Order Approving and Granting Antitrust Immunity

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

Order Approving and Granting Antitrust Immunity

SUMMARY: This document approves and grants antitrust immunity to the

agreement in Docket 48831 and those portions of the agreement in Docket

49596 as set forth in the order. The order is published as an appendix

to this document.

DATES: The order was issued in Washington, DC, July 13, 1995 and the

order became effective on July 13, 1995.

FOR FURTHER INFORMATION CONTACT: Lawrence Myers, U.S. Department of

Transportation, Office of the Assistant General Counsel for

International Law, room 10105, 400 Seventh Street, SW., Washington, DC

(202) 366-9183.

Patrick V. Murphy,

Acting Assistant Secretary for Aviation and International Affairs.

[Order 95-7-19; Docket 48831 Resolution 600b Docket 49596 R-1, R-8]

Agreements adopted by the Cargo Services Conferences of the

International Air Transport Association relating to conditions of

contract.

Order

Various members of the International Air Transport Association

(IATA) have filed two agreements with the Department for approval

and antitrust immunity under sections 41309 and 41308 of Title 49,

United States Code, and Part 303 of the Department's regulations.

They were adopted at the annual meetings of the Cargo Services

Conferences in 1993 and 1994 for amended intended effectiveness on

October 1, 1994.\1\

\1\ IATA memoranda CSC/Reso/062, Docket 48831; and CSC/Reso/063,

Docket 49596.

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In 1989, IATA adopted Resolution 600b, which was a new,

abbreviated version of the standard Air Waybill Conditions of

Contract contained in Resolution 600b(II), which it was intended to

replace. Portions of Resolution 600b were disapproved by the

Department in Order 89-10-52 and the decision confirmed on

reconsideration in Order 91-10-21. As a result, the airlines

continued to use Resolution 600b(II). In 1993, IATA amended

Resolution 600b, taking into account the Department's expressed

concerns, and submitted the amended version for approval in Docket

48831 with an intended effective date of October 1, 1995. In 1994,

IATA further amended Resolution 600b, taking into account certain

U.S. court decisions interpreting provisions of the

[[Page 37702]]

Warsaw convention as applied to the contents of a cargo waybill. The

latter amendments to Resolution 600b were submitted to the

Department as R-1 in Docket 49596, with a revised intended effective

date of October 1, 1994, for the resolutions in both dockets.\2\

\2\ A French version of the amended Resolution 600b (R-1) was

submitted as Recommended Practice 16006 (R-8) in the same docket,

along with various other cargo resolutions. Orders 95-2-3 and 95-3-

12 approved all these resolutions except R-1 and R-8. In addition,

an expedited agreement amending resolutions 600AA, 600AB, 600B(II)

and 670A was filed in Docket 49595 and was approved by Order 94-7-

17.

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We will approve the text of Resolution 600b as submitted in

Docket 48831, CSC(15)600b. As IATA noted in its justification in

that docket, Order 89-10-52 approved the language of paragraph 7.1.1

only upon the understanding that the words ``immediately after

discovery of the damage'' do not constitute a time limit for filing

claims independent of the specified 14-day period from the date of

receipt of the cargo. IATA assures us that the words are ``intended

to encourage prompt reporting'' without constituting a separate

requirement. We will therefore approve IATA's language, subject to a

condition implementing this understanding.

However, with respect to the additional amendments to Resolution

600b submitted in Docket 49596, CSC(16)600b, we have two substantial

difficulties. First, IATA has proposed a new paragraph 4.2 which

states that in carriage to which the Warsaw Convention does not

apply, a carrier ``may'' permit a shipper to increase its cargo

liability limitation by declaring a higher shipment value and paying

a supplemental charge if so required. The cargo liability limitation

for this non-Warsaw carriage is the same as that set forth in

paragraph 3 for Warsaw carriage: 17 Special Drawing Rights (as

defined by the International Monetary Fund) per kilogram of cargo

lost, damaged or delayed. Paragraph 4.2 is intended, in IATA's

words, to provide the same ``option'' to shippers that is provided

by paragraph 4.1 for Warsaw carriage. However, paragraph 4.2 is

clearly permissive, while the language in paragraph 4.1 indicates

that the shipper's right to declare a higher value under the

Convention is absolute for cargo accepted for carriage. We have not

objected to the extension of the Warsaw cargo liability limit to

non-Warsaw carriage, but are firmly of the view that, in return, the

complementary right of the shipper to declare excess value should be

no less assured in the case of non-Warsaw carriage. We will

therefore defer action on paragraph 3 of Resolution 600b until IATA

changes the word ``may'' to ``shall'' in paragraph 4.2, or adopts

other acceptable language that assures the shipper of the same right

to declare excess value in non-Warsaw situations.

Our second problem with the latest amendments to Resolution 600b

is the addition of language to the Notice on the face of the air

waybill and similar language to paragraph 7 on the back which may be

interpreted by carriers, shippers and the courts as expanding the

applicability of the Warsaw Convention to carriage not heretofore

considered covered by its provisions, and which could cause great

uncertainty over its application.\3\

\3\ The words ``shipper agrees that the shipment may be carried

via intermediate stopping places which the carrier deems

appropriate'' would be added to the Notice on the face of the

waybill, and the underlined words ``Carrier is authorized by the

shipper to select the routing and all intermediate stopping places

that its deems appropriate or to change or deviate from the routing

shown on the face hereof'' would be added to the last sentence of

paragraph 7.

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IATA indicated in its justification that the proposed language

was prompted by ``recent court decisions'' interpreting Articles 8

and 9 of the Warsaw Convention.\4\ Article 8 of the Convention

requires, inter alia, that the air waybill shall contain various

particulars, including ``the agreed stopping places.'' Article 9 of

the Convention provides that if the waybill does not contain these

and other particulars, the carrier shall not be entitled to avail

itself of the provisions of the Convention which exclude or limit

its liability. Apparently, IATA is concerned that courts may deny

the carriers the Warsaw limits on their liability unless they list

all intermediate points that might be used for any type of stop or

else incorporate language such as that proposed which arguably makes

any stop selected by the carrier one agreed to by the shipper.

\4\ IATA provided no further explanation of its position, but,

upon request, provided the Department with a reference to one case,

Maritime Ins. Co. LTD. v. Emery Air Freight Corp., 983 F.2d 437 (2nd

Cir. 1993).

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If this is indeed IATA's position, we do not share its premise

or agree with its interpretation of the proposed language. In the

context of cargo service, whose hallmark is routing flexibility

which benefits shippers as well as carriers, the language proposed

by IATA is not objectionable from an operational standpoint, and we

therefore approved it on that basis by Order 94-7-17 in the context

of amendments to Resolution 600b(II). In this sense, the language is

merely an elaboration of the right of the carrier under the waybill

to determine the routing of the shipment.

However, it is neither necessary nor appropriate to construe the

proposed language as broadening the meaning of ``agreed stopping

place,'' as that term is used in the Warsaw Convention, where it

appears not only in Article 8 but also in Article 1. Article 1

confines the applicability of the Convention itself to carriage

between at least two contracting parties or within one contracting

party if there is an ``agreed stopping place'' in another

jurisdiction, whether or not it is a contracting party.

One of the primary goals of the Convention was legal

predictability, and that goal would be undermined if ``agreed

stopping place'' in Article 1 had been intended to encompass all

possible routings rather than just those expressly agreed to by the

shipper and entered on the waybill. Such an interpretation would

mean that the determination of many important contractual rights of

both carriers and shippers would depend on operational vagaries

which may not reflect assent by either party for jurisdictional

purposes and, indeed, which may engender wasteful litigation over

the facts of individual routings which deviate from points specified

on the waybill.

We will approve IATA's language as proposed in CSC(16)600b, but

only upon the condition that its reference to intermediate points

does not constitute an ``agreed stopping place'' for purposes of

jurisdiction under Article 1(2) of the ``Warsaw Convention.'' We

similarly clarify that our approval in Order 94-7-17 of amended

paragraphs 8./8.1 and 8.2 of Resolution 600b(II), submitted in

Docket 49595, is based on the same understanding.\5\

\5\ We understand that IATA intends for Resolution 600b to

replace Resolution 600b(II), but wish to make clear the scope of our

approval of the latter provisions to avoid the possibility of legal

confusion until Resolution 600b comes into effect.

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Acting under Title 49 of the United States Code, as amended,

(``the Code'') and particularly sections 40101, 4013(a), 41308 and

41309:

1. We do not find Resolution 600b, set forth in the agreement in

Docket 48831, to be adverse to the public interest or in violation

of the Code, subject to the condition that the phrase ``immediately

after discovery of the damage'' in paragraph 8.1.1 of Resolution

600b does not constitute a time limit for filing claims independent

of the 14-day period specified elsewhere in that paragraph;

2. Except as provided in finding paragraph 3 below, we do not

find R-1 and R-8 of the agreement in Docket 49596, to be adverse to

the public interest or in violation of the Code, subject to the

condition that the reference to intermediate stopping places in

paragraph 2 of Resolution 600b does not constitute an ``agreed

stopping place'' for purposes of jurisdiction under Article 1(2) of

the Warsaw Convention;

3. We find paragraph 4.2 of Resolution 600b, set forth in R-1 of

the agreement in Docket 49596, to be adverse to the public interest

and in violation of the Code; and

4. These agreements are a product of the IATA tariff conference

machinery, which the Department found to be anticompetitive but

nevertheless approved on foreign policy and comity grounds by Order

85-5-32, May 6, 1985. The Department found that important

transportation needs were not obtainable by reasonably available

alternative means having materially less anticompetitive effects.

Antitrust immunity was automatically conferred upon these

conferences because, where an anticompetitive agreement is approved

in order to attain other objectives, the conferral of antitrust

immunity is mandatory under title 49 of the United States Code, as

amended.

Order 85-5-32 contemplates that the products of fare, rate and

services conferences will be subject to individual scrutiny and will

be approved provided they are of a kind specifically sanctioned by

Order 85-5-32 and are not adverse to the public interest or in

violation of the Code. As with the underlying IATA conference

machinery, upon approval of a conference agreement, immunity for

that agreement must be conferred under the Act. Consequently, we

will grant antitrust immunity to the agreements set forth in finding

paragraphs 1

[[Page 37703]]

and 2 above, subject to the conditions imposed therein.

Accordingly,

1. We approve and grant antitrust immunity to the agreement in

Docket 48831 and to those portions of the agreement in Docket 49596,

set forth in finding paragraphs 1 and 2 above, subject to the

conditions imposed therein;

2. We disapprove that portion of the agreement in Docket 49596

set forth in finding paragraph 3, above; and

3. We attach the following condition to our approval in Order

94-7-17 of the amendments to paragraphs 8/8.1 and 8.2 of Resolution

600b (II) in Docket 49595: The references to intermediate stopping

places in paragraphs 8/8.1 and 8.2 of Resolution 600b (II) do not

constitute an ``agreed stopping place'' for purposes of jurisdiction

under Article 1(2) of the Warsaw Convention;

4. We defer action on paragraph 3 of Resolution 600b, set forth

in R-1 of the agreement in Docket 49596, until such time as IATA

amends paragraph 4.2 of the same resolution to assure shippers of

the same right to declare excess value when the Warsaw Convention is

not applicable as when it is applicable; and

5. We will publish this order in the Federal Register.

By:

Patrick V. Murphy,

Acting Assistant Secretary for Aviation and International Affairs.

[FR Doc. 95-17827 Filed 7-20-95; 8:45 am]

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