitted the Protocols to the Senate in
January 1977, and the treaties were reported out of com-
mittee subject to a qualified approval. One of the sev-
eral provisos attached to the committee’s approval was that
“the United States government shall continue actively to seek
to negotiate higher limits on the liability of carriers than those
*4These currencies are the American dollar, the English pound, the
German mark, the French franc, and the Japanese yen.
TWA emphasizes the desire of the Convention's framers for stability.
Yet it is questionable whether such stability can be achieved by utilizing
a device, such as the SDR, which is redefined every few years. During
the period 1968-74, the SDR was calculated on the basis of gold, From
1974 to January 1978, the SDR was based on the weighted average of
sixteen currencies. The identity of the sixteen currencies was not con-
sistent during this period, nor were the weights assigned to the various
currencies, Since January 1, 1978, the SDR has been the weighted aver-
age of five currencies. Gold, by contrast, has been a medium of ex-
change and a standard of value for a few thousand years.
*6Use of the SDR is criticized in A. Tobolewski, “The Special Draw-
ing Right in Liability Conventions: An Acceptable Solution?” Lloyd's
Mar. & Com. L. Q. 169 (1979 Part Two). This brief article is reprinted
ot page A272 of the Joint Appendix submitted to the Court of Appeals.
31
provided under these Protocols.” Senate Executive Report 98-1,
at page 8, Committee on Foreign Relations, U.S. Senate, 98th
Cong., Ist Sess. (February 10, 1983.)
The Protocols came up for debate and vote on 8 March 1983.
Senator Percy, a proponent of the Protocols, asserted that the
Protocols were a means of resolving Franklin Mint and
other cases that reflect “a growinc frustration, and even rebel-
lion, by the U.S. court system against the present [Warsaw]
system.” 129 Cong. Rec. $2277 (daily ed. March 8, 1983) (re-
marks of Sen. Percy). Nevertheless, the Protocols were soundly
rejected by the Senate. 129 Cong. Rec. $2279 (daily ed. March
8, 1983). Apparently, it was the first time since 1960 that a
treaty had been rejected by the Senate. “Air Liability Treaty
Rejected by Senate,” N.Y. Times, March 9, 1983, at D6, col. 5.
The Protocols still remain on the Senate calendar, however, be-
cause of Senator Baker's request for reconsideration. 129 Cong.
Rec. §2279 (daily ed. March 8, 1983).
Hence, there is presently pending before the Senate a treaty
that would specifically amend the Warsaw Convention to make
the change being requested now by TWA, i.e., use of the SDR.
Under the Constitution treaties are to be made by the execu-
tive “by and with the Advice and Consent of the Senate”. U.S.
Const., Art. II, §2. Adoption of TWA's proposal to use the SDR
would result in a judicial intrusion into a policy area allocated
by the Constitution to the other branches. The Court should
not amend the Convention under the guise of interpretation,:
particularly when the same issue is already before the Senate.
TWA criticizes use of the free-market price of gold because
this price is subject to fluctuations.” The difficulty with this
criticism .s that it likewise applies to SDR's. TWA fails to ex-
During oral argument, the Second Circuit, by Judge Oakes, sug-
gested that one way of ameliorating the day-to-day fluctuations in the
market price of gold would be to take the average market price over
an extended period.
32
plain the distinction between the acceptable (to TWA) fluctua-
tions in the price of SDRs and the unacceptable gold price fluc-
tuations.
The alternative is picking a conversion factor with absolutely
no fluctuations, i.e., $42.22. The difficulty with this approach is
that it creates a rigidity not found in the system as drafted by
the Convention's founders,
The key in the phrase “last official price of gold” is the word
“last”. TW.4's preference is to have the valuation of gold fixed
for the future according to the state of affairs on 31 March
1978. No matter what happens to the domestic or world econ-
omy, passengers and cargo will always be stuck with the figure
of $42.22." Such a proposal destroys the flexibility inherent in
the Warsaw system and substitutes for it a qualitatively different
arrangement.
This point was recognized by the district court in the Polish
Case:
To be sure, tying the operation of a dynamic clause of
the Warsaw Convention, meant to deal with a changing
global economy without the need for constant amendment,
to the public policy of the United States, as expressed in its
official price of gold at one moment in time, runs the risk
2TThe effec: of inflation is illustrated in the Kennedy Memorandum,
supra at note S$, at 4 (JA48). In 1934 the limit for a hypothetical
44-pound suitcase was $330. In 1980 this limit (using the last official
price of gold) would be $400. Yet in purchasing power terms the $330
in 1934 would be the equivalent of $1,920 in January 1980,
As shown in the Clare article, supra, prior to the par value system
created by Bretton Woods, the limit of recovery would fluctuate (except
in the United States) based on fluctuations in the local currency. There
has been no suggestion that the airlines were unable to deal then
these fluctuations in the limit, Table | in the Clare article shows,
example, that in France over a twenty-year period the limit
1420.1% in terms of the local currency.
33
under some circumstances of itself undermining the inten-
tion of the Convention's drafters. (Polish Case, 535 F.
Supp. at 844.)
In support of the $42.22 figure, TWA relies on two CAB
documents. The first item is CAB Order 74-1-16, 39 Fed. Reg.
1526 (1974) (JAS4), and TWA cites several cases for the
proposition that an agency order is entitled to a presumption of
validity. While that legal proposition is obviously true as a gen-
eral rule, Franklin contests its applicability in the present case.**
CAB Order 74-1-16 is based on a factual assumption that no
longer is present: the existence of an official price of gold in the
United States. With the elimination of an official gold price,
the entire foundation upon which Order 74-1-16 is based has
been destroyed. The Order, by its very terms, is no longer fac-
tually applicable to the current situation.
The CAB itself no longer considers Order 74-1-16 as stat-
ing existing policy. This conclusion is shown by three docu-
ments submitted to the lower courts. The first item is CAB
Order 81-3-143, which is dated March 24, 1981.%* In that
Order the CAB was concerned with the pa:senger limitation of
the Convention, which is 125,000 gold francs. At the conclu-
sion of the Order, the Board states “We do not by our state-
ments in this order express any views on the appropriate valua-
tion of 125,000 francs as expressed in terms of goid.” If the
Board had still considered Order 74-1-16 to state existing pol-
icy, then there obviously would have been a reference to Order
**An agency interpretation of a statute that violates the purpose of the
Statute is not entitled to be followed. United States ex rel. Dancy v.
Arnold, $72 F.2d 107, 113 (3d Cir. 1978); National Wildlife Federa-
tion Vv. Snow, 56\ F.2d 227, 238 (DC. Cir. 1976). The same reason-
ing is applicable to treaties. See Deutsche Lufthansa Aktiengeselischaft
v. Civil Aeronautics Board, 479 Fle 912 (D.C. Cir. 1973).
"This Order is reprinted a; page Al2! of the Joint Appendix sub-
mitted to the Court of Appeals
34
74-1-16. Instead, the Board expressly disclaimed any views on
the valuation of the gold franc.
The two other CAB items that support Franklin Mint are let-
ters reproduced at pages A362 and A369 of the Joint Appendix
that was submitted to the Court of Appeals. In the first letter
the chairman of the CAB stated in May 1981 that “The Board
has not taken any position on the issue... .” In a letter of No-
vember 1981, the General Counsel of the Board opined that
the interpretation of the Convention’s liability limit was for the
courts to determine. No mention was made of Order 74-1-16.
The other CAB document on which TWA relies is the Golden
Memorandum (JA33). Although Mr. Golden recommends
maintenance of the status quo, it is not because of any strong
belief in the merits of this approach. As he says in the conclud-
ing paragraph of his * emorandum:
Because of the confusion inherent in converting Warsaw's
limits when there is no official rate of gold and the equi-
table considerations raised by the low limits currently in
force, we believe the Board should develop a coherent pol-
icy resolution of the questions, and then meet the Depart-
ments of Transportation and State to review this prob-
lem. These agencies will be solely responsible for enforc-
ing Warsaw in the future and have participated actively
in formulating U.S. policy in this area in the past. (JA41)
In fact, in the sentence immediately following the one quoted
by TWA in its brief at page 29, Mr. Golden points out the draw-
back of continued use of the $42.22 figure: “Use of the last
official rate of gold, however may at times prevent passengers
from recovering the full extent of damages caused by carriers.
Carriers ma‘ no longer need the protection of these low limits,
given the maturation of the aviation industry since 1929.”
(JA40-41; footnote omitted.)
35
TWA also relies on two federal decisions rendered after the
Second Circuit's judgment in Franklin Mint.*° Maschinenfabrik
Kern, A.G. Vv. Northwest Airlines, Inc., 562 F. Supp. 233 (N.D.
Ill. 1983); Deere & Co. v. Deutsche Lufthansa A.G., No. 81
C 4726 (N.D. Ill. Dec. 30, 1982) (not officially reported; set
forth at page A-61 of the Appendix to TWA’s certiorari peti-
tion). Both cases are by federal judges in Chicago, and both
defer to the CAB on the matter. Yet in neither case is there any
discussion of the CAB material subsequent to Order 74-1-16,
in particular the Board’s statement in Order 81-3-143 quoted
above. Because these decisions are a rubber-stamp approval of
an obsolete agency order, they are not entitled to great consider-
ation. See Federal Maritime Commission v. Seatrain Lines, Inc.,
411 U.S. 726, 745-46 (1973).
The only other federal decision on this issue post-Franklin
Mint, is In re Aircrash at Kimpo International Airport, Korea
on November 18, 1980, 558 F. Supp. 72 (C.D. Cal. 1983),
interlocutory review denied, No. 83-8051 (9th Cir “May 10,
1983). That case adopts the Second Circuit’s reasoning and
applies it retrospectively, as suggested at Point III below.
Finally, TWA relies on a number of foreign decisions.** Both
“TWA also cites Electronic Memories & Magnetic Corp. v. The Fly-
ing Tiger Line, Inc., No. 784512 (Cal. Super. Ct., San Francisco Aug.
25, 1982) (set forth at page A-60 of the Appendix to TWA's certiorari
petition), which pre-dates the Second Circuit's opinion. The opinion
by a California Superior Court consists of 1our sentences, and the de-
cision is presently on appeal.
‘1TWA has also referred to a 1974 resolution of the Legal Subcom-
mittee of the International Civil Aviation Organization (JAS8). That
resolution, however, was pass..1 at a time when the “two-tier” gold system
was in effect. Hence it is not surprising that preference was given to
the official, as opposed to the unofficial, gold price. Furthermore, as one
commentator has observed, “Obviously, since the resolution received so
few affirmative votes, it could not be relied upon to afford a solution
for problems caused by the two-tier gold regime.” G. FitzGerald, “The
(Footnote continued on following page)
36
sides have foreign decisions in their favor, and suffice it to say
that there is no international uniformity on the subject. This
lack of uniformity is the reason for the drafting of the Montreal
Protocols. In addition, the views of an English solicitor are in
order:
There are dangers in relying upon decisions of foreign
courts in an indiscriminate fashion. Quite apart from pos-
sible errors or imperfections in translation where a judg-
ment is in a foreign language, the judgment may reflect
legal ideas used in foreign legal systems and essential to
the proper understanding of the judgment but alien to
those of the reader in another jurisdiction. Furthermore,
there are many foreign cases in which the full facts are
not described and the law not properly argued. Often the
relevant authorities are not cited. There is thus a great
danger in treating one or two foreign cases as pointing to
the existence of some vaguely constituted international
body of case law. Furthermore, the reporting of relevant
decisions varies enormously in quality and clarity from
country to country as does the inclusion of cases in various
digests and periodicals produced on an international basis.
It must be emphasized, again and again, that there is no
international body of case law in the field of aviation nor,
indeed, in any other.” (P. Martin, “The price of gold and
the Warsaw Convention (III)", 6 Air L. 246 (1981).)
(“Martin”)
TWA sets forth, for example, two Austrian decisions in the
Appendix to its brief on the merits. Kislinger v. Austrian Air-
(Footnote continued from previous poge)
Four Montreal Protocols to Amend the Warsaw Convention Regime
Governing International Carriage by Air,” 42 J). Air L. & Com. 273,
324 (1976). As TWA conceded to the district court, “as a practical
matter, the effect of the 1974 ICAO Resolution has been eclipsed as a
result of the elimination of an official rate of gold, ..." (TWA Mem-
orandum of Law of 31 July 1981 in Support of Defendant's Motion, at
p. 22.)
37
transport, No. 1 R 145/83 (Commercial Court of Appeals of
Vienna, Austria, June 21, 1983) (at BA 12); Rendezvous-
Boutique-Parfumerie Friedrich and Albine Breitinger GmbH v.
Austrian Airlines, No. 14 R 11/83 (Court of Appeals of Linz,
Austria June 17, 1983) (at BA22). In Austria, however, the
legislature had already adopted the SDR into analogous trans-
portation conventions. In the Dutch case cited by TWA, State
of the Netherlands v. Giants Shipping Corp., Rechtspraak van
de Week 321 (May 30, 1981) (Supreme Court of The Nether-
lands May 1, 1981), a maritime convention was at issue, the
so-called Brussels Convention.** That Convention had been
amended by a protocol to provide for the use of SDRs, although
the protocol was not yet in effect.
These Austrian and Dutch decisions illustrate precisely what
is missing in the case at bar: an expression of public policy by
the domestic legislature. The Congress has eliminated an offi-
cial price of gold. The Senate has refused its advice and con-
sent to the Montreal Protocols. No domestic legislation, as exists
in other countries, has been proposed here on the conversion
question. As long as Article 22 exists in its present form, it is
a gold clause. The only price of gold currently in existence is
the free-market price. Consequently, if Article 22 is enforceable,
it can only be enforced as written based on the free-market price
of gold.
POINT II
Alternatively, Article 22 of the Convention should be
held to be unenforceable.
It is useful to contrast the present case with the problem be-
fore the courts in Day v. Trans World Airlines, Inc., 393 F.
Supp. 217 (S.D.N.Y.), affd, 528 F.2d 31 (2d Cir. 1975), cert.
52Formally known ©s the Convention Relating to the Limitation of
the Liability of Owners of Sea-Going Ships, done Oct. 10, 1957, re-
printed in 6 Benedict on Admiralty 5-11 (7th ed. 1983).
38
denied, 429 U.S. 890 (1976). There the courts were faced with
interpreting the meaning of Article 17, which sets temporal
limits on the Convention's applicability. The specific question
was whether passengers in a boarding line were within the Con-
vention’s coverage. The Day case illustrates the typical problem
of in.erpretation faced by the courts in applying general stat-
utory language to concrete situations.
In the present appeal there is no dispute as to the translation
or the literal meaning of Article 22. Likewise, no one contends
that a limit is to be calculated on the basis of the present-day
value of a specific French coin that has not been minted since
1936,
The difficulty is rather one of trying to put into terms com-
prehensible to the 1980's a system based on the assumptions
of the 1920's. The key assumption made by the Convention's
drafters concerned the use of gold as a standard of value. Gold
has been valuable to man for several thousand years, as it still
is today. In 1929, however, that value was set by government
fiat. Today, there is still an international price of gold, but the
price is set by the market. Because the price of gold now is a
market } rice, it can change frequently based on the perceptions
of people throughout the world. Hence, while gold still per-
forms its intended role as a standard of value, the price of gold
is now set by a method not expected by the drafters for “a Con-
vention which is drawn for a few years” (minutes, supra, at 90;
JA162.)
It is also useful to contrast the situation normally faced by
the Court in interpreting the Constitution. The system created
by the Constitution has continued vitality precisely because a
general scheme was outlined and broad language (e.g., “due
process of law”) was used. The Warsaw Convention, on the
other hand, is very specific (see, e.g., Article 8). As a vice-
president of the Warsaw Conference noted, “If there are impro-
vements to be brought forth, life does not end today, we can
do them later on.” (Minutes, supra, at 32.)
39
Unfortunately, the Convention has proven very difficult to
amend, and the parties’ suggestions are all somewhat Procrus-
tean in their effort to jam 1983 realities into the 1929 frame-
work. As the Second Circuit noted, “Indeed, there are power-
ful arguments against each of the proffered solutions.” 690 F.
2d at 305-6; JA19S.
Franklin Mint submits that the only valid alternative to the
use of the free-market price of gold is a determination that Ar-
ticle 22 is unenforceable as written. This conclusion was the
one reached by the Second Circuit, and is a result supported
by both the facts and the applicable American law.
The two key facts are that (1) in 1929 Article 22 was pre-
mised on the existence of a price of gold established interna-
tionally by government action, and (2) since the Jamaica Ac-
cords of 1975 and the U.S. repeal of the Par Value Modifica-
tion Act, there no longer exists a gold price set by statute.
The legal principles applicable to the foregoing facts are
straightforward. The interpretation of a treaty is a judicial ques-
tion. Sullivan vy. Kidd, 25¢ U.S. 433, 442 (1921); see also
Baker v. Carr, 369 U.S. 186, 211-12 (1962); Society for the
Propagation of the Gospel In Foreign Parts v. New Haven, 21
U.S. (8 Wheat.) 464, 491-94 (1823). A treaty is to be re-
garded as equivalent to an act of the legislature. Valentine v.
United States ex rel. Neidecker, 299 U.S. 5, 10-11 (1936);
Foster v. Neilson, 27 U.S. (2 Pet.) 253, 314 (18 9) (Marshall,
C.J.). A treaty stands no higher than any other legislative act.
Whitney v. Robertson, 124 U.S. 190, 194 (1888).
Thus it is clear that a treaty may be modified by a subse-
quent act of Congress. Moser v. United States, 341 U.S. 41, 45
(1951). A treaty may be entirely abrogated by a later -tatute.
Whitney v. Robertson, 124 U.S. 190, 194-95 (1888); Edye v.
Robertson (The Head Money Cases), 112 U.S. 580, 597-99
(1884); The Cherokee Tobacco, 78 U.S. (11 Wall.) 616, 620-
21 (1870).
40
The Second Circuit's decision is also supported by interna-
tional law, which is part of our domestic law. The Paquete
Habana, 175 U.S. 677 (1900). Under the doctrine of rebus
sic stantibus, a treaty need not be followed when there has been
a substantial change in conditions since the promulgation of the
treaty. Restatement, Second, of the Foreign Relations Law of
the United States §153 (1962). In view of the radical changes
that have occurred since 1929, this doctrine is certainly appli-
cable to the Warsaw Convention.
An English solicitor’s conclusion on the gold franc issue was
that “It is my strongly held view that there is no or no wholly
satisfactory solution to be found by the courts anywhere; the
muddle can only be cleared up by effective international legis-
lation.” Martin, supra, at 249. The Court of Appeals reached
a similar conclusion when it said that “selection of a unit of
conversion and the sevel of value of a limitation on liability
is plainly a matter to be negotiated by the parties, as the history
of the Convention demonstrates.” 690 F.2d at 311; JA208. Both
the international community and the Congress explicitly aban-
doned the asumption concerning gold by which Article 22 of
the Convention had been interpreted in this country for over
forty years. The conclusion of the Court of Appeals that the
subsequent Congressional act modified the Warsaw Convention
is consequently a decision that is constitutionally valid.
POINT Ill
Article 22 should be held unenforceable as of 1 April
1978.
Although the Court of Appeals determined that Article 22
was unenforceable because of Congressional action, the ap-
pellate court gave this holding only prospective effect. The jus-
41
tification for this decision was that the court’s “resolution was
not clearly foreshadowed” (quoting Chevron Oil Co. v. Huson,
404 U.S. 97, 106 (1971) and that “[pJarties to transactions
covered by the Convention should have time to adjust their af-
fairs to this ruling.” 690 F.2d at 312; JA209. The Court should
reverse this portion of the Second Circuit’s judgment and re-
mand the action to the trial court for a determination of Frank-
lin Mint’s damages.
The Court has given prospective effect to its rulings almost
exclusively in the context of criminal constitutional rights. See,
e.g., Wainwright v. Stone, 414 U.S. 21 (1973); Michigan v.
Payne, 412 U.S. 47 (1973). For these cases the retrospective
application of newly established constitutional rights would have
had the potential effect of forcing the retrial, or release. of thou-
sands of convicted criminals.
The civil cases on this topic are likewise readily distinguished.
For example, in Cipriano vy. City of Houma, 395 U.S. 701
(1969), the Court held unconstitutional a statute limiting the
franchise concerning local bond issues. The ruling was made
prospective in consideration of the “significant hardships” that
retroactive application would have “imposed on cities, bond-
holders, and others connected with municipal utilities,” where
the time for challenging such election results had lapsed. 395
U.S. at 706.
In Northern Pipeline Construction Co. v. Marathon Pipe
Line Co., 102 S.Ct. 2858 (1982), the Court concluded that
the broad grant of jurisdiction to the bankruptcy courts in the
Bankruptcy Act of 1978 is unconstitutional; and this holding
was made prospective. The practical effect of a contrary result
would have been to invalidate all of the cases filed under the
Act. As the Court noted, retroactive application “would surely
visit substantial injustice and hardship upon those litigants who
relied upon the Act’s vesting of jurisdiction in the bankruptcy
courts.” 102 S.Ct. at 2880.
42
In Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), the Court
listed three considerations as properly bearing upon the issue
of retroactivity. 404 U.S. at 106-7; see also Northern Pipeline
Co., supra, 102 S.Ct. at 2880. The Court of Appeals, however,
mentions only one factor in its decision.
The first factor mentioned in Chevron Oil Co. is that the de-
cision must establish a new principle of law, either by overruling
clear precedent or by deciding an issue of first impression whose
resolution was not clearly foreshadowed. 404 U.S. at 106. The
present case involves a matter of first impression in the United
States; there is no American precedent on the subject.
Nevertheless, at least since the 1974 decision of the Greek
appellate court in Zakoupolos vy. Olympic Airways Corp., No.
256/74 (Court of Appeal, 3d Dep't. Athens, Greece, January
10, 1974), the airlines have known of their exposure to in-
creased liability because of the uncertainty surrounding Article
22. In a 1981 article IATA’s counsel of record noted “How-
ever, in recognition of the controversy over the conversion rate
for the Warsaw limitation, from ‘gold’ francs into United States
currency, settlement offers may still exceed $75,000.” R. Craft,
“Factors Influencing Settlement of Personal Injury and Death
Claims in Aircraft Accident Litigation,” 46 J. Air L. & Com.
895, 898-99 (1981) (footnote omitted). The very purpose of
the Montreal Protocols of 1975 was to eliminate this uncer-
tainty concerning the limitation in the Convention. As stated by
the district court in Jn re Aircrash at Kimpo International Air-
port Korea on November 18, 1980, 558 F. Supp. 72, 75 (C.D.
Cal. 1983), interlocutory review denied, No. 83-8051 (9th Cir.
May 10, 1983):
It is clearly established that the airlines knew that “a
rational limit on liability cannot exist” without an interna-
tionally agreed upon unit and “the Montreal meeting in
1975 was a recognition by the Warsaw parties that the
Convention's unit had been eliminated.” Therefore, air-
43
lines, including Korean, presumptively knew that this “in-
ternational disarray” would prevent the Convention from
shielding them in any rational manner, and they would be
expected to protect themselves and obtain additional in-
surance.
Furthermore, the knowledge of this “international disar-
ray” and the “recognition by the Warsaw parties that the
Convention’s unit had been eliminated by events,” contrary
to the holding in Franklin Mint, would allow the airlines
to see—as early as 1975—that, eventually, a court would
refuse to enforce the Convention. Therefore, this Court's
decision as to the enforceability of the Convention is ap-
plicable to this action.
The second factor mentioned in Chevron Oil Co. is whether
retrospective operation will further or retard the operation of
the holding in question. 404 U.S. at 106-7. If the Court deter-
mines that Article 22 is unenforceable, the basis for that deci-
sion must rest on the fact that since 1 April 1978 there is no
longer a price of gold set by statute. It makes no sense to reach
a decision founded on the significance of that date, yet also to
hold that only future cases are affected by this change in the
controlling facts. Either the state of affairs was different after
1 April 1978, or it was not. If it was different, then the only
way to give full effect to the Court’s decision is to make a hold-
ing on unenforceability effective as of 1 April 1978.
The final factor is whether retroactive application could pro-
duce substantial inequitable results in individual cases. 404 U.S.
at 107. In Chevron Oil Co., for example, giving retrospective
effect to the pertinent holding would have meant that the plain-
tiffs claim would have been time-barred. In the present case,
not giving retrospective effect would mean limiting TWA’s ad-
mitted liability (JA15) to about 2.5% of Franklin Mint’s
claimed damages.
A retrospective ruling in favor of claimants under the Con-
44
vention will not result in the chaos envisioned in either North-
ern Pipeline Co. or the criminal cases, because Article 29 of
the Convention establishes a two-year statute of limitations. A
retrospective ruling by the Court would therefore, as a practical
matter, affect only pending cases and causes of action that have
arisen within the last two years. In view of the uncertainty con-
cerning Article 22 since the mid-1970's, there is no reason,
either in equity or in logic, why air carriers (or their liability
insurers) should reap the benefit of the international disarray.
This Court stated the matter in United States v. Donnelly,
397 U.S. 286, 294-5 (1970):
Acts of Congress are generally to be applied uniformly
throughout the country from the date of their effectiveness
onward. Generally the United States, iike other parties, is
entitled to adhere to what it believes to be the correct in-
terpretation of a statute, and to reap the benefits of that
adherence if it proves to be correct, except where bound to
the contrary by a final judgment in a particular case.
If Franklin Mint is correct in Point II of this Brief that Ar-
ticle 22 is unenforceable, then the Court’s ruling should be ap-
plicable as of 1 April 1978, the date when the statutory rela-
tionship between gold and the dollar was abandoned.
45
CONCLUSION
For all the foregoing reasons the Judgment of the United
States Court of Appeals for the Second Circuit should be re-
versed and the action remanded to the District Court. Upon
remand the District Court should determine, and enter judg-
ment for, the actual amount of Franklin Mint’s damages. Al-
ternatively, the District Court should enter judgment for Frank-
lin Mint for the lower of two amounts that are to be determined
by the District Court: (1) the limit of TWA’s liability using the
free-market price of gold on the date of the carriage contract’s
breach, and (2) Franklin Mint’s actual damages.
Dated: New York, New York
October 12, 1983
Respectfully submitted,
JOHN R. FOSTER
Counsel of Record
120 Broadway, Suite 1825
New York, New York 10271-
0156
(212) 227-3550
Counsel for
Franklin Mint Corporation
Franklin Mint Limited
McGregor, Swire Air Services
Limited
Of Counsel:
WAESCHE, SHEINBAUM
& O'REGAN, P.C.
Al
APPENDIX
Article 22 of the Warsaw Convention
CONVENTION FOR UNIFICATION OF CERTAIN
RULES RELATING TO INTERNATIONAL
TRANSPORTATION BY AIR
Article 22
(1) In the transportation of passengers the liability of the
carrier for each passenger shall be limited to the sum of 125,000
francs. Where, in accordance with the law of the court to which
the case is submitted, damages may be awarded in the form of
periodical payments, the equivalent capital value of the said
payments shall not exceed 125,000 francs. Nevertheless, by
special contract, the carrier and the passenger may agree to a
higher limit of liability.
(2) In the transportation of checked baggage and of goods,
the liability of the carrier shall be limited to a sum of 250 francs
per kilogram, unless the consignor has made, at the time when
the package was handed over to the carrier, a special declara-
tion of the value at delivery and has paid a supplementary sum
if the case so requires. In that case the carrier will be liable to
pay a sum not exceeding the declared sum, unless he proves
that that sum is greater than the actual value to the consignor
at delivery.
(3) As regards objects of which the passenger takes charge
himself, the liability of the carrier shall be limited to 5,000 francs
per passenger.
(4) The sums mentioned above shall be deemed to refer to
the French franc consisting of 65% milligrams of gold at the
standard of fineness of nine hundred thousands. These sums
may be converted into any national currency in round figures.
A2
Par Value Modification Act
Pub. L. No. 92-268, § 2, 86 Stat. 116, 117 (1972):
Sec. 2. The Secretary of the Treasury is hereby author-
ized and directed to take the steps necessary to establish
a new par value of the dollar of $1 equals one thirty-eighth
of a fine troy ounce of gold. When established such par
value shall be the legal standard for defining the relation-
ship of the dollar to gold for the purpose of issuing gold
certificates pursuant to section 14(c) of the Gold Reserve
Act of 1934 (31 U.S.C. 405b).
Pub. L. No. 93-110, § 1, 87 Stat. 352 (1973):
Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled,
That the first sentence of section 2 of the Par Value Modi-
fication Act is amended by striking out the words “one
thirty-eighth of a fine troy ounce of gold” and inserting in
lieu thereof the following: “0.828948 Special Drawing
Right or, the equivalent in terms of gold, of forty-two and
two-ninths dollars per fine troy ounce of gold”.
Bretton Woods Agreements Act of 1976, Pub. L. No. 94-564,
§ 6, 90 Stat. 2660, 2661 (1976):
Sec. 6. Section 2 of the Par Value Modification Act
(31 U.S.C. 449) is hereby repealed.
A3
Designation of Corporate Relationships
Franklin Mint Corporation, Franklin Mint Limited, and
McGregor, Swire Air Services Limited, filing their brief on the
merits in this consolidated proceeding, state that:
1. This is their first amended Designation of Corporate Re-
lationships.
2. Franklin Mint Corporation is a subsidiary of Warner
Communications, Inc.
3. Franklin Mint, Limited is a subsidiary of Warner Com-
munications, Inc. (U.K.), which is in turn a subsidiary of
Warner Communications, Inc.
4. McGregor, Swire Air Services Limited, presently known
as McGregor Sea & Air Services, Ltd., is a subsidiary of Ocean
Cory, Ltd., which is in turn a subsidiary of Ocean Transport &
Trading plc.
5. Affiliates and subsidiaries of Franklin Mint Corporation
and Franklin Mint, Limited are:
Atari, Inc.
Atlantic Records
WEA Manufacturing
Warner Bros.
Panavision
DC Comics
Warner Cosmetics
Warner Amex Cable Communication
Elektra/Asylum/Nonesuch Records
Warner Special Products
Warner Bros. Television
Warner Home Video
Mad Magazine
Warner Software, Inc.
A4
Designation of Corporate Relationships
Cosmos Soccer
Warner Amex Satellite Entertainment Co.
Malibu Grand Prix
Warner Bros. Records
WEA International
Warner Bros. Music Publishing
Licencing Corp. of America
Warner Books
Warner Publisher Services
Warner Theatre Prods.
6. Affiliates and subsidiaries of McGregor, Swire Air Serv-
ices Limited are:
McGregor Uyeno K.K.
Calayan Co., Ltd.
McGregor Swire Air Services (Malaysia) Sdn. Bhd.
G.E. Gieen & Co. Pty., Ltd.
MSAS SRL
Society Francaise Wm. Cory et Fils
MSAS Transport GmbH
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.