Who bears the full liability for MH370?

Guest post by Sreemathy Mohan

As the final hours of Malaysian Air Flight 370 still remain wrapped in mystery, the next question is who bears full liability for the jet’s disappearance? (The current lead insurer of this aircraft is Munich based Allianz SE for both the aircraft and airline liability)

Will Malaysian Airline System Bhd be liable (even if the plane is not found?) or the airlines can allege that 777′s manufacturer Boeing was at fault for this huge liability loss? – Under the Montreal Convention of 1999 (an international treaty that covers air travel), the carrier has to pay damages for each passenger killed or injured in an accident, even if its cause is unknown. By those rules, the airline’s liability could stand at more than $40 million. (Roughly about $175,000 per passenger)

Under the convention, claims against the airline will probably be litigated in China and Malaysia, the home countries of most of the passengers on the flight.  The treaty caps an airline’s damages at the equivalent of about $175,000 if the carrier can prove it wasn’t negligent or that a third party, such as terrorists or a manufacturer, was solely at fault. If it can’t mount such a defense, its liability could be much higher.(And if the event is linked to the USA, families can sue in USA and this can trigger more awards/settlements).

Several scenarios have been offered for the flight’s disappearance, including hijacking, intentional downing or an on-board fire. Evidence of any of these could open avenues for family members to sue. There were 153 Chinese passengers aboard Flight 370, according to the airline, and might likely to choose to make their claims in the home country.

When there was a similar incident in 2009 of Air France Flight 447, which vanished between Rio De Janeiro and Paris, and the wreckage was found in sea, and the black box  discovered after 2 years in the Atlantic, there was at least an evidence which helped the investigators to find out the pilot’s struggle to recover the aircraft. But in the case of MH 370, there is absence of evidence (as of today) – right from wreckage, flight data, cockpit recordings – and so Malaysian air has a huge liability hovering! – For the families its even more harder to prove an unsolved mystery liability of others beyond the airline. Malaysian Air said that while its insurers are studying the issue of compensation based on the Montreal Convention, it is considering an advance payment to all the families.

With prayers to all the 226 passengers and 13 cabin crew who went down!